Latest / Core Memory / China Builds, The US Regulates - EP 35 Dan Wang

Transcript

China Builds, The US Regulates - EP 35 Dan Wang · Core Memory

0:00
SPEAKER_01: I don't know, man.
0:00
SPEAKER_01: You've done these things.
0:01
SPEAKER_01: It's like having a chat.
0:06
SPEAKER_01: But yeah, you feel good?
0:08
SPEAKER_01: I feel good.
0:08
SPEAKER_01: You feel good.
0:09
SPEAKER_01: Okay.
0:26
SPEAKER_01: Dan Wong, thank you for coming on the show.
0:28
SPEAKER_01: Thanks for having me, Ashley.
0:30
SPEAKER_01: I'm really excited about this.
0:32
Okay,
0:32
let's start at the very beginning,
0:35
which is you've just written this amazing book.
0:37
SPEAKER_01: We'll make sure I get it there on the screen just as a fellow author.
0:42
SPEAKER_01: While I know most people are listening, we'll call it out.
0:45
SPEAKER_01: So Breakneck, it's a New York Times bestseller, which is hard to do.
0:50
SPEAKER_01: So congratulations on that.
0:52
SPEAKER_01: And
0:53
SPEAKER_00: It's good.
0:54
SPEAKER_00: I mean, Ashley, you've done it, and this is a nice experience.
0:58
SPEAKER_01: It's a good feeling, right?
0:59
SPEAKER_01: Yeah.
1:00
SPEAKER_01: So,
1:01
SPEAKER_01: obviously,
1:01
SPEAKER_01: we're going to talk about the book,
1:04
SPEAKER_01: so we'll get into everything,
1:05
SPEAKER_01: but it's about China,
1:07
and China is this engineering culture and its relationship to
1:13
the United States.
1:14
It's kind of about both countries in a lot of ways and where
1:17
they're heading or
1:18
SPEAKER_01: could be heading,
1:18
SPEAKER_01: and...
1:23
We arranged this podcast pretty quick,
1:24
so I had to race through the book.
1:26
SPEAKER_01: I did get through the whole thing,
1:29
SPEAKER_01: but kind of quicker than I had hoped,
1:31
SPEAKER_01: because I really wanted to marinate with this.
1:34
SPEAKER_01: It's a topic that's near and dear to my heart.
1:36
SPEAKER_01: It's a fantastic book.
1:37
SPEAKER_01: Thank you.
1:38
SPEAKER_01: I'm not saying this just because you're sitting here.
1:41
SPEAKER_01: One, it's very easy to read.
1:44
SPEAKER_01: It's smart.
1:45
SPEAKER_01: It's very clear.
1:46
SPEAKER_01: It moves quickly, so that's nice.
1:51
It's like for anyone who just wants to have a sense of what
1:54
China has accomplished
1:55
SPEAKER_01: over the last four decades,
1:57
SPEAKER_01: this is a path to get there very directly.
2:02
SPEAKER_01: And it's just wonderfully written.
2:05
SPEAKER_01: I mean, I was really taken away.
2:07
SPEAKER_01: And then, you know...
2:11
SPEAKER_01: Just so people know,
2:12
SPEAKER_01: I mean,
2:12
SPEAKER_01: I don't think it's not like pro-China,
2:14
SPEAKER_01: anti-China,
2:15
SPEAKER_01: it's not pro-U.S.,
2:16
SPEAKER_01: anti-U.S.
2:17
SPEAKER_01: You kind of give both sides and you offer kind of like,
2:26
SPEAKER_01: you do a thing that most people don't,
2:28
SPEAKER_01: which is do some criticism but not really come back with any ideas for
2:33
SPEAKER_01: what each country could do differently or maybe better.
2:36
SPEAKER_01: And you do do that throughout the book.
2:38
SPEAKER_01: So I found that really fantastic.
2:41
SPEAKER_01: Anyway, congratulations.
2:42
SPEAKER_01: Thank you.
2:42
SPEAKER_01: It's a wonderful book.
2:43
SPEAKER_01: Shamefully, you're...
2:48
People have been following your work for many years,
2:50
many prominent people.
2:52
You're a scholar and I think you were born in China and grew up
2:57
in Canada,
2:58
US and Canada.
2:59
SPEAKER_01: Right.
3:00
And then have,
3:01
while writing this book,
3:02
lived in China for six or seven years.
3:04
SPEAKER_01: That's right.
3:04
SPEAKER_01: Okay.
3:05
SPEAKER_01: And then now you're back in the US and is it fair to,
3:08
SPEAKER_01: you're an intellectual,
3:09
SPEAKER_01: you're an academic.
3:10
SPEAKER_01: Is that fair?
3:10
SPEAKER_01: Yeah.
3:11
SPEAKER_00: I'm an egghead.
3:12
SPEAKER_00: I admit it.
3:13
SPEAKER_00: I'm sorry.
3:15
And I...
3:17
Is the Hoover...
3:18
Is that the best place to...
3:19
Where should we anchor you?
3:21
SPEAKER_00: I'm a research fellow at the Hoover Institution.
3:23
SPEAKER_01: Okay.
3:23
SPEAKER_01: Okay.
3:24
SPEAKER_01: And so for years,
3:25
you've been writing this annual letter about China that's very
3:28
well-read and just
3:29
SPEAKER_01: incredibly thoughtful on the country,
3:31
SPEAKER_01: what's happening.
3:32
SPEAKER_01: All right.
3:32
SPEAKER_01: So that's my intro.
3:34
SPEAKER_01: We do okay so far?
3:35
SPEAKER_01: Sure.
3:36
SPEAKER_01: Sounds great.
3:36
SPEAKER_01: Okay.
3:37
SPEAKER_01: I've got a million questions.
3:38
SPEAKER_01: I mean...
3:40
SPEAKER_01: What you are writing about,
3:42
SPEAKER_01: okay,
3:44
SPEAKER_01: you kind of frame it as China as this engineering economy versus the US,
3:50
SPEAKER_01: which you argue,
3:51
especially since the 1960s has turned into this lawyerly
3:55
economy and that the US
3:57
SPEAKER_01: has managed to,
3:59
SPEAKER_01: um,
4:00
SPEAKER_01: yeah,
4:00
SPEAKER_01: kind of like
4:02
SPEAKER_01: in some ways, sue itself into inaction.
4:04
It has not tended to its infrastructure at all while China has
4:09
been building at
4:09
SPEAKER_01: this incredible clip.
4:12
SPEAKER_01: You note that China's top politicians tend to be engineers,
4:17
SPEAKER_01: whereas in the U.S.,
4:18
SPEAKER_01: they tend to be lawyers.
4:19
SPEAKER_01: And yeah,
4:20
SPEAKER_01: I mean,
4:20
SPEAKER_01: it's quite,
4:20
SPEAKER_01: you know,
4:21
SPEAKER_01: it's just,
4:22
SPEAKER_01: these are things that I've known and followed.
4:24
SPEAKER_01: You just lay it out so starkly in this book.
4:27
SPEAKER_01: And so obviously you'd been thinking about this for a long time.
4:29
SPEAKER_01: I mean, did you, when you went,
4:32
SPEAKER_01: back to China,
4:34
did you go there with like doing a book in mind or all these
4:39
ideas came from your
4:41
SPEAKER_01: experience and just watching this firsthand?
4:44
These ideas came as I lived through what I felt were pretty big
4:50
issues in China.
4:52
I moved to China at the start of 2017 after working here in
4:58
Silicon Valley.
5:00
SPEAKER_00: And at the start of 2017,
5:02
SPEAKER_00: when I moved to Hong Kong and then subsequently to Beijing and Shanghai,
5:05
SPEAKER_00: I didn't realize all of these big changes that I would be expecting.
5:10
SPEAKER_00: At the start of 2017,
5:11
I remember watching some of the Senate confirmation hearings of
5:15
Donald Trump's
5:16
SPEAKER_00: first cabinet meetings,
5:18
and the whole world was totally unsure about what was going to
5:21
come with the first
5:22
SPEAKER_00: Trump administration.
5:24
SPEAKER_00: And I lived through Trump's first trade war,
5:27
which morphed into a technology war that smashed a lot of
5:30
Chinese tech companies.
5:32
I lived through China's great economic and some technological
5:37
successes over this
5:38
SPEAKER_00: period,
5:39
as well as new and tightening forms of repression under Xi's
5:43
consolidating rule.
5:45
And the centerpiece of that was spending the entirety of zero
5:48
COVID in China.
5:50
SPEAKER_00: And so,
5:50
SPEAKER_00: you know,
5:51
SPEAKER_00: when we thought about,
5:52
SPEAKER_00: when I thought about something like zero COVID,
5:55
SPEAKER_00: when I thought about something like the one child policy,
5:58
SPEAKER_00: which took place a few decades ago and ended in about 2015,
6:03
SPEAKER_00: The numbers in these policies are right there in the name.
6:06
You have one child,
6:07
zero COVID,
6:08
no ambiguity about what these things mean.
6:10
SPEAKER_01: I liked how you put that in the book.
6:12
SPEAKER_01: It's not like in the US where we try to market everything or frame it.
6:16
It was just that they were very on point about what they were
6:19
trying to do.
6:20
SPEAKER_00: It felt like engineering projects.
6:22
SPEAKER_00: It felt like social engineering projects.
6:23
SPEAKER_00: Yeah.
6:24
SPEAKER_01: All right, what do we do at Core Memory?
6:26
SPEAKER_01: We cover innovative,
6:27
SPEAKER_01: fast-moving,
6:28
SPEAKER_01: forward-thinking companies,
6:30
SPEAKER_01: which is why Core Memory is sponsored by Brex,
6:34
because Brex is the intelligent finance platform for many of
6:39
these companies,
6:39
SPEAKER_01: 30,000 companies from startups to the world's largest corporations.
6:45
SPEAKER_01: rely on Brex's technology for their finances.
6:48
SPEAKER_01: They've got smart corporate cards,
6:50
SPEAKER_01: high-yield business banking,
6:53
SPEAKER_01: and expense automation tools that are fantastic.
6:56
SPEAKER_01: I hate doing my expenses.
6:58
SPEAKER_01: And Brex's AIs and software run right through those expenses,
7:02
SPEAKER_01: figure out where we're spending money,
7:05
and take care of so much stuff for you so you don't have to
7:07
waste your time on it
7:09
SPEAKER_01: yourself.
7:10
Go to brex.com slash core memory to learn more and just,
7:14
you know,
7:15
get with the program.
7:16
SPEAKER_01: Let's get going.
7:16
Let's get out of this archaic finance software and move toward
7:21
the future.
7:21
SPEAKER_01: Core memory and Brex.
7:24
SPEAKER_00: And as I saw China's amazing infrastructure,
7:28
SPEAKER_00: bridges,
7:29
SPEAKER_00: high-speed rail,
7:30
SPEAKER_00: subways,
7:30
SPEAKER_00: these things I was using on a daily basis sometimes,
7:34
SPEAKER_00: weekly basis sometimes,
7:35
SPEAKER_00: it felt like this is a country that is just much more metric-driven,
7:40
SPEAKER_00: literal-minded perhaps in the governance of the people.
7:43
SPEAKER_01: Yeah.
7:44
And you have two chapters,
7:47
one on the zero COVID policy and one on the one child policy.
7:52
SPEAKER_01: And to your point,
7:53
SPEAKER_01: I just hadn't thought about them quite like that as a reflection of this
7:56
SPEAKER_01: engineering culture.
7:58
SPEAKER_01: I mean,
7:58
SPEAKER_01: everybody thinks about the factories and all the consumer products and
8:02
SPEAKER_01: manufacturing and all this stuff,
8:03
SPEAKER_01: but I,
8:03
SPEAKER_01: yeah,
8:04
SPEAKER_01: I mean,
8:04
SPEAKER_01: it was interesting for me just to look at it as this mindset.
8:08
SPEAKER_01: And so you're
8:11
SPEAKER_01: You kind of argue,
8:12
SPEAKER_01: and it is this,
8:14
SPEAKER_01: I think it's this roughly 40 year period,
8:18
SPEAKER_01: that it is just,
8:20
SPEAKER_01: I mean,
8:20
SPEAKER_01: maybe put it in your own words,
8:21
SPEAKER_01: this engineering culture,
8:25
SPEAKER_01: like what is the heart of that?
8:27
So I think China's engineering roots really took place
8:33
throughout the 1980s when
8:36
SPEAKER_00: Deng Xiaoping took over as China's top leader basically by 1979.
8:42
He surveyed the wreckage of China during the Mao years when Mao
8:48
had overseen some
8:50
SPEAKER_00: famines and the Cultural Revolution and all sorts of disasters.
8:54
And Deng Xiaoping took a look and said,
8:56
whatever Mao did,
8:58
let's do the opposite of that.
8:59
And so Deng decided that the counterstroke to Mao's romantic
9:05
misrule was to promote
9:06
SPEAKER_00: a lot of technocrats into China's top leadership.
9:10
SPEAKER_00: And so throughout the 1980s,
9:11
SPEAKER_00: throughout the 1990s,
9:13
SPEAKER_00: a lot more people with engineering degrees became top leaders.
9:17
SPEAKER_00: And the peak of this was in the year 2002,
9:20
SPEAKER_00: when the previous General Secretary of the Communist Party took over.
9:23
SPEAKER_00: His name was Hu Jintao.
9:24
SPEAKER_00: He trained as a hydraulic engineer.
9:26
SPEAKER_00: He took part in building a dam.
9:31
SPEAKER_00: His deputy, the premier Wen Jiabao, was a geologist.
9:34
SPEAKER_00: And all nine members of the standing committee of the Politburo,
9:38
SPEAKER_00: which is the nine highest ruling echelon of the Communist Party,
9:41
SPEAKER_00: all nine of them had engineering degrees of a very Soviet sort.
9:46
SPEAKER_00: This was the peak of the engineering state.
9:50
SPEAKER_00: Afterwards, it sort of lessened.
9:51
SPEAKER_00: There were more lawyers and economists in China's cabinet.
9:55
SPEAKER_00: Xi himself could be kind of a hybrid.
9:58
He studied chemical engineering as an undergrad and has a
10:01
doctorate in Marxist economics.
10:04
But I also want to draw a little bit on this idea that China's
10:08
engineering state
10:09
SPEAKER_00: has older roots,
10:10
SPEAKER_00: that ancient imperial China,
10:13
SPEAKER_00: we don't have to take this too seriously,
10:15
SPEAKER_00: but they built a lot of stuff.
10:18
SPEAKER_00: What are the...
10:20
SPEAKER_00: some big projects that we associate with ancient China.
10:22
Well,
10:22
it could be something like the Great Wall,
10:24
which is a fast fortification system.
10:26
It could be something like the Grand Canal,
10:28
which is a big waterway management system.
10:30
The emperors rarely hesitated to completely reorder a peasant's
10:35
relationship to her land.
10:37
SPEAKER_00: And this is also the country that famously administered a
10:42
basically a thousand-year-old exam that started about 1,200
10:45
years ago to find smart
10:48
people and bring them into the court and elevate them as
10:51
mandarins in this highly
10:53
SPEAKER_00: rigorous metric-based exam system.
10:55
SPEAKER_00: And so I don't want to be too literal.
10:57
SPEAKER_00: I want to be playful with this device,
10:59
SPEAKER_00: but that's how I want to think of China as an engineering state.
11:02
SPEAKER_01: And you write that the
11:05
SPEAKER_01: There's a bit that I actually want to read.
11:06
I mean,
11:07
the US and China share in a lot of these,
11:11
share a lot of similar traits.
