All In Podcast Episode 94 Notes September 1 2022

September 1 2022

• Early pod so JCal can go to Burning Man
  • Sacks has gone previously
  • Chamath and Friedberg haven’t gone
  • What is Burning Man really about
  • Sacks has gone with people who go glamping
    • NY Times article about people ruining BM was due to parties like Sacks’
• NFT market crash
  • OpenSea volume has dropped 99% since peaks
  • Bored Ape has dropped 53%
  • OpenSea raised $300M at $13.3B valuation in Dec 2021 by Coatue and Paradigm 9 months ago now
  • What a boondoggle
  • Is this a category ending crash (and therefore different from stocks, real estate crash)?
  • This is about narratives and collective belief and that drives change - money, government, art all is from narrative and collective belief
  • A lot of these things are the same and when a few people approach it early (Burning Man, Coachella etc) - they are too insecure admit its the same
  • We keep repeating things over and over - we have certain choices and other people repeat to you that your choices are good and you’re convinced this is all worthwhile
• California fast food wages bill
  • 3 things CA did in the last week
    • Will ban internal combustion engines sales by 2035
      • Largest auto market in US
      • Trump and CA fought because CA had better emission standards
    • Create state sponsored org to set minimum wage rate for fast food workers
    • Assembly woman Buffy Wix passed a law through state that social media companies are liable for mental health state of kids
  • So CA has become extremely legislatively active recently
  • So CA is disintermediating the unions? And wants to set the wages?
  • Lorena Gonzalez introduced the bill when they were in the assembly
  • Lorena Gonzales-Fletcher now
  • She asked Elon to leave - and he left - 🙃
  • So this closer to Europe model - negotiations by unions are happening - but now its a whole sector, not company by company negotiation
  • 10 person panel
    • They will not stop at minimum wage, and also working conditions
  • You will be hit if you’re part of a chain that has 100+ restaurants around the country
  • So if you own 2 McDs you will be hit but if you own 20 restaurants of your own chain you won’t be
  • So this is now employees of McDonalds starting their own startup - offering services to McDonalds
    • They think they are 90% of the value of the business
  • So businesses that rely on commodity workers will not be so valuable
  • And the other thing is such businesses will automate
  • Customers will suffer because of higher costs
  • This is just like access to docks in shipping is controlled by government - and so unions can do regulatory capture through government
  • So now its hard to use free market to grow
  • Some besties started CafeX - 2 units at SFO making $73000 last month
  • These laws cap profitability of certain companies
  • EBITDA margins of Big Tech have eroded over time because employees have demanded more and more of those gains
  • So the unfortunate thing is that you will rebuild the business without people
  • Immigrants and students will get hurt by not having entry level jobs
  • CA needs to understand this - these things aren’t free - there are unintended consequences here
  • Elected people are not elected for long term plan of the state - they are elected to represent the people
  • If you’re struggling as a person you will vote for someone who will give you what you want now vs someone who will prioritize the long term
  • So this is natural in democracy where people are struggling
  • Natural Restaurants Association and other orgs are flooding the state with money to lobby - so its a racket, politicians make money
  • If you raise the minimum wage too much then employers will replace minimum wage workers with automation
  • This is not for the benefit of the workers - its for the benefit of the politicians
  • Gavin Newsom is the protection end of this extortion racket
  • Lorena Gonzalez passes this bill on the start and businesses go running to Newsom to help them out
  • The typical govt worker in CA makes 53% more than private equivalent and 100% if you count pensions, benefits, etc
  • Legislature and party are transferring wealth from private to public entities
  • CA is a 1 party state - party machine goes door to door and know everyone
  • LA has a mayoral race - Rick Caruso vs Karen Bass - latter has worked in Dem party forever and puppet of the machine - former has built amazing real estate things in LA like Grove, etc, also has been on a bunch of committees - people love him, he’s the best possible candidate - he understands homelessness, etc
    • On election night he has the most votes, but after ballot harvesting Karen Bass was up 5 points - the party machine is very powerful
  • The party is the platform and the candidate is the app - so a new candidate has to build his own platform
  • Rick Caruso had to spend $100M of his own money - if he loses, his infrastructure just goes away
  • There’s a 2-1 party affiliation in CA towards Democrats
  • Republican party in CA has to move to the center - they are a mess, they are down 30 points
  • There are pro choice republicans in CA but Newsom just has to point to Texas
  • Average person in CA knows someone working in McDs more probably than someone who owns shares in McDs
  • McDs workers will drop - they already got rid of their cashiers
  • Lower end of the market is most sophisticated about margins and supply/demand
  • Number of people employed will drop because legislators don’t understand how well economy works
  • Technology is introduced and technology crater captures 1/3 to 1/2 of that productivity improvement
  • What is CA trying to do here?

    • Net migration out of state last year first time anywhere

    • People here are very rich or very poor and middle class is govt workers

    • Tech and hollywood have benefited from Globalization - massive global exports - market is whole world - super rich have done very well - they have funded the state

    • This is not an economic model for the entire nation - Gavin Newsom wants to take this to the nation - this is not how you get a thriving middle class to America

      
      • These robots will do a better job than manual labor

    • Chamath invested in Relativity Space - 3d printed rockets and engines - in 2014

    • Adam D’Angelo: Moore’s law never ended - it just shifted to GPUs

    • Surface area of compute and innovation has shifted

    • We are at a point now where expert systems are going to be completely next level

    • Governments dont understand how fast they are pulling the future forward that they are trying to prevent

    • Who owns images produced by AI trained on images by Disney?

    • CMA and Medicare will cap big pharma price to $2000 instead of $2.8M for certain drugs - if that happens, geneticists will lose job coz these companies will go to AlphaFold

• Zuckerberg on Rogan, FBI interference with Hunter Biden laptop story
  • Zuck told Rogan they treated Hunter Biden story as misinformation because of tip from FBI, they muted the story - fewer people saw it than otherwise
    • The decreased distribution was meaningful
  • Republicans are attacking Zuck, but most people in his position would believe the FBI
  • The issue is the politicization of the FBI
  • NYPost gets the information about Hunter Biden
  • In response 50 former intelligence agents said “this has hallmarks of misinformation” without seeing the stuff (Clapper, Brennan, etc - former agents)
  • FBI had hard drive for a year - sat on it, knew it was authentic - someone leaked it to Giuliani and NYPost
  • They knew it was authentic and played into the narrative of misinformation
  • So people privacy shouldn’t be violated (pictures, etc) but there was Ukraine information there
  • Point: FBI went to FB to censor a story they knew was true - that’s the bombshell
  • Obama also took 30000 documents - he might also have had sensitive information?
  • So Trump did this because he wanted memorabilia - so national archivist just wants them back
  • They have backed off completely from nuclear - its not in the affidavit - they just leaked that to get through a tough news cycle
  • Law enforcement agencies should not be politicized
  • When govt and FBI does censorship - its a violation of First Amendment
  • Social media companies should ask for a court order if they are leaned on
  • Apple did this well - they held the line during San Bernardino situation
• Climate Change

  • We can’t save the planet by destroying the