AI Cyber Panic, Ken Griffin's Bubble Warning, The Fall of France?

(0:00) Bestie intros! (0:11) Ken Griffin's AI bubble warning (8:19) Palo Alto Networks CEO Nikesh Arora joins (14:24) AI Cyber panic: PHP exploits and the tumultuous year ahead (44:17) France on the brink: Riots, immigration referendum, debt crisis (1:31:49) Trump's second half strategy, Press Secretary J-Cal? Follow Nikesh: https://x.com/nikesharora Follow the besties: https://x.com/chamath https://x.com/Jason https://x.com/DavidSacks https://x.com/friedberg Follow on X: https://x.com/theallinpod Follow on Instagram: https://www.instagram.com/theallinpod Follow on TikTok: https://www.tiktok.com/@allin Follow on LinkedIn: https://www.linkedin.com/company/allinpod Intro Music Credit: https://rb.gy/tppkzl https://x.com/yung_spielburg Intro Video Credit: https://x.com/TheZachEffect Referenced in the show: https://www.bloomberg.com/news/articles/2026-10-20/ken-griffin-says-ai-almost-certainly-in-a-bubble-right-now https://x.com/chamath/status/2112757725369348417 https://abcnews.com/Technology/urgent-security-fix-issued-code-vital-estimated-70/story?id=137447718 https://thephp.foundation/blog/2026/10/21/todays-php-security-release-and-how-were-strengthening-php-security https://x.com/eastdakota/status/2113079352682570051 https://x.com/nsacyber/status/2112903220209098897 https://abliteration.ai https://www.nytimes.com/2026/10/21/world/europe/macron-trump-france-protests.html https://www.reuters.com/world/europe/french-10-year-bond-yields-hit-5-highest-since-2002-2026-10-21 https://www.wsj.com/finance/investing/french-government-bond-yields-rise-spread-widens-as-treasury-yields-fall-e67fc4cd https://x.com/visegrad24/status/2111542897598455888 https://polymarket.com/event/france-declares-state-of-emergency-byptptpt https://polymarket.com/event/moodys-or-sp-downgrades-france-byptptpt https://x.com/GOP_is_Gutless/status/2112157762981347373

• 0:00Speaker 00

  All right, everybody. Welcome to the literal number one podcast in the world. Three weeks running. We got a lot to get to. Saks is out this week. We've got a special guest coming up. Let's get to our first story. Ken Griffin says AI is almost certainly a bubble and Chamath has responded. Chamath responding and moving markets almost every week here on the pod. Look out, France. The Citadel founder made the comments this week at the company's annual Future of Global Markets Conference. But he says generally, hey, bubbles are normal. Any radical transformation of our economy is generally intertwined with a bubble. He said he's bullish on AI's long-term potential. But his concern is that companies are struggling to turn AI spending into productivity.

• 0:45Speaker 00

  Something we've talked about here, I guess, last year. And so companies are, quote, "looking at their bills from Anthropic and OpenAI and asking where the productivity is." We had this discussion over and over again. On Thursday, tech continued to get crushed on the data center and CapEx front. So people who are either making data centers like CoreWeave down 10% or having a huge AI spend. Meta, which is an extraordinary one, they're down 6% after earnings. AMD down 5%, SpaceX was down 5%. But these things have been swinging up and down a bit and generally trending up. Chamath, what's your take here on the market sentiment?

• 1:27Speaker 00

  October 22, 2026. What are your thoughts here on how markets are viewing the AI, quote, unquote, "bubble"? And do you have concerns? Because Jensen from Infiniya thinks money is available and money is going to want this opportunity to finance it. And I think we all think companies are getting a ton of value out of AI technologies.

• 1:50Speaker 01

  My social capital research team had a really great call with Ramp's chief economist, Ara Karazian. The first question that they had was because I was doing my own math. And I tweeted this thing, Nick, maybe you can put it back up there, where I said, okay, my back-of-the-envelope math, knowing everything that I know and everything that I see, is about 1% of all of the companies represent 90% of all the revenue.

• 2:24Speaker 00

  Revenue for AI spend?

• 2:28Speaker 01

  Yeah. So what I said was 1% of companies represent 90% of AI spending. So that's tokens. And of that 90%, 80% of them are from unprofitable VC-backed companies. So the cycle here, just to be very precise, is VCs raised from pension funds and LPs and foundations and family offices. They put money into a startup. That startup takes that money and invests in growth.

• 2:57Speaker 01

  Part of growing is by consuming other people's AIs. And so that company then starts to show revenue traction. Those folks then say, hey, look how well we're doing, raises a bunch of money from the same VCs. And it's just this circularity. Why that's important is what Ken is pointing out is that for AI to really scale as a predictable driver of long-term earnings, it has to diffuse out of the startup ecosystem. And so you can't be in a situation where, on the one hand, you're talking about breathtaking valuations, but where 75 cents of every dollar is actually just a startup sending it back and forth so that they can mark themselves up. That's, I think, a structural problem.

• 3:41Speaker 01

  Now, we've seen that structural problem in the past. That happened in the early days of cloud. When AWS initially started to expose EC2 and S3, the consumers of an EC2 instance or an S3 bucket were startups. But the difference there is that AWS was abstracted from Amazon Retail, which was already then a roughly breakeven profitable business, at least on a free cash flow basis. So what's different here is you have a bunch of money-losing entities just spinning a bunch of money around, and it has to diffuse more broadly. So I think that that's what Ken is observing. Now, when we brought that data to Ramp, the quote is incredible because this is what my researcher told me. I prepared a list of factors to see if your thesis, this is him texting me,

• 4:25Speaker 01

  around VC money being 80 to 90% of the top 1% of AI spend. But he said Chamath's actual estimate is pretty much correct. And then the second thing, though, that he said, he sent us, and Ramp hasn't published his chart, so thanks to Ramp and thanks to Ara, he said we could be the first ones to publish this.

• 4:41Speaker 00

  And just to be clear for the audience, Ramp provides financial services, neo-bank, credit cards primarily to startups, so they know startup data. There's a free commercial.

• 4:50Speaker 01

  Yep. I think they know broad-based data from other data sources as well. And I think Ara has access to all of it. But what he said is, now, look at this chart. So what this shows is how are the top 1% of spenders in AI spending their money? And I think that Ramp is going to publish this soon, as I said. So thanks to them for letting us preview this. What's amazing to me is the blue box in this histogram. What this shows is what percentage of money they are spending on GPU compute. Now, why does that matter? Well, the rose-colored box is LLM traffic. That's the typical spend you're going to spend on the big frontier labs, closed models effectively, either through things like Bedrock on AWS or what have you.

• 5:33Speaker 01

  What's really interesting is that the blue box is ticking up. The blue box is people buying their own GPUs because they're moving to open source. And so what I think is really interesting is you have this two-pronged thing that's happening. One is the diffusion that we need within AI is happening a little bit slower than we all would like. I see that at 80, 90 as well. I think the large companies that we work with, you can almost pinpoint it on a chart. Ever since Alex Karp's commentary on CNBC about data sovereignty, buying patterns have changed. And I think people are being a lot more methodical. They are building out their own data centers or at least moving into VPCs, virtual public clouds.

• 6:16Speaker 01

  My team yesterday was at the CIO event of, let's say, one of the largest banks in America. You know what they said? I'm not going to say the name of the bank. It was the most incredible thing. They said, "We have decreased our spend on AWS and GCP. We now have six completely independent ground-up data centers that we've built from scratch for ourselves." And I was like, what is going on here?

• 6:39Speaker 00

  Wow, we're back to the future. People standing up their own data centers, yeah.

• 6:43Speaker 01

  It's back to the future. So I think if you look at this, I didn't mean to have any commentary other than just observing what I think. But yeah, AI has a diffusion problem. It is too concentrated and ripping around in a small, little ecosystem. We need to diffuse out. But as it diffuses out, people are picking open source, is what I would tell you.

• 7:00Speaker 00

  And we were early on that discussion two years ago here on the All In Pod. I will say, Ken Griffin, and I didn't hear the full quotes here because I wasn't in the room where it happened. However, based on the quote, I think he may have something slightly wrong. When startups flood to a technology, that is a strong signal. Why? Startups, and I invest in 100 a year and we evaluate over 10,000 a year at my fund, they look for the cheapest, best, fastest edge they can get. What is the biggest edge they could get 20, 15, 20 years ago? It was cloud computing. They saved a lot of money. It was WeWork. They saved a lot of money. It was more efficient. And then it was Facebook ads.

• 7:44Speaker 00

  Facebook ads were mispriced. They were super cheap. They dumped all their VC money into Facebook ads. Then, and now it's become AI. For the last two years, yes, they've been dumping into it. So if you see startups rush to a technology or rush to a trend and start spending all their VC money on it, it means this little colony of 2 to 200-person companies have determined, and they're the most nimble, that this is the best solution. So that's a tell that things are going in the right direction. The big, slow, cumbersome enterprises, they're the slowest to the new technology. And that's why they buy startups all the time. Speaking of buying startups all the time, my guy, Nikesh, is here from Palo Alto Networks to tell us

• 8:27Speaker 00

  if this is the end of days and all of our bank accounts and if Bitcoin is going to get hacked this weekend and buy more guns and chickens and eggs and drill a well. Welcome back to the program, Nikesh Arora. How are you, sir?

• 8:43Speaker 02

  I'm doing great. Thank you for having me, guys.

• 8:46Speaker 00

  And you had a nice event last week, didn't you? A little nice event in Napa.

• 8:49Speaker 02

  I did. We had a bunch of CIOs, not just one bank CIO, like Chamath said. But before we jump into the end of days, I do want to say something to what you guys were talking about earlier about the open source versus the, sort of, these hyperscalers providing influence. So we had this peculiar problem. We'd like to embrace AI as quickly as many of the startups. And we've gone through all the understanding, all the analysis, open source versus cloud models. And we preference open source, open weight because it allows us to modify the weights and train them. And something which most people don't talk about is it allows us to interrogate the chain of thought. Because over time, what's going to happen is all of us enterprises are going to need explainability, auditability.

• 9:31Speaker 01

  Hundred percent.

• 9:32Speaker 02

  And if I've gone valid, it's not going to be okay to go to your boss and say, I don't know what happened, but the IT guys put an AI model in there, it did it. That's not explainable to the regulator in financial services and healthcare. So they want explainability, verifiability, and, you know, auditability. And we can only get that with open source, open weight models. We can interrogate chain of thoughts. That's kind of one reason we're gravitating towards that as opposed to getting caught into the closed race. The challenge, though, I think you guys talked about, and I saw Jamal's chart, the challenge we have is, is very hard to find a global resilient, highly available inference provider outside of the hyperscale community right now.

• 10:14Speaker 02

  So if I'm a startup, great, I can go rent 10 megawatts in one data center in one part of the US. And if it goes down for a few hours, I'm out of luck, but I'm a startup, so I'm okay. But I'm providing resilient services at 99.9% reliability. It's very hard for me to find a global inference provider who does not want to sell me their model at this point in time at the price. It just makes it economically useful to use open source.

• 10:41Speaker 01

  Let me ask you a question, though. Do you think that there's a world where Palo Alto Networks says one of two things? One is, you go to the hyperscalers and say, okay, listen, guys, you run it for me, but I want the bare metal, I want it totally air gapped, and it's an AWS facility, but I'll just lease it from you. Otherwise, just get out of the way so that I can have everything inside of it. Or do you do what this one big G-SID bank does and say, I'm going to build my own inside the United States? Is there a world where do you think other companies go to that limit? Or do you think that's an extreme case that's probably not representative of the norm?

• 11:16Speaker 02

  So this is the interesting debate, Jamal. You know, six, eight years ago, when I came to Palo Alto, I shut down all data centers. I said, we cannot run a global data center sort of footprint at the scale, speed, and reliability as I could probably rent it from hyperscalers. And life was great. And suddenly, what's happened is, in the current sort of incarnation of where we are, compute is highly dear. It's very hard to find compute in the world, period. So I don't, I'm a buyer, I'm a taker of terms, not a dictator of terms. So it's very hard to go and dictate terms anywhere, because, yeah, sure, you can make any plans you want, but those plans are, you know, you talk to Jensen, he can't give you chips for 2028. He talks to, you know, where do you get land power and shells? So it's very hard to go, so yes, I can go build my own data centers, but it's kind of an empty threat.

