Ep. 1368: Seth Levine Interview with Michael Covel on Trend Following Radio

My guest today is Seth Levine. His day job is as a partner at Foundry, a venture capital firm, which he cofounded in 2006. Today it has nearly $4 billion in assets under management. He is also the co-founder of Goodbread, and the co-founder of Pledge 1%. Seth also spends time as an advisor to entrepreneurs and policymakers in the U. S. as well as globally. The topic is his co-authored book Capital Evolution: The New American Economy. In this episode of Trend Following Radio we discuss: America on the precipice Messy middle of capitalism Immigration and border policy Diversity, merit and DEI Governance, safety and rule of law Jump in! --- I'm MICHAEL COVEL, the host of TREND FOLLOWING RADIO, and I'm proud to have delivered 10+ million podcast listens since 2012. Investments, economics, psychology, politics, decision-making, human behavior, entrepreneurship and trend following are all passionately explored and debated on my show. To start? I'd like to give you a great piece of advice you can use in your life and trading journey… cut your losses! You will find much more about that philosophy here: https://www.trendfollowing.com/trend/ You can watch a free video here: https://www.trendfollowing.com/video/ Can't get enough of this episode? You can choose from my thousand plus episodes here: https://www.trendfollowing.com/podcast My social media platforms: Twitter: @covel https://twitter.com/covel Facebook: @trendfollowing https://www.facebook.com/trendfollowing/ LinkedIn: @covel https://linkedin.com/in/covel/ Instagram: @mikecovel https://www.instagram.com/mikecovel/ Hope you enjoy my never-ending podcast conversation!

• 0:00Speaker 00

  My guest today is Seth Levine. He is the author of a book called Capital Evolution, The New American Economy. He also happens to be a longstanding venture capitalist. Interesting guy, interesting background, kind of a heavy conversation, diving right into the deep end of American capitalism, American government, American politics, American life, American culture, the good, the bad, what can be improved, what maybe won't be improved, all kinds of topics today. Without any further delay from me, let's jump right into my guest today, Seth Levine.

• 0:50Speaker 00

  I'm not going to take you line by line through the book, but I think where you start with this notion of we are on the precipice, and I feel that, and I don't even live in America, right? I'm in Ho Chi Minh City, Vietnam, but I'm still connected and I can see the intensity, I can see the disagreement, I can see the polarization. I grew up in the Washington DC area, I know something about politics, I feel like things have gone in very different directions. If I had to roll forward a handful of years, I don't know how many, probably in my lifetime, that I see some serious disagreement in America where maybe it results in heavy

• 1:34Speaker 00

  conflict. That's where I'm at right now, that's what I see. What is your perspective? Because when you say we're on the edge of the precipice, in a way, it sounds similar.

• 1:42Speaker 01

  Maybe I'm naive about it. I'm an optimist, and what we write about, we talk about being on the precipice, but ultimately Elizabeth and I, whoever the book was, we're hopeful people, right? So the book is more upbeat than that, but it feels like we're in a moment of change. And what we describe is this era of capitalism, neoliberalism, that lasted for about 50 years. And actually, if you think about it, probably ended, I don't know, five or six years ago, right? And we're now in some messy middle between. That and whatever comes next. What that is something that at least is really important to talk about. Because we have a choice to shape it in the way that we want. A little bit of the fracture that we see in our politics is actually reflective of being in this messy middle.

• 2:25Speaker 01

  And frankly, reflective of some of the shortcomings of neoliberal capitalism, particularly around the middle class and stagnant wages and increases in debt and all of those sorts of things. And it reached a breaking point. And you see it on both the left and the right in the rise of populism, right? Where people are saying, hey, the system isn't working and something needs to give. And what's interesting is it's the antecedents to that are the same, right? Whether you're on the left or the right, things are too expensive, the job opportunities aren't there, et cetera. And then, of course, their prescriptions for what's wrong are very different, right? On the right, it might look like there are too many people coming into the country and they're taking your jobs. And we outsource manufacturing and on and on and on. On the left, it's college is too expensive and it should be free.

• 3:10Speaker 01

  And your rent is too high and that should be controlled somehow. And whatever, transportation costs too much and that should be free. There's probably grains of truth in all of that. But they all fall into this sort of grievance politics. And my hope is we can get past the grievance part of this and actually talk about maybe constructive solutions. But I think that's what you're sensing, right? Is this moment of transition and this sort of anger and grievance. Yeah, that's everywhere right now in the US. It's hard, actually. I'm a little jealous that you get to sit outside of that. But it's somewhat disheartening to hear that you feel it even though you're thousands of miles away.

• 3:44Speaker 00

  The most interesting thing about living in Asia for over a decade is the nature of the culture, the people, and especially being in what I can refer to as a homogenous society. So I'm the interloper. I'm the guy that has to fit in, play by the rules and do as, for example, Vietnamese culture dictates, or they're not going to keep me. This also applies to Japan, China, Korea. And whether you call these countries, they're all one-party countries, essentially. Regardless in Asia, that's just how it works. The culture kind of binds people together on all fronts.

• 4:26Speaker 00

  Living in that environment and then observing America, the optimism for me is not there because I just see that if you take too many different ideologies, too many different peoples, and put them in one melting pot, I don't know why necessarily we should expect that there's going to be a good result. It does seem like we're at a point where all of those tensions are rising to the surface. They're out in the open and it does look like a balkanization to me.

• 4:57Speaker 01

  Our greatest strength is our greatest weakness. The great strength of America is this entrepreneurial spirit, this sort of, I don't know, this melting pot idea. And it also at times is our greatest weakness, right? It is much harder to govern and to, in some respects, live in a society that is this sort of amalgamation of all sorts of different cultures. In many cases, that can be an incredible strength and certainly historically for the US has been incredible strength. And we're at a moment where people are kind of questioning that. We'll get past that, but you're absolutely right. You don't see that really in any other country, but especially in Asia. Very homogenous, as you just described. And that leads to different sets of challenges, but very different kinds of challenges that we have.