11:13
SPEAKER_01: And obviously,
11:14
SPEAKER_01: you know,
11:14
SPEAKER_01: for the last century plus,
11:16
SPEAKER_01: I mean,
11:16
SPEAKER_01: the US has had many engineering feats.
11:19
SPEAKER_01: In the book, you talk about
11:21
SPEAKER_01: The US sometimes gets,
11:22
SPEAKER_01: especially these days,
11:23
a little too obsessed with the moment of invention and then not
11:27
seeing things
11:28
SPEAKER_01: through.
11:29
But you also write that to some of the things you were just
11:32
talking about,
11:33
SPEAKER_01: both countries share in this kind of like forward-looking,
11:39
SPEAKER_01: we are going to do great things type of mentality.
11:43
SPEAKER_01: And so there is like a...
11:45
SPEAKER_01: Some of the projects you were just outlining,
11:47
SPEAKER_01: I mean,
11:47
SPEAKER_01: you know,
11:48
SPEAKER_01: going to the moon,
11:48
SPEAKER_01: the Manhattan Project,
11:50
SPEAKER_01: you know,
11:51
SPEAKER_01: you can see the US also clearly,
11:53
SPEAKER_01: you know,
11:54
SPEAKER_01: has a similarity.
11:55
SPEAKER_00: Yeah, absolutely.
11:56
SPEAKER_01: Yeah.
11:57
SPEAKER_01: And you write, you write, let's see, you, I mean,
12:02
SPEAKER_01: Right at the beginning of the book, you just go right at it.
12:05
SPEAKER_01: I am sure that no two peoples are more alike than Americans and Chinese.
12:11
SPEAKER_01: A strain of materialism,
12:12
SPEAKER_01: often crass,
12:14
SPEAKER_01: runs through both countries,
12:15
SPEAKER_01: sometimes producing veneration of successful entrepreneurs,
12:18
SPEAKER_01: sometimes creating displays of extraordinary tastelessness,
12:22
SPEAKER_01: overall contributing to a spirit of vigorous competition.
12:26
SPEAKER_01: Chinese and Americans are pragmatic.
12:28
They have a get-it-done attitude that occasionally produces
12:31
hurried work.
12:32
Both countries are full of hustlers peddling shortcuts,
12:35
especially to health and wealth.
12:37
SPEAKER_01: Their people have an appreciation for the technological sublime,
12:41
SPEAKER_01: the awe of grand projects pushing physical limits.
12:45
SPEAKER_01: This is kind of what we're talking about.
12:47
American and Chinese elites are often uneasy with the political
12:51
views of the
12:51
SPEAKER_01: broader populace,
12:52
but masses and elites are united in the faith that theirs is a
12:56
uniquely powerful
12:57
nation that ought to throw its weight around if smaller
13:01
countries don't get in
13:02
SPEAKER_01: line.
13:02
I'm going to shut up in a second,
13:04
but there's one other bit that I want to read.
13:07
These two countries are messy in part because they are both
13:10
engines for global change.
13:12
SPEAKER_01: I hopped forward just a little bit.
13:14
Europeans have a sense of optimism only about the past stuck in
13:18
their mausoleum
13:19
economy because they are too sniffy to embrace American or
13:22
Chinese practices.
13:24
and the rest of the world is either too mature or too young to
13:28
match the impact of
13:29
SPEAKER_01: these two superpowers.
13:31
SPEAKER_01: It is Americans and Chinese,
13:33
SPEAKER_01: Silicon Valley,
13:34
SPEAKER_01: Shenzhen,
13:35
SPEAKER_01: Wall Street,
13:35
and Beijing that will determine what people everywhere will
13:39
think and what they
13:40
SPEAKER_01: will buy."
13:40
SPEAKER_01: I read this because it resonates deeply with me.
13:44
SPEAKER_01: I've been arguing in my writing and on this podcast that
13:51
Seems fairly clear to me that China and the US are shaping our
13:56
collective future.
13:58
SPEAKER_01: And sometimes I feel
14:01
as if they're racing forward so quickly on an almost science
14:05
fiction-like pace and
14:08
SPEAKER_01: things that are being invented.
14:10
And it strikes me that most of the rest of the world will just
14:12
be renting or
14:13
SPEAKER_01: participating in what these two countries produce.
14:16
And so this is a very important question,
14:18
you know,
14:19
as to how these two countries push forward.
14:23
you like i said you do offer hope for the us and hope for china
14:29
but you know when
14:31
you read this book it is disheartening for americans i think
14:36
just to see what china
14:37
has done and how little the us has done over the last 40 years
14:41
i mean i was i was i
14:43
SPEAKER_01: was depressed
14:45
SPEAKER_01: on some level, you know, just to really have it put in your face.
14:49
SPEAKER_00: Well, I hope it's, I tried my best to capture what China was doing well.
14:57
SPEAKER_00: And if there's anyone that could be disheartened,
14:59
SPEAKER_00: I think it should not be only Americans,
15:01
SPEAKER_00: it should also be Chinese,
15:03
SPEAKER_00: because I also try to capture what America does really well.
15:06
SPEAKER_00: And I think that maybe I would add,
15:10
SPEAKER_00: if I could rewrite that paragraph that you just read,
15:13
SPEAKER_00: Ashley,
15:13
I would add just one more line to say that both countries are
15:17
also extraordinarily
15:18
gifted at delivering self beatings on themselves and setting
15:23
themselves back in
15:24
SPEAKER_00: super big ways.
15:25
Because I think that both countries have also made these
15:29
tremendous mistakes.
15:31
SPEAKER_00: that have hurt their people,
15:33
SPEAKER_00: that have hurt their economies,
15:34
SPEAKER_00: that have hurt their companies in really serious ways.
15:38
SPEAKER_00: And what I'm really trying to do is to offer a rousing call to China,
15:45
SPEAKER_00: the Chinese,
15:46
to know that life could be a lot better and also for the
15:48
Americans to know that
15:49
SPEAKER_00: life ought to be a lot better as well.
15:51
SPEAKER_01: Yeah.
15:51
SPEAKER_01: Okay.
15:52
SPEAKER_01: And I want to dive in on a couple of those ideas.
15:54
SPEAKER_01: Just one more thing, just to...
15:58
SPEAKER_01: Do you know that guy, Arnaud Bertrand?
16:00
SPEAKER_01: On Twitter.
16:01
SPEAKER_01: Yes, yeah.
16:01
SPEAKER_01: I'm kind of curious how you feel about him.
16:03
SPEAKER_01: But sometimes he'll go to these more rural cities and show how fantastic,
16:10
SPEAKER_01: in China,
16:10
SPEAKER_01: and show how fantastic their infrastructure is.
16:12
You also go on this bike ride and this journey to a city that
16:16
seems to have like
16:17
SPEAKER_01: the economy,
16:18
SPEAKER_01: the equivalent of like,
16:20
SPEAKER_01: I don't know,
16:20
SPEAKER_01: like Wichita,
16:21
SPEAKER_01: Kansas or something.
16:22
SPEAKER_01: I mean, not a... It sounds like a region that's...
16:28
SPEAKER_01: not super rich.
16:29
SPEAKER_01: It's not like the center of capital.
16:30
And what you saw was that its infrastructure was really better
16:34
than New York or Los Angeles.
16:37
SPEAKER_00: Much better.
16:37
So I was in the city of Guiyang in the province of Guizhou,
16:43
which is deep in China's southwest.
16:45
SPEAKER_00: This place is heavily mountainous, very far away from the coasts.
16:49
SPEAKER_00: Historically, it has been poor forever because of
16:52
various issues with malaria and inaccessibility,
16:56
and still one of China's poorest provinces.
17:00
SPEAKER_00: I went there to cycle for five days,
17:03
SPEAKER_00: about 600 kilometers with two friends to go from Guiyang to Chongqing,
17:07
SPEAKER_00: which was China's wartime capital,
17:09
SPEAKER_00: and also a super mountainous place.
17:11
SPEAKER_00: And in China's fourth poorest province,
17:14
SPEAKER_00: I saw much better levels of infrastructure than California,
17:18
SPEAKER_00: one of America's richest states.
17:20
SPEAKER_00: Guizhou has 45 of the world's tallest bridges.
17:25
SPEAKER_00: It's not China's tallest bridges.
17:27
SPEAKER_00: It's the world's tallest bridges.
17:29
It has something that California has been trying to build for
17:33
more than 15 years now.
17:34
SPEAKER_00: It has a high-speed rail network.
17:36
SPEAKER_00: It is pretty easily connected to Shanghai, where it was traveling.
17:39
SPEAKER_00: It has 11 airports.
17:41
And so generally,
17:43
what I was trying to make sense of is kind of this puzzle of
17:47
SPEAKER_00: For China being so poor,
17:50
SPEAKER_00: and it has about one-sixth the GDP per capita levels of the US,
17:54
SPEAKER_00: by some measures,
17:55
SPEAKER_00: it might be on par with the American economy.
17:59
SPEAKER_00: Guizhou is certainly much, much poorer than California.
18:03
SPEAKER_00: And yet here we are,
18:04
SPEAKER_00: you know,
18:04
SPEAKER_00: chatting in the technological beating heart of our,
18:08
SPEAKER_00: you know,
18:09
SPEAKER_00: the beating heart of our technologically accelerating civilization.
18:12
SPEAKER_00: Is Palo Alto very pleasant?
18:13
SPEAKER_00: It's okay.
18:14
SPEAKER_00: Is Melo Park very pleasant?
18:16
SPEAKER_00: Absolutely not.
18:17
SPEAKER_00: And so, you know, we're in such a rich place.
18:20
SPEAKER_00: Why are things so unfunctional here?
18:22
SPEAKER_01: Yeah.
18:22
SPEAKER_01: Yeah.
18:22
SPEAKER_01: It's shocking.
18:23
SPEAKER_01: I mean, they're,
18:24
SPEAKER_01: Palo Alto, Menlo, they're just kind of innocuous.
18:27
SPEAKER_01: I mean, it's nice.
18:29
SPEAKER_01: Good weather, nice trees, but there's nothing very spectacular.
18:32
SPEAKER_01: This is not where you would think Silicon Valley would be.
18:35
SPEAKER_01: I always think that San Jose is actually the saddest
18:42
SPEAKER_01: It makes no sense to me.
18:43
SPEAKER_01: I mean,
18:44
if we are living in modern-day Florence and we have such an
18:50
absurd amount of the
18:52
SPEAKER_01: world's wealth collected here in this relatively small spot,
18:57
SPEAKER_01: I mean,
18:58
SPEAKER_01: you know,
18:58
SPEAKER_01: the last 30 or 40 years,
19:00
SPEAKER_01: San Jose should be,
19:01
SPEAKER_01: like,
19:01
SPEAKER_01: the most spectacular city on planet Earth,
19:04
SPEAKER_01: and it has kind of,
19:06
SPEAKER_01: like,
19:06
SPEAKER_01: not changed at all in the entire time I've lived here,
19:10
SPEAKER_01: which is 20-plus years.
19:12
SPEAKER_00: We have a few more parking garages.
19:13
SPEAKER_00: Right.
19:14
SPEAKER_00: How about that?
19:14
SPEAKER_01: Yeah.
19:15
SPEAKER_01: But I can, like, never understand this.
19:16
SPEAKER_01: I mean,
19:17
SPEAKER_01: it's just...
19:17
SPEAKER_01: And I talked about this with some friends,
19:19
SPEAKER_01: and it's just...
19:20
SPEAKER_01: It's like,
19:20
SPEAKER_01: well...
19:22
Nobody with money wants to go through the ordeal of what it
19:25
would take to do some
19:27
SPEAKER_01: grand project.
19:28
SPEAKER_01: It's just not worth the time and effort.
19:30
SPEAKER_00: Yeah.
19:31
There is something also strange about the philanthropic culture
19:35
of Silicon Valley.
19:36
SPEAKER_00: They don't give as much as the folks in New York and LA.
19:41
SPEAKER_00: 100%.
19:42
SPEAKER_00: Now,
19:42
it could be the case that they don't give so much because maybe
19:46
the New Yorkers and
19:47
SPEAKER_00: the Angelenos are...
19:49
SPEAKER_00: just giving money to the ballet and the opera.
19:52
SPEAKER_00: I like the opera a lot, but maybe that's not the best use of our money.
19:54
And maybe they're a little bit too effective altruist to give
19:58
money to traditional institutions.
20:01
SPEAKER_00: But I feel strongly that there's a sense in which
20:05
SPEAKER_00: America works really well for the rich.
20:07
They don't really have to suffer through the issues of the
20:11
working class or even
20:12
SPEAKER_00: the middle class.
20:13
You don't have to take these subways or Caltrain systems that
20:17
can be screechingly loud.
20:20
SPEAKER_00: You don't really have to deal with
20:22
SPEAKER_00: all sorts of housing unaffordability issues.
20:25
SPEAKER_00: In New York,
20:26
SPEAKER_00: you have these super tall skyscrapers that are pencil thin,
20:30
SPEAKER_00: and maybe you can take the helicopter to your private jet.
20:34
And so what I also want to say is that the US can't stay as a
20:39
great power if it
20:40
SPEAKER_00: works only for the rich.
20:42
And Silicon Valley,
20:43
to me,
20:43
one of the things I find quite distasteful about this place is
20:45
that
20:46
SPEAKER_00: It seems to work well for the rich, not so well for anyone else.
20:49
SPEAKER_01: Yeah, yeah.
20:50
SPEAKER_01: It's interesting.
20:52
SPEAKER_01: The last few years,
20:53
SPEAKER_01: I've been doing documentaries,
20:54
SPEAKER_01: and when I try to raise money,
20:56
SPEAKER_01: when I first went about this,
20:58
SPEAKER_01: I was like,
21:00
SPEAKER_01: oh,
21:00
SPEAKER_01: I have more billionaires in my cell phone than anyone should,
21:06
SPEAKER_01: and they're all into technology.
21:08
SPEAKER_01: I'm making documentaries about technology.
21:10
SPEAKER_01: I was like, this is gonna be easy, man.
21:12
SPEAKER_01: I'm just asking for like,
21:14
SPEAKER_01: 500K, a million bucks, they won't even,
21:17
even notice it you know what i mean and i i would have these
21:20
meetings around
21:21
silicon valley and like nobody wanted to do it i went to new
21:24
york talked to three
21:25
people raised all my money three meetings you know three checks
21:29
and and these are
21:30
kind of like hedge fund type people and i was like oh okay so
21:34
so they they're just
21:36
like kind of more interested in funding the arts and and these
21:39
types of projects
21:40
and sort of having their name and my sense with the silicon
21:44
valley folks is more
21:46
SPEAKER_01: if they're giving money, it has to be to a startup.
21:48
It's like,
21:49
I'm willing to fund the next big idea,
21:52
and that's almost like philanthropy.
21:55
SPEAKER_00: That's interesting.
21:56
SPEAKER_00: Can you say more about that?
21:57
SPEAKER_00: Are they just thinking about this more in terms of investments?
22:00
SPEAKER_00: Is this more about EA dynamics?
22:02
SPEAKER_01: No, I think it's what resonates with them.
22:05
SPEAKER_01: I think they have trouble
22:07
First of all,
22:08
I'm not even sure many of them watch many movies or TV shows.
22:11
SPEAKER_01: I mean, some, but it's not part of the culture, right?
22:17
SPEAKER_01: And they see,
22:18
SPEAKER_01: I don't think they get,
22:20
SPEAKER_01: when I do these raise money in New York,
22:22
people get a kick out of having their name on the movie and
22:25
being part of the whole
22:26
SPEAKER_01: going to the premiere process and stuff like that.
22:28
SPEAKER_01: That seems not to appeal to these folks.