• 12:01Speaker 02

  It's very hard to go build it. I would be resilient. And by the way, I don't run 50 data centers around the world where I'm running 10 to 20 megawatts of inference. So it's a, it's a good conceptual sort of idea that I should go become independent, build my own inference. But most likely, the answer is somewhere in the middle. I'm going to have to get bare metal, yes. Most likely, I'm going to get from either a hyperscale or a cousin of a hyperscaler, or somebody's going to be stitching, you know, sleeves of compute from around the world to meet my needs in the hope that I'm going to migrate to something more resilient and more robust over time.

• 12:33Speaker 01

  All right. So you have a hybrid solution down there. One second, I just want to complete that. You have a hybrid solution.

• 12:38Speaker 00

  I just want to get to cyber stuff before we run out of time to say no.

• 12:40Speaker 01

  Then you go and you basically get a bunch of open source models so that you can interrogate chain of thought tokens. Is that a representative solution for most of the Fortune 500 or Global 2000?

• 12:50Speaker 02

  I think we get there. I expect at some point in time, we will start seeing hyperscalers giving bare metal and letting us run open source models, which they already do to some extent. So that's probably what's going to happen, because, you know, it's a matter of profit pool, right? It all depends on where you shift the profit pool. Today, they all live in Nvidia and the memory industry, and they're being shifted towards the hyperscalers, people who have large compute available, because at one, it becomes less about the chips, it becomes more about the availability of compute. Because I think demand is insatiable. There's enough demand, there's more demand than you and I can imagine. So yes, I understand the enterprise diffusion comment, but it's going to get diffused. The question is, even if you try, if every company in the world today said, I'm in, I'm in, I'm ready, I'm embracing AI, let's go as fast as we can. There's not enough compute in the world to satisfy us.

• 13:35Speaker 00

  But we asked you to come on, Nikesh, not just because you're awesome, and you're now a bit based.

• 13:43Speaker 01

  He's a bestie.

• 13:44Speaker 00

  He's a based bestie. He was very quiet under the radar.

• 13:47Speaker 03

  I hang out with Nikesh every 48 hours.

• 13:49Speaker 02

  I know, David, and I keep running into each other.

• 13:52Speaker 00

  I mean, every time there's a Knicks Warriors game, Nikesh invites me to sit with him. So it's awesome.

• 13:57Speaker 02

  Is there one?

• 13:58Speaker 00

  That's not true. I'm just manifesting. He's got great seats, I can manifest, a boy can manifest, kid from Brooklyn's manifesting.

• 14:06Speaker 02

  As long as you're willing to go with my 11 year old, you're welcome anytime.

• 14:08Speaker 00

  I'm totally fine with that.

• 14:10Speaker 02

  He's always looking, he's always looking for somebody to go with. So you could be next, Jason.

• 14:14Speaker 00

  I'm happy to babysit if, with the courtside seats or second row.

• 14:18Speaker 02

  He'll babysit you.

• 14:19Speaker 00

  Exactly. But there's a cyber panic going on, all seriousness. The last couple of days, AI found two major exploits that impact most of the internet. Here's what happened. PHP, which is an open source coding language, powers about 70% of all websites, think WordPress, Wikipedia, is at risk. In August, security researchers using AI found two, one, two, critical exploits nicknamed PHP2shell. PHP's security team gave this a severity rating of 9.2 out of 10, basically DEFCON 1 for these security teams. Since August, developers and companies have been working together on fixes. This is standard operating procedure. And the plan was to roll this out gracefully in one major patch on October 22nd, which

• 15:03Speaker 00

  is the day we're recording this very podcast. In the days leading up to the release, information about the exploits leaked. Nobody knows how it leaked. That's going to be part of the postmortem of this cyber attack week. So PHP moved the release up just by a day to Wednesday, October 21st. And on Wednesday, all hell broke loose. AWS reported a jump in hacking activity, while CloudFlare CEO, friend of the pod, said they saw millions of hacking attempts as well. A bunch of precautionary shutdowns happened. Governments across sites in Europe, France, Germany, Netherlands, Denmark, Finland, et cetera, they started taking websites down. Wikipedia took down some of its systems just to get them patched.

• 15:47Speaker 00

  In the United States, the NSA and the FBI put out a bunch of warnings, and now everybody's started panicking. People are starting to think that Bitcoin's going to get hacked, their website's going to get hacked, their bank accounts are going to get hacked. It's a bit of chaos. And then there's a second sub-issue around agents accessing banks that dropped at the same time. Now, you're in the security business, you've got lots of different products and services here. When did you first learn about this? And how severe is it? Is this an acute issue? Or is this a harbinger of things to come? And is this going to happen every 10 days for the next year, as these models have gotten incredibly powerful at what we call cyber, which really means cybersecurity, not just cyberpunk, but cybersecurity?

• 16:28Speaker 02

  Oh, Jason, I think 10 days is too long. I think this thing's going to happen much faster than every 10 days. I think part of the challenge we're seeing is, we've been talking about technology debt that we've all have to go pay sooner than later. And what's happened is, people have not paid attention to the idea that they have to go fix their stuff. I'm at a customer once they were, but, you know, I talked to the CIO this morning, they had a PHP problem, they have a bunch of websites, some are running the most advanced business office, they can put the patch. Some are running older versions, which they can't patch, they've got to bring them down and go build them up. But you know what? They never did anything about the fact they were running older versions because it wasn't important. So now they have got to go take those websites down, they're going to go upgrade them, put

• 17:13Speaker 02

  the patch, and bring them back up. We found out about this a few days ago. We scanned everything in our infrastructure to make sure that there were no issues. We made sure that our products had patches available for our customers who deploy them. So there's two ways to solve this problem, right? One, you can go in and patch the vulnerability. You can go in, find the code, patch what has been given to you by PHP, and make it work. The other is, you can actually put it in a perimeter defense product like ours, or CloudFlare has one, or other firewalls have one. You put the patch there, it's a virtual patch, so any attacker trying to access that vulnerability can stop the perimeter, because we know what they're looking for.

• 17:48Speaker 00

  They're coming to a CDN, the content delivery network, first, and that acts as a first line of events, because they're not getting to the actual servers. But if they do get to the actual servers, my understanding is, they can run code on these servers, and there were some security certificates that were incredibly brittle and easy to hack.

• 18:07Speaker 01

  The closed models have

• 18:10Speaker 00

  Basically said, hey, these things are cyber risks and so we need to be very thoughtful. I know Anthropic did that with Mythos where they brought you in and a bunch of other people and like 50 companies in and said, okay, now go harden your systems. Were the closed models helpful here? Were they the ones that helped you find these CDEs? Bring us behind the curtain.

• 18:30Speaker 02

  The closed models are, can be helpful because both OpenAI and Anthropic and most likely Google as well have very powerful models now, which can go, if you give them enough compute, enough persistence, they're going to go find vulnerabilities. They're going to even chain vulnerabilities to find an attack path, right? If they can solve neighbor stokes, they can change four vulnerabilities. And if you give them enough immense compute, they will try every way possible to be able to group. Actually, the PHP problem was solved by persistent compute. This problem was identified a few years ago, but nobody thought it could be solved because it required too much of coordination. So what happened was if you throw compute at the problem, it persisted and it found a way to crack that. Once it found the way to crack that and they published it or got reverse engineered, every

• 19:13Speaker 02

  hacker knows now how to go after it because the challenge you have with patches is hackers are smart. They look at a patch, they see what the patch is trying to do, they reverse engineer from there and say, okay, if I follow the reverse engineer path, if somebody's not patched it, I can break in.

• 19:26Speaker 03

  It seems like a bunch of the hullabaloo today that's being grummed up and this seems like it's going to change every day is all about these bank accounts getting access. Is that, do you think primarily through kind of the front end through a website using an agent that's logging in on a browser based system on behalf of its user? Because it seems like a lot of this may be coming from Muse or some of these other sort of like personal agents. They're logging into your bank account to get information about transactions and what you're doing. And the banks are seeing all this activity and they're like, oh my gosh, is this authorized? Is it not authorized? The traditional way that banks have provided access to account data has been through APIs using verified applications where I as a user, as a consumer would log into my, you

• 20:11Speaker 03

  know, mint.com account and it had a legal access point to Amex or to Bank of America.

• 20:18Speaker 00

  Plaid is the service there.

• 20:19Speaker 03

  Yeah. Plaid is an intermediary.

• 20:21Speaker 00

  Yes.

• 20:22Speaker 03

  And so there's a bunch of these sort of intermediaries that then provide that capability to apps. Is that ultimately going to lead to a world where the banks are all going to just turn off website access and say, no one can log into a website because technically agents could do it and they're not able to kind of manage that? How do you think this is going to evolve as it relates to consumer financial services? Cause I actually think this is going to be a big part of the press cycle over the next week or two.

• 20:46Speaker 02

  Two different things. Yeah, I think two different things, David. I think the reason banks have found unauthorized access to their accounts is possibly because of PHP problem. Because their websites are hackable and they've been able to get through them and get to credentials. I don't think, there are two different problems. One is unauthorized access happening because people have not, these sites have become hackable. I think the second problem you're mentioning is the personal agent problem. So far, most personal agents are using your credentials to log in. So it becomes hard for a bank to decide whether it's actually you logging in or is it your Muse agent who has your credentials logging on your behalf? They cannot distinguish between your traffic or agent traffic. They're both logging in from the website.

• 21:31Speaker 02

  They're basically logging in as you and your browser and trying to conduct the transaction. Now, as you know, there's this technological capture which tries to see that it's not a tech, it's not like an agent that's sort of, or it's a sort of a bot or an agent accessing the account instead of you. Now today, there are ways to validate capture with AI so you don't even actually have to have the human on the other end.

• 21:52Speaker 00

  AI is pretty good at it.

• 21:54Speaker 02

  It's pretty good at it. It's actually, sometimes I have to squint to see what the hell does it want me to do.

• 21:58Speaker 00

  Yeah. Click all the bicycles in this picture, like it takes you three times at our age with our eyesight. But the interesting thing here is there is a hybrid as well, Friedberg, which is your your Muse agent, your Grok bot is running a virtual browser. It will pop up the virtual browser and say, hey, do this catch and then take over. So Nikesh, is this fear, uncertainty and doubt, the old FUD by the banks to try to neuter or sandbag these agents from getting the, the front door to banking? Cause then they could just route to a bank that's cheaper, better, has better rates on behalf of the agent and the customer.

• 22:36Speaker 02

  I think that would be giving them a lot of credit.

• 22:40Speaker 00

  Okay.

• 22:40Speaker 02

  I think, I think, I think right now, the fundamental challenge they have is a liability problem. Look, it's kind of like if you call customer support at your favorite bank and say, I don't know how $50,000 vanished from my account. I never did this.

• 22:55Speaker 00

  Yes.

• 22:56Speaker 02

  Right?

• 22:56Speaker 00

  What's the spirit in Rhino? I don't know what this is.

• 23:02Speaker 02

  The challenge you have is.

• 23:03Speaker 00

  Three times.

• 23:04Speaker 01

  Keep going, keep going Nikesh. Don't be distracted. Don't be distracted.

• 23:08Speaker 00

  We're number one for a reason.

• 23:11Speaker 02

  The challenge is you, you've given your credentials to an agent. You didn't even realize that it got your credential, it's living on your browser, living on your laptop, it's going to get an innumerable amount of credentials. And I think the biggest problem we're going to have is who owns the liability and who has accountability, whether it's enterprise agents or consumer agents. So I think you see banks saying, do not, I do not allow you to interact with me with your agent, period. Right? They're yelling that disclaimer from the top of the roof saying, it's not going to be my fault. Look, banks had to go, don't forget, it's not even the problem with the cost. It's like the liability is secondary. Remember, banks, we all know this, like credit cards below a certain amount of money, they don't want to dispute, just pay you because the cost of the customer support call is higher than, than they're going to have to deal with.

• 23:55Speaker 02

  Now, if you start having tons and tons of these agents doing [BLEEP] and you start calling your bank for explainability, you're going to create huge amount of costs. I think, I think that's where they're going to be honest.

• 24:03Speaker 00

  Okay, you have a unique, you have a unique seat, Nikesh, because you, you talk to the people who are being hacked, have been hacked and you help them prevent being hacked with this, all these Swedish services over Palo Alto Networks. So I want to take you through a couple of the theories people have about AI's impact on security. You tell me if you agree with them or not. The first one is this is going to be largely an issue of who has the most compute. And because the white hats have access to the most amount of compute, they will be able to out compute, compute the black hats, in other words, the hackers. Is that a true statement or is that not yet a true statement? And maybe it will be in the future.