• 5:42Speaker 01

  By the way, your point of sort of one party rule, that can certainly lead to some things that are actually, in a weird way, positive. I'm not advocating for it, but the planning cycles for something like China or some of the countries in the Middle East are decades long, right? And we struggle with one administration to the next, right? You think about the last eight or so years in the US, we've bounced from Trump to Biden, now back to Trump, right? The policies are changing left and right. It's really hard to make long-term plans as a business person in that kind of environment. And you've got to take the good with the bad. And again, I'm an optimist, so we'll get through it.

• 6:14Speaker 00

  If I read between the lines and not even necessarily between the lines, some direct statements from you, I would hazard a guess that if I was describing your beliefs to the audience, that you are definitely to the left, left of center, and probably not a fan of Trump.

• 6:29Speaker 01

  Yes, but I would describe myself as pretty centered. I'm unaffiliated is what we call it in Colorado, which is independent. I would say that I identify more with democratic policies. And certainly, if you look at where I've given money in the last couple of cycles especially, I spent entirely Democrats. So that's absolutely a true statement. One of the things, though, that I think is true about Trump, which is sometimes hard for my friends who are also Democrats to hear, is that I actually think Trump does a really good job of identifying challenges. In many cases, the root cause of some of the challenges. I think his prescriptions are often off-base.

• 7:08Speaker 00

  Give me an example of one of the challenges and give me one of the examples of what you perceive as a prescription off-base. That will be helpful.

• 7:14Speaker 01

  Absolutely. Listen, I actually think a lot of what Trump has identified is not off-base. So take immigration. Particularly the southern border was too porous and open. We did not have an immigration policy that made sense. Without question, and Trump identified that early. I don't love the language he used. There's a lot of things about it I didn't like. And by the way, the solution, which is having these ICE agents run around the streets of America without badges and masks on, like that is not at all the way to create a holistic immigration policy. But he did correctly identify that we needed to rethink the immigration system. By the way, he recently just announced that we were going to start charging $100,000 for H1B visas.

• 7:56Speaker 01

  Again, the H1B, he identified a problem. The H1B visa program has absolutely been abused and should be reformed. I don't personally think the $100,000 idea is the right reform, but at least he's talking about it. He identified, I don't know that he's going to do anything about this, again, back to stick on immigration for just a second, this idea that we don't just staple a green card or at least a five or seven-year visa to every, certainly advanced degree student that gets a degree from a US college. I don't understand that. I've heard him talk about it. It doesn't make any sense why we don't do that. Again, he identifies the problem. Even something like tariffs, right? This notion of is it okay to use tariffs as at least a tool in your foreign policy?

• 8:39Speaker 01

  Yeah, actually. And did we maybe let this sort of globalization go a little bit too far? We stretched some supply chains a little bit too much? We maybe outsourced some things that we might not have wanted to outsource? And when pandemics hit and things like that, we can't actually create or manufacture some of the goods that we need? Again, correctly identify that. Do I think the way that he's willy-nilly imposing tariffs makes any sense? I mean, to your point about being in Vietnam, if you want to move people away from China, should you tax or tariff Vietnam higher than China? Like, no, that doesn't make any sense to me. Trump has a sense for the sort of the pulse of the nation in a weird way,

• 9:20Speaker 01

  and he identifies challenges. He's just often a little bit off on the solution. By the way, another one where I think he's actually been closer to the right solutions, from my perspective, has been his policies around AI and crypto, for example. We went way too far in the wrong direction under Biden, and Trump correctly identified that these are strategic areas for the United States. Quantum would be another one. And we need to be careful of it.

• 9:45Speaker 00

  Follow up here on something, though. You mentioned, okay, supported the candidates on the left for the last bunch of cycles. And you say, hey, we went too far on immigration. But if Harris won, none of this immigration stuff would have stopped. That was not an issue. To me, where does that all lead? Because, again, to the people on the right, they feel like if Trump was not elected, it was surely not going to stop. And if it didn't stop, we talk about America as the melting pot in diversity, but we can all look at what immigration has done to the changing demographics of America. And it's radical in three or four decades. So now, some people might say that's fine. Other people are going to say it's not fine. But it's definitely a radical change. How do you address that? Because ultimately, if Harris won, there was not going to be an immigration change. It would have been a wide-open border.

• 10:31Speaker 01

  Yes, she was a flawed candidate. One of the challenges that a lot of people who are like me in the United States, which is by the way, a pretty large percentage of the voting population, who are somewhere in between, struggle with not identifying with either party and then struggling to pick which one to vote for. In my case, they didn't struggle all that much because I really just found Trump himself distasteful. If they had run someone else as a Republican, I probably would have had either a harder time or would have considered voting for them. But you're absolutely right. This is one of the challenges of the US political system is that we've polarized in such a way that there are lots of people that call themselves Democrats that I don't identify with.

• 11:15Speaker 01

  And by the way, the book that I wrote was in part a defense of capitalism because I felt like it needed to be defended, right? If you ask people under 40, something approaching a majority don't think capitalism works, and they're looking for something else. And that's why you see people excited about Bernie Sanders or Mumdani in New York. And that, I don't identify with that at all. I joke, I'm a venture capitalist by my day job. And so I'm a capitalist by job title, right? I really believe in capitalism deeply. And in fact, we start the book with a full-throated defense of capitalism. So we want to set people clearly with the idea that what we are talking about is very much capitalism.