22:31
SPEAKER_01: I think it's, and then you have to frame everything
22:36
SPEAKER_01: like a startup in order for somebody to like wrap their head around it.
22:40
SPEAKER_01: You know what I mean?
22:40
SPEAKER_01: Because a documentary is not a money-making enterprise.
22:44
SPEAKER_01: At best,
22:44
you're like kind of getting your money back and like maybe just
22:48
enough to have made
22:50
SPEAKER_01: four years of work like vaguely tolerable.
22:53
SPEAKER_01: And when you talk to the folks in New York,
22:56
SPEAKER_01: they don't even really expect their money to come back.
22:59
Whereas when I would pitch it here,
23:00
you like had to be like,
23:01
and we'll get a
23:03
SPEAKER_01: 20% return, you know what I mean?
23:05
SPEAKER_01: And it was just that mentality, yeah.
23:08
But that was the first time it really jumped out at me,
23:10
this kind of cultural difference.
23:13
SPEAKER_00: Right, so they expect a return.
23:15
SPEAKER_00: I mean,
23:17
SPEAKER_00: well,
23:17
SPEAKER_00: the billionaires don't need any defense,
23:19
SPEAKER_00: but I guess to defend the billionaires a little bit,
23:21
it is that maybe the opera and the documentaries are not going
23:25
to change the world,
23:27
SPEAKER_00: but...
23:28
SPEAKER_01: Which is fair.
23:30
And then I also think though they underestimate the
23:34
storytelling part of stuff and
23:36
SPEAKER_01: the knock-on effects that it can have as well.
23:40
SPEAKER_01: This is hard because your book
23:43
covers a lot of ground and I want people to read it and I don't
23:46
want to just rehash
23:47
SPEAKER_01: what's in the book.
23:47
And then I had like 20 different things that were a little more
23:51
specific that I
23:52
SPEAKER_01: wanted to get into,
23:53
but I don't want to jump so far ahead that people don't like
23:56
have a full sense of
23:57
SPEAKER_01: kind of where you're coming from.
23:58
SPEAKER_01: But, um, so I was battling with this in my head.
24:02
SPEAKER_01: That's not, that's not your, your problem.
24:03
SPEAKER_01: It's my problem.
24:04
Um,
24:04
you know,
24:05
you talk,
24:05
there's,
24:05
there was one thing I wanted to explore with you.
24:08
SPEAKER_01: You,
24:10
SPEAKER_01: you talk so much about how obviously the U.S.
24:13
SPEAKER_01: has... Okay, let's do one bit of framing real quick for people.
24:18
I mean,
24:18
this 1960s moment that you talk about,
24:22
you lay out that for 100,
24:26
150 years,
24:26
the U.S.
24:27
SPEAKER_01: was doing what China was doing today.
24:29
SPEAKER_01: We were building, building, building.
24:32
SPEAKER_01: Industry was booming.
24:34
SPEAKER_01: All this infrastructure that we still rely on was being laid.
24:37
SPEAKER_01: And then kind of like, you know, and there were problems.
24:39
SPEAKER_01: I mean, there was pollution and
24:41
And the industrialists were just kind of barging through
24:44
wherever they wanted.
24:44
SPEAKER_01: And so in the 60s,
24:45
SPEAKER_01: you had this natural counterforce to that,
24:48
which was these lawyers from Harvard and Yale come on the scene
24:52
and they're like,
24:52
SPEAKER_01: let's,
24:53
SPEAKER_01: let's,
24:55
SPEAKER_01: do this better.
24:55
SPEAKER_01: Let's kind of put some checks in place.
24:58
SPEAKER_01: Let's fix the environment.
24:59
SPEAKER_01: We can't just have these industrialists.
25:01
SPEAKER_01: You know, so there's parts of this that you understand, right?
25:03
I mean,
25:03
nobody wants the river to be like catching on fire and
25:07
uninhabitable.
25:08
SPEAKER_01: But you detail that,
25:10
SPEAKER_01: I mean,
25:10
SPEAKER_01: in my sense,
25:12
SPEAKER_01: just from the way you write about it,
25:13
SPEAKER_01: is that then this like spirals out of,
25:15
SPEAKER_01: it goes too far.
25:16
SPEAKER_01: Okay.
25:17
SPEAKER_00: I think the US used to be an engineering state.
25:20
It certainly built these incredible projects from basically
25:25
about 150 years from
25:26
SPEAKER_00: canals and trains and skyscrapers in the 19th century to Manhattan,
25:30
SPEAKER_00: Apollo,
25:32
SPEAKER_00: interstate highway system,
25:34
SPEAKER_00: basically terminating in the 1960s.
25:37
SPEAKER_00: We needed a correction.
25:38
We needed a correction because Robert Moses was ramming
25:41
highways through dense
25:43
SPEAKER_00: urban neighborhoods in New York.
25:45
We needed a correction because the US Department of Agriculture
25:48
was spraying DDT
25:49
and other pesticides absolutely everywhere and killing a lot of
25:53
the wildlife.
25:56
We needed a correction because Ralph Nader correctly pointed
25:59
out that automotive
26:01
SPEAKER_00: executives were way too cozy with the regulators.
26:04
And the military industrial complex and the Defense Department
26:08
lost a lot of
26:08
SPEAKER_00: credibility after the war in Vietnam.
26:12
And I think what we need now is a correction against the
26:16
correction in some minor form.
26:18
We need to keep evolving as a society and not keep confronting
26:22
the problem of the 1960s.
26:25
SPEAKER_00: And so what the 1960s built,
26:27
SPEAKER_00: starting from mostly Ralph Nader,
26:30
SPEAKER_00: he was a really crucial policy entrepreneur,
26:33
SPEAKER_00: organizer about all of these things.
26:35
SPEAKER_00: He had been recently out of law school.
26:39
SPEAKER_00: He was organizing a lot of other elite law students.
26:42
I believe he went to Harvard Law and he organized other
26:46
students to say under this
26:48
SPEAKER_00: banner of,
26:49
SPEAKER_00: we need to sue the bastards.
26:51
And the bastards was essentially the government because the
26:53
government had been the
26:54
SPEAKER_00: perpetrator of a lot of these misdeeds.
26:58
SPEAKER_00: And by suing the government,
27:00
I think what it has done is that it has constrained a lot of
27:04
abuses and it has also
27:05
SPEAKER_00: constrained its ability to do important things.
27:09
SPEAKER_00: California high-speed rail.
27:10
SPEAKER_00: We can talk about this because here we are in Silicon Valley.
27:14
Voters approved the referendum to build California high-speed
27:17
rail in 2008.
27:19
SPEAKER_00: How much has been built so far?
27:22
SPEAKER_00: Very, very little.
27:23
And perhaps the first stretch will connect Bakersfield to
27:26
Merced in the year 2030 to 2033.
27:29
And this is,
27:31
I think,
27:31
a giant failure,
27:33
and nobody seems to really care very much anymore.
27:36
SPEAKER_00: No heads have rolled over this giant failure.
27:40
SPEAKER_00: I mean, in fact, you know,
27:42
SPEAKER_01: Gavin Newsom walks around with a straight face,
27:44
SPEAKER_01: just sort of,
27:45
SPEAKER_01: I mean,
27:45
SPEAKER_01: still like vaguely talking about it.
27:48
SPEAKER_01: I think people should be ashamed.
27:50
SPEAKER_01: I mean, it's shocking to me.
27:53
SPEAKER_01: It's embarrassing.
27:53
SPEAKER_00: And all of these important environmental laws,
27:56
SPEAKER_00: I think,
27:56
SPEAKER_00: are being used against environmental interests.
28:01
A lot of NIMBYs have been using environmental laws to hold up
28:04
construction of wind
28:05
SPEAKER_00: turbines off the coast of Massachusetts,
28:08
SPEAKER_00: solar out in places that are barely habited,
28:12
SPEAKER_00: And transmission lines as well.
28:15
And so there's something really perverse about using 1960 laws
28:19
to not solve climate change.
28:21
I'll just cite two examples here of the perversities of
28:25
environmental law.
28:26
Los Angeles has these oil derricks that are still operating
28:30
kind of within city limits.
28:34
And the people have tried to remove them and NIMBYs have used
28:39
environmental laws to
28:40
defeat the removal of oil derricks as if removal of oil
28:44
derricks can be harmful to
28:46
SPEAKER_00: the environment.
28:47
And the other point that I think is very strange here is that
28:51
UC Berkeley tried to
28:52
SPEAKER_00: expand its campus and tried to build some dormitories in a vacant lot.
28:57
And neighbors alleged that UC Berkeley and the state did not
29:01
sufficiently study
29:02
SPEAKER_00: students as a source of noise pollution,
29:05
SPEAKER_00: as if students themselves were polluting,
29:07
SPEAKER_00: you know,
29:07
SPEAKER_00: they're going to have extra trash,
29:08
SPEAKER_00: are we going to deal with that?
29:10
SPEAKER_00: And, you know, students are an environmental problem as well.
29:13
SPEAKER_00: So I think we needed a correction against the American engineering state,
29:18
SPEAKER_00: engineering state with American characteristics.
29:21
But now we need to actively evolve and think about whether the
29:24
laws are fit for purpose still.
29:26
SPEAKER_01: And you do,
29:27
SPEAKER_01: you get into China's similar...
29:32
SPEAKER_01: what the US was facing in the 1960s,
29:34
SPEAKER_01: the repercussions of this build-out.
29:36
SPEAKER_01: I mean,
29:36
you note not all is well with the results of China's mass
29:42
expansion as well,
29:43
SPEAKER_01: and there are consequences to this,
29:44
SPEAKER_01: but you...
29:45
SPEAKER_01: You kind of argue,
29:46
SPEAKER_01: I mean,
29:46
SPEAKER_01: because the government is set up so differently,
29:50
SPEAKER_01: there's consequences,
29:51
SPEAKER_01: but we're still,
29:52
SPEAKER_01: China's still pushing forward with their agenda.
29:55
SPEAKER_01: Like there's not gonna be lawyers, you know, slowing them down.
29:59
SPEAKER_00: law students are not going to organize and slow the party down.
30:03
There's been some signs that people have been distressed at
30:07
some aspects of development.
30:10
I'm thinking of a case in which the Shanghai government tried
30:13
to build a trash
30:14
SPEAKER_00: compactor and incinerator near folks,
30:16
SPEAKER_00: and then people protested,
30:18
SPEAKER_00: and then the government moved things away.
30:20
SPEAKER_00: And so that sounds like a recognizably American act.
30:24
You can sue the government in China in most cases,
30:28
but the courts may not respect her lawsuit.
30:32
But I certainly don't see any movement that emerged in China
30:39
that would be
30:39
SPEAKER_00: analogous to what happened in the United States in which
30:43
SPEAKER_00: a bunch of students, a bunch of elites organize.
30:47
They're not really happy about student organizers in China to
30:52
really try to defeat
30:53
SPEAKER_00: some elements of the government's agenda that it doesn't really like.
30:56
Now,
30:56
I think that China's government does have more than cursory
31:00
environmental reviews.
31:01
SPEAKER_00: Sometimes the environmental reviews can be pretty robust,
31:04
SPEAKER_00: and often they do listen to the people.
31:06
SPEAKER_00: In the case of
31:07
SPEAKER_00: the trash incinerator that I just mentioned.
31:10
SPEAKER_00: But in general,
31:11
my view is that the government is going to do what it wants to
31:15
do by hook or by
31:16
SPEAKER_00: crook.
31:16
SPEAKER_01: Right.
31:17
SPEAKER_01: And then I kind of want to go a different direction.
31:19
SPEAKER_01: But I mean,
31:20
your example of the zero COVID and the one child policy where
31:26
this engineering at
31:27
SPEAKER_01: all cost mentality had severe repercussions.
31:31
SPEAKER_01: I mean, you have...
31:33
SPEAKER_01: men trying to find wives,
31:35
SPEAKER_01: the country,
31:35
SPEAKER_01: you know,
31:35
SPEAKER_01: I mean,
31:36
SPEAKER_01: like deep societal issues from the one child policy.
31:39
SPEAKER_01: And then you had people kind of losing their mind,
31:41
SPEAKER_01: um,
31:42
SPEAKER_01: during zero COVID and,
31:44
SPEAKER_01: and you write in another chapter about
31:47
um uh generation of youth you know leaving leaving the country
31:51
despite how
31:52
prosperous it is because they're they're kind of not really
31:55
getting what they um
31:56
SPEAKER_01: had dreamed out of it right so there are there are these like societal
31:59
repercussions absolutely yeah um let's talk about like the elon
32:03
musk of this all
32:04
because you know very controversial figure for many many
32:07
reasons but let's focus
32:08
SPEAKER_01: for a moment on sort of the manufacturing end of elon and
32:12
and not get into,
32:13
you know,
32:14
like Twitter persona,
32:15
Elon,
32:16
if people can do that.
32:17
SPEAKER_01: But,
32:17
SPEAKER_01: you know,
32:17
SPEAKER_01: when I wrote my book,
32:18
SPEAKER_01: so much of what you wrote resonated with me because,
32:21
SPEAKER_01: you know,
32:21
SPEAKER_01: my book came out in 2015,
32:24
SPEAKER_01: but I was researching it for three,
32:25
SPEAKER_01: four years before that.
32:26
SPEAKER_01: And I was writing this series of stories for Business Week.
32:30
SPEAKER_01: I got very sad.
32:31
SPEAKER_01: You know,
32:31
SPEAKER_01: I felt like Silicon Valley had become,
32:33
SPEAKER_01: especially during like the peak Facebook,
32:35
SPEAKER_01: rise of Facebook,
32:36
SPEAKER_01: just obsessed with
32:39
SPEAKER_01: What I saw was like trivial kind of nonsense.
32:41
SPEAKER_01: I mean,
32:41
SPEAKER_01: it was like,
32:43
SPEAKER_01: you know,
32:43
SPEAKER_01: there was a guy who's quoted in my book and he says,
32:45
SPEAKER_01: you know,
32:46
the best minds of my generation are thinking about how to make
32:48
better ads.
32:49
SPEAKER_01: And this just kept running through my head.
32:51
SPEAKER_01: I was like, oh my God, yes, we have like a...
32:54
generation of geniuses trying to like algorithmically get you
32:57
to buy a BMW.
32:59
SPEAKER_01: This does not seem like the best use of our human capital.
33:02
SPEAKER_01: And Elon was kind of like emerging in the middle of this.
33:07
SPEAKER_01: California,
33:08
SPEAKER_01: completely dysfunctional,
33:09
SPEAKER_01: and yet,
33:10
SPEAKER_01: you know,
33:10
he was lucky because he got to take over an existing car plant
33:15
in Northern
33:15
SPEAKER_01: California,
33:16
SPEAKER_01: but still took use of that and built Tesla.
33:19
SPEAKER_01: SpaceX was just...
33:22
SPEAKER_01: You know, we're told you can't build anything in California.
33:25
SPEAKER_01: And somehow in the last 20 years,
33:27
this guy right in the middle of Los Angeles builds the world's
33:30
most impressive
33:31
SPEAKER_01: rocket company,
33:32
SPEAKER_01: which even with China's ambition and investment,
33:36
SpaceX outclasses the entire world in terms of rockets and
33:40
satellites and what it
33:41
SPEAKER_01: can do in many,
33:42
SPEAKER_01: many,
33:43
SPEAKER_01: many ways.
33:43
SPEAKER_01: So this guy has pulled this off.