• 24:45Speaker 00

  In other words, Palo Alto Networks or OpenAI, whoever it happens to be, could fire up so much compute to defend systems that a bunch of hackers in North Korea, Russia, China, et cetera, just don't have the firepower and they'll be outgunned. True, not true? When will it be true?

• 25:01Speaker 02

  True, not true today because the underlying systems are not, are not architected or orchestrated in such a way that we can launch these, let's call it defensive swarms, because everything is sort of in disparate situations, right? Like if it was true, then by definition, you could send out a bunch of agents to go patch PHP if you wanted. The company's got 5,000 websites and guess what? Their poor IT guys are going cataloging each one of them because they've never actually aggregated everything, put it together, understood their stuff. So I think we need to get our infrastructure to a base level of preparedness, which is the tech, where the technological debt lives.

• 25:37Speaker 00

  Let me take you to the next thesis in theory people have here, which is persistent computing, reviewing code and people taking proactive measures more seriously is going to solve this problem. And right now we just have this interim period where people have accumulated technical debt you've talked about, but AI is going to solve that problem because you'll have persistent tools from companies like yours and others or in-house ones that are constantly banging on systems to find these before hackers get to them. Is that going to be the end game here? True, not true, short-term true, long-term true? Take us through it.

• 26:14Speaker 02

  True. Today, if you can see, almost every large company in the enterprise space is out there busy using Mythos or equivalent to try and penetrate their own defenses to see where the holes are and they're trying to patch them. The challenge that you'll appreciate is that the next model is going to be more powerful. It's going to find more ways to get into your infrastructure. So you're going to be playing this cat and mouse game of constantly patching. I think there's a slightly different sort of version of this, Jason, where for a second, let's assume that you will get breached. Okay. Cause there are so many vulnerabilities out there, you can spend a lot of money patching everything. The question becomes less about how I got breached and which vulnerability is going to let people through. The question is, how quickly can I find them and how quickly can I eject them?

• 26:55Speaker 00

  Hmm.

• 26:55Speaker 02

  Right? So our advice to people is build the infrastructure in such a way, which is possible today where you're aggregating all the signals, all the data in such a way that you can actually look for anomalous behavior with that white hat compute you talked about, right? Because I have more compute. Go ahead.

• 27:11Speaker 00

  And then the third one is the frontier models are causing a lot of this chaos because they are gatekeeping the most powerful solutions to do cyber defense and that the open source community is giving more functionality to the white hats, to the security teams, to the CISOs to actually solve this. And that frontier models need to change how they deploy this technology in some way. Are they causing part of this problem by gatekeeping this technology and not giving the raw power to the white hats?

• 27:49Speaker 02

  What did you say earlier about as a diplomatic answer, about giving too much credit?

• 27:53Speaker 00

  Yes.

• 27:53Speaker 02

  I think, I think your theory is giving too much credit. Again, I think that they, remember, majority of them are researchers to start with. They're sitting there and saying, wow, this is extremely powerful. What do I do with it? And they're talking to us and saying, what do I do with it? Now, remember these models that are so far ahead, they're still trying to figure out how to release them, how to package them, how much compute are these guys going to take? And they're all compute constrained, right? So they're all rate limiting all of us, even though I have access to the most recent model, which is available publicly, I'm still rate limited. Right? So there's tons of issues that are going on. So I think they're not causing the problem. They're just trying to grapple with the fact that these things are extremely powerful. What they would like, they would like to figure out how to monetize it.

• 28:35Speaker 00

  They want to compete with you?

• 28:37Speaker 02

  No, they just need money, bro. They're like, they're not listening to your conversations about compute needs and where the money is going to come from. They're like, they're not trying to compete. They're just trying to go after profit pools because they want a lot of money because they got to go give it back to Jensen.

• 28:48Speaker 00

  So that's their main issue. Yeah.

• 28:50Speaker 01

  Let me ask you a hypothetical question. I'll ask all of you. I use one of these agentic services. I'm a consumer. I give it my credentials to my bank account. Let's use your example, $50,000 goes missing.

• 29:05Speaker 01

  I don't know what happened. Maybe I escalated to the agent I use, you know, instinct muse dot. Or I copy of A. Everybody's finger pointing at the other one. Maybe there was a prompt injection. Who knows? Maybe the agent just went rogue and transferred the 50K. Let's just assume that that's possible 5K, you know, because it's under some threshold. Who is responsible? Okay, Friedberg, who is responsible? And who should be responsible? Who is responsible? Who should be responsible?

• 29:37Speaker 03

  Well, the terms of service of the bank say you can't use an agent to access the bank account through the website, right?

• 29:45Speaker 01

  Does it say that now?

• 29:46Speaker 03

  Yes. Yeah. So, given that that's the terms of service, if the agent hasn't built in a capacity to recognize that and stop that access, then it is a software liability issue with the provider of the agent, I believe. Unless it alerts you and says this violates the terms of service, do you want to override my block? And do you want to do it? Now the liability shifted to you as a user.

• 30:10Speaker 00

  And we have evidence of this, Chamath, not in banking, but in e-commerce. Amazon has blocked these. And subsequently, Grok now will tell you, my Amazon shopping bot says, I can no longer check out for you, but I can put it into your shopping cart. Tell me which address, which card you want, and I'll tee it all up for you, but I won't hit the buy button. So it's being

• 30:35Speaker 00

  adjudicated in real time right now. And I think that's probably where we wind up.

• 30:40Speaker 01

  Nikesh, what do you think?

• 30:42Speaker 02

  You are.

• 30:43Speaker 01

  Yeah.

• 30:44Speaker 02

  I think, I think, come on, we all have to take responsibility to empowering agents and giving them our credentials. You can't say I gave my

• 30:51Speaker 01

  It's the only solution.

• 30:52Speaker 02

  I give my credit card to Chamath, he went and burned $20,000 on it. Who's responsible? The bank? No way. Is it Chamath? Yeah, he is, but I gave it to him.

• 31:00Speaker 01

  Yeah.

• 31:01Speaker 00

  Well, what if the agent Chamath says, I have been programmed to be maximally helpful? You know, these sycophantic agents, and it goes and says, I found a way, you know, I found a way. Actually, if I fire up this type of browser and I simulate a human behavior, I think I can get this done. That's what a lot of these agents will do is they'll try to please you and they find that. Then that to me would lean towards the platform providing the agent.

• 31:26Speaker 01

  No, that's you. It's your responsibility.

• 31:30Speaker 00

  Yes.

• 31:30Speaker 02

  There's a word in agent, it's called agency. Somebody has to give the agent agency.

• 31:37Speaker 00

  Okay.

• 31:37Speaker 02

  Who's giving the agent agency? You or Facebook? I think you're giving agency to act on your behalf. And if you're the one who's giving agency, you have the liability.

• 31:46Speaker 01

  Yeah, I think as a practical matter, it's the only scalable solution because what will happen when these lawsuits happen is everybody's incentive, everybody meaning the corporate incentive. B of A will point to Facebook, Facebook will point to the user. It's the only way that this thing continues to scale like this.

• 32:02Speaker 02

  But Chamath, there's an exception case. And I think Jason said it in his words, you said it, but we didn't dwell on it. It's called the rogue agent. Now, that's a product liability issue. If a product does not, if a product does not behave like it's intended to behave,

• 32:17Speaker 01

  Right.

• 32:17Speaker 02

  then there is a platform liability in my mind would say, wait, you said this is what it does. And today, you buy any product in the world, if the product doesn't do what it's supposed as advertised, it goes rogue on you, then it's the person who built the product, it's their fault.

• 32:30Speaker 00

  And now we're in Theranos territory, which is, hey, it can do 140, it's capable of doing 140 tests. You know, just maybe not really. Let me ask you, in the Wheat's question, we incubated a company, Obliteration AI. And what this company is doing.

• 32:47Speaker 02

  Nice name.

• 32:48Speaker 00

  Yeah, and obliterated models, maybe people don't know about, but they're going to understand what these are. This company, a little bit controversial, provides models that have no constraints, no guardrails, and it's your responsibility when you have a red team, a team that's going out and banging on different vulnerabilities, to build up those. What are your thoughts on this new, somewhat controversial?

• 33:16Speaker 01

  Wait, before you go, let me just say, before you go, I find obliteration unbelievably scary. That is a vector of risk that is so unbelievably underappreciated right now, because to your point, Jason, it is a very long till thing, not enough people understand what it is. But I find this probably the thing more than alignment that I think people should really understand and think about. Sorry, Nikesh, over to you.

• 33:40Speaker 00

  Yeah, go ahead, Nikesh, tell us what you think of these services.

• 33:42Speaker 02

  So I think this is where, this is the dark side of AI. And what I mean by that is, you know, we've had all these debates at the White House, many of you were present. We talked about responsibility and alignment and making sure we tested them before. The problem is, you're, you're dependent on the weakest link. Now, if this, there's a company which is going to give you the raw power of AI without any guardrails, without any controls that are either built in or can't be built in, then you're basically handing a nuclear sort of bomb to the hands of anybody who wants it because you didn't afford it. That's the problem, because at one level, we're saying we need global treaties to manage the pacing of AI or development of AI and just for good. On the other hand, you're saying, we can have a company which can allow you to have this most powerful thing with no control, no guardrails, and no governance.

• 34:28Speaker 02

  It's like saying, hey, here's a, here's a DIY aspirin kit.

• 34:34Speaker 02

  Have a good time. You can build your own medication. Have a good time. Sometimes we get it wrong, but don't worry about it.

• 34:39Speaker 00

  Or just giving somebody some really powerful power tools to build things that make things more secure, like build a wall.

• 34:47Speaker 01

  I don't understand what the business model of your company is. Like, your company is like basically like inducing product liability as a service?

• 34:54Speaker 00

  No, it's providing it to white hats under very constrained. No, it's providing this to white hats and corporations. They share the same logo list as Nikesh and Palo Alto Networks. There are people who want access to these in order to do proper testing and make things more rigid. So you do have a higher authority of like not providing this for free, like Claude was doing.

• 35:16Speaker 02

  But Jason, are you telling me they, they, they underwrite that these models, that when you put these things in infrastructure and use testing, they're not going to go rogue on you?

• 35:24Speaker 00

  Well, it's your responsibility to manage the model as opposed to giving it to, in this, yeah, if you were the NSA or if you were Morgan Stanley, you might need this.

• 35:34Speaker 02

  How is that different? How is that different from me going and taking an open rate model and training it to my needs?

• 35:39Speaker 00

  You could do that. This is just a place that has the infrastructure to do it. So providing that infrastructure you talked about earlier, like who's going to serve and that kind of thing. And, and making, you know, just essentially making it more efficient for you to do this with more constraints. You know, and letting you take the liability, but it's a very interesting place. Why does technical debt build up? And historically, have we just under, and a lot of these causes of these cyber scares, is this just all because corporations deprioritize security and technical debt? And that we just need to change that in this new world? And that will essentially solve the problem if we prioritize safety first?

• 36:18Speaker 01

  Nobody wants to work on this stuff. I mean, the problem is when you ship something into prod, everybody wants to work on like the next greatest thing. Nobody really thinks about like maintenance as like a sexy idea. That's one thing. Second thing is, if you actually deploy it inside of your own virtual private cloud, the problem is the software vendors don't have this one version that's constantly updated. You have a drift problem where you have a version, Nikesh has a version, Friedberg has a version, they're all out of sync. And so now, you know, you as a software vendor are maintaining 19 versions because everybody has their own pace and cadence for upgrades and migrations. Then you have the fact that technologies are constantly changing and the underlying way in which things can happen changed so rapidly, but the way in which you've done it represents a sunk cost and you can't just rip and replace this stuff.

• 37:02Speaker 01

  And you multiply that by millions of companies and hundreds of trillions of lines of code, and this is why it is like it is.

• 37:09Speaker 02

  And Chamath, also to add to that, the incentive alignment problem. The CIOs are not incented to maintain the most modern infrastructure. They're maintained to keep costs low. And they're maintained to keep everything available all the time. So every time you want to upgrade something, it introduces risk of blowing up or going down. It's like, I don't want to go, I don't want to go change everything all the time because all my users complain because you know, every time you upgrade something, change something, it causes friction in the system and then it costs money. The last time your, your CIO showed up and he said, yeah, great, have some more money and have a bigger budget because of the new toy.

• 37:40Speaker 00

  This is a real tragedy. And you'll see this with like, say, the CIA or the FBI. If there's no terrorist attacks, people are like, we're spending too much money. And it's like, or we're spending the right amount of money because we haven't had a 9/11 again. And when they come to us and say, hey, we need more because based on what we're seeing, you know, there could be another, God forbid, 9/11 and then Congress or whoever's, you know, got the power of the purse at the given point in time says, yeah, you know, we're not going to give you more money because we haven't had one in 20 years. That, that is really the core of this problem is they only get credit.