• 11:56Speaker 01

  It's just not exactly the capitalism that we've been operating under for the last 50 years. I struggle because I don't have a natural political home because I do embrace ideas from different places.

• 12:09Speaker 00

  But if you say you choose the left for your voting and your money, that's a home. I mean, you know.

• 12:12Speaker 01

  The people that I'm supporting are people like Alyssa Slotkin or Abby Spanberger, people that are, might have even been independents until they had to run and they chose a party one way or the other. One of the things that's interesting about US politics is that Republicans have become, at least by my reckoning, a bit more homogeneous around sort of the MAGA movement. And Democrats are all over the place, right? And so you have, again, Abby Spanberger is going to hopefully win the In Virginia, she's a very moderate ex CIA Democrat. And right, and she's in the same party as Bernie Sanders.

• 12:49Speaker 00

  I grew up in Vienna, Virginia. Okay, that's my hometown. So I've lived there for over 30 years of my life. There is absolutely nobody on the right in the state of Virginia that thinks Spanberger is a moderate. Nobody at all, including me. Okay, there's nobody thinks she's a moderate.

• 13:03Speaker 01

  Oh, man, maybe that says something about the Democratic Party.

• 13:06Speaker 00

  That's why I'm pushing back a little bit on the whole thing. Let me go to the word capitalism for a second. So I caught this even before you're getting on the conversation today. Somebody, I'm not sure who it was, some podcast, and again, I don't have the verification of it, but that individual, I would trust it was a fair number. Thirty seven percent of the US economy is government spending and whatnot. So like from a capitalism perspective, I don't even know if we're in capitalism right now. And then if I look at something like of the course of my adult lifetime in my 50s now. If I look at how interest rates have just as one issue since the dot com era have been manipulated to certain ends. And of course, I know you talk about Friedman in your book and whatnot. And he was a big fan of, okay, let's manipulate the rates to the proper whatever.

• 13:51Speaker 00

  How is that capitalism, this rate manipulation for decades upon decades to some end? The government spending that goes on. So I was thinking you have this idea of a capital evolution, looking at capitalism different. And here I am sitting here going, I'm not even sure we're at capitalism anymore.

• 14:07Speaker 01

  The problem is actually even worse than what you described. It is in the sort of high 30s. But it's worse than that if you count sort of government adjacent, right? So people that maybe they don't work for the government, but they work for a contractor who is paid by the government, right? It's in the 40s and maybe in the mid to high 40s. It's way too much.

• 14:23Speaker 00

  This is why in the DC area where I grew up, you now have houses that were sold for a couple hundred thousand dollars in the 90s. Now selling for 3 million just because of their proximity to DC.

• 14:36Speaker 01

  It's disgusting, Michael. I'm a fan of more limited government. Government's neither the solution nor the problem, but I believe we have too much regulation. I believe the government is simply too large. That becomes a hard challenge for people to get their arms around. And by the way, I don't think that the deficits we run are sustainable. I mean, there's all sorts of things I would love to change about how we operate as a government or as a society. And for whatever reason, we haven't been able to effectively have those conversations because either the defense budget is completely untouchable or whatever, certain social programs we couldn't possibly think about changing, even though they were all put in place, whatever, 80 years ago. That has led us to this moment where our economy is not working in the best way that it possibly can.

• 15:21Speaker 01

  And by the way, the solution to all of this is probably painful. I mean, maybe we increase productivity and that would be the nice way out of this. But the other ways out of it are we default on our debt, which presumably we're not going to do, or we inflate our way out of it, which is not going to be fun for most people. For asset holders, it might be fine, but for everyone else, it's going to be really challenging. And your point about the central bank is an interesting one. And the other thing about interest rates, there's this whole argument about how independent it should be and how manipulated is it? And of course, it is manipulated, right? We just saw that there was a rate cut today as we're taping this. But interestingly, the actual rates that are affecting short-term loans for consumers are much less influenced now by the Fed funds rate, which is really the rate that banks

• 16:05Speaker 01

  pay back to the Fed for overnight borrowing. I mean, it's been interesting to see that. It maybe suggests that both that the interest rate and the Fed are less important, their balance sheet is important, but the rate setting may be a little bit less important, and that maybe the market is actually going to make its own decision about the right level for rates. That's probably a good thing, right?

• 16:24Speaker 00

  Look, after witnessing the Fed rate decisions since, again, the dot-com era, yeah, anything to take the power away from the Fed, I mean, frankly.

• 16:33Speaker 01

  So I talked about my voting. I'm curious about your voting. Did you vote as an S-Pat? And who are you partial to? I'm guessing the way you're pushing back that you're more partial to the Republican Party, but I'm curious about which issues.

• 16:44Speaker 00

  I grew up in, like I said, the Northern Virginia area, and that was a primarily kind of a moderate Republican-type place. Both Bushes were supported and whatnot. And I kind of went along with that. I was like, oh, okay, this makes sense to me. And we'll get into this another issue, but I never really understood the Left's desire to not really focus on merit, and that always bothered me. But I would have to say that once I saw the early 2000s, the wars and whatnot that took place, and even Bush in the 90s, all that kind of stuff, I was like, okay, this is not my team. I'm not a neocon. None of this makes any sense to me. As an independent entrepreneur, you watch the social media and the online stuff, the

• 17:29Speaker 00

  grip started to take place, the censorship grip, the cancel grip. Clearly, that was one side. That was the Left. That was not the Right that was doing that. You get to a point where it was pretty obvious why Trump got elected the first time, and it was pretty obvious why Trump got elected the second time. Because the Left was not putting up a candidate like, for example, whether people like him or not, you know, Mario Cuomo, or somebody that just talked plainly. The Left was clearly putting up candidates that were chosen in a lab to meet the requirements of their diverse population that was voting, and it always just seemed disingenuous.