33:46
SPEAKER_01: I've spent the last 12 years
33:50
SPEAKER_01: When you write at the end of your book,
33:52
SPEAKER_01: you're like,
33:53
SPEAKER_01: I mean,
33:53
SPEAKER_01: it will be hard for some Americans,
33:56
SPEAKER_01: I think,
33:57
SPEAKER_01: to digest what is near your last line,
34:00
SPEAKER_01: which is that the U.S.
34:01
SPEAKER_01: needs to think of itself as a developing nation.
34:04
SPEAKER_01: And the optimistic note that you leave us with is like,
34:07
we should embrace this let's build mentality and this will fill
34:12
the nation with
34:13
SPEAKER_01: optimism and things to look forward to and all that.
34:18
SPEAKER_01: I am still perplexed,
34:19
SPEAKER_01: like why,
34:20
SPEAKER_01: you know,
34:21
SPEAKER_01: this desire seems to be here,
34:23
SPEAKER_01: but in my,
34:24
SPEAKER_01: I cover hardware more than anyone on earth,
34:26
SPEAKER_01: I think,
34:28
SPEAKER_01: especially among startups and manufacturing in the US.
34:32
SPEAKER_01: Elon still strikes me,
34:33
SPEAKER_01: whatever he figured out,
34:34
SPEAKER_01: he seems to be the major person that's figured it out.
34:37
SPEAKER_01: And I think if you look at the last 20 years,
34:39
Tesla and SpaceX are the clear manufacturing marvels that the
34:44
US has produced.
34:46
SPEAKER_01: If he knows how to do this, and there is this will and desire,
34:53
SPEAKER_01: Why don't we see more of this?
34:54
SPEAKER_01: Why is there one guy in the US?
34:57
SPEAKER_01: I mean, is it for all these reasons you've laid out?
35:00
SPEAKER_01: Everyone wants to be like this guy,
35:03
SPEAKER_01: but yet,
35:04
SPEAKER_01: what,
35:04
SPEAKER_01: there's just too many forces against this stuff?
35:07
SPEAKER_01: I have trouble figuring this out.
35:09
SPEAKER_00: Yeah.
35:10
SPEAKER_00: Well, first of all.
35:11
SPEAKER_00: Does that make sense?
35:12
SPEAKER_00: Absolutely.
35:12
I think,
35:13
first of all,
35:13
I should mention that I remember your Business Week articles
35:17
very well.
35:18
SPEAKER_00: And I remember in particular,
35:20
SPEAKER_00: probably,
35:21
SPEAKER_00: I think this must have been the big profile you wrote of eLine.
35:24
And something like the last or second to the last paragraph
35:29
mentioned something
35:30
like a big tube to transport people across vast distances at
35:35
extremely high speeds.
35:37
SPEAKER_00: I think he did not use the word hyperloop.
35:39
SPEAKER_00: I mean, the hyperloop was not there at the time.
35:41
SPEAKER_01: He was like flirting with the idea before.
35:43
SPEAKER_00: Yeah, before.
35:44
And that was one of these things I remember tweeting about this
35:47
article and saying,
35:48
SPEAKER_00: wow,
35:48
SPEAKER_00: this is amazing.
35:49
SPEAKER_00: And
35:50
Perhaps that was one of the reasons in 2016 that I decided to
35:55
depart from Silicon
35:56
Valley and all of these ad chasers to go to China to study made
36:01
in China in 2025
36:03
with electric vehicle batteries and ultra high voltage
36:05
transmission and memory
36:06
SPEAKER_00: chips.
36:07
So if I have anyone to blame for this book,
36:10
perhaps it should be you,
36:11
Ashley.
36:11
SPEAKER_00: Perhaps it should be you.
36:13
SPEAKER_01: This makes me happy in some ways.
36:16
SPEAKER_01: Okay,
36:16
SPEAKER_01: since day one,
36:17
the Core Memory podcast has been supported by the fine people
36:21
at E1 Ventures.
36:22
SPEAKER_01: They are a young and ambitious VC firm in Silicon Valley,
36:26
SPEAKER_01: investing in young and ambitious companies and people.
36:30
SPEAKER_01: Thank you so much to E1 Ventures for all your support.
36:33
SPEAKER_00: And I think there is,
36:34
SPEAKER_00: you know,
36:35
SPEAKER_00: there is something,
36:36
SPEAKER_00: I want to get your take on this,
36:38
SPEAKER_00: because if I take a look at Tesla right now,
36:41
SPEAKER_00: I don't follow Tesla almost at all,
36:43
SPEAKER_00: but it seems to be struggling.
36:44
SPEAKER_00: And,
36:45
SPEAKER_00: you know,
36:45
SPEAKER_00: maybe the share prices are not a great reflection of that,
36:48
but its sales have not done well in part because of competition
36:52
and part because of
36:53
SPEAKER_00: its own faults.
36:54
And Elon,
36:55
in particular,
36:56
I don't know how much he thinks about his companies today.
37:00
SPEAKER_00: He's been quiet after being terminated as co-president,
37:05
SPEAKER_00: and I'm not even seeing his tweets all that often anymore.
37:11
SPEAKER_00: Well, that's hard to do.
37:13
But I think that what is a little bit strange is how I feel
37:19
like Tesla has had more
37:22
SPEAKER_00: operational problems.
37:23
SPEAKER_00: So even that has rusted.
37:24
It is joining the ranks of other apex manufacturers like Intel,
37:30
Boeing,
37:30
Detroit automakers.
37:31
SPEAKER_00: Previously, Tesla was a standout success.
37:34
SPEAKER_00: Now it seems to be pulled down by the broader morass.
37:37
And what I would say is that there are some really visionary
37:40
folks in the US,
37:43
SPEAKER_00: absolutely visionary people that you speak to a lot,
37:45
SPEAKER_00: in California in particular.
37:47
SPEAKER_00: And I feel like they're fighting against this broader morass of declining
37:53
SPEAKER_00: manufacturing ability,
37:55
SPEAKER_00: declining process knowledge in the manufacturing industry,
37:57
SPEAKER_00: a million and one laws and regulations,
38:01
SPEAKER_00: and
38:03
SPEAKER_00: problems that they have to face down,
38:05
a million and one conventions and norms that are pulling at
38:10
them at all times.
38:11
SPEAKER_00: And so my functional model for this is not that the U.S.
38:16
SPEAKER_00: lacks any visionaries.
38:17
SPEAKER_00: There's so many brilliant people here.
38:20
But there's also just so many forces that are tugging at them
38:23
at all points that are
38:25
SPEAKER_00: dragging down a little bit of their optimism,
38:28
SPEAKER_00: their confidence,
38:29
SPEAKER_00: their ability to get stuff done.
38:30
SPEAKER_00: And so that's the beginning of a hypothesis that I would offer you,
38:35
SPEAKER_00: that that's why the US isn't doing very well anymore.
38:37
SPEAKER_01: I think it's why Eli went crazy.
38:39
SPEAKER_01: I think...
38:40
SPEAKER_01: COVID was kind of like his breaking point.
38:42
SPEAKER_01: He was just like, ugh, you're just not going to let me make stuff.
38:45
SPEAKER_01: I can't take it anymore, you know?
38:47
SPEAKER_01: Yeah.
38:48
SPEAKER_01: And he kind of snapped.
38:49
SPEAKER_01: I agree with you so much.
38:51
I don't want to prattle on because I'm more interested in what
38:53
you're saying.
38:53
SPEAKER_01: I just,
38:54
SPEAKER_01: you know,
38:54
SPEAKER_01: I went to this re-industrialized conference in Detroit,
38:58
SPEAKER_01: I don't know,
38:58
SPEAKER_01: like a month or six weeks ago.
38:59
SPEAKER_01: And
39:00
SPEAKER_01: To your point, these are people I talk to all the time.
39:03
SPEAKER_01: I'm into them.
39:04
SPEAKER_01: I mean,
39:05
there's this generation of people that want to bring
39:07
manufacturing back to the
39:08
SPEAKER_01: United States.
39:09
SPEAKER_01: They have interesting products.
39:10
SPEAKER_01: And I do not mean this to undermine.
39:16
SPEAKER_01: I think they are doing the right thing.
39:18
SPEAKER_01: There's part of it where I came back and I'm like,
39:22
SPEAKER_01: Not like it's play acting,
39:23
SPEAKER_01: but I'm like,
39:24
SPEAKER_01: you know,
39:24
SPEAKER_01: if this is it,
39:25
SPEAKER_01: this was a conference,
39:26
SPEAKER_01: there's like 1,000,
39:27
SPEAKER_01: 1,200 people there.
39:28
SPEAKER_01: They're all kind of preaching to the choir.
39:30
SPEAKER_01: They've bought in.
39:31
SPEAKER_01: I'm like,
39:31
SPEAKER_01: man,
39:31
SPEAKER_01: this should be the biggest thing in America right now because,
39:35
SPEAKER_01: like,
39:36
SPEAKER_01: this is the last hope as far as I could see.
39:38
SPEAKER_01: And it still seemed like a pittance.
39:40
SPEAKER_01: You know, I went around Detroit.
39:42
SPEAKER_01: I went to Atomic Industry.
39:45
So they're trying to kind of reinvent tool and die making,
39:47
which is fantastic.
39:48
SPEAKER_01: They want to do this, like, modern take on it.
39:50
SPEAKER_01: So it's like, we're not going to
39:52
SPEAKER_01: like you write in the book,
39:53
it's like the ship has kind of sailed on catching up to China
39:57
at this point.
39:57
SPEAKER_01: So you got to do something different.
39:58
SPEAKER_01: So they want to do tool and die making a different way.
40:01
SPEAKER_01: But you know,
40:01
like every machine in their building that they rely on to
40:04
develop this new tool and
40:06
SPEAKER_01: die making technology comes from Germany,
40:08
SPEAKER_01: Japan,
40:10
SPEAKER_01: even Portugal.
40:11
Like,
40:11
the US doesn't make the foundational machines anymore,
40:14
so that left me sort of depressed.
40:16
SPEAKER_01: Then I went to GM.
40:17
SPEAKER_01: They have this huge battery R&D operation.
40:20
SPEAKER_01: They're working on new chemistries for car batteries, which is fantastic.
40:24
SPEAKER_01: They've kind of like, alongside Panasonic, I believe, come up with the...
40:28
SPEAKER_01: new recipe for future batteries.
40:32
SPEAKER_01: But,
40:32
SPEAKER_01: you know,
40:32
SPEAKER_01: then they're telling me,
40:33
SPEAKER_01: it's like,
40:33
SPEAKER_01: oh,
40:33
SPEAKER_01: well,
40:33
the University of Texas developed the lithium ion technology
40:38
that pretty much the
40:39
SPEAKER_01: entire world relies on.
40:40
SPEAKER_01: We just didn't happen to do anything with it.
40:42
SPEAKER_01: China mastered, you know, making those.
40:45
SPEAKER_01: You write about, like, tons of these instances.
40:47
The US invents something solar,
40:50
and then China figures out how to make it.
40:52
SPEAKER_01: And so, yeah, I don't know.
40:54
SPEAKER_01: My general...
40:55
takeaway is really weird because i was like excited that these
40:58
other people were
40:59
all excited to like do this and obviously trump is kind of like
41:02
putting some
41:02
policies in place to make some of this possible but man it
41:06
really like when you
41:07
write at the end about this this is what we need is like i
41:10
agree with you but then
41:11
SPEAKER_01: i'm i'm
41:13
SPEAKER_01: It feels very small.
41:14
SPEAKER_01: I don't feel that most people even remotely...
41:17
SPEAKER_01: I would urge people to read your book so they can understand how far...
41:23
SPEAKER_01: What we would be talking about is like a national,
41:29
everybody getting behind this sort of movement to try to make
41:33
this happen.
41:34
SPEAKER_01: And I feel like we're far, far from that.
41:36
SPEAKER_00: Yeah,
41:37
SPEAKER_00: I mean,
41:37
SPEAKER_00: when we bring up the terrorists,
41:39
SPEAKER_00: maybe the paradox in the US is that the sentiments are always in place,
41:44
SPEAKER_00: the goal and the objectives are always correct,
41:47
but it's always the implementation that fails in some pretty
41:50
significant way.
41:52
SPEAKER_00: Trump wants to re-industrialize America.
41:53
SPEAKER_00: Biden wants to re-industrialize America.
41:56
SPEAKER_00: How are they doing?
41:57
SPEAKER_00: Well,
41:57
SPEAKER_00: I'm more sympathetic to the Biden approach,
41:59
SPEAKER_00: which is to fund chips and clean energy build out.
42:03
SPEAKER_00: But it didn't really,
42:04
SPEAKER_00: I mean,
42:04
SPEAKER_00: the chips money was allocated,
42:05
SPEAKER_00: but we haven't had much infrastructure build out,
42:09
SPEAKER_00: right?
42:09
SPEAKER_00: And so the implementation was just not there.
42:11
And if we take a look at Trump's approach,
42:13
I mean,
42:13
I think that is just flawed from the start.
42:15
SPEAKER_00: If we take a look at the tariffs
42:18
SPEAKER_00: Since April, the US has lost about 80,000 manufacturing jobs.
42:23
SPEAKER_00: Manufacturing activity has contracted for about six months now.
42:25
It doesn't make sense to become a technological scientific
42:28
superpower by denying
42:29
SPEAKER_00: funding to NSF and NIH and all the other funding agencies.
42:34
SPEAKER_00: It doesn't make sense to deport our manufacturing workforce,
42:37
SPEAKER_00: especially not the high-skilled Korean type.
42:39
SPEAKER_00: It doesn't make sense to frighten researchers away.
42:42
SPEAKER_00: Now, maybe there's something good about energy policy.
42:44
SPEAKER_00: Maybe there's something good about the deregulatory agenda.
42:47
SPEAKER_00: I'm sure there will be something good about the deregulatory agenda.
42:49
SPEAKER_00: But most of these don't seem to work very well.
42:52
SPEAKER_00: um and i'm curious to hear a little bit more about your take on the
42:56
re-industrialized i wasn't able to make it um but i heard i
42:59
mean there are some
43:00
people who went and said there have been some protests in part
43:02
because secretary of
43:04
defense hexath was one of the keynote speakers i understand the
43:08
impulse but i mean
43:09
was there did it feel partisan did it feel weird did it feel
43:13
interesting in good
43:14
SPEAKER_00: ways was it optimistic
43:16
SPEAKER_01: The conference itself was optimistic.
43:18
SPEAKER_01: It was partisan in the sense that it was like a very patriotic.
43:22
SPEAKER_01: It was like hardcore America thumping.
43:25
SPEAKER_01: The protests were sort of stupid.
43:27
SPEAKER_01: It was probably like, I want to say like 30, 40 people.
43:30
SPEAKER_01: It was kind of like this like anti-Palantir.
43:32
SPEAKER_01: It was all Palantir related.
43:34
SPEAKER_01: And it was like a...
43:35
SPEAKER_01: It was more like a Palestine thing.
43:37
I don't think the people protesting had any idea of what the
43:40
conference stood for,
43:42
SPEAKER_01: or they just knew Palantir and Andrewl were there,
43:45
SPEAKER_01: and it was mostly Palantir.
43:47
SPEAKER_01: And so that was that part of it.
43:50
SPEAKER_01: I...
43:52
I can tell something has changed in that I've been covering
43:56
hardware all this time
43:57
SPEAKER_01: and I used to be,
43:58
SPEAKER_01: I wasn't like fringe,
44:01
SPEAKER_01: but I was one of like not many people focusing on this sort of stuff.
44:05
SPEAKER_01: And obviously in the last two years now people are like,
44:08
SPEAKER_01: oh,
44:08
SPEAKER_01: we're in this new age of manufacturing and hardware and we are,
44:12
SPEAKER_01: you know,
44:12
SPEAKER_01: people are kind of,
44:15
SPEAKER_01: are finding those things and attaching to them.