• 38:12Speaker 02

  That's about to change.

• 38:14Speaker 00

  Because we're going to have a bunch of 9/11s in cyber. Yeah.

• 38:17Speaker 02

  Guess what? The phones keep ringing every day and the conversation always is now, how do I get out of this? Because I'm tired of once getting punched in the face every morning when I wake up.

• 38:27Speaker 00

  When people really appreciate the CISO and those groups, when these things and the systems come back online and the system's been hacked, it's going to be brutal the next year or so. Yeah, it's going to be a big transition time.

• 38:40Speaker 02

  I think, you know, the CIOs could become the next CEOs. Think about it. If you believe in three years from now, every business function of yours wants to transform themselves with AI. Let's go to the positive side, right? My CFO has never wanted AI. He's saying, dude, I could do all this financial analysis. You just appoint some people to my team. My marketing people want them. My HR people want them. So almost every function wants more AI people, which has never happened historically. Everybody wants AI people. If that's what's going to happen, every function is sort of waiting for AI or technology people. They all want DCI or to come and help them. Then who's the person running the company?

• 39:17Speaker 00

  What percentage do enterprises spend on security of their total spend? And what should it be ideally? I'm just curious. We have no insight here.

• 39:26Speaker 02

  The insight is that typically if your IT budget, the cost is somewhere in the four to 10% range for cyber. Okay. And 10% is typically where you'll find financial services, the federal government, because they want to make sure things are secure and robust. 4% can either be cloud people, because that's where the hyperscale will take care of infrastructure security for you. You just have to worry about application and software security. So it ends up at 4% to 5%. That's the range. You can get a 4% to 5% to 8% to 10%.

• 39:54Speaker 00

  Yeah. And that's going to have to go up. And there's, there's an issue, I think, as you're pointing out, if there is AI talent in the building, we got to build new products and services for our customers. YOLO.

• 40:08Speaker 02

  Jason, there's a whole, it's kind of like, you know, I was joking the other day, but it's true. Like, there's a whole new category, which we even don't know how to put our arms around AI. Like, nobody knows. Like, imagine if I said, great, you know what? Go deploy AI in my company, and let's make sure AI is secure. All the bosses, whatever you do, make sure you can integrate agents to the chain of talk. That's easy to say. That's hard to do. How do I find all the agents that are running it? So it's like, we haven't built AI security harnesses that are needed. I joke, like, you know, when they invented planes, the Wright brothers are out there. Nobody said, let's go create TSA. This is about time. We're going to build security now because a bad [__] is going to happen. So people are busy enthusiastically deploying AI, embracing AI. You saw, I don't know if you saw this morning, that, you know, somebody, some researcher found that if

• 40:52Speaker 02

  you send a muse conversation to somebody else, you can extract private information out of it. So now they've got to go back to the drawing board and patch it. So everybody's experimenting, new [__] being found out. We need to build all the security harnesses for AI, and that's not even started yet.

• 41:06Speaker 03

  Bernie Sanders goes on Twitter today and says, look at all the craziness. This is insane. Stop AI now. So you're in a room with Bernie Sanders, and someone says, Nikesh, we need you to save America. Go meet Bernie Sanders. You get on the plane, you go over there, you get in the room, and the guy says, we got to stop AI now. What is your response?

• 41:27Speaker 00

  How are you going to solve this problem? Nikesh, Arora, how are you going to solve it?

• 41:33Speaker 02

  I said, sounds like a great idea. Let's go. Why don't you start? I'm right behind you. It's like, I get it. You know, with all respect, it's interesting. This is the first time we have dwelled so much on the dark side of technology and history. And I don't know why it is. Maybe you guys can explain to me. We spend so much time obsessing with the dark side of technology. And my thesis is, it started with the godfathers, or whatever you want to call them, the builders of this technology. They have overindexed and dwelled harder on the dark side of this, causing this narrative. I think we need a narrative shift. And think about it, like, we only hear about all the bad stuff that this technology does. Oh, my God, I got missiles. Wait, I got something worse. My guys jumped over. Wait, mine jumped over six months ago. Mine are worse. It's like, dude, this is

• 42:18Speaker 02

  not a good narrative. This is a race to the bottom from a narrative perspective.

• 42:22Speaker 03

  We're building a wet lab. Nikesh, why then do you think Bernie Sanders and others are seizing on the moment? I know we've talked about this before, but like, what's going on that's motivating Bernie Sanders to be so vocal about stop AI, stop AI? Is it like a power struggle that they view there to be an emerging system of power that they don't control, that they don't have a hold on, that diminishes their power? Or is there something kind of more simple than that?

• 42:51Speaker 02

  David, this is what I phone a friend. You guys are much more competent at answering these questions than I am. Jason and Chamath are probably better, better equipped to answer these questions than me.

• 43:02Speaker 00

  Yeah. Yeah. It's a populist issue. If you, if the people at the labs are going to tell you, half of white collar jobs are going away, and all the, you know, drivers are going away, and it's a 10% of everybody dying. I mean, what a great issue to align yourself with if you're a populist, whether you're America First populist on the right or a liberal on the left. It's just a great way to get people's attention and get votes. And, you know, maybe it helps you win another election. Nikesh, we appreciate you. You're busy, and this is like the busiest time you could possibly have, I think, right? What is your day like? Have you slept? I mean, are you just getting woken up by clients at like 1:00 AM when they're like, hey, I need a, I need front, forward deployed engineers

• 43:46Speaker 00

  from you? I mean, what's going on in your life?

• 43:48Speaker 02

  I woke up at 3:00. I flew to the East Coast. After this, I'm going to get back on the plane and come back home, because I got to make it time for dinner with customers.

• 43:55Speaker 00

  Crazy. I mean, it is just a crazy time for you, man. No sleep. I know. Yeah, I love it. Yeah. I mean, this is the time to grind. All right.

• 44:01Speaker 01

  I love that.

• 44:02Speaker 00

  Thanks so much for, Nikesh, for joining us. We got to get you on for a full episode and talk about a range of issues.

• 44:06Speaker 03

  Thanks, Nikesh.

• 44:07Speaker 00

  You're so busy. Follow and follow Nikesh on X. He does it daily. He does one tweet per day, and it's based in Nikesh.

• 44:16Speaker 02

  Thank you, Jason.

• 44:17Speaker 00

  All right. Next up on the docket, is this the fall of France, gentlemen? We covered this two weeks ago. Situation in France is, my God, well, the place is on fire. It's gotten worse. Over half a million people have taken part in the protests. They've now spread to Italy, Spain, Albania, and a couple of other regions. Over the weekend, France saw its worst riots in decades. And they love to riot. So it's a high watermark. Numbers, pretty striking. New York Times data, the French guy, they're good at it. This is their wheelhouse.

• 44:48Speaker 01

  Pro rioters?

• 44:50Speaker 00

  They're professional rioters, exactly. It's kind of their number one pastime. For us, it's like football. For them, it's rioting. Over 3,000 businesses, Chamath, have been damaged. You've seen the videos, obviously trending all over the place. Hundreds of millions in losses. Over 1,000 police officers injured. 2,500 people have now been arrested. 70% of them are adult men. You remember, this was a high school protest because high schools were dilapidated and underfunded. And that's what the origin of the protest was. Now it's just become complete civil unrest and looting. Multiple historic government buildings tragically have been burned down. Notably, a 143-year-old city

• 45:32Speaker 00

  hall in a town 250 miles south of Paris, Le Moje.

• 45:36Speaker 01

  Le Moje.

• 45:37Speaker 00

  Beautiful name, beautiful building, absolutely heartbreaking to watch it collapse. For what reason? So they could upgrade the schools in France? Seems like there's a lot more going on here. France has finally implemented some curfew, some curfews. I don't know how you don't do that day one. New York Times, quote, France, France's government has accused ultra-left militants and opportunist looters of causing the violence. President Trump and Vice President Vance have called this a third world immigration and welfare state issue. Here's what France's justice minister said. Riders include, quote, people from immigrant backgrounds, people who are foreigners, but there are also people who

• 46:19Speaker 00

  are fully integrated and who are French. Our partner, Polymarket, says, 18% chance France declares a state of emergency by the end of the year. Same time, investors are dumping French debt. Friedberg, France's tenure has surpassed 5% this week, highest since 2002. On the other hand, and this is an ongoing issue here in the United States, tenure dropped just under 5% for the first time in a month. Wall Street Journal says this might be because people are fleeing EU debt and buying the US debt. Polymarket, our long-term partner here at All In, says, 91% chance Moody's or S&P downgrades France

• 47:02Speaker 00

  by October 31st. So let's stop there. Chamath, when you see this, and you spend your time in Italy in the summers, obviously, we talk about that here on the pod, you see it happening in Italy. And what's your, what's your takeaway here from what we're seeing?

• 47:17Speaker 01

  It's heartbreaking to see what happens. Let's just be very clear. I think that these people are absolute criminals. They're all terrorists, and they should all be arrested. And I think that this shows sort of like what is at the end of all of this quote unquote empathy that all of these governments have been espousing. It's just a disguised way of promoting urban chaos. And I don't know how a police officer thinks it makes any sense for him to be deployed into this melee to do what effectively like protect a Christian Dior store in the 7e arrondissement

• 47:58Speaker 01

  of Paris. Like, it is so stupid. So, these folks have created the tinderbox and the conditions for this to happen. And they've done it because they won't even acknowledge what this is. Even when Macron went on state television, he tried to talk about this in terms of the suffering that these people must have. When you look at these pictures, these are not people that are suffering. These are people that are enacting chaos and violence and terrorism, domestic terrorism. And I think you need to respond to these people with an incredibly heavy hand. And then you need to fix the much broader problem. And as you said, Jason, I think what's happening now is that France is going to be in an incredibly

• 48:42Speaker 01

  difficult economic position. We've already talked about this before, that France is this critical country that's going to set the tone for the rest of continental Europe in terms of how it finances its long-term debts. It's already proposed 50 billion euros of austerity. That's going to have to go up. I don't understand how in an austerity scheme you actually invest in things like education in a way that would appease these people if that were the true thing that they were rioting and protesting about. The government is in a no-win situation. I think they are going to lose the upcoming presidential elections. And I think you're going to see a very complicated reset of the French bureaucracy and the French

• 49:24Speaker 01

  economy. And I think this is the harbinger of a lot of change to come because the average French citizen should not tolerate what's happening in their country right now.

• 49:34Speaker 00

  Friedberg, what's your take here when there might have been completely valid peaceful protests? High school students protesting is a beautiful thing. They have some gripe. They created a lot of the democratic system that we actually built America off of. They were great pioneers in democracy and protest. Completely valid form of protest, peaceful, taking to the streets. And then it tips over into something that's obviously, at a minimum, just incredible criminal and potentially, you know, in Chamath's interpretation, you know, terroristic. And the definition of terrorism, to terrorize people for your political goals?

• 50:14Speaker 00

  Yep, seems like it fits the definition. So, for you, what do you think this represents? Is this a harbinger of more to come and something we might see flare up here in the United States again? Remember, we had the BLM riots, we had the January 6 riots, we've had our own series of riots here, and they had a very similar pattern. You know, people who felt politically like maybe, or socially, they weren't being represented properly. And then, in some cases, it tips over to just criminal looting and incredible violence. What's your take here, Friedberg?

• 50:50Speaker 03

  I think it's a little conflating to add some of that other stuff to the mix here.

• 50:55Speaker 00

  How so?

• 50:56Speaker 03

  I think those have very kind of acute political or socio-political events tied to them. This one seems to be kind of much more broad-based. So, if you watch some of the interviews that were done on the street, there's a very wide range of complaints if you listen to the folks that are rioting. Everything from schools to free Palestine to the government's not doing enough for us with healthcare, with support, with jobs, we're underemployed. There's just so much discontent with the objective being to get the government to do more for the people. There's a lot of immigration that happened. And so, all these immigrants that come in, they expect the government to provide to them.

• 51:39Speaker 03

  The promise was that the government would provide to them. And over time, the government providing things to the people, as we've talked about countless times, is never, ever, ever, ever, ever a sustainable answer. Decentralized government doesn't have accountability. There is no progress. There is no possibility for economic growth. There is no possibility for creating the right incentive structure. So, the more the government tries to provide to the people, the more the people are let down. We've seen this in the United States, I would argue, with the three things that the government is trying to provide here, which is healthcare, housing, and education. And the more the government spends to try

• 52:20Speaker 03

  and provide more of those things, the worse those things get, and the more unattainable they become. And the same has happened in France. So, take a look at this chart. This chart is a measure of public spending as a percent of GDP. Rand Group Research published it. And you can see the comparison of France's public spending as a percent of GDP to the peak public spending as a percent of GDP of major communist nations. Soviet Union during 1989.