• 18:10Speaker 00

  If we really go back in time, would JFK ever have gotten nominated or elected in the current Democratic Party? No way. Even LBJ, who I'm not a fan of, LBJ would have never gotten elected today, you know?

• 18:25Speaker 01

  Well, imagine a Mitt Romney running on the Republican ticket right now. It's just we're so far away from those days. Even a Reagan decides that.

• 18:32Speaker 00

  That was the part that maybe the left was not seeing is that the right that was waking up was like, hold on, we don't want any more Mitt Romney, George Bush replacement. We don't want any more of that. We don't trust any of that. That seems like the left to us. And so I think Trump is the perfect storm to walk into whether or not he can execute, and we know how hard it is to execute. Whether or not he can execute on everything is one issue. Like you said, he is able to read the pulse very well.

• 18:59Speaker 01

  Yeah, absolutely. The execution question is a big one. I mean, we all watched with great interest the sort of the Doge stuff. People forget was initially an Obama department, was renamed. I hope that everyone was rooting on at least the concept behind those, right? Which is that we should be critical about how we're spending money as a government and make better choices. Now, they ran through a bunch of departments and I don't know, that may be more of a rabbit hole that we want to get through. But it's clearly it's really hard to wrangle in the federal government because and you would know this better than I do, just based on where you grew up. It's just it's like a monster that exists to feed itself. Bureaucracies rarely shrink, right? It's really hard to rein them in. And maybe that goes to your question around, are we already past capitalism a little bit?

• 19:40Speaker 01

  Because we have this sort of government-supported society now with 35% of the workforce directly working for the government and some other really big percentage adjacent to it. And those are that that's a sort of a scary way to think about it. But we've got to figure out a way to rein all of that in. And maybe the answer is companies need to assert themselves. And that's a little bit of what we're seeing right now is the sort of rise as government becomes less trusted, as media now for lots of reasons becomes less trusted. The companies and the CEOs of those companies are rising up to take stands on issues and be the stewards of the economy in some ways.

• 20:15Speaker 00

  Interesting point. You brought up an issue in your book. You talked about the Trump administration pushing on the banks and some firms. You talked about the notion of backing away from diversity pledges. And that's something we haven't talked about yet. Most people I know are observing. And it's definitely boiling in America, whether it's the SCOTUS decisions. I saw, for example, Harvard has now seen their Asian student population has now gone up because of the most recent SCOTUS decision. In a perfect world, and here I am in a place where there is really no safety net. You hustle, you make it happen. There's no organized set asides.

• 20:57Speaker 00

  You say in your book, you say racism is America's original sin, a topic that the country continues to grapple with. But if the solutions, or the, I guess, solutions is a good word, if the solutions are forced diversity, whether at the government level, in the universities, it's been hog wild for decades. I've got nieces and nephews in college. For sure, they both dealt with that issue in the last handful of years, and it affected the schools they went to. How does that get resolved? If companies say to themselves, "We don't like past, quote, injustices, so we are going to take initiative to do certain things." And therefore, when we are faced with the choice of deciding between a candidate,

• 21:41Speaker 00

  we start to look at factors beyond merit. It's the part the left doesn't see that's causing the right to get very agitated.

• 21:49Speaker 01

  Clearly. And it feels to people like some people get to cut in line. It's such a challenging topic. Let's try to pull it apart a little bit. We've got a little bit of time. And this is a super thorny one. I would start by just saying, as a general matter, government intervention should be the least amount possible. As a general rule, when people don't like to be told what to do, and the government generally works better when it's in nudge mode, not requirement mode.

• 22:18Speaker 00

  I just had Richard Thaler on the podcast recently.

• 22:20Speaker 01

  I listened to it because I was a psych and econ major myself back before that was even a thing. And Thaler and Conant, of course, but Thaler is like a hero of mine. And so I listened to a handful of your podcasts as I was getting ready for this. And I saw the Thaler one as I was flipping through it. I loved it.

• 22:36Speaker 00

  You have the much thornier topic, though. You know that.

• 22:39Speaker 01

  Fair enough. And he's like an elder statesman. He's fantastic. But yeah, this is partially why we wrote the book, not the DEI topic, right? That comes up in the book, but it's not a sort of central theme. But we wrote it because this is like a thorny topic. And part of why I wanted to write it and Elizabeth wanted to write it is we had very confused views about this. And we wanted to try to shine a light on how, what we really thought. And our way of doing that is to write. So that's partially why we did it. So back to the DEI question, here's how I'd frame it for you that's maybe a little bit different. Because I agree, when you start getting into quotas and you start getting into the specific requirements and things like that, it can get problematic. And it's also okay to acknowledge, I don't know if you read, there's a great book by Adam Grant.

• 23:22Speaker 01

  It's pretty recent, actually, in the last couple of years called Hidden Potential. And it talks about like the journey that one took is sometimes the most important factor. And I lived a little bit of this. My very first job out of college, I worked for Morgan Stanley, a big investment bank as an analyst. And that's a very competitive program. And basically they only recruited from schools that were schools I couldn't have gotten into Harvard, Yale, et cetera. And they had a small number. There were like eight of us in a class of 115 that had gone to schools that weren't recruited schools. I thought that I was going to be inferior, frankly, to all of these other people, right? Because they had all gone to schools that I couldn't have gotten into. Literally not a single school on the list of schools they recruited to was a school that I felt like I could have gotten into.

• 24:06Speaker 01

  What I learned there actually was that sort of the journey matters. Turned out that being one of the eight kids that got in from whatever it was, 30,000 applications they got from all the other schools in the world. They weren't the whatever 25 schools or 20 schools they recruited from. Turned out to actually be like a better indicator of success. Than being the whatever seventh kid that they hired from Harvard. There is something to be said about that journey. What's fair in considering admissions, I think about just my own hiring. I care about how someone got to where they got to and what they had to do to get there. And that tells me something about them and their character.