44:18
SPEAKER_01: The New York Times wrote about the re-industrialized conference.
44:21
I assumed it would have taken them like five or six years to
44:23
sort of figure out
44:25
SPEAKER_01: that that conference was taking place.
44:27
SPEAKER_01: So I guess I was impressed by that.
44:30
SPEAKER_01: So I do feel like there's bits of this, but then...
44:34
SPEAKER_01: Going back to what I was saying from your book,
44:36
SPEAKER_01: I mean,
44:37
SPEAKER_01: you know,
44:37
SPEAKER_01: there is this part where it's like,
44:39
no one probably ever will match what China has already achieved
44:45
at this point.
44:46
SPEAKER_01: And, you know, it has the population size.
44:49
SPEAKER_01: It's got so many factors that, like, even if the US was like, no,
44:54
SPEAKER_01: we are gonna become the world center for all manufacturing.
44:57
I mean,
44:57
probably like,
44:58
it doesn't work out for a bunch of reasons you lay out.
45:00
SPEAKER_01: I mean,
45:00
SPEAKER_01: the standard of living here,
45:01
SPEAKER_01: the wages,
45:02
SPEAKER_01: the workers wouldn't tolerate the conditions needed to pull that off.
45:05
SPEAKER_01: So then, I'm just left, again, I'm with you.
45:08
SPEAKER_01: I'm like, I want this optimistic call.
45:09
SPEAKER_01: I want these,
45:11
SPEAKER_01: re-industrialize people to work,
45:13
SPEAKER_01: but then it's almost like to what end,
45:15
SPEAKER_01: I guess,
45:16
SPEAKER_01: because we can't get all the way to apples to apples type thing.
45:22
SPEAKER_01: And so are you arguing that that's okay,
45:27
but if we focus on improving our infrastructure and modernizing
45:31
the country and
45:32
SPEAKER_01: bringing some of this back,
45:34
SPEAKER_01: that that's enough?
45:35
SPEAKER_01: Is that kind of...
45:37
SPEAKER_00: Let me make you more pessimistic.
45:40
I think right now,
45:42
the US has about 12 million people employed in manufacturing.
45:47
SPEAKER_00: It never recovered to its 2008 highs after plunging.
45:52
And I worry that there will be another big China shock in which
45:59
China initially
45:59
SPEAKER_00: took all of these textile and jobs that are not terribly important,
46:05
SPEAKER_00: but now it is just much,
46:07
SPEAKER_00: much more competitive in all sorts of advanced technologies.
46:11
I strongly believe that made in China is now a marker of
46:15
excellent quality,
46:17
SPEAKER_00: whereas it was known for shoddy quality in the past.
46:20
You can see this in the trade data in which German exports of
46:24
automotives in
46:25
particular has started to fall pretty substantially essentially
46:30
the last year as
46:32
Chinese automakers have outcomputed German automakers in all of
46:35
these cars.
46:37
And I think that China will eat the lunch of other
46:40
industrialized countries,
46:41
SPEAKER_00: namely Japan,
46:43
SPEAKER_00: South Korea,
46:43
SPEAKER_00: Germany,
46:44
SPEAKER_00: in terms of all these machine tools,
46:47
SPEAKER_00: all of these automotive components,
46:48
SPEAKER_00: it's going to get a lot better.
46:50
SPEAKER_00: And I worry that the US right now has not super exposed to China,
46:55
SPEAKER_00: in part because it doesn't specialize in these sort of things.
46:59
SPEAKER_00: But for the 12 million manufacturing workers,
47:02
could I see that to go down by a couple of million over the
47:06
next five years?
47:08
SPEAKER_00: I think there could be a case.
47:09
SPEAKER_00: That's true.
47:10
SPEAKER_00: And once these job losses start to take place,
47:15
SPEAKER_00: I don't think our economics writ large will get much better.
47:19
SPEAKER_00: I don't think our political dysfunctions will get much better when these
47:23
SPEAKER_00: manufacturing jobs disappear.
47:25
SPEAKER_00: And so that is really what I'm worried about.
47:29
SPEAKER_00: I think that, you know, we should try to resist that as best as we can.
47:36
SPEAKER_00: Because right now,
47:36
SPEAKER_00: you know,
47:37
SPEAKER_00: the failures of Boeing,
47:40
SPEAKER_00: Intel,
47:41
SPEAKER_00: Detroit automakers has not been primarily due to Chinese competition.
47:46
SPEAKER_00: It's been mostly due to management failures,
47:48
SPEAKER_00: I would argue,
47:49
SPEAKER_00: engineering quality failures as well.
47:52
SPEAKER_00: And I think we need to get much better infrastructure in America,
47:56
SPEAKER_00: not to out-compete China in high-speed rail or anything,
48:00
but just because we need much better Caltrain service such that
48:03
workers can get in
48:04
SPEAKER_00: between Silicon Valley and San Francisco.
48:07
and so these are like the sort of the basics that let's just
48:09
get the basics right
48:10
not out of geopolitical competition but because people need
48:13
them and then hopefully
48:15
if we can have much better levels of infrastructure then we
48:18
have a little bit more
48:19
margin to resist the industrialization as well because the
48:21
companies would have a
48:23
little bit more buffer to operate it and so that is a lot of
48:26
what i'm saying it's
48:27
SPEAKER_00: not about competition let's just do things better for for our own people
48:32
What is it that you said that she calls the software-based
48:38
attention economy?
48:39
SPEAKER_00: Yeah.
48:39
SPEAKER_01: It's like the stupid economy?
48:41
SPEAKER_00: They use two terms.
48:43
SPEAKER_00: One is the fictitious economy, and another is the bubble economy.
48:46
Not so much as a financial bubble,
48:48
but a bubble that could pop at any point.
48:50
SPEAKER_01: Okay.
48:50
SPEAKER_01: So I've thought of...
48:54
SPEAKER_01: software as the US's superpower.
48:57
SPEAKER_01: You know,
48:59
SPEAKER_01: every time Silicon Valley comes under threat,
49:01
SPEAKER_01: it always comes back to me that we just have so many software,
49:04
SPEAKER_01: the world's best software engineers here,
49:06
SPEAKER_01: and it seems to bail us out.
49:08
Larry Ellison just became the world's richest person the week
49:11
that we're recording this.
49:13
SPEAKER_01: You know, Oracle, Windows.
49:15
SPEAKER_01: So many of these products are just at the heart of the worldwide economy,
49:19
SPEAKER_01: and nobody's really been able to challenge them.
49:21
SPEAKER_01: When you started writing about that,
49:23
SPEAKER_01: and so that stuff is real,
49:25
SPEAKER_01: but some of the stuff on top of it,
49:27
SPEAKER_01: the Facebook,
49:27
SPEAKER_01: all the entertainment,
49:28
SPEAKER_01: the crypto,
49:31
SPEAKER_01: all these places we put our attention,
49:33
SPEAKER_01: yeah,
49:33
SPEAKER_01: man,
49:33
SPEAKER_01: that resonated with me.
49:35
SPEAKER_01: And then I started to see, oh, okay, so for the last 40 years,
49:40
SPEAKER_01: we've built this kind of like software skill,
49:43
SPEAKER_01: and China has just doubled,
49:45
SPEAKER_01: doubled,
49:45
SPEAKER_01: doubled,
49:46
SPEAKER_01: doubled down on hardware.
49:48
SPEAKER_01: And this is like this polar opposite of sort of cultures to me.
49:53
SPEAKER_00: Yeah.
49:54
SPEAKER_01: And I don't know, that just came in stark relief reading your book.
49:57
SPEAKER_00: Right.
49:57
SPEAKER_00: Well, I think the Chinese are getting pretty good at software itself.
50:01
SPEAKER_00: Um, and what they don't have are the valuations.
50:04
SPEAKER_00: I mean,
50:05
SPEAKER_00: you know,
50:05
SPEAKER_00: $4 trillion valuations for companies like Nvidia and Apple,
50:10
SPEAKER_00: Chinese companies are just not so highly valued,
50:11
SPEAKER_00: but I think the talent in China is there.
50:13
SPEAKER_00: Maybe the market conditions are not really there for the software, but I,
50:17
I feel like Chinese software has improved by leaps and bounds
50:21
over the last,
50:21
SPEAKER_00: call it 15 years,
50:23
while American manufacturing has lost ability by leaps and
50:28
bounds over a similar
50:30
SPEAKER_00: time period.
50:30
SPEAKER_00: So the Chinese are catching up, but the Americans are not.
50:33
And maybe the best possible case that one could make for
50:38
Silicon Valley's approach is that.
50:40
Who knew that video game design could produce AI,
50:44
and yet here we are,
50:45
right?
50:45
SPEAKER_00: And maybe all of this entertainment,
50:47
SPEAKER_00: even with the crypto stuff,
50:48
SPEAKER_00: even with Facebook stuff,
50:50
SPEAKER_00: actually produces some breakthrough that none of us could see,
50:53
SPEAKER_00: maybe.
50:55
SPEAKER_00: Maybe America will figure out AI and achieve,
50:58
SPEAKER_00: I learned this acronym recently,
51:00
SPEAKER_00: a decisive strategic event,
51:02
SPEAKER_00: decisive strategic advantage,
51:04
SPEAKER_00: DSA.
51:06
SPEAKER_00: And maybe we will invent the HEI,
51:09
SPEAKER_00: the super intelligence,
51:10
SPEAKER_00: and then within seconds,
51:11
SPEAKER_00: they will solve all of our problems.
51:14
SPEAKER_00: I'm highly skeptical of that approach.
51:16
And I wouldn't trade AI,
51:19
the best algorithms,
51:21
every genius you can get in a data center.
51:23
SPEAKER_00: I wouldn't trade that for a robust manufacturing base.
51:27
SPEAKER_00: Because what you need for a military are drones, ammunitions, and ships.
51:31
And right now,
51:31
China can make them,
51:32
and the US is not so good at making them.
51:34
SPEAKER_01: Let's have the hardware.
51:35
I think this is so smart and fascinating because people talk
51:38
about AGI,
51:40
all these things.
51:40
The AI wakes up and the next day it's solving all these
51:44
problems and everybody's out of work.
51:47
SPEAKER_01: There's always this,
51:47
SPEAKER_01: like,
51:47
physical manifestation of the technology that I feel like is
51:51
very short shrift,
51:52
SPEAKER_01: which is,
51:53
SPEAKER_01: like,
51:54
SPEAKER_01: even in this crazy scenario they lay out,
51:57
SPEAKER_01: I'm like,
51:57
SPEAKER_01: well,
51:57
SPEAKER_01: who's,
51:58
SPEAKER_01: like,
51:58
SPEAKER_01: making the stuff that
52:00
SPEAKER_01: that is out in the world enacting what the AI wants.
52:03
SPEAKER_01: And it's, it's like, well, how is AI going to build my high speed rail?
52:06
SPEAKER_00: Right.
52:06
SPEAKER_01: You know?
52:07
SPEAKER_01: And, and then I just always go, I was like, well, obviously China.
52:11
So I've been doing this stories on these robot fights that are
52:14
taking place,
52:15
SPEAKER_01: um,
52:15
SPEAKER_01: in San Francisco.
52:17
SPEAKER_01: I had not fully realized, uh,
52:21
Because I see Tesla's Optimist and I see figures,
52:24
humanoid robots,
52:25
all the time.
52:25
SPEAKER_01: I live kind of near American humanoid robot valley.
52:30
SPEAKER_01: And, you know, they're quite advanced for what they are.
52:32
And I did not realize that,
52:34
like,
52:35
Unitree from China,
52:36
Booster Robotics were...
52:40
SPEAKER_01: not just either comparable or a head,
52:43
SPEAKER_01: but that they are selling these to anyone that wants to buy them,
52:47
SPEAKER_01: whereas Tesla is just making robots for itself,
52:50
SPEAKER_01: figures kind of making robots for itself.
52:56
SPEAKER_01: You know,
52:56
SPEAKER_01: I can just see,
52:57
SPEAKER_01: like,
52:57
SPEAKER_01: if this AI plays out the way some of these companies want it to,
53:00
SPEAKER_01: and you need a physical manifestation,
53:02
SPEAKER_01: it's like,
53:02
SPEAKER_01: China's gonna win robots as well.
53:04
SPEAKER_01: And the physical end of this AI is going to take place there.
53:08
SPEAKER_01: And so this, yeah, that just seems like a massive problem to me.
53:11
SPEAKER_01: And like, God, if the US does not actually win,
53:15
SPEAKER_01: on just the software piece of this,
53:17
SPEAKER_01: the foundational model,
53:18
SPEAKER_01: I think that's like our last stand,
53:19
SPEAKER_01: because it's like,
53:20
SPEAKER_01: what do we have left that we do better?
53:23
SPEAKER_01: Yeah, I don't know.
53:24
SPEAKER_01: That part gets me sad.
53:26
SPEAKER_01: I can see you grimacing a little bit.
53:29
SPEAKER_01: So it looks like you've had this thought.
53:32
There are a couple of things you wrote about in the book that I
53:35
had not really realized.
53:36
I always think of like the communist state as taking care of
53:40
the poor and rising all tides.
53:44
And I mean,
53:45
you write in here that people are,
53:49
so there isn't much,
53:50
a great social safety net.
53:52
SPEAKER_01: The people are kind of like not taxed as high as even,
53:56
SPEAKER_01: they seem like barely taxed at all in some ways,
53:59
SPEAKER_01: except for a consumption tax.
54:01
SPEAKER_01: Yeah.
54:01
SPEAKER_01: How does like all this get paid for?
54:03
SPEAKER_01: The...
54:06
It's just this growth that the government has been able to
54:08
piggyback off?
54:10
SPEAKER_01: Doesn't the reaper come?
54:12
SPEAKER_01: I know we've had crashes in real estate and different things,
54:14
SPEAKER_01: but isn't this like a Ponzi scheme at some point?
54:18
SPEAKER_00: I don't think it's a Ponzi scheme.
54:19
But first,
54:20
I acknowledge the idea that China feels like kind of a
54:25
Reaganite fantasy.
54:28
SPEAKER_00: You're right that income taxes are pretty low.
54:30
I think something I said in my book,
54:32
that's something like only 40% of people pay in income tax.
54:36
SPEAKER_00: Most of the taxes are on consumption, which is regressive.
54:39
SPEAKER_00: The poor people pay relatively more than the rich.
54:42
SPEAKER_00: Xi Jinping has, Xi is actually
54:46
SPEAKER_00: A lot of Communist Party speeches are really boring,
54:48
SPEAKER_00: but Xi often has these great lines that I enjoy reading.
54:51
SPEAKER_00: He has denounced welfareism,
54:54
SPEAKER_00: and we don't want people to get lazy,
54:57
SPEAKER_00: which sounds totally like Reagan.
54:59
SPEAKER_00: I mean,
54:59
SPEAKER_00: Reagan would be called insensitive if he said something,
55:01
SPEAKER_00: half the things that Xi has said,
55:03
SPEAKER_00: right?
55:05
SPEAKER_00: Where China's growth has come from is that,
55:09
SPEAKER_00: well,
55:10
SPEAKER_00: the savings rates has been very high among Chinese for a long time.
55:16
SPEAKER_00: China has a pretty robust financial system,
55:21
which the government has been pretty clever about selling off
55:27
pieces of land and
55:28
SPEAKER_00: then expecting that infrastructure development will pay for itself.
55:33
SPEAKER_00: And that has been a strategy for its growth for a while.
55:38
I think that China is pretty savvy at financial management and
55:41
trying to clear out
55:42
SPEAKER_00: the risks in its own financial system.