• 52:48Speaker 01

  This is an incredible chart, Friedberg. Wow.

• 52:50Speaker 03

  Communist Romania, Venezuela under Chavez, and then communist China.

• 52:55Speaker 01

  That's unbelievable. So, do you think France is a communist state?

• 52:59Speaker 03

  Well, this is...

• 53:00Speaker 01

  They spend like it.

• 53:01Speaker 00

  Well, it's certainly been a socialist state, right?

• 53:03Speaker 01

  Is it working?

• 53:04Speaker 03

  Yeah, that's my point. And I think this is such an oppressive lesson for the West to look at. We all think that there's some political problem with Macron or whoever it was. The more the government spends, the worse the conditions get for its people. Not the opposite. And then the people riot and revolt and say that the government's not spending enough, and the government needs to be doing more. Now, take a guess, pull that chart back up. Take a guess where the US is today.

• 53:29Speaker 00

  What percentage of our GDP?

• 53:31Speaker 01

  20%, I would guess.

• 53:33Speaker 00

  Yeah, I was gonna say 25, yeah.

• 53:37Speaker 03

  Federal government spending is 7.4 trillion. State and local government spending is 4.6. You add those two together, it's $12 trillion out of a $33 trillion GDP. US public spending is roughly 36% of GDP.

• 53:50Speaker 00

  Okay, yeah, we're right there.

• 53:52Speaker 03

  France today is the same as the US. It's about 120% debt to GDP. France today is operating its national government spending deficit is 5.4% of GDP. The US is actually 6.2% of GDP. France is, I think, probably the first to go because they're only growing their economy at half a percent while the US is growing, you know, at 2.3%. So, we're still kind of hanging on because we have some degree of economic growth that's allowing us to kind of hold things together. But I would argue that we are facing the same sort of fiscal cliff which leads to this extraordinary social unrest as France. All the economic measures are aligned. We're at the same rate. We're at the same set of problems. And we're

• 54:37Speaker 03

  starting to see the cracks in the system. I think that France is a bellwether for the West. You can load in all the immigration stuff with it because I do think that that's a big part of it where you open the border to let people in, to try and grow the economy. You promise them things. They actually add fuel to the fire. Things get worse, and it becomes a real problem. Fundamentally, socialism destroys progress. It limits everyone's upside by giving everyone a floor. And the limiting of the upside is what leads to these sorts of problems where no one feels like they can progress. And as soon as the quality collapses because you've taken out all the incentives in the system, everyone starts to feel incredible discontent. France, I think, is one of the first to go. But if we don't right the ship

• 55:19Speaker 03

  in all these other countries in the West, I think we might find ourselves falling down the same hole. And I'm very concerned about that. I think we need to observe this for what it is and be really thoughtful about it with our politics becoming, unfortunately, a little more disturbed going into this midterm and over the next two years. I worry quite a bit.

• 55:39Speaker 01

  What do you specifically think should be done?

• 55:41Speaker 03

  Cut spending, cut deficit to GDP, cut programs.

• 55:45Speaker 01

  Okay, but hold on. Let me just push back.

• 55:47Speaker 03

  Yeah.

• 55:47Speaker 01

  Let me just push back for one second. So, you know, what do we think is at the root cause of this? Let's just focus on the young people. Like, the young people, they're not optimistic about the future.

• 55:58Speaker 03

  Yep.

• 55:59Speaker 01

  Right? They have a lot of difficulties financially, career-oriented, as well as social. I mean, like, I think their social progression has been stalled relative to other generations. You have these things that are like these swords of Damocles hanging over them, like pensions. I'm sure that they don't understand it completely, but, you know, if they took a second to realize that at some point these pension things come due for their parents and their grandparents. That's going to be on them. So how do we set it right for them? What do we do?

• 56:34Speaker 03

  I think four things are the primary cause of this that could be directly addressed. It's education, housing, healthcare, and then the retirement system. Every one of them, there's probably a multi-year solution. Education, I think we need to wind down the federal student loan program. I've said this many times, and I think in the process, we've got to eliminate a lot of the student debt that's outstanding. I think it's a necessity.

• 56:57Speaker 01

  So cancel the underwriting at the federal level, but also cancel the existing debt of the folks that have it?

• 57:02Speaker 03

  There's a complicated mechanism that I think is needed for the deletion of student debt, perhaps in bankruptcy or something like that, to go back on that law that made it impossible.

• 57:11Speaker 01

  Just on this one, just to add to this, I'm extremely sympathetic to canceling student debt. I don't think it should be, I think it should have always been dischargeable through bankruptcy. But I'm quite, I'm quite supportive of this idea that-

• 57:22Speaker 03

  It has to happen with deleting the federal student loan program. What will happen then is you'll right-size all the institutions and their tuition costs, because then all the institutions will start to fit to the market. It'll take about 10 years. It won't happen overnight. So we have to have a firm commitment to seeing it happen over the next decade. In housing, we've got to do something similar with housing loans that keep inflating the cost of homes and deal with the fact that a good chunk of the middle class-

• 57:44Speaker 01

  Okay, wait, but go through your list. Go through your list, because I have, I have one critical question at the end of your list, because your list makes sense on the surface.

• 57:52Speaker 03

  Then I think that we need to make defined benefit retirement programs, including the social security trust fund, illegal. I think all defined benefit programs need to be transitioned to defined contribution programs over, call it a decade period. In the process, everyone gets, like, whatever you're owed in social security gets deposited in effectively an IRA or a Trump account, or whatever they're called, for you today. And all of social security is deleted, and now everyone owns equity.

• 58:19Speaker 00

  Superannuation funds, like we talked about in Australia, we just transfer to that. What would the pushback on that be, Free Bird?

• 58:25Speaker 03

  Because people lose a guaranteed income. But rather than do it one time, what you would do is you would transition 10% of all your social security amount owed to you per year for the next 10 years. So you do a 10-year transition where everyone gets their money-

• 58:36Speaker 01

  So you smooth out the buying into the market? Yeah, great.

• 58:39Speaker 03

  Yeah, and then people can choose a 40-60 plan, or an 80% bonds plan, or whatever plan they want, depending on their age.

• 58:45Speaker 01

  Do healthcare and do housing.

• 58:47Speaker 03

  Healthcare is the hardest, but I think housing, healthcare is way more complicated. But I think it's fundamentally got to get pushed to corporations that employ people where they've got to go into a market for insurance, and that forces the market for insurance to force prices and services down. But there's two things that get in the way.

• 59:02Speaker 01

  Wait, and housing?

• 59:03Speaker 03

  So HIPAA and housing regulations are the two things that get in the way of price coming down in healthcare and housing. So you've got to address those, which are much more complicated, because in the case of housing, it's state and local.

• 59:15Speaker 01

  So let me just ask a question. So when you look at France and Italy and you look at these riots, I think it's important to observe that they have theoretically two of the four roughly solved, which is they give you free education and free healthcare. Okay?

• 59:30Speaker 00

  Do you know how cheap it is to go to college, Chamath, in France?

• 59:35Speaker 01

  I don't.

• 59:35Speaker 00

  300 euros a year, and costs the state like 12,000. So they are in college and graduate school. When I was in Paris this summer, I had somebody explaining to me the resentment here. They consider it like, I'm trying to think of the equivalent we might consider here in terms of entitlements. They believe they should be able to go to college and graduate school forever.

• 59:54Speaker 01

  What I'm asking you, Jason, and I'll ask you, I'm asking both of you, is you bring up these four issues. One is a vagary of the United States, meaning the student debt issue is purely an anomalous thing that exists in the US that does not exist in some of those Western countries where we're seeing riots. The second thing that we brought up, which is healthcare, is roughly free over there. The third thing we brought up, which is education, is roughly free over there. The fourth thing we brought up, which is, you know, defined benefit versus defined contribution. Again, the, the system there is a problem, because it's the same system that we have effectively, and you have these pension overhang. But I guess what I'm saying is, there, two of the four are roughly solved.

• 1:00:35Speaker 01

  One of the four doesn't exist, yet they're still rioting, so it's not that-

• 1:00:40Speaker 00

  No, no, I can actually, hold on, I can answer this. I think, you know, the, the original riots, when it was students, were banal, you know, maybe throwing a couple of bottles here kind of riots. The students weren't looting. The looting occurred by illegal immigrants from Northern Africa, and a lot of resentment from Islamic Muslim immigrants in France who have not been allowed to integrate into society, and in some cases are second and third generation Parisians who have either not integrated into society, or part of this is also on the native French who have not integrated into society. If those people weren't there, Chamath, they weren't there, we wouldn't be having this conversation.

• 1:01:23Speaker 00

  We would just be talking about run-of-the-mill, you know, people who just want a slightly better classroom, slightly better teacher ratio to students. This is because of the unmitigated disaster of immigration to Italy, to Spain, and to France. And people have a hard time just saying it like it is, but that's what it is. And that's why, you know, here, I think we stopped it by closing the southern border. And there, they have a different type of immigration. It's, it's people who don't want to integrate. If you take the average Mexican who comes to America, they're more than happy to learn English. They're more than happy to integrate into American society and our customs. It is not the same in the UK, Italy, and obviously France, as we've seen. It's an immigration issue.

• 1:02:08Speaker 03

  But Chamath, I don't, I don't know if it's actually solved, because I think the time to get a doctor's appointment is weeks. The quality of the education is poor. You're, you're sitting in a classroom with 60 kids. That's what the kids are complaining about. There's obviously a lot of other kind of motivations in those riots that are happening. But there's a fundamental feeling of oppression that I think weighs heavily on this entire population. And the oppression is, there's a higher caste that is doing better than we are, and it is not fair, because we were promised that we would do well. Pull up this video, Nick, that I sent. I think this is a view of some of the anger, which is-

• 1:02:46Speaker 04

  The Chinese have become too rich in France.

• 1:02:52Speaker 05

  Too rich?

• 1:02:55Speaker 05

  And that's not fair?

• 1:02:57Speaker 04

  Well, I think it's not fair. They're now in the category of people with nice clothes and big cars.

• 1:03:02Speaker 03

  So this was a response interview to why the rioters were going after Chinese-owned stores and destroying them in Paris. So they were specifically targeting Chinese-owned stores, breaking the stores, burning them down, because they think that these immigrants have become too successful in France, and they don't deserve that success. And I think that that is what this weight of socialism, this weight of a giant government does to everyone, which is if anyone is seen to be ahead of the suffering that we are all dealing with, they must be the problem. They are bad. They are the issue. And I think that there's this kind of fundamental rooting on the Free Palestine movement, on, you know, the patriarchy. It's all rooted in the same sort of principle, which is they don't realize

• 1:03:47Speaker 03

  that the reason that they're feeling this way is because the government is already trying to do too much, and they're not able to do it well, because the government is the worst place to provide services to the population. So they see, they see any degree of success. And it's sort of like what we're seeing with the populist movement in the US, hating tech, hating billionaires, and, you know, it's, it's very common across the West, and it's going to continue to grow, unfortunately.

• 1:04:11Speaker 00

  Well, and reports where they were specifically targeting Chinese and Jewish businesses, and specifically avoiding, this is when it moved into the full-scale riots and terrorism, and avoiding Muslim businesses. And, you know, I, I got to say, like, thank God for the Second Amendment. I don't think we would have these type of riots here on a sustained basis. If you remember the LA riots, and there was, there's a term called rooftop Koreans. And if you remember, the Koreans just literally went on top of their businesses and defended in K-Town in LA, they defended their businesses. And when you see these poor business owners not being able to defend their businesses, and they're beaten by these mobs, and you just think, my God, that poor small business owner, they put their entire lives into this business. You know it's not easy to run a small business, and then they're being beaten

• 1:04:56Speaker 00

  and watching their lives work burnt down, that's unacceptable. I honestly think, you got to rethink the First, the Second Amendment as well. And I know I'll get massive blowback, but you don't, you don't see this in Texas, in LA.

• 1:05:09Speaker 01

  Let me give you how I try to think about what the end game of this looks like. I mean, basically, what you guys are saying is, independent of who is in charge, it could be left, it could be right, and independent of what the facts are, you basically showed a chart here that shows that France spends more than every other communist government in the history of the world.