• 24:48Speaker 01

  And even if they maybe didn't quite achieve as much as, let's say, someone else that I'm talking to, but who started with many more advantages. I still might decide I want to hire the first person because I believe that the grit and the hunger that they had and the journey that they went through, to me, it was more impressive. It is okay when you are, let's say, a college admissions officer to say, hey, I'm going to look at the whole person and I'm going to take into consideration. It's not just a formula, right? There's a reason why admissions isn't just, for most colleges at least, isn't just SAT score times this weighting, plus grade point average times this weighting, plus strength of SA times this weighting, and then we say yes or no, right? So they consider other factors. So I believe that's true.

• 25:30Speaker 00

  On some of the college admissions stuff, we've gotten the differential between SAT scores amongst various groups is radical. I'm an underdog, so I appreciate what you're saying. And that's how I look at it from my perspective, from my life. However, if it's Harvard and you're accepting the best of the best, and the best of the best is judged by your scores, even though I wasn't getting accepted to Harvard, I like the idea that merit is still a thing. And oh, by the way, speaking of merit being a thing, in the fall of 2008, if there was merit, all four investment banks would have gone out of business, not just two of them. Morgan Stanley and Goldman Sachs would have been gone too. They were saved by a non-merit system. They were saved in a way that I despise too.

• 26:15Speaker 00

  A lot of this kind of like picking the winners thing, that goes on across society. You know, you just say to yourself, hey, we got a market. If the market was going to put all four investment banks out of business in the fall of '08, you know what? I was fine with that.

• 26:29Speaker 01

  It's interesting you bring that up. If I were to say, where did the rise of this sort of current incarnation of populism came from? It came from that exact moment. All these people were losing their homes and no one was held accountable at any of the big financial institutions that were at the heart of the problem. That is the origin of our current politics for exactly the reasons that you just described.

• 26:53Speaker 00

  I would argue, if you take it back to the dot com era, okay, the early 90s, there were some rough real estate issues in America, the fall of communism in Russia and whatnot. We get the AOL disk showing up in the mail in 94, and Drising goes public in the summer of 95, and it was game on. And that was one of the most interesting, strange periods ever, that dot com era. But you know, when it burst, and we get to the fall of 02, and the NASDAQ is still down 77%, and the only way they could figure out a way to dig out of it was to crank the rates to nothing and give everybody a home. So yeah, I completely agree with you that what they did with Goldman Sachs, Morgan Stanley at that point in time, and others, was terrible. It was coming out of the dot com era. Ultimately, I might argue,

• 27:38Speaker 00

  we got this huge demographic of boomers. And if these boomers in their 40s and 50s have their retirement decimated, and they're the voters, and they control everything, then how will they retire? And then you roll forward 20 years, and here we are. It still seems connected to those same events that we're talking about.

• 27:57Speaker 01

  Two comments on top of that, if you're absolutely on to something. One is that Americans, but people in general, want the system to feel fair. What you are describing when you say, hey, there's a limit to the differences in whatever, the SAT scores and things like that, recognizing that SAT prep and things like that have different opportunities from different places. What you're really saying is Americans feel like it needs to be, you can take other factors into consideration, but it needs to feel, on the whole, somewhat fair. When it feels unfair, and when it feels out of balance, that's when people get upset. One thing, two, related to your point about the dot com bubble, and then the, and then Zerp era, the other thing that happened at that point was we started pouring, so not

• 28:42Speaker 01

  only did we take interest rates to zero, we also started pouring money into the economy, both in the form of QE, but also quantitative easing, but also in the form of deficits. And the debt really ballooned, absolutely ballooned, from post, if you remember, like, Clinton actually had a couple budgets that had surpluses in the dot com bubble. And then after Clinton, The debt just went up by crazy amounts. Seven trillion dollars under Biden, eight trillion under Trump. It was probably six trillion, seven trillion under Obama. I mean, remember when we were arguing about TARP? And it was going to be too much money because it was $600 billion or something like that. It hails into comparison, in comparison with the amount of money that has been pumped into the system over the years since then.

• 29:26Speaker 01

  It's just absolutely nuts, completely unsustainable.

• 29:29Speaker 00

  From a war perspective too, some people on the left, they might say, well, hey, Mike, this perspective on war, because, look, the typical GOP view, which I'm not, the typical GOP view for much of the last handful of years has been this kind of neocon, pro-war stance. Looking back in hindsight, going all the way back to where I am right now, really, there was no good reason for us to be in any of these conflicts post-World War II. Even, look, there's a lot of arguments about Korea. Even though Korea ended up with a result that a lot of people have liked. If you're really negative, you might say, were all these conflicts just about people making money with the war machine? Like I said, if you grow up in the DC area, you see what the war machine produces, a lot of expensive houses.

• 30:13Speaker 01

  It certainly is a fact that a lot of people made money on war, which is why the Department of War, I guess we're calling it now, but that department's budget is a trillion dollars. It is insane to me, that's how we decide to spend our taxpayer dollars at that level. And I'm not saying we shouldn't have some form of Department of Defense and defense spending, but it's gotten crazy out of control. Of course, what happens? They were really smart about it. They spread out these projects in all these different districts. And it's really hard, people don't like to cancel, House members don't like to cancel projects in their districts. And all these big defense contractors did a really good job of figuring out how to spread that stuff around, and it became locked in, and these budgets became completely locked.