55:45
SPEAKER_00: It endlessly studies Japan.
55:47
SPEAKER_00: It endlessly studies the US financial crisis,
55:50
SPEAKER_00: and it says,
55:50
SPEAKER_00: let's not do any of these sort of things.
55:53
SPEAKER_00: Its banking system is pretty boring.
55:55
SPEAKER_00: Indeed, often growth pays for itself.
55:58
SPEAKER_00: That doesn't mean that they don't have physical challenges,
56:00
but I think that people have been calling China's financial
56:05
system Ponzi-like or
56:07
SPEAKER_00: very fragile for a very long time.
56:09
SPEAKER_00: I think that is not the big concern with China.
56:12
SPEAKER_01: Okay.
56:13
SPEAKER_01: Okay.
56:13
I mean,
56:14
and then you write a,
56:16
I think this is true for BOID and similar companies.
56:19
I mean,
56:19
just really don't make much in the way of profit,
56:23
if any profit at all,
56:25
right?
56:25
SPEAKER_01: I mean, there's a different mentality to some of this.
56:28
SPEAKER_01: Whereas in the US,
56:29
you've got the bankers and the shareholders trying to eke out
56:33
the last dollar and
56:34
SPEAKER_01: like not chasing big projects because it's too costly.
56:38
SPEAKER_01: And we just want to
56:39
SPEAKER_01: have our nice software SaaS business that's high margin in China.
56:45
They're willing to have like a giant hardware maker that just
56:47
doesn't make that much money.
56:49
SPEAKER_00: Yeah.
56:49
SPEAKER_00: BYD does have pretty healthy profits,
56:52
but BYD has healthy profits only because it's the biggest in
56:55
the industry.
56:56
SPEAKER_00: If you take a look at,
56:57
SPEAKER_00: let's say,
56:57
SPEAKER_00: the seventh largest EV maker in China,
57:01
SPEAKER_00: the profit margins there would be pretty,
57:03
SPEAKER_00: pretty thin.
57:04
SPEAKER_00: In the solar industry,
57:05
SPEAKER_00: almost no one makes any profits at all because people are making mostly
57:09
SPEAKER_00: undifferentiated products.
57:12
SPEAKER_00: When I started thinking about this,
57:14
I came to understand maybe this is what socialism with Chinese
57:17
characteristics
57:18
SPEAKER_00: means.
57:18
You have brutally competitive industry dynamics in which the
57:23
companies themselves
57:23
SPEAKER_00: don't make that much money,
57:25
SPEAKER_00: the investors don't make that much money.
57:27
SPEAKER_00: If you take a look at the Chinese stock market,
57:29
SPEAKER_00: the Shanghai exchange over the last 35 years,
57:31
SPEAKER_00: it's mostly been pretty flat.
57:33
It's not at all commensurate with an economy that grows 8% to
57:36
9% on average.
57:38
And what we have is the state winning,
57:41
which completely dominates critical industries.
57:45
Consumers win because solar prices plunge like a stone and
57:49
companies and investors kind of lose.
57:52
SPEAKER_00: And so that is the curious dynamic.
57:54
SPEAKER_01: But then most things come down to incentives at some point.
57:59
SPEAKER_01: So how do you keep people coming up with big ideas?
58:02
SPEAKER_01: How do you keep them working hard?
58:05
How do you keep that competitive spirit if there isn't some
58:10
bucket full of gold at
58:11
SPEAKER_01: the end or it's just so brutal on the march there?
58:15
SPEAKER_00: Well, no general wakes up and decides to fight a protracted war.
58:21
SPEAKER_00: Every general decides to fight a lightning war.
58:24
And every entrepreneur wakes up and says,
58:27
I'm going to build a trillion dollar company.
58:29
So I think people decide to get into this because they feel
58:34
like there might be a
58:34
SPEAKER_00: pot of gold and that pot of gold might be there.
58:37
SPEAKER_00: It's just that everybody can only take a few pieces out of it.
58:41
SPEAKER_00: I remember visiting the company Meituan in 2018.
58:45
SPEAKER_00: Meituan was already a big company then,
58:48
SPEAKER_00: and now it's one of China's five largest internet companies.
58:52
SPEAKER_00: And in 2018,
58:53
SPEAKER_00: part of their founding mythos is that at the time they started,
58:58
SPEAKER_00: they were about one of 5,000 clones of Groupon.
59:02
SPEAKER_00: And out of this battle royale, out of this grand melee,
59:08
SPEAKER_00: It survived and 4,999 other companies did not.
59:12
SPEAKER_00: So imagine how ruthless and effective this team must be.
59:16
And I think that's kind of just the dynamic of China in which
59:19
you have a lot of
59:20
SPEAKER_00: people who are really hungry to do big things.
59:23
SPEAKER_00: And I think that hunger is absolutely real.
59:25
SPEAKER_00: You find them in Beijing, you find them in Xinjiang.
59:28
SPEAKER_00: people really want to get ahead.
59:30
They just try things and they're up against other people also
59:33
trying things.
59:35
SPEAKER_00: I don't think people there are lazy.
59:38
SPEAKER_00: They just want to give up, broadly speaking.
59:39
And you don't need that large of a share of the population to
59:43
really decide to be
59:44
SPEAKER_00: crazy and be entrepreneurs.
59:46
SPEAKER_00: And so they all hope to become the next Elon Musk.
59:49
SPEAKER_00: And there's so much Elon Musk worship there that
59:52
Some of them try to succeed,
59:55
but often what ends up happening is just this brutal
59:57
competition.
59:58
SPEAKER_01: And you think that can carry on?
1:00:01
SPEAKER_01: It doesn't just start...
1:00:02
It just feels like at some point there must be unrest as people
1:00:07
maybe start to give
1:00:08
SPEAKER_01: up on the notion that they can be that one that succeeds.
1:00:12
SPEAKER_01: It just becomes too brutal.
1:00:13
SPEAKER_00: Well, maybe it's too brutal, and then they decide to lie flat.
1:00:18
There's this term tumping in China,
1:00:19
which people decide to lie flat and quiet quit.
1:00:22
SPEAKER_00: I mean, there's analogous sentiments over in the US as well.
1:00:26
SPEAKER_00: People decide to opt out of the system, and we see that a lot.
1:00:29
SPEAKER_00: We see a lot of folks in Shanghai,
1:00:31
SPEAKER_00: Beijing,
1:00:31
SPEAKER_00: Shenzhen say,
1:00:32
SPEAKER_00: I don't want this crazy life of 996,
1:00:34
SPEAKER_00: working from 9 a.m.
1:00:35
SPEAKER_00: to 9 p.m.
1:00:36
SPEAKER_00: six days a week.
1:00:37
SPEAKER_00: I'm going to open a cafe instead.
1:00:39
Sometimes these cafes last weeks or maybe even days before they
1:00:43
lose customers and
1:00:44
SPEAKER_00: then they're out-competed again.
1:00:46
SPEAKER_00: But a lot of people now are trying to opt out of that lifestyle.
1:00:50
SPEAKER_00: I spend time with a bunch of creative kids in northern Thailand,
1:00:54
SPEAKER_00: in Chiang Mai,
1:00:55
who are just smoking dope and opting out of the brutally
1:00:59
competitive life in
1:01:00
SPEAKER_00: Shenzhen.
1:01:01
SPEAKER_00: But I think I go back to this idea that
1:01:04
SPEAKER_00: You don't need that many people to have really advanced industries.
1:01:07
SPEAKER_00: How large is the semiconductor industry broadly defined in America?
1:01:12
SPEAKER_00: It's a few hundred thousand people,
1:01:14
SPEAKER_00: maybe at most one or two million in the broadest possible definition.
1:01:19
SPEAKER_00: And yet the U.S.
1:01:21
SPEAKER_00: has a pretty leading semiconductor industry.
1:01:23
SPEAKER_00: And China doesn't need, you know,
1:01:26
SPEAKER_00: every young person to be fully motivated.
1:01:28
It just needs a certain percentage and that it has in order to
1:01:31
further de-industrialize the US.
1:01:33
SPEAKER_01: And there's this like, there is that steel sharpening steel aspect.
1:01:38
SPEAKER_01: I remember I went to visit DJI in Shenzhen and,
1:01:41
SPEAKER_01: you know,
1:01:41
SPEAKER_01: I was just looking at what had happened to the American drone market.
1:01:45
SPEAKER_01: And then while I was there, I just got this palpable sense.
1:01:48
SPEAKER_01: I mean, DJI, they're not even worried about like,
1:01:51
whatever the US cooks up because their next three competitors
1:01:55
in China are doing
1:01:56
SPEAKER_01: everything in their power to steal,
1:01:59
SPEAKER_01: undercut,
1:02:00
SPEAKER_01: DJI just all the time as the most ruthless competition in its backyard.
1:02:06
SPEAKER_01: And so it's just improving at this dramatic rate to survive just there.
1:02:12
SPEAKER_01: I could feel it.
1:02:16
SPEAKER_01: I mean,
1:02:18
SPEAKER_01: when I went to Shenzhen the last time,
1:02:20
SPEAKER_01: which was like 2018,
1:02:21
SPEAKER_01: now after reading your book,
1:02:22
I want to go back so badly because it seems like it must be a
1:02:26
totally different
1:02:28
SPEAKER_01: world,
1:02:28
although even you talk about Shenzhen's maybe on the decline in
1:02:32
some ways.
1:02:34
SPEAKER_01: Yeah, I mean, you could feel the energy.
1:02:36
SPEAKER_01: You know,
1:02:36
I remember going to another factory where they were building
1:02:40
the machines that were
1:02:40
SPEAKER_01: gonna replace the workers on the line,
1:02:43
and it was just 25-year-old dude sleeping in the hallway next
1:02:46
to the machine with
1:02:47
SPEAKER_01: like a screwdriver,
1:02:48
SPEAKER_01: you know,
1:02:48
SPEAKER_01: in the thing.
1:02:49
SPEAKER_01: I mean, dude, it was just relentless and impressive and visceral.
1:02:54
SPEAKER_01: Yeah, it was amazing.
1:02:57
SPEAKER_01: You've read so much of what she has written over all these years.
1:03:02
SPEAKER_01: Like,
1:03:03
SPEAKER_01: what is,
1:03:03
SPEAKER_01: I mean,
1:03:03
SPEAKER_01: it's a giant question,
1:03:05
SPEAKER_01: I guess,
1:03:05
SPEAKER_01: but what is,
1:03:05
SPEAKER_01: like,
1:03:06
SPEAKER_01: your takeaway on this man?
1:03:08
SPEAKER_01: And clearly...
1:03:13
wants to stick around and definitely did the things like going
1:03:18
after Jack Mons,
1:03:20
SPEAKER_01: that whole class of kind of internet entrepreneurs who,
1:03:23
SPEAKER_01: who were a little too focused on the fictitious economy.
1:03:27
However,
1:03:28
I remember when I saw that,
1:03:29
I was like,
1:03:29
Oh,
1:03:29
this is the beginning of the end.
1:03:31
You know,
1:03:31
you're gonna,
1:03:31
you are going to wreck that entrepreneurial spirit.
1:03:34
SPEAKER_01: If you, if you start whacking people like this, um,
1:03:38
SPEAKER_01: Yeah,
1:03:38
what's your take on his personality and if this is like his
1:03:45
approach is sustainable
1:03:47
SPEAKER_01: and like net positive or net negative?
1:03:50
SPEAKER_00: Net negative, for sure.
1:03:53
SPEAKER_00: I think that she is,
1:03:56
I think the first word that comes to mind to describe she is
1:04:00
just very patient.
1:04:02
SPEAKER_00: His family,
1:04:04
SPEAKER_00: his father in particular,
1:04:06
SPEAKER_00: was one of maybe the top 10 most important lieutenants under
1:04:11
SPEAKER_00: Mao and his dad was purged, I think something like five times.
1:04:17
And he just knows how to keep his pie hole shut and not reveal
1:04:23
his intentions and
1:04:24
SPEAKER_00: just be very calm and strategic about doing different things.
1:04:31
SPEAKER_00: And some of these things can be positive, but I think most of the time,
1:04:37
SPEAKER_00: I see him as being craving power above all else.
1:04:41
SPEAKER_00: He does not want to be displaced as the emperor.
1:04:45
SPEAKER_00: He is quite paranoid about everything else going on around him.
1:04:50
SPEAKER_00: And his instincts are always for more control.
1:04:54
And so maybe the three adjectives to think about with Xi is
1:05:00
patient,
1:05:00
paranoid,
1:05:01
and controlling.
1:05:02
SPEAKER_00: And maybe sometimes we should have
1:05:06
Donald Trump not shoot out his mouth all the time and display a
1:05:10
little bit more patience.
1:05:11
SPEAKER_00: That would be nice.
1:05:14
And I think it would be,
1:05:15
you know,
1:05:17
maybe good for Trump to be just strategic in every other way.
1:05:21
SPEAKER_00: But I think in general,
1:05:23
Xi cares much more about maintaining his own position within
1:05:28
the Communist Party,
1:05:29
SPEAKER_00: maintaining the domineering position of the Communist Party within China,
1:05:34
SPEAKER_00: And then third, he thinks about what's best for China.
1:05:38
SPEAKER_00: And I think the tension in China is that you have a state that is really,
1:05:43
really strong and has a pretty robust state tradition over the
1:05:47
last 2000 years.
1:05:49
SPEAKER_00: And sometimes it really helps entrepreneurs.
1:05:53
I think mostly by making these giant investments in traditional
1:05:57
infrastructure,
1:05:58
SPEAKER_00: in data connectivity,
1:06:00
SPEAKER_00: in building out electrical power.
1:06:02
SPEAKER_00: These are all things that make entrepreneurial lives a lot easier.
1:06:06
Sometimes it just crushes certain particular entrepreneurs it
1:06:12
really doesn't like.
1:06:14
SPEAKER_00: Overall, on net, probably helping more than hurting.
1:06:19
SPEAKER_00: But you have this state that is running up against this highly creative,
1:06:23
SPEAKER_00: competitive entrepreneurial class.
1:06:26
And I don't know if the domineering instincts of the Communist
1:06:30
Party is going to
1:06:31
win out or if somehow the entrepreneurial spirit is just robust
1:06:36
enough to achieve a
1:06:37
SPEAKER_00: great rejuvenation of the Chinese people,
1:06:40
SPEAKER_00: more in spite of the state rather than because of the state.
1:06:43
SPEAKER_01: And so do you think...
1:06:50
I'm generalizing off of like a handful of conversations the
1:06:53
last time I was in
1:06:53
SPEAKER_01: China,
1:06:54
SPEAKER_01: so I feel like this is bad.
1:06:55
SPEAKER_01: When I went to Russia the last time,
1:06:57
SPEAKER_01: if I hung out with 20,
1:06:58
SPEAKER_01: 30,
1:06:58
SPEAKER_01: 40-year-olds,
1:06:59
they all sort of knew that the news was fake and that they were
1:07:04
being served
1:07:05
SPEAKER_01: propaganda.
1:07:06
When I went to China the last couple times and was hanging out
1:07:11
with similar
1:07:11
SPEAKER_01: cohorts,
1:07:12
SPEAKER_01: you know,
1:07:12
SPEAKER_01: they were people who were like on VPNs getting their news,
1:07:18
SPEAKER_01: but were far less like politically charged to me,
1:07:22
SPEAKER_01: a bit less questioning of the government.
1:07:25
SPEAKER_01: I mean,
1:07:26
SPEAKER_01: maybe because it's like,
1:07:27
SPEAKER_01: you know,
1:07:28
SPEAKER_01: Russia is a shitshow of suffering and economic malaise in China.