• 1:05:30Speaker 01

  These things are a disaster. And there's part of it here where people probably think that this isn't true. And they want to see even more state intervention to make things better. They themselves know that they can't solve the problem. And so the only person to turn to is the government. Because it's not like you're going to turn to the person on your left or your right.

• 1:05:47Speaker 03

  That's right.

• 1:05:48Speaker 01

  Okay. So you go to the government. But at some point, they're going to realize that chart is true. And they're going to see that enough times on their television or on TikTok and X and Facebook and Instagram, where they're going to be like, wait a minute. I had no idea we're spending twice as much as Communist China. I thought the whole point was that we should be spending more like Communist China or like Communist Russia, because this socialism thing, you know, is the better version of communism. It's not going to work. So then who can really fix this? That's sort of where I go to, because independent of what you think is right, who can fix this?

• 1:06:24Speaker 03

  You need Neo in The Matrix.

• 1:06:26Speaker 01

  And I know, I think that you go, I go back to two things. One, which is in our control. And one that is in the control of the large pools of money and, you know, what I kind of euphemistically call these bond vigilantes. The bond vigilantes can break the back of the French government. And they can do that economically. And they can do that by essentially making their debt unfinancable. The knock on effect of that decision would be where you bring long rates so far up that they can't finance their debt. And it essentially causes an economic reset inside of France. And in that, you have to have a grand bargain where you can try to reset these things.

• 1:07:09Speaker 01

  The problem with that is that every time that has happened in the past, somebody accrues more power and somebody thinks about their own ability to then have influence over the next N number of years after that reset. And it's never about resetting in the right way. The right way would cause you to look at the pension system, to your guys' point, you know, enforce a bunch of rules around, you know, the student to teacher ratios in classrooms, enforce a bunch of rules around wait times at hospitals, enforce a bunch of rules around, you know, how fast or how slow you can get building permits and what you can see in rent adjusted inflation, yada, yada. You could do all of these things if you had the political will. Unfortunately, that's not how it's going to go down.

• 1:07:51Speaker 01

  It's going to go down by who is in power, who wants to basically pin the blame on somebody else and then have that power for the next five or 10 years coming out of a reset. Because in the middle of a reset, what happens is you just give away all your rights. So that's not the solution. So then what's the solution? Then we're only left with, okay, how do we all solve this? And you're back to the whole like, is there like a panacea? And the only panacea that nobody wants to believe is, you know, we say it because we believe it, like AI abundance and all of this beautiful stuff. It just sounds like mischigas. Like, it's like, I don't know if I were, if I was anybody in France, I'd be like, AI? What are you talking about? A bunch of oligarchs from Silicon Valley? No, thank you. So it's almost this intractable problem.

• 1:08:34Speaker 01

  It's like the irresistible force meeting the immovable object. And I am completely at a loss to simulate in my brain an outcome here. I don't see a reasonable end game. And so I'm completely confused and completely without.

• 1:08:53Speaker 03

  Yeah, I mean, look, it depends how far the collapse goes. You could have this sort of social collapse that you see in some countries that involve rioting and murder and all these sorts of things. Or you end up having what is more of like an economic collapse, which is sort of like Argentina and Brazil. And others have gone through Greece more recently, where the ability to service the debt, because the government got too big, forces this kind of restructuring of the economy. And yes, there are still massive protests. There is still an incredible loss of net worth. There is an incredible inflation effect effectively that wipes out asset values for people. And you end up having kind of a resetting, economic resetting,

• 1:09:37Speaker 03

  without the great social resetting. So, you know, which path Dosty choose? I think we have to do something. I don't think we can run a higher deficit to GDP than France in the United States with the same debt to GDP as France and only modestly higher GDP growth. I think we are fundamentally going to need to have some degree of reset in the United States. The question is, do we want it to be a massive social reset? Or do the left and the right want to put on their hard caps and say, okay, we got to go in the mines and do the work and figure out how to cut this from seven and a half a year to four a year and do it in a way that doesn't destroy the economy? And I think that there's a couple of solutions that will allow that to happen. Like, you know, you basically can deflate parts of the economy,

• 1:10:20Speaker 03

  like the education system, the higher education system by taking away federal student loans. You can have a hit to housing, which will drop the net worth of the middle class by 10 to 20% by taking the federal home loan system and reducing the underwriting that's happening, reduce the volume that's pushing through. Because we've used it largely to keep prices propped up high, to keep homes net worth high so that the middle class remains highly solvent and feel wealthy. The problem is it's now inaccessible to the young people, so they can't buy a home. So we're now sort of hitting the head here. Something's got to give. So if you want to have the social unrest, you don't move on that. But if you want to allow them to feel like they have access, you're going to have to take a hit, middle class, upper class, wealthy, et cetera. And the US are going to have to take a hit on asset value

• 1:11:02Speaker 03

  and transfer it more kind of carefully to the emerging folks. And then you've got to fix this pension system, which is either overloaded or underloaded. In both cases, it's really bad. And this is why when ERISA happened, all of the private companies in the United States got rid of a defined benefit programs. Only defined benefit programs in the United States that still exist are inside of governments, because unionized government employees said, we want to keep defined benefits. And if they had moved to defined contribution, this is what's so sad about it. If they had moved to defined contribution programs, including social security, they would have all had so much more money. Everyone would have been wealthier.

• 1:11:40Speaker 01

  You don't even have to wonder about this. You could literally look at what's happened to Australia and how happy people are that they're forced to be in the market.

• 1:11:47Speaker 03

  And Norway, yeah.

• 1:11:48Speaker 01

  And Norway, they're just like, if you're, if you're forced to do that. And then we had this incredible thing this week, uh, which dovetails with this, which is Elon said he's going to give every American child, which I think is defined as under 18, a share of SpaceX worth $150, $160, $170 it's been trading at, which is a $10 billion gift, which I believe will be amongst the largest gifts in the history of charity ever done. And he said, he's just getting started with that. There's nothing that says this is not going to, uh, become, you know, a bit of a contagion amongst the affluent to give a large portion of their wealth to, um, or even a small portion of their overall wealth. But giving it directly to kids who can't touch it for 18 years.

• 1:12:32Speaker 01

  And if we made it part of their superannuation fund, maybe we could have Invest America up to 18 years old for college. And then we could have an Invest America for your retirement. I mean, it would, actually, if you bifurcated that and you gave one share to each, that could be even more accretive, right?

• 1:12:47Speaker 03

  Jason, what did you think about your friend Kara Swisher's?

• 1:12:50Speaker 01

  No longer friends, Karen. Karen and I know for a long time. I, I think she is one of them.

• 1:12:56Speaker 03

  Can you just describe for the audience what her criticism was of Elon and your reaction to it?

• 1:13:00Speaker 01

  I think she had multiple videos. One of them is it's only one share and that they should just give money directly to people. And, uh, you know, it's obviously what, the reason that's incredibly stupid is you should give any possible gift that people are willing to give. And forcing people to hold on to it makes them part of capitalism. And Kara Swisher makes $10 million a year from her podcast. She talks about it all the time. She is of the 0.1 or 0.01%. She should give half of her podcasting revenue if she's so virtuous to Invest America accounts. And she's also saying they should be putting Elon in jail. Uh, and that the Democrats are going to do that if they win. So there's like kind of a doubling there.

• 1:13:42Speaker 01

  But she's, um, you know, she's a Karen and she's a hypocrite.

• 1:13:46Speaker 03

  Yeah. Can I say something about this? Nick, can you pull up that image of that woman whose store was destroyed in France, who's a well-known activist? You guys see this, this image?

• 1:13:56Speaker 01

  I did see this and I don't know that it's true or not. But the story here is.

• 1:14:01Speaker 03

  Yeah, the story is that this woman is a well-known activist in France, who for a long time was very vocal about opening the borders and letting the immigrants come in and taking care of the immigrants. And she was angry and upset and yelling at people in the street while they were destroying her store, saying, do you know who I am? I am an activist who advocated for you all. And they didn't give a [bleep]. They went in and destroyed her store. And the look on her face, which was like, what the hell happened? Is meant to be this moment that sort of captures the zeitgeist of what some people call suicidal empathy. But I think it's much more about being, call it. An armchair do-gooder. And an armchair do-gooder is someone who kind of sits at home,

• 1:14:44Speaker 03

  in a nice home, in the suburbs, or wherever they live. And they say, "Let all the people in, take care of all the people." But as soon as the people show up to their front step and says, "Can I come and stay in your house?" The answer is, "No, of course not."

• 1:15:02Speaker 00

  Yeah.

• 1:15:02Speaker 03

  Someone else has to deal with it. Someone else has to hold you in their home. Someone else has to house you. Someone else has to feed you. Someone else has to give you a job. Because I can't house you. I can't feed you. I can't give you a job. And I think that this is what has become inherent throughout the West, which is the armchair do-gooder that says, "We should do all these good things." But when it comes home to roost, when the cost of doing those good things comes home to roost, they're shocked.

• 1:15:29Speaker 00

  Yeah.

• 1:15:29Speaker 03

  And they're all in the face. And they're like, "Holy [bleep]!" And this, by the way, we see it in the US.

• 1:15:34Speaker 00

  We had a term for it, by the way.

• 1:15:36Speaker 03

  There are all these great videos on Twitter, by the way, where these people go around, they go to suburban homes and they're like, "Hey, did you vote for so-and-so bill to have unrestricted immigration?" And they say, "Yes." They're like, "Okay, here's 15 guys. They want to come live in your house." And the people are like, "No, they can't live in my house. What do you mean?"

• 1:15:50Speaker 00

  This was called, in another era, we called this limousine liberals. And it was manifested when they used, which was quite offensive, but quite effective, when they used immigrants and bused them to Martha's Vineyard or other places. And we're like, "Here's your immigrants. You said you wanted them."

• 1:16:08Speaker 03

  What Rob Henderson called luxury beliefs.

• 1:16:10Speaker 00

  Luxury beliefs, limousine liberals. You know, if you were to look at the problems in France, they're not completely intractable. A lot of the complaints are, I think, you know, "Wait times at a hospital, well, you have free healthcare." "Oh, my, you know, the student ratio." "Well, you're only paying 300 euros a year for your college. If you want to go from 60 to 1, down to 30 to 1, okay, we're going to need to charge you 2,000 euros a year."

• 1:16:34Speaker 01

  No, you don't. No, you don't. You don't need to charge them more. This is the point. The point is, when the bureaucracy inflates and the quality of the service goes down, an intelligent person would look at that inflated bureaucracy and say, "This is inversely correlated to what I expected." So really, what should happen is people have the intelligence to say, "Hold on a second. I'm now spending 57 cents of every gross productive dollar on a government that now has increased my wait times and decreased the student-teacher ratio."

• 1:17:04Speaker 00

  Oh, yeah. They're certainly not going to be efficient. So it's not as sufficient.

• 1:17:08Speaker 03

  I'm not exactly right. That's right.

• 1:17:10Speaker 00

  But if you, the second part of what I was going to say here is, you know, there's austerity measures, which have been happening in Europe for a long time. But if you have an immigration rate where you're importing 1.5% of your population a year and your GDP is not growing, that might be a signal to you that maybe you have to change gears. And if the people who you're immigrating into the country are not productive or not productive yet, maybe their kids will be productive or their kids' kids will be productive. But right now, they're a drain on society. You can only accept so many people. And then there's another nuanced point under that, which is if you cannot, you cannot accept people who do not make a commitment to assimilate into that country's culture. Period, full stop. You can have a very small number of people, whether it's Japan, the United States, or France,

• 1:17:54Speaker 00

  you can only have so many people join the country who don't speak the native language. Because that becomes an incredible burden. Now you have to create an entire second education system, healthcare system, where people speak Spanish, where people speak whatever, you know, French, German, whatever it happens to be. And that's what's taxing these. I think it's 1 in 19 are from Northern Africa and like 1 in 9 is an immigrant. And they have unmitigated immigration in Europe. That's the other piece to this problem. If they didn't have that for the past 20 years and they weren't adding so many low-value immigrants as opposed to high-value immigrants, high-value being people with graduate degrees who are investing in companies versus people who are taking bottom-run jobs. And you started looking at it against the GDP of the country,

• 1:18:39Speaker 00

  against the unemployment, against where does this immigrant fit in what jobs we need? So do we need this type of worker, construction worker? Yes, okay, we should add more of those because we have a deficit. But they're not doing it intelligently. And that speaks to this woman running her small shop. She wants to allow all these people to come there, but she's not looking at the balance sheet. And the balance sheet doesn't support it.