• 30:50Speaker 00

  Let me push you on something, just to get it. Because I think what's nice about this conversation, A, we're not yelling at each other. We probably share a lot of the same views, which people can hear. But then there's going to be areas where we see differently. When it comes to issues like the DEI, the diversity, the affirmative action, right now, we're having this grand debate about EBT in America right now, that perhaps is not going to be paid on November 1st. And is that going to be a trigger to some crazy conflict or something? But the left would generally say, you know what? These programs, we're okay with these programs.

• 31:27Speaker 00

  And the right is going to say, no, we went along with this since the Great Society. It hasn't fixed things. We're at a worse situation. We've created epic dependency. But it does seem like that this is a pretty strong division of ideology, meaning there are two distinct camps here that really are not finding common ground, and I don't think they're going to. What do you think about that division, though? In your book, you use the phrase white rage from somebody else, but you use it in your book. And I said to myself, gosh, why is he not saying black rage or Muslim rage or Jewish rage? Why is it just white rage? Maybe someone's listening to me and they say, Mike, you sound pretty intense. Maybe you've got rage, you know?

• 32:11Speaker 00

  I think this kind of division along race and gender or sex, this is not going away. I just keep wondering, where is the bridge to anything?

• 32:23Speaker 01

  Just to be clear, though, for your listeners, and hopefully they'll read the book, so they'll see it, because that phrase actually comes up quite early in the book. We use it actually as we describe, like, we're in a moment that feels very fraught, a moment of, and we use that phrase amongst a bunch of other phrases that people use to describe where we are in terms of our moment of time.

• 32:42Speaker 00

  Of course, no one on the right would say that's a left perspective saying, that's not a right perspective saying that.

• 32:47Speaker 01

  Yeah, that's interesting. I've never heard the term, in, used in the same context, like Muslim rage versus white rage is a term that, maybe you're right, maybe I get exposed to it because I'm reading the, whatever, the New York Times or something like that. But this question of like, what's the right level of social benefit is an interesting one. Look, social security is a broadly loved program of the US government, right? Whether you voted for Trump or you voted for Harris. That's a little bit of why there was so much consternation around to what extent will that get cut? Because the social security program is in and of itself, is widely popular. I don't quite understand why people on the left, and a little bit on the right, right? Trump himself said, we're not going to touch

• 33:29Speaker 01

  social security, aren't willing to at least engage in a discussion around not just like, what's the right retirement age? And where you get benefits and how do we calculate that? But also, how is the social security trust invested? For example, when we defined the social security program and we said it had to only invest in treasuries. The reason we did that is because we needed someone to buy US treasuries back in the 30s and 40s. And that's because there wasn't this worldwide market for that. There has been for many decades and yet still the social security trust can only buy US treasuries. And just as one example, we're not willing to engage in a conversation around that. I don't understand why we're not willing to engage in a conversation about that.

• 34:10Speaker 00

  I agree. It's a touch different, though, than perhaps the diversity and the set aside issues. I can see what my debit from the government over the years to take and supposedly take from my pay to put into social security. So they definitely take something from me versus a lot of the perspective on the left that I see is something slavery in America. Obviously, there's been slavery all around the world for eons, but slavery in America thus justifies programs that feel subjective today in 2025. And it's something you bring up in your work and these are issues that you touch on. Just explain more to me the perspective from the left on how and why they might think that the folks.

• 34:53Speaker 00

  I'm using terms like left and right, but the folks that disagree with them, how they think those people would actually come around to their perspective. This seems more like a fight than it seems like possible persuasion.

• 35:06Speaker 01

  Part of why there's not this agreement is because we're not debating the same thing. People on one side of the argument see the history in a certain way. And I'm not talking about history being different, but what they're talking about being different. And they live and feel it in a way that feels very proximate to them. Whereas people with another perspective feel like that was generations ago and I had nothing to do with that. Like, why are we still talking about this and what do you want me to do about it? I didn't own any other humans. I didn't participate in these sorts of things.

• 35:37Speaker 00

  For example, an 18 year old, white guy, black guy, Asian guy in America. Instead of those three men, those three 18 year old men competing against each other, that's not how it works in America.

• 35:50Speaker 01

  When you read the book, I hope, I mean, it sounds like you thought it was a bit more left than maybe I thought it was when I was writing it, which is more in the center. There's even an entire chapter, which is Class Matters, which really talks about why actually class is a better predictor of people's wants and needs and desires in life than race is. One of the things that happens on the left is that they assume that race is this sort of unifying factor in a way that it isn't. And then maybe on the right, they feel they just misrace completely. And neither of those two things is true, right? People feel race very directly. I certainly feel my Jewishness a lot these days, very directly, even though I'm not religious. So you do feel that, but at the same time, I don't want to be defined by that. A lot of people don't want to be defined by that.

• 36:34Speaker 01

  A great guest for you would be Coleman Hughes. He's got a podcast of his own. He's written a bunch of interesting books on this topic. We actually talk about him in that chapter, Class Matters. Happens to be a black man. He talked a lot about race being less important than class. And then what happened to him? He got boycotted on Ted. He did a Ted Talk and he got boycotted on their website because people at Ted were upset that he brought this topic up. What frustrates many people of the left, which is that they're not willing to engage in these conversations, they just try to shut the discussion down when people don't agree with them. And I think that's a little bit of what you're getting at. As it relates to DEI specifically, I feel like you've been trying to pull this out of me and I haven't quite figured out how I want to describe it. I believe that, and the studies suggest that people from diverse backgrounds, and

• 37:19Speaker 01

  let's define diversity in this case, actually, pretty broadly. So that absolutely includes factors like race, but it also includes socioeconomic, where you're from in the world, things like that. Teams that are more diverse do produce better outcomes, right? And so there is an economic reason why diversity actually is a good thing. And I also agree with you that when the government or whoever starts imposing quotas, that doesn't feel right either. I'm a fan of the free markets and part of what I'm trying to drive to is companies being more explicit about how and what their values are, and then the markets can make decisions or end it.