1:07:33
is prosperous,
1:07:34
and so it's kind of like,
1:07:35
well,
1:07:36
probably care a little bit less.
1:07:37
SPEAKER_01: But I mean,
1:07:38
SPEAKER_01: what you just laid out,
1:07:39
SPEAKER_01: I mean,
1:07:40
SPEAKER_01: you were kind of hinting that if things got dire enough,
1:07:44
SPEAKER_01: I mean,
1:07:45
SPEAKER_01: there could be a possibility of some sort of unrest,
1:07:48
or do you think the system is just so strong and we'll never
1:07:53
see something like
1:07:54
SPEAKER_01: Tiananmen Square again?
1:07:56
SPEAKER_01: Or like, is there even a... Do you even see like a...
1:08:02
SPEAKER_01: the conditions where something like that would even be desired or,
1:08:06
SPEAKER_01: you know,
1:08:07
SPEAKER_01: among the young people.
1:08:08
If I had to bet,
1:08:09
I would bet on regime stability over the next decade or two.
1:08:13
Now,
1:08:13
I think the first thing to say is that regimes can collapse and
1:08:18
no one sees it coming.
1:08:20
And then afterwards,
1:08:21
everyone declares,
1:08:22
of course,
1:08:22
that was obvious and necessary.
1:08:24
SPEAKER_00: So that happens again and again.
1:08:26
SPEAKER_00: But if I had to place my money, it would be for regime stability.
1:08:32
SPEAKER_00: We saw some protests.
1:08:33
SPEAKER_00: We saw extraordinary protests in 2022 when I was still living in China.
1:08:39
SPEAKER_00: And that was because mostly of zero COVID.
1:08:43
SPEAKER_00: In Shanghai,
1:08:44
SPEAKER_00: in the bar district,
1:08:45
SPEAKER_00: in the most hip part of the French concession,
1:08:49
SPEAKER_00: young people staggered out of their cocktail bars at around 3,
1:08:53
SPEAKER_00: 4 a.m.
1:08:53
SPEAKER_00: and chanted down with the Communist Party, down with Xi Jinping.
1:08:58
SPEAKER_00: I would not have expected that the night before.
1:09:01
I knew there was tremendous discontent in Shanghai in
1:09:05
particular because it
1:09:06
suffered probably the most ambitious lockdown ever attempted in
1:09:10
the history of
1:09:10
humanity in which 25 million people were unable to leave their
1:09:13
homes for about
1:09:16
SPEAKER_00: eight weeks in the spring of 2022.
1:09:18
But I didn't think that students and young people would chant
1:09:22
these things and the
1:09:23
SPEAKER_00: police were standing by.
1:09:25
SPEAKER_00: We have the videos of police doing nothing to restrain them.
1:09:30
SPEAKER_00: We saw some protests in some Foxconn factories.
1:09:32
SPEAKER_00: There were scattered protests throughout China.
1:09:36
SPEAKER_00: But that took the most ambitious lockdown in the history of humanity,
1:09:40
SPEAKER_00: really,
1:09:40
SPEAKER_00: to get to that point.
1:09:42
SPEAKER_00: And what we also saw was that to enforce this lockdown,
1:09:47
SPEAKER_00: China didn't even unveil the full sweep of its security services.
1:09:51
SPEAKER_00: It didn't bring out the army.
1:09:53
SPEAKER_00: It didn't even bring out the paramilitary troops,
1:09:56
SPEAKER_00: which are dressed almost identically to the army,
1:09:59
SPEAKER_00: known as the People's Armed Police.
1:10:01
I think municipal police was all it took to enforce this quite
1:10:05
severe lockdown.
1:10:07
SPEAKER_00: And so the other point is not only that the security apparatus is big and
1:10:13
SPEAKER_00: sophisticated,
1:10:15
SPEAKER_00: it is also that economic growth in China has been real.
1:10:19
People's lives generally have gotten better in a way that I
1:10:22
think is not so real in Russia.
1:10:24
In Shanghai,
1:10:26
you keep seeing new cafes,
1:10:28
you keep seeing new noodle shops.
1:10:31
SPEAKER_00: I loved living in Shanghai.
1:10:32
SPEAKER_00: You're never very far from a subway station.
1:10:35
The city just works in a way that I think works much better
1:10:38
than New York City does.
1:10:41
SPEAKER_00: It had 500 parks in the year 2020,
1:10:43
SPEAKER_00: and the government announced by the year 2025,
1:10:46
SPEAKER_00: it will have a thousand parks.
1:10:47
SPEAKER_00: And so when you see this sort of physical dynamism,
1:10:50
SPEAKER_00: and again,
1:10:50
this is something I want Americans to experience in the way
1:10:53
that Chinese have been
1:10:53
SPEAKER_00: able to experience.
1:10:55
SPEAKER_00: Even though you have a lot of competition in your life,
1:10:59
SPEAKER_00: for a lot of urbanites,
1:11:01
SPEAKER_00: you're able to have some sort of support from your parents.
1:11:03
Your parents were probably allocated two,
1:11:06
three,
1:11:06
maybe even four units from the state.
1:11:08
SPEAKER_00: And a lot of these have really high value.
1:11:11
SPEAKER_00: They have the ability to live perhaps at home or bunk with friends.
1:11:16
SPEAKER_00: You have the ability to keep getting new sorts of noodles.
1:11:21
I feel like consent of the governed is still pretty strong in
1:11:24
China because most
1:11:25
SPEAKER_00: people have freedom to do what they want to do most of the time.
1:11:30
SPEAKER_00: And so it doesn't feel like the conditions are ripe.
1:11:34
SPEAKER_00: But again, you never know.
1:11:35
SPEAKER_00: But I think that...
1:11:38
Part of the virtues of the engineering state to build more
1:11:42
subway stations,
1:11:42
SPEAKER_00: to build more parks,
1:11:44
SPEAKER_00: is not only to stimulate the economy,
1:11:46
but it is also to construct political resilience because people
1:11:50
feel like people
1:11:51
SPEAKER_00: can have a sense of optimism about the future.
1:11:54
SPEAKER_01: I know your wife works here, but why did you come back?
1:11:59
SPEAKER_01: China sounds like a more exciting place to live.
1:12:02
China is a much more exciting place to live,
1:12:04
but it's a bit too exciting of a place.
1:12:07
SPEAKER_00: I came back because, first of all, I thought I wanted to write a book.
1:12:13
SPEAKER_00: And being in the daily news flow of China is just not super conducive.
1:12:19
And so when the Yale Law School's Paul Tsai China Center very
1:12:22
generously offered me
1:12:23
SPEAKER_00: a perch to do some thinking,
1:12:25
SPEAKER_00: I thought,
1:12:26
Well,
1:12:27
you know,
1:12:27
retreating to the scholastic life at Yale is probably a good
1:12:31
thing.
1:12:32
I missed a degree of pluralism after having been in China for
1:12:38
three years of zero
1:12:39
SPEAKER_00: COVID,
1:12:40
SPEAKER_00: unable to get out.
1:12:42
SPEAKER_00: I was ready for a break.
1:12:44
SPEAKER_00: I thought that the...
1:12:47
SPEAKER_00: Consumption is amazing in China, but I care about more than consumption.
1:12:53
Call me an egghead if you wish,
1:12:54
but I like to read books,
1:12:56
and I couldn't get books in China.
1:12:58
SPEAKER_00: What do you mean, the books you wanted?
1:13:00
SPEAKER_00: They don't ship to China.
1:13:02
SPEAKER_00: Amazon doesn't ship to China.
1:13:04
The only way I could get the books that I wanted was that I
1:13:08
ordered them to my
1:13:09
SPEAKER_00: parents who live in Pennsylvania.
1:13:11
SPEAKER_00: And, uh, they would mail these out in like 20 kilogram batches.
1:13:15
And sometimes the censors would just take one of these books
1:13:18
before I got my hands on them.
1:13:20
SPEAKER_00: Um, it's very random.
1:13:21
SPEAKER_01: They would grab it out of the mail.
1:13:23
SPEAKER_00: Yeah.
1:13:24
SPEAKER_00: Okay.
1:13:24
SPEAKER_01: But then still send you the rest of the package.
1:13:26
SPEAKER_00: Yeah.
1:13:27
SPEAKER_00: Um, like one, it's very random.
1:13:28
Like one time I lost a book on Mozart and it's like,
1:13:30
oh,
1:13:30
it's Mozart political.
1:13:32
SPEAKER_00: Definitely not.
1:13:33
Um,
1:13:33
so I miss being able to get books because you can't really get
1:13:36
books in China.
1:13:37
SPEAKER_00: I mean, the information environment is generally highly censored.
1:13:39
SPEAKER_00: It's not just the internet.
1:13:40
SPEAKER_01: Yeah, sorry.
1:13:41
SPEAKER_01: What do you mean when you say that?
1:13:42
SPEAKER_01: I mean, I've been to bookstores in China.
1:13:43
SPEAKER_01: You can't get certain books.
1:13:45
SPEAKER_00: You can't get the good books, let's say.
1:13:47
SPEAKER_00: You can't get the good books.
1:13:49
SPEAKER_01: Will this be published in China?
1:13:51
SPEAKER_00: I would love to have a Chinese publisher.
1:13:53
SPEAKER_00: I haven't found one yet.
1:13:55
SPEAKER_00: I hope they publish this.
1:13:57
SPEAKER_01: Would you let them?
1:13:58
SPEAKER_01: Because they always ask to censor my books.
1:14:00
SPEAKER_00: Yeah.
1:14:00
SPEAKER_01: Yeah,
1:14:01
SPEAKER_01: and I didn't...
1:14:03
SPEAKER_01: First time I went through it on the Elon one,
1:14:04
SPEAKER_01: I was like,
1:14:04
SPEAKER_01: ah,
1:14:05
SPEAKER_01: there's nothing even in there.
1:14:07
SPEAKER_01: The last two times I've said no, and I...
1:14:10
yeah i just don't love i don't like the thought of that at all
1:14:14
i expect that if i
1:14:15
can get a mainland publisher they're gonna take a big axe and
1:14:18
trim this into the
1:14:19
size of a pamphlet in which case um you know it's probably not
1:14:22
worth it for anyone
1:14:24
um and you know i i like having pluralism i like having debate
1:14:28
i mean i love being
1:14:30
part of debates in the u.s now i'm a research fellow at the
1:14:34
hoover institution i
1:14:36
Last week,
1:14:36
this time,
1:14:37
I was speaking at the Abundance Conference in Washington,
1:14:39
D.C.
1:14:40
There's so much energy that you're part of as well to try to
1:14:45
make America better in some ways.
1:14:47
And this sort of robust conversation is,
1:14:50
I think,
1:14:50
just a sign of health for civil society.
1:14:53
SPEAKER_00: And that's what makes me optimistic about America.
1:14:55
SPEAKER_00: On the other hand,
1:14:57
SPEAKER_00: What we see is that in spite of pretty robust debate and conversation,
1:15:01
SPEAKER_00: generally,
1:15:02
SPEAKER_00: America's leading manufacturing firms are losing their leading positions.
1:15:08
SPEAKER_00: The infrastructure is still not really being built.
1:15:10
SPEAKER_00: There's some more housing construction in California,
1:15:13
SPEAKER_00: but it doesn't seem to be meeting the needs.
1:15:16
SPEAKER_00: And so this is one of these other paradoxes.
1:15:20
SPEAKER_00: America has so much energy for reform,
1:15:22
SPEAKER_00: but it always gets lost in the implementation when a million and one,
1:15:26
SPEAKER_00: I would say,
1:15:27
SPEAKER_00: lawyerly forces manage to tug away all of that dynamic spirit.
1:15:31
SPEAKER_01: Honestly, if California fucks this up completely, I'll be so pissed.
1:15:35
SPEAKER_01: I mean, this is the promised land.
1:15:39
SPEAKER_01: I mean,
1:15:39
SPEAKER_01: you couldn't have more,
1:15:42
SPEAKER_01: just more beauty,
1:15:44
SPEAKER_01: more perfect conditions,
1:15:45
SPEAKER_01: the world's richest,
1:15:47
SPEAKER_01: most forward-thinking companies,
1:15:50
SPEAKER_01: and we're systematically fucking this up.
1:15:52
SPEAKER_01: I've been writing about California forever,
1:15:55
SPEAKER_01: covering California forever,
1:15:56
SPEAKER_01: and we have a big video piece coming out.
1:15:58
SPEAKER_01: I mean, I get it.
1:16:00
SPEAKER_01: can feel a little,
1:16:01
SPEAKER_01: I don't know,
1:16:02
SPEAKER_01: sinister billionaires buying a huge chunk of land to make a new city.
1:16:08
SPEAKER_01: On the other hand, there's nothing else on that land.
1:16:10
If a bunch of rich people want to get together and take a crack
1:16:14
at making a new
1:16:15
SPEAKER_01: city,
1:16:16
SPEAKER_01: I mean,
1:16:16
SPEAKER_01: the conspiratorial stuff around that is like,
1:16:19
SPEAKER_01: there's nothing there.
1:16:20
SPEAKER_01: You have nothing to lose.
1:16:22
SPEAKER_01: Let them go spend their money in the roadblocks.
1:16:25
they were being put up to that i just sometimes i yeah i just i
1:16:29
i'm like you guys
1:16:31
you you're holding you know everything in your hand you you
1:16:36
cannot mess this up
1:16:38
it's like shocking to me yeah well they're it up you know it's
1:16:41
like it doesn't seem
1:16:42
SPEAKER_01: like it's uh we're being saved here dad um we okay so
1:16:48
SPEAKER_01: There's one that you don't write about as much in the book.
1:16:51
SPEAKER_01: You focus on the lawyerly part.
1:16:52
I mean,
1:16:53
isn't there a part of this where we've just kind of dumbed
1:16:55
ourselves down?
1:16:56
My entire adult life has been spent,
1:16:58
I think,
1:16:59
fighting about abortion and guns,
1:17:01
and like...
1:17:04
SPEAKER_01: until kind of recently because of Trump, I guess.
1:17:06
SPEAKER_01: I mean, that used to just be the heart of every election to me.
1:17:09
SPEAKER_01: It was kind of like how you fell on those two issues,
1:17:12
SPEAKER_01: and then there was this little sliver of undecided people in the middle.
1:17:17
SPEAKER_01: Yeah,
1:17:18
SPEAKER_01: sometimes I just feel like,
1:17:20
SPEAKER_01: and I say this with all due respect,
1:17:22
SPEAKER_01: I love living here,
1:17:24
SPEAKER_01: but we're just too stupid to get out of our way.
1:17:26
SPEAKER_01: It's not just the lawyers.
1:17:27
SPEAKER_01: It's like we just...
1:17:30
gonna fight with each other about the same two or three things
1:17:34
ad infinitum while
1:17:35
SPEAKER_01: you have this other country that has like a 40-year plan and is,
1:17:39
SPEAKER_01: you know,
1:17:40
SPEAKER_01: executing on strategic objectives.
1:17:44
SPEAKER_01: I feel like when we talk about climate change or something,
1:17:46
it's just like so pointless because it's so far down the list
1:17:49
of things people care
1:17:51
SPEAKER_01: about and are actually gonna act upon
1:17:54
SPEAKER_00: Yeah,
1:17:54
SPEAKER_00: but actually,
1:17:56
SPEAKER_00: if you were in China,
1:17:57
you would see that they're also dumbing themselves down in
1:18:01
tremendous ways.
1:18:02
SPEAKER_00: This gives me hope.
1:18:04
SPEAKER_00: It gives us hope.