• 1:19:01Speaker 03

  I'll simplify it down.

• 1:19:02Speaker 00

  It's an economic issue, yeah.

• 1:19:04Speaker 03

  Just to restate what you said slightly differently, if you're providing social services to an immigrant population, then that's not necessarily a productive immigrant population in terms of being able to contribute to growing the economy and supporting civil society. Social services that are requisite for an immigrant population should indicate to you that that's probably not the immigrant population you want to bring in. This has nothing to do with the countries or the character of the people.

• 1:19:33Speaker 00

  Ethnicity, color of skin, race.

• 1:19:35Speaker 03

  It's simply a statement that if you're paying for social services to support an immigrant population, something's wrong. And it's the wrong population that you want. But if a population, if immigrants come in and they're productive, meaning they can get jobs and they can work and they can support themselves, that means they're adding something positive to the economy, to the civil society. And that is the sort of selection criteria that needs to take place. So that's a simple framework for determining whether or not you should do this. And an easy way to solve it is get rid of social services for immigrants. As soon as you get rid of social services for immigrants, then you self-select into the right population that's going to come in. The second thing is, Jason, just to put a point on this, it's not about assimilating to society. It's about sharing the values

• 1:20:19Speaker 03

  of what makes the United States the United States.

• 1:20:21Speaker 00

  Well, that's what I mean.

• 1:20:22Speaker 03

  The value of self-sufficiency. I don't care about your religious beliefs. I don't care about your movie interests. I don't care about your first language. I don't care about your sports interests. The multiculturalism of the United States actually adds an incredible amount of value. But the values of what do we actually care about? What are the principles that we all share as a civil society of the United States or a civil society of France? Is a screening criteria that seems to have been thrown out the window as we've allowed the immigrant flocks to kind of take over the West.

• 1:20:51Speaker 00

  Do you believe in freedom of speech? Do you believe in the Second Amendment? Do you believe in the core benefits of America? You pull yourself up by you.

• 1:20:56Speaker 03

  Do you believe in women's rights? Do you believe that women are equal to men?

• 1:20:59Speaker 00

  Yeah.

• 1:20:59Speaker 03

  As a simple one, right? Do you believe that you should work for your money as opposed to take it from the government? Do you believe in your individual rights? Do you believe in the individual?

• 1:21:08Speaker 00

  Do you believe in the legal system versus your church's legal system?

• 1:21:11Speaker 03

  Is your church paramount to the government? And do you, in the laws of the state? And do you believe that other people have rights that you don't get to trample on? Those are the sorts of things that are, in many cases, counter to the cultural, religious, and other traditional beliefs of certain populations that end up causing the damage in the West. And I think that it's been kind of completely lost in the process.

• 1:21:33Speaker 01

  You know what I thought when I heard that kid talking about targeting these Chinese people? It's like weirdly reminiscent of like a more bottoms-up, maybe poorly disorganized, but a bottoms-up version of Kristallnacht, where you had, obviously, the looting of Jewish businesses and synagogues in 1938.

• 1:21:56Speaker 00

  Because they were doing better.

• 1:21:57Speaker 01

  Which were state-sponsored. And, you know, they had like some idiotic pretext, but ultimately, it was because they were jealous of the Jews. And now here you see folks that are essentially like burning and pillaging businesses. And at least some narrow percentage of them were doing it effectively to target a cohort of people that they are jealous of. And they are jealous of exactly what you said. Because I don't think the Chinese, you know, immigrate to a country and have some of these long-tail views. They're like, "Get me in the game, coach. Tap me in, I'm ready to go."

• 1:22:27Speaker 00

  They're entrepreneurs. And they want to do better.

• 1:22:29Speaker 01

  They're industrial, they're super hardworking.

• 1:22:31Speaker 00

  Exactly.

• 1:22:32Speaker 01

  And so the contrast is quite stark, where you see one immigrant essentially saying, "C'est pas juste" is basically his way of saying, "It's not fair." Which is like, kind of like a petulant child. You know, so on the one hand, you have petulant children. On the other hand, you have hardworking immigrants. They're both immigrants. It's the craziest dichotomy. I mean, just seeing it in real life is shocking.

• 1:22:52Speaker 00

  Immigrant-on-immigrant violence. Because one is working harder, has a better plan, is applying themselves and probably working seven days a week, 12 hours a day at that business to make it successful.

• 1:23:04Speaker 01

  Well, no, her specific story is even more incredible.

• 1:23:08Speaker 00

  I was talking about the Chinese one, yeah.

• 1:23:09Speaker 01

  Yeah, the Chinese woman. Because they went and they actually told her story. And, you know, she had worked there, you know, she had worked essentially in restaurants for 34 years to earn the money to open that restaurant.

• 1:23:18Speaker 00

  Yeah. I grew up in the restaurant business. Let me tell you, it's the hardest thing on a family is to run a business. Because when somebody doesn't show up for work or you don't have the money, you all just have to work. My family, we all worked at the restaurant. My mom, my mom made the [bleep] desserts at our restaurant because she wanted to save money. And she was a nurse, not a pastry chef. Yeah. And, you know, and my brothers and I, we worked at the restaurant since we were six or seven years old. We set the tables, we polished the silverware. We were working in the kitchen at 10 [bleep] years old. And we were still living week to [bleep] week. And then you come burn the business down? You come burn my dad's business down? We're going to unload. My dad was packed, was packing, you know? Like, he was strapped.

• 1:24:02Speaker 00

  And you do this in America? You do this in Texas? You're going to get shot. And when I saw those poor Chinese people on the balcony, you know, and their lives are at risk and their whole livelihood, I was just like, "Man, I wish these people had guns. I wish these people had guns to defend their private property." It is just crazy that they could just be run over like this. And they were going to get killed. There's absolutely a non-zero chance that that mob, when mobs get into that heightened state, they will murder people. They will beat them to death. And this poor other shop owner was getting kicked and beaten just trying to defend his little tiny business, little tiny store. If you've ever been to Paris, little tiny stores, beautiful bespoke stores, trying to make a living and something they're passionate about.

• 1:24:46Speaker 00

  It's just absolutely heartbreaking. And, you know, it's not...

• 1:24:50Speaker 01

  I'll just say this. The Bond vigilantes need to show up here and draw a hard line in the sand. I think they need to break the back of the French government.

• 1:24:58Speaker 00

  Okay, there it is. There's the mandate.

• 1:25:00Speaker 01

  And you need to do it severely. And you need to do it properly.

• 1:25:02Speaker 00

  6%, 7% would do what? 6%, 7% on these bonds?

• 1:25:05Speaker 01

  I think you need to take France to like 8% and just break them.

• 1:25:08Speaker 00

  Yeah. And then all of a sudden, austerity measures, immigration, all this stuff's going to be taken a lot seriously.

• 1:25:13Speaker 01

  At least it'll all be on the table and they'll have to sort through. They will have to sort out what they're willing to give up. But right now, if you can skate through this moment... Then these things continue to fester and it is a tinderbox that at some point, again, we know, again, just to use the analogy of Kristallnacht, we know what the trail of breadcrumbs can lead to in terms of fomenting this societal rage. You cannot allow that to happen. And so the government has a responsibility now to nip this in the bud in a structural way. And I think the people have a responsibility to understand the numeric reality in which they're

• 1:25:53Speaker 01

  living. They are living in a state that is spending more than any communist utopia that they hoped to achieve. Yet the outcomes are broken, which means the system is broken and you need to reset that. And the government will not reset it on its own. And so the bond vigilantes will have to do it for them. This kind of stuff, if it continues to compound, is extremely, extremely dangerous.

• 1:26:17Speaker 00

  Yeah, super dangerous. And we had our little flashes here. So it's, we're definitely not immune to it. We're a larger group of 50 states. So and they're, they're at, by the way, I think France is almost at 56% as their top tax rate. Maybe it's 55, 56. The only place that's higher, I think, in Europe is Denmark, which is like a 60% top tax rate.

• 1:26:41Speaker 01

  It doesn't matter. Take it to 90%. Nothing will get better, folks. Do whatever you want.

• 1:26:47Speaker 00

  If the government provides the service, there's going to be no innovation and there's going to be no efficiency.

• 1:26:53Speaker 01

  Unless there is an individual human incentive to do well, nothing gets better.

• 1:27:01Speaker 00

  All right. Capitalism at its core. And you know, thing is, Macron was trying to get capitalism going there as well. It was like a big part of-

• 1:27:07Speaker 03

  You can just click on this image here or this link.

• 1:27:10Speaker 00

  What are we looking at here?

• 1:27:11Speaker 03

  I mean, this is sort of another indicator of why GDP growth is laggard. But this is tax revenue as a percentage of GDP. So France also tops the list on tax revenue as a percentage of GDP at 46%. So every dollar of GDP generated by the country is recollected as government tax revenue.

• 1:27:32Speaker 00

  Obviously, two, two drivers here. High tax rates or low GDP, high GDP. And we have-

• 1:27:39Speaker 03

  No, it's just the tax, because the tax rate is always a function of income.

• 1:27:42Speaker 01

  I think the point is, if you put this and the other one together, you have a confiscatory government that represents the overwhelming amount of the economy, where you have incredibly deleterious outcomes. That is to connect the dots. And you can't hide.

• 1:27:57Speaker 03

  This is the question for the United States, is which direction do you want to go? Do you want to go up the chart or down the chart? On both charts that we looked at? Which way do you want to go? Because the quality of life goes down as you move up the chart for all people. And the ability to progress gets destroyed as you move up the chart. And as you move down the chart, each individual's ability to progress in life improves. You have to do it on your own. You have to have more agency. But your capacity to improve your life improves as tax revenue goes down as a percentage of GDP and as government spending as a percentage of GDP goes down. Your opportunity as an individual, the basis of the foundation of this great country, improves. And that is really the North Star that we should all be talking about is how do we get back there? How do we

• 1:28:42Speaker 03

  continue to move back in that direction in the chart? And they're very practical things. There's very simple things to do, like we talked about on the show.

• 1:28:48Speaker 00

  Pull the chart up again. And I'll just, I'll give you a little bit of a challenge here. I think most people in America, especially young people, don't believe what you're saying. If you look at the US here, ahead of the US, Australia, Argentina, South Korea, Japan, Brazil, Canada, UK, Germany, Italy, France, most people want to live in those countries above us. Most Americans who are complaining now certainly want to live in one of those countries and have healthcare and want to have cheaper and affordable college. Now, housing is still screwed.

• 1:29:18Speaker 01

  I disagree.

• 1:29:19Speaker 00

  Oh, you disagree that most Americans don't want universal healthcare?

• 1:29:23Speaker 01

  No, no, no. Most Americans don't want to live in a country above us on this list. Absolutely not.

• 1:29:26Speaker 00

  Well, they certainly don't want to go below us to South Africa, Russia, Turkey, China, Mexico, India, Indonesia, all due respect.

• 1:29:33Speaker 01

  I've been to, I've been to every single country on this list above us. I've spent a lot of time there. I've been a citizen of one of them. And I would not choose to be in any country other than the United States.

• 1:29:43Speaker 03

  Yeah. Jason, you know what youth unemployment is in Brazil?

• 1:29:46Speaker 00

  Brazil, I do not know. I'm going to guess 20%.

• 1:29:49Speaker 03

  Youth unemployment in Brazil is around 15, 16%.

• 1:29:52Speaker 00

  Yeah, that's right in the streets.

• 1:29:54Speaker 03

  And it's, and it's rising. And it's rising. It's almost a 20%. US is still fortunately below 10%.

• 1:30:01Speaker 00

  Yeah, 9%.

• 1:30:02Speaker 03

  And the same is true in many of these other countries. Like, there just isn't a growing economy that can support a youthful employment system in many of these countries. So I don't know if I would agree with your statement, most people want to go live in those other countries. Because if they wanted to, they could use a credit card, buy a plane ticket and go do that.

• 1:30:19Speaker 00

  Well, let me restate, most people want what those countries deliver. Most people want-

• 1:30:23Speaker 03

  They want what those, what those countries say they deliver.

• 1:30:25Speaker 00

  And they would be willing to pay more tax for it. Or they'd certainly be willing for us to pay more tax to achieve it.

• 1:30:30Speaker 03

  It's not in full scope. The full scope of what those countries deliver is not just an acute, no-fee trip to the doctor's office. It's that people want to have the ability to do that and also have a job and also have the ability to progress. And to have all of these things, fundamentally, the best system is a smaller government system, because the more the government grows, the less of that pie of things you will actually get. It gets worse and worse.