• 38:00Speaker 01

  Investors specifically can make decisions about whether they want to support that or not support that.

• 38:05Speaker 00

  I completely agree. Look, if some company, billion dollar company, and the CEO is far right or far left, and they want to have this perspective, and the market gets to value them. That's how it should work. I do think, though, that if you walk out there with that kind of attitude, in this day and age, it catches a lot of flack.

• 38:24Speaker 01

  It's starting to pick up, though, Mike. I really do. I actually believe that the world is moving a bit more in this direction. We contrast two companies. These are private companies, so you don't have a chance to invest in them. But Hobby Lobby and Patagonia, and Chick-fil-A for that matter, are like the same thing. They are values-driven businesses. If you believe that Patagonia is this great business because it's values-driven, even if you don't agree with the values of Hobby Lobby or Chick-fil-A, you should, at least in my reckoning, you should believe that they are also good examples of value-driven businesses. You may not want to work for one or the other, right? You may decide you don't agree with whatever Patagonia is doing. You don't have to wear their stuff. You don't have to buy their clothing as a consumer. You don't have to shop at Hobby Lobby. You don't have to go to Chick-fil-A. But they're examples of the same thing. So I've said that to some friends who are more liberal,

• 39:09Speaker 01

  and they're taken aback by the concept, "Oh, no, but Patagonia is this great company, and they're doing all these great things for the world," whatever. You're like, yes, and it's values-driven because Yvon Chouinard had these values, and his family passed them down, whatever. But the same thing is true of Hobby Lobby, and the same thing is true of Chick-fil-A, just to pick some, like, very high-profile examples.

• 39:26Speaker 00

  It is an interesting time. Again, looking out the window at Ho Chi Minh City, a very homogeneous place. Except tourism has picked up quite a bit. Okay, my background. I'm 50% Lithuanian, father's side. Father's side came early 1900s. Mother's side, been in the country for 300 years, probably British, Irish, et cetera. So I've got some diversity in the gene pool there. But when I look out and I observe what I see in Asia, and I see the often lack of diversity, but I see generally safe cities. I see generally respectful cultures. And then I think to myself, "I feel like going for a walk tonight, name any American major city, by myself."

• 40:10Speaker 00

  In certain parts of certain cities, these are experiences you don't have in Asia. You can really feel nice about a 21-year-old lady friend who needs to walk a couple of blocks at night, or take her bike home, or whatever. It's not something that exists in America. What are the reasons for this, other than saying we've got people together that are so different culturally, racially, ideologically? We put them all in the same place and we say, "Now, you kids just get along." Whereas, if you're in a homogenous culture, where the families are all embedded, it's still got that system built in to where it's, if you step out of line, if you misbehave,

• 40:54Speaker 00

  that's gonna shine bad on you, it's gonna shine bad on the family, the neighbors are gonna look at you, and we don't have that as much in America now.

• 41:03Speaker 01

  Let me push back on that a little bit, because I'm actually glad to find something very specific to, for us to disagree on, because we've been walking around some disagreements in a really interesting and respectful way.

• 41:12Speaker 00

  I don't try to walk around. Hold on, let me let the guests say the guest is trying to walk around.

• 41:16Speaker 01

  But I disagree. I don't think that the root cause problem, and that actually wasn't a negative thing, I actually really enjoyed this conversation. I actually don't think the root cause of some of the sort of dangers in American cities, I don't think that's diversity at all. I think it's just a lack of governance and policy. I was actually thinking about this just yesterday and today. I was in San Francisco, I hadn't been in a while, and San Francisco was bad. It was really problematic, and I was very uncomfortable being there for many years. And then what happens? They elect a new mayor, they elect a new DA. Daniel Lurie brings a much more pragmatic approach, and in months, just months, he's

• 41:59Speaker 01

  only been in office since January, in months, it is significantly better. All of the things you just described, that is true in other places, but I don't think that's the cause of sort of the disruptions in these major American cities. It's a lack of governance.

• 42:13Speaker 00

  When you say lack of governance, do you mean not enough cops on the street to keep people from killing each other?

• 42:17Speaker 01

  Either not enough cops or just no enforcement. San Francisco, part of the problem was the old DA, who by the way was a socialist, which I don't think works at all, decided they didn't want to prosecute what they described as petty crimes. So it was crimes, I can't remember the threshold, it was like a thousand dollars, something like that. And what did people do? They started stealing $999 because they weren't going to get prosecuted for that. It was a terrible idea, basically open the doors for people to come in and start committing crimes. It made absolutely no sense. So yeah, some of that was just policing, but most of that was just they chose not to enforce it. I have no idea why they decided to do that.

• 42:51Speaker 00

  If you generally go around most Asian cities, you don't have cops everywhere. So there's actually a personal responsibility, there's actually an ethic, there's actually a belief of, oh, I'm a good person, I'm not going to just steal, I'm not going to just beat that guy over the head.

• 43:08Speaker 01

  But how much of that, Mike, is because they tend to be more authoritarian in their styles and there are a lot of cameras?

• 43:13Speaker 00

  The proof is in the pudding. Ultimately, do you see, if you go around, I don't know whether it's Singapore, whether it's Beijing, or Shanghai, or Tokyo, even Bangkok, which is a little bit wild, do I see and do I feel the same thing? And look, there's plenty of cameras these days in America. It's an interesting question. You seem to be pushing back a little bit on me saying you don't necessarily buy it. I would say, after being in Asia for a long time, I would say that there is a culture and an ethic that's different in America, where you don't necessarily need to have a cop on every corner to prevent somebody from acting bad, which feels a little bit like what you were just saying to me.