1:18:05
SPEAKER_00: I mean, this is the thing.
1:18:06
SPEAKER_00: This is what I want to always come back to, that...
1:18:10
SPEAKER_00: U.S.
1:18:10
is delivering self-beatings,
1:18:12
and the only country that could match its self-beatings is
1:18:15
China.
1:18:16
TikTok is like,
1:18:17
or Douyin over there,
1:18:18
it's like it's making everyone dumb.
1:18:20
SPEAKER_00: It's really reducing social interactions.
1:18:23
People would be in business meetings,
1:18:25
chatting,
1:18:25
and they would be on their phone.
1:18:26
SPEAKER_00: They would be on their WeChat.
1:18:28
SPEAKER_00: You can watch people go to restaurants together,
1:18:31
SPEAKER_00: and everybody would be on their phone,
1:18:33
SPEAKER_00: barely chatting.
1:18:34
Couples,
1:18:34
friends,
1:18:34
you know,
1:18:35
people are just looking at stuff all the time.
1:18:39
SPEAKER_00: People aren't having kids there.
1:18:40
SPEAKER_00: That's a pretty obvious thing.
1:18:41
SPEAKER_00: And as weird as America is,
1:18:44
at least it has some sort of self-confidence in which people
1:18:47
want to have kids.
1:18:49
SPEAKER_00: And that is a pretty damning fact about China.
1:18:51
SPEAKER_00: And it's not just the people that are dumbing each other down.
1:18:55
The government is also actively dumbing the people down because
1:18:59
it restricts access
1:19:00
SPEAKER_00: to information,
1:19:01
SPEAKER_00: because it wants its own voice to speak above everyone else.
1:19:06
SPEAKER_00: It really treats the population like children.
1:19:08
SPEAKER_00: This is something that I also really didn't like,
1:19:10
that there's this kind of infantilizing element of being in
1:19:14
China because there's
1:19:16
SPEAKER_00: just so little trust of the government for its people,
1:19:19
SPEAKER_00: even though the people are just incredibly creative.
1:19:23
They have amazing memes and they have all of this great artwork
1:19:27
they could achieve
1:19:29
SPEAKER_00: if only the government trusted its people more.
1:19:32
SPEAKER_00: And so this is also one of these reasons I feel like,
1:19:36
SPEAKER_00: you know,
1:19:37
SPEAKER_00: yes,
1:19:37
SPEAKER_00: they're able to build a lot.
1:19:38
SPEAKER_00: Yes,
1:19:39
SPEAKER_00: the cities are highly functional,
1:19:40
SPEAKER_00: but it is not just about material improvement in our lives.
1:19:43
SPEAKER_00: That's not the only measure of flourishing.
1:19:45
SPEAKER_00: I have a broader measure of flourishing.
1:19:47
SPEAKER_01: I remember reading Lu Xun, this like... Classic Chinese writer.
1:19:53
SPEAKER_01: Yeah, like kind of 1800s, right?
1:19:54
SPEAKER_00: Like maybe... Early 19, yeah.
1:19:56
SPEAKER_01: Late 18, going into 19.
1:19:58
SPEAKER_01: I mean,
1:19:58
SPEAKER_01: sort of like it's been 20 years since I read him,
1:20:01
SPEAKER_01: but I remember it being almost like postmodern-ish.
1:20:04
SPEAKER_01: I mean, it felt...
1:20:07
more contemporary than when he was writing,
1:20:09
but kind of this critic on society.
1:20:12
SPEAKER_01: You write about a couple people who say things online,
1:20:15
SPEAKER_01: but I don't know,
1:20:15
is there some writer we should all be reading who's doing this
1:20:22
sort of like almost
1:20:23
SPEAKER_01: satirical commentary?
1:20:25
SPEAKER_00: Yeah, I am a big fan of the movies of Jia Zhangke.
1:20:34
SPEAKER_00: He's more art house,
1:20:36
SPEAKER_00: but the more recent movies are A Touch of Sin,
1:20:40
SPEAKER_00: Mountains May Depart,
1:20:42
SPEAKER_00: and it is not so much super satirical,
1:20:46
SPEAKER_00: but it captures an element of the absurdities of officialdom,
1:20:50
SPEAKER_00: I think,
1:20:51
SPEAKER_00: quite well.
1:20:52
And in terms of if I could offer other suggestions for people
1:20:56
to read in China,
1:20:58
SPEAKER_00: I'm a mega fan of The Three-Body Problem by Liu Cixing.
1:21:01
SPEAKER_00: I think that is a total work of genius.
1:21:04
And I think that speaks a little bit more to at least the
1:21:06
strand of the ruling ideology in which
1:21:10
SPEAKER_00: Not to give too much away,
1:21:11
SPEAKER_00: but humanity faces an otherworldly threat and more or less unites under a
1:21:17
SPEAKER_00: technocratic world government in order to confront this threat.
1:21:21
And I think there is an element in China in which people are
1:21:24
really happy to just
1:21:26
SPEAKER_00: throw the entire nation at producing science and technological goods.
1:21:31
SPEAKER_00: And so I think that is kind of the tension.
1:21:36
SPEAKER_00: But ironically,
1:21:37
maybe even Liu Cixing could not write his work anymore because
1:21:43
his output was
1:21:44
entirely published or almost entirely published before Xi
1:21:47
Jinping took office.
1:21:49
SPEAKER_00: And before Xi took office, that was a much more permissive time.
1:21:53
I mean,
1:21:54
not that permissive,
1:21:55
but still much more permissive,
1:21:56
relatively speaking.
1:21:57
And I wonder whether someone like Liu Sixian could still write
1:22:01
a major scene of the
1:22:03
SPEAKER_00: Cultural Revolution in the middle of the book,
1:22:05
SPEAKER_00: as Liu did.
1:22:06
SPEAKER_01: That's what I was kind of curious.
1:22:07
SPEAKER_01: Yeah, that's what I was.
1:22:09
SPEAKER_01: I suspect not.
1:22:09
SPEAKER_00: Yeah.
1:22:10
SPEAKER_01: Yeah.
1:22:11
SPEAKER_01: If you, I mean, it's totally.
1:22:15
You put all the,
1:22:16
you made me think about so much stuff,
1:22:18
which is a point of book.
1:22:19
SPEAKER_01: Good.
1:22:19
SPEAKER_01: Yeah.
1:22:20
SPEAKER_01: Don't want to bake your noodle here.
1:22:22
SPEAKER_01: No, it was good.
1:22:23
SPEAKER_01: It was good.
1:22:24
SPEAKER_01: But if you,
1:22:25
SPEAKER_01: it's an unfair question in some ways,
1:22:27
but it is the one that was floating through my mind as I walked
1:22:30
out of this.
1:22:31
SPEAKER_01: You know, you set this up.
1:22:33
SPEAKER_01: Where again,
1:22:34
SPEAKER_01: you go through the pros and the cons and then,
1:22:37
SPEAKER_01: but you know,
1:22:38
SPEAKER_01: if you take this away,
1:22:39
SPEAKER_01: I mean,
1:22:39
SPEAKER_01: people would obviously,
1:22:40
SPEAKER_01: a lot of people would argue like this is going to be the Chinese century.
1:22:43
SPEAKER_01: And I mean,
1:22:44
the way you leave it is kind of the great inventions of the
1:22:49
next 50 years seem
1:22:51
SPEAKER_01: poised to come out of China.
1:22:53
I mean,
1:22:53
like,
1:22:53
so if you have to fast forward with all these things we've
1:22:56
covered,
1:22:58
SPEAKER_01: and you're urging the U.S.
1:22:59
SPEAKER_01: to pay attention to different things and to rewire itself some.
1:23:02
SPEAKER_01: I mean,
1:23:03
SPEAKER_01: you know,
1:23:03
SPEAKER_01: realistically,
1:23:04
SPEAKER_01: like 50,
1:23:05
SPEAKER_01: 100 years from now,
1:23:08
SPEAKER_01: what do you think people are saying?
1:23:11
SPEAKER_01: Is this still like some U.S.
1:23:12
SPEAKER_01: versus China battle and there's two superpowers?
1:23:16
SPEAKER_01: Or has the U.S.
1:23:17
SPEAKER_01: become Europe and it's China alone?
1:23:22
SPEAKER_00: I want to say that
1:23:26
SPEAKER_00: It's going to be a competition for a very long time.
1:23:31
I don't think that the US has a decisive advantage in the way
1:23:36
that I don't think
1:23:37
SPEAKER_00: that China has a decisive advantage.
1:23:39
We can take a look at all of China's cons and have a pretty
1:23:43
ugly outlook on life.
1:23:45
SPEAKER_00: And we can do exactly the same exercise with the United States.
1:23:49
SPEAKER_00: And I feel like the more that the U.S.
1:23:52
SPEAKER_00: is going to be behind here,
1:23:54
SPEAKER_00: the more that China is going to be overconfident,
1:23:57
SPEAKER_00: make a lot of mistakes,
1:23:58
SPEAKER_00: and the more that's going to create urgency in the U.S.
1:24:01
SPEAKER_00: to catch up and vice versa.
1:24:03
SPEAKER_00: I think that both countries are going to,
1:24:06
SPEAKER_00: again,
1:24:06
SPEAKER_00: deliver humiliating self-beatings all the time against themselves.
1:24:11
SPEAKER_00: I don't think that there's a single decisive advantage here.
1:24:14
I don't think that AI is going to represent some sort of a
1:24:19
decisive strategic advantage here.
1:24:21
SPEAKER_00: I worry that as the US de-industrializes,
1:24:26
SPEAKER_00: that it will create all sorts of economic and political problems,
1:24:29
SPEAKER_00: but I'm not sure it has to defeat the country writ large.
1:24:34
SPEAKER_00: And I think the world is dynamic.
1:24:36
SPEAKER_00: And something that I keep in mind is that
1:24:41
the US has been a pretty stable share of global GDP for a very
1:24:45
long time.
1:24:46
SPEAKER_00: It's essentially been about 25% of global GDP since about 1850.
1:24:50
SPEAKER_00: Now, could that shrink?
1:24:53
SPEAKER_00: Yeah, perhaps.
1:24:54
But the history here is that the trend has been that the US has
1:24:58
been doing pretty
1:25:00
SPEAKER_00: well,
1:25:01
SPEAKER_00: especially if we fast forward to
1:25:04
50,
1:25:04
100 years from now,
1:25:06
China's demographic woes are not really biting at the moment.
1:25:10
SPEAKER_00: The curve of the decline is not very steep.
1:25:13
But by the year 2100,
1:25:15
China's population is expected to halve,
1:25:17
maybe even more so.
1:25:20
They still will have 700 million people,
1:25:22
but many of them will be pretty old.
1:25:24
SPEAKER_00: But 700 million is still going to be larger than the United States.
1:25:28
SPEAKER_00: So, you know, I think the competition is live.
1:25:31
It's always out there and no country should ever throw up its
1:25:35
hands and submit and
1:25:37
SPEAKER_00: then decide not to get up again.
1:25:39
SPEAKER_01: Yeah.
1:25:40
SPEAKER_01: And there's, I mean... Oh, I'm gonna let you go in one second.
1:25:42
SPEAKER_01: Thank you so much for your time.
1:25:43
SPEAKER_01: I mean,
1:25:44
SPEAKER_01: there is something...
1:25:44
SPEAKER_01: It always strikes me as silly in,
1:25:47
SPEAKER_01: like,
1:25:48
SPEAKER_01: those bits that I read from the very beginning of the book.
1:25:50
SPEAKER_01: I mean,
1:25:51
SPEAKER_01: it's like two countries that do so much business together that are really
1:25:58
SPEAKER_01: capitalist at heart and competitive,
1:26:01
and you must share all those characteristics that you so
1:26:05
eloquently wrote about.
1:26:08
there's something uh i'm not naive but you know there is
1:26:11
something so silly about
1:26:12
about all of this and that there has to be us versus them i
1:26:16
mean the cold war felt
1:26:18
SPEAKER_01: a little more obvious to me um whereas china's economy i think is is
1:26:25
clearly,
1:26:25
yes,
1:26:25
has some of these,
1:26:26
like,
1:26:27
more,
1:26:28
um,
1:26:28
communist,
1:26:29
uh,
1:26:29
state-run elements.
1:26:31
SPEAKER_01: But like,
1:26:32
SPEAKER_01: look,
1:26:32
SPEAKER_01: everybody's ultimately,
1:26:34
SPEAKER_01: they're capitalists in this exercise,
1:26:36
SPEAKER_01: trying to make some money.
1:26:37
SPEAKER_01: I think we're a lot more united.
1:26:38
SPEAKER_01: And I could see, this is my,
1:26:41
SPEAKER_01: My naive vision of the world,
1:26:42
SPEAKER_01: you could just see a world where,
1:26:44
SPEAKER_01: my God,
1:26:45
if we teamed up on science and you could make so much progress
1:26:51
with the brilliance
1:26:52
SPEAKER_01: across these two countries and the resources and,
1:26:55
SPEAKER_01: you know,
1:26:56
SPEAKER_01: the thought that somehow we...
1:26:58
end up in some war over taiwan and this only gets worse just
1:27:02
makes me like makes me
1:27:03
want to beat my head against the wall well that's not very much
1:27:07
the dc perspective
1:27:08
ashley i think if you said this in dc they would accuse you of
1:27:12
taking drugs that
1:27:13
are legal in the state of california but um yeah maybe maybe
1:27:17
that is the maybe that
1:27:19
SPEAKER_00: is the right perspective after all
1:27:20
SPEAKER_01: Yeah, I mean, there's something cool about it.
1:27:22
SPEAKER_01: Because I think during the Cold War,
1:27:27
SPEAKER_01: except around space,
1:27:28
SPEAKER_01: where some things did happen,
1:27:29
SPEAKER_01: it would be hard to imagine the US and the Soviets uniting on causes.
1:27:33
SPEAKER_01: Whereas to me,
1:27:35
we live in this amazing moment where you could do so much for
1:27:39
health and energy and
1:27:40
SPEAKER_01: everything if we could align.
1:27:43
SPEAKER_01: So anyway.
1:27:44
SPEAKER_01: Yes, I'm probably crazy.
1:27:45
SPEAKER_01: We'll leave that out there.
1:27:49
SPEAKER_01: The book is Breakneck.
1:27:53
SPEAKER_01: Hopefully everyone can see it.
1:27:55
SPEAKER_01: You should buy it.
1:27:57
SPEAKER_01: I bought it twice.
1:27:57
SPEAKER_01: Thank you.
1:27:58
SPEAKER_01: I've got the hardback and the audio.
1:28:01
audio version i didn't even use my credit i actually uh i paid
1:28:05
i paid hard cash and
1:28:07
dan thank you so much um for coming on is there anywhere i mean
1:28:11
you have a website
1:28:12
where should i mean point people to the book what else should i
1:28:14
point people that's
1:28:15
good enough okay okay i mean please please do buy you'll learn
1:28:19
so much and it's
1:28:20
just it's like um it's just fantastic so congratulations um and
1:28:24
thank you so much
1:28:24
SPEAKER_01: for coming on the show actually this is a lot of fun okay thank you
1:28:31
core memory podcast is hosted by me ashley vance it is produced
1:28:36
by david nicholson
1:28:37
and me our theme song is by james mercer and john sortland and
1:28:44
the show is edited
1:28:46
SPEAKER_01: by the john sortland
1:28:49
SPEAKER_01: Thanks, as always, to Brex and E1 Ventures for making this possible.
1:28:55
Please visit our Substack YouTube and podcast channels to get
1:29:01
more of what Core Memory makes.
1:29:03
SPEAKER_01: Thanks, y'all.