• 1:30:56Speaker 00

  I'm in line with your argument. I just say, I'm just saying, that chart does not make a great, that chart is not a good piece of evidence in this argument. I think most people are not entrepreneurial and most people want-

• 1:31:07Speaker 03

  Not about being entrepreneurial.

• 1:31:08Speaker 00

  No, but I mean, I think more freedoms, less tax is what we all want. I think a large percentage of America wants us to pay more taxes and get more services. And they believe those countries right above us want more, will give them more services. Therefore, they don't mind waiting an extra couple of hours or months to get healthcare, if they get healthcare, because they currently get no healthcare, or they get bankrupted by healthcare. That's how dysfunctional our healthcare system is in the United States. So, yeah, I think most Americans would disagree with us looking at that chart. That's just my belief. But we, we're here to sharpen, iron sharpens iron. I think we have to keep working on this value prop. And I think this is where, I don't know if you guys saw my tweet this week about how Trump, President Trump could save the

• 1:31:53Speaker 00

  second term. And a big part of it, I think, is he has to talk about housing as much as he's talking about data centers. I think raising the minimum wage is a nice gesture, since it only impacts 10, 15 million people, the federal minimum wage in this country. And there are things we can do to make it apparent to the people in the bottom half of the country that we care about them and that the president is signing executive orders for them as well as for us. And us, I mean, the tech industry and, and large businesses. And I think that's, that's the big problem of why the president is just so lowly, his, his ratings are so low, his approval is so low. And perhaps we'll see on November 3, what happens with this election. That's a

• 1:32:35Speaker 00

  big part of the discontent right now, is people are frustrated that they're not even, President Trump doesn't even talk about them anymore. He doesn't talk about minimum wage, doesn't talk about housing, doesn't talk about inflation. He just says, it's all going to be fine. And we're, we're living in the golden age. But then he's more than willing to talk about our issues, data centers, crypto, et cetera. And the messaging in this country is really far off. It's really far off. And until we get somebody in that office who is willing to talk about the bottom half of the country and 50/50, you know, hey, we're going to talk about big tech, we're going to talk about lowering taxes, but we're also going to talk about raising the minimum wage. We're going to talk about a plan to build more affordable housing as opposed to just more data

• 1:33:18Speaker 00

  centers. That's the disconnect that I'm just bringing up here.

• 1:33:21Speaker 01

  Hold on, hold on.

• 1:33:22Speaker 00

  You can bring it up.

• 1:33:24Speaker 01

  If you actually read what he tweets, I think he connects the dots on all of these things. I think that he has acted in a way that one should when you realize that the AI buildout is the disproportionate percentage of all GDP. It is basically all of it. And it doesn't just pull through stock performance for seven companies. There's been a bunch of data now. It pulls through massively increased wages for middle class and skilled labor. And then he's been telling people that if you're going to build these data centers, do it in a way where you lower the electricity costs, do it fully behind the meter, invest in the local communities. That also has positive

• 1:34:04Speaker 01

  impact. So, you know, he's trying to make sure he lands the plane on the US economy. And right now-

• 1:34:11Speaker 00

  I agree he's doing that.

• 1:34:12Speaker 01

  Whether you agree with it or not, the US economy is entirely and completely levered to and correlated with the AI trade. Period.

• 1:34:20Speaker 00

  I, I agree that he is doing a great job in that, like, better than any president I've ever seen in my lifetime in terms of getting the economy rocking. The public, the overwhelming number of Americans now do not agree with what you just said. They believe that he is not, does not care about the issues he cares about. That's why he's at his historic low in terms of approval rating. So there is a messaging problem here. So I'm not saying I should be the press secretary here, but somebody's got to be a press secretary here based on communications.

• 1:34:53Speaker 01

  First, first of all, I think-

• 1:34:54Speaker 00

  Because the communication sucks out of this administration.

• 1:34:56Speaker 01

  Let me say something about the press secretary, I think, just for one second, just one small deviation.

• 1:35:00Speaker 00

  We're going into weird territory.

• 1:35:02Speaker 01

  We have not spent enough time actually acknowledging what more people should acknowledge more often, which is Caroline Levitt is an absolute goat. She set the bar so high. She's so talented. She's, for being so young, it's unbelievably impressive. It's almost an impossible job to follow her. Let me just say that, because I don't think people say that enough. Second, I will actually go on a limb and say this. I think that you are an incredibly dogged bulldog. I think that if you got to know the president, you would be besties with him. I really legitimately think you would. And I think you would be an incredible press secretary. Now, the problem is, the problem is that you have stupid ideas. And as long as, and as long as you could avoid representing your stupid ideas-

• 1:35:46Speaker 00

  Raising the minimum wage is a stupid idea? I don't think so.

• 1:35:48Speaker 01

  No, no, no, no, no.

• 1:35:49Speaker 03

  It is a terrible idea. I agree with that.

• 1:35:51Speaker 00

  No, it is not. The federal minimum wage is not. Look at the studies.

• 1:35:53Speaker 01

  You are the epitome of an armchair do-gooder. Okay? And, and if you could, if you could quell that instinct and actually be, you know, his vessel, you would be incredibly effective because you are dogged, you're great on your feet, you're super funny, you'd be incredible.

• 1:36:10Speaker 00

  People are now, people are now pitching me to do it.

• 1:36:12Speaker 01

  I don't think you'll be able to manifest this one, but you are, you are incredible.

• 1:36:16Speaker 00

  I mean, we were number one the last two weeks in a row. So I would not underestimate my manifesting powers. I do think free, if you, if you look at the studies, I think you're dealing with old data and maybe a little bit of dogged libertarian principles, which I too shared. If you look at what's happened-

• 1:36:31Speaker 01

  Dogged libertarian principles?

• 1:36:33Speaker 00

  No, I, listen, I'm, I'm, I share some of those libertarian ones where I'm like, the free market will work it out. It's only 15 million people in this country who make under $15 an hour and who are impacted by the federal minimum wage, which has not moved in decades. If the president came out and just said, hey, we're going to increase the minimum wage by $1, federal minimum wage, which is basically doesn't count for half the states because half the states have their own minimum, and it just says, it would just be like a good faith thing to do. Hey, we're going to do add a dollar a year for seven years. We're going to get it to $15. What happens is all that money gets recirculated and it just creates more monetary velocity in the country. It all gets spent at the company. So it's a tragedy of the commons. You know, one person doesn't want to pay this and the other person

• 1:37:15Speaker 00

  doesn't. Look at what happened in Australia. Look at the Nordics when they raised.

• 1:37:19Speaker 03

  Jason, Jason, listen, California passed Assembly Bill 1228, 2024, increase the minimum wage in California.

• 1:37:26Speaker 00

  Fast food workers to $20, to $20. It was too, too fast. I, I am not advocating from seven to 20.

• 1:37:31Speaker 03

  So when they did that, we lost 18,000 fast food jobs in the state. And the reason is, just think about this.

• 1:37:38Speaker 00

  And we still have record unemployment.

• 1:37:39Speaker 03

  But just think about this. The reason is, the reason is that the fast food industry sells food to consumers. Consumers want cheap fast food. So when you increase the labor rate against the market's demand, then the consumer says, I'm not paying $8 for a burger. I can't afford it. I can only afford $4. So there's actually no one to pay the wages of those fast food workers. So number one, the consumers lose because they've now lost their local fast food joint because they can't afford the new fast food. And number two is the employees who were voluntarily willingly working there for 18 bucks or 16 bucks or 12 bucks, whatever the number is, suddenly lost their job.

• 1:38:21Speaker 00

  Yeah. So let me.

• 1:38:22Speaker 03

  And as many ways as you want to slice this, this is not a dogged libertarian principle. This is just a very common sense view on the world, which is if, if the buyers are there and the buyers are saying, hey, I'm willing to pay more and the workers are willing to say, I need to get paid more to work here, the market finds a happy medium. But when the government intervenes, it blows up the market. It destroys the supply. It destroys the demand and people lose jobs. And that's what we see time and again, when the government intervenes in market dynamics.

• 1:38:49Speaker 00

  Here's where you're wrong. Number one, I never said go to $20 an hour. I said, go add $1 per year for the next seven, which will get us to 15 in seven years, which will put us out in 2032. So you're comparing the most radical program, California's, which I don't agree with, to the my common sense one. Put that now going to the second point. It has added essentially 25 cents to each meal at those places when you do this, and it makes them get rid of the jobs that are going to be replaced anyway, like cashiers. But we still have the same unemployment rate in these places. People went to other productive jobs when those jobs became automated. An argument you and I have made here many times, which is people go find work. So you can't have it both ways, Mr. Friedberg. You can't

• 1:39:34Speaker 00

  say people will find more productive work. People do find, those people who lost their jobs found better work in statistically here in California.

• 1:39:43Speaker 03

  You're trying to be market prognosticator, where you're trying to determine what is the right price for the market. And the more you do that, the more you are going to destroy the market. Because fundamentally, that $1 or whatever the thing that you do to rationalize the government's intervention, it's going to have some effect on some set of the market that is going to tip over the point where it no longer makes economic sense for the buyers to pay the premium price and some number of those sellers will get out of the market and the thing goes away.

• 1:40:12Speaker 00

  This would be true. This would be true if you apply this in an unconstrained fashion, in a very constrained fashion, raising the bottom. All it does, it practically is those people go spend the money with the same companies they're working for. The Amazon delivery person or the, you know, UPS delivery person, those people already have $20 an hour jobs. But the people who are doing those jobs, they just spend it at the same companies. So in reality, when you force everybody at the same time to hit a minimum labor dollar amount, and we already have it, by the way, for this very reason, it just gets recirculated. It's actually good for companies. And we saw it in Australia, New Zealand, in the Nordics.

• 1:40:54Speaker 00

  As they raised it, all the companies did better because their customers had more money to spend and people were happy. And in a society, you don't just want to do things for economic reasons. You also want to do it to make people have a better life. And I think that's what raising the minimum wage does. It makes an esprit de corps. It makes everybody's in it together and the president of the United States is looking at that lowest paid worker and saying, you know what, we're going to ask Amazon, we're going to ask McDonald's, whoever it is, to just do a little bit better for but 10 million Americans. It has no effect. It's only 10 million Americans. That's why I think it's a no brainer. It's a no brainer.

• 1:41:29Speaker 03

  We're not going to agree on this. I think an alternative would be to drop taxes for the lower bracket and give people a zero tax rate.

• 1:41:35Speaker 00

  Okay.

• 1:41:36Speaker 01

  Or those sorts of mechanisms. Zero tax right up to 150K. That, that would solve everything.

• 1:41:39Speaker 03

  And when you do that, you don't have to raise the minimum wage. You can trip those people, that money in their pocket.

• 1:41:43Speaker 00

  They save 25%.

• 1:41:44Speaker 03

  Because they don't have to pay money out of their, their pocket.

• 1:41:46Speaker 01

  Zero out the taxes.

• 1:41:47Speaker 03

  And you can do other things like credits for them. So there's a lot of ways, Jason, to kind of get it.

• 1:41:52Speaker 00

  So let's get, let's get President Donald J. Trump to act.

• 1:41:54Speaker 03

  Let me just finish. Let me just finish. There's a bunch of ways to solve that problem of giving people access to capital and allowing them to progress in a meaningful way without forcing your way into the market, which I think always has adverse consequences. And you can do that through tax policy and incentives and other structures. But let's agree to disagree and move on.

• 1:42:12Speaker 00

  We already have, we already have a minimum wage. So what we're debating here is what should it be? All right, everybody, we'll see you next time on the

• 1:42:16Speaker 01

  Love you, boys.

• 1:42:17Speaker 00

  literal number one podcast in the world. Bye bye.

• 1:42:21Speaker 01

  Bye bye.

• 1:42:22Speaker 06

  We'll let your winners ride.

• 1:42:25Speaker 00

  Rain Man David Sacks.

• 1:42:28Speaker 06

  And instead, we open source it to the fans and they've just gone crazy with it.

• 1:42:35Speaker 00

  Love you, Wes. I'm the queen of Kinoa.

• 1:42:37Speaker 06

  Let your winners ride. Let, let your winners ride.

• 1:42:41Speaker 00

  Besties are gone. That is my dog taking a piss in your driveway. Oh, man. My aviator will meet me at one.

• 1:42:54Speaker 06

  We should all just get a room and just have one big huge orgy because they're all just, it's like this, like sexual tension that they just need to release somehow. What, you're the bee. What, you're the bee. What? We need to get merch. Besties are back. I'm going all in. I'm going all in.