• 43:49Speaker 01

  Without a doubt, you use the word culture, and I think that absolutely is true. The culture in many Asian countries is much more respectful of authority, things like that. And look, the US was founded with disrespect for authority, right? We fought against a king. That is like permeated our ethos for the entirety of the American experiment. You have a very different cultural starting place. One, two, you have different styles of government and different styles of oversight. And there are different ways to police. One is with a camera and one is with someone on a corner. I'm not excusing what's happened anyway, what's happened in these American cities. I literally stopped. Going to San Francisco because I felt like it wasn't safe. I didn't feel like I wanted to spend my time there.

• 44:27Speaker 01

  And I was pleasantly surprised. I had heard this from a couple of friends, but I was pleasantly surprised when I was there yesterday that actually it felt safe to walk around at night. And like I wasn't walking past open air, whatever drug markets and things like that.

• 44:39Speaker 00

  Did we make progress today, do you think? Or do you think by the end of it, we got to that wall that everybody can observe where it's two clear sides? And everyone just says, yep, they're the two clear sides, whether or not you or I are on either side. That's not the issue. But I think we've defined two clear sides in this conversation. And do you think people just say, oh, yep, that's what I already knew. There's two clear sides. And now, when is something going to change or when is something going to get worse?

• 45:04Speaker 01

  What I hope is, and certainly my experience in this discussion, and I hope it was yours as well, was I like getting pushed on these things because it makes me think. Again, it's why I wanted to write the book in the first place. And by the way, Elizabeth and I didn't, my co author and I didn't totally agree on this stuff. And so we had to push each other and decide where we had agreement, how we were going to write with if we did have disagreements and things like that. So that's why I enjoy engaging in these sorts of conversations. And by the way, I do with my friends who are on the left as well, where I'm trying to convince them that some of their ideas just don't make sense or aren't practical, et cetera. And I think a little bit of maybe what's missing in society right now in the U. S. is this cross party dialogue. Because people are struggling to listen to each other. What I wish for our country is that people listened to each other more.

• 45:48Speaker 01

  What I would hope for your listeners is if you heard a couple of tidbits that were interesting, whether you agreed with them or not, and maybe even better if you disagreed with them, pick the book up. I was thinking about this. I just read the new Ben Shapiro book. Ben and I don't have a lot of alignment in our politics, but I read the Ramaswamy books. I read the Coleman Hughes book. I try to find the perspectives of other people who don't agree because what I find is it often at least moves me a little bit. Makes me think a little bit differently about issues. That's really my hope, both in writing the book and in engaging in conversations like this, which is to make people think. Maybe there's a little something there. I want to explore that a bit more. And you've certainly given me some ideas around that.

• 46:29Speaker 00

  One little follow-up question before I let you run. If things were to go in the direction that you don't like, and for example, Trump being president is one, and you've mentioned stuff like ICE, stuff like that. What is your ultimate elevator line that you would say is your biggest fear that could unfold? Because you're a very successful guy, company's doing well, making it rain. So what is your biggest fear of what could happen as the country seems to be moving to the right?

• 47:02Speaker 01

  I worry about the rule of law.

• 47:03Speaker 00

  In what way?

• 47:04Speaker 01

  I worry that the rule of law is going to break down. I worry about crony capitalism, that I'll no longer be able to be in business without essentially bribing people. You see it a little bit, there's corruption already at the highest level of government. I worry that's going to filter its way down to other places, right? Where grease the cop and you get out of your ticket and things like that. I don't think that is good for our economy. There's a reason the Magna Carta sits next to the Declaration of Independence. You need, and the Magna Carta was the document that defines how the merchants would work with the king and this notion of the rule of law, like, that's really important to me. So I worry about that. I worry that the army becomes militarized in our cities and that ICE runs rampant and was pulling people off the streets without due process.

• 47:49Speaker 01

  If you take that stuff to the extreme, it's already, I think, pretty bad, but if you take it to the extreme, that's a pretty scary place. Do I worry about Trump's economic policies? Look, we've had Democrats that had policies I didn't agree with, we had Republicans that had policies that I didn't agree with. As you just said, we went into a bunch of wars that neither of us would have wanted to go into, for example. We get through those sorts of things because those are legitimate differences and the economy is stronger or not stronger, or we feel proud or less proud to be traveling around. That's stuff I'm not worried about. That's just normal ebb and flow of politics. What I really worry about is permanent damage to our institutions and to our economy.

• 48:24Speaker 00

  Good stuff Seth. The book Capital Evolution: The New American Economy, we have just touched on a handful of issues. But look, I think you've jumped into the deep end here. It's beyond just capitalism. You're looking at every aspect of America and how it could possibly be improved. And I'm sure some people listening today are going to say, "Right on, Seth." And some people are going to say, "No way, Seth."

• 48:44Speaker 01

  I hope whichever one you said, you go buy the book and see what you really think. And then send me a note about it. I'm very available online. We'll put it in the show notes. I'd love to hear from people.

• 48:53Speaker 00

  You've listened to some of my podcasts. I've got a diverse perspective and I come at things from my own way. And look, everything about being a 50-something American man seems to get stranger and stranger to me. You've got the optimistic perspective. Bless you. I'm sure some people are saying I'm kind of on the pessimistic Mike's side. But again, the book Capital Evolution: The New American Economy. Seth, where can we send people?

• 49:16Speaker 01

  To find out more about the book, you can go to thecapitalevolution.com. And there are links to where to buy it. There's a bit more information on me, on Elizabeth. And of course, you can also buy it at your local bookstore or on Amazon.

• 49:28Speaker 00

  Cool. Appreciate it, man.

• 49:30Speaker 01

  Michael, this is great. I really enjoyed this conversation.

• 49:38Speaker 02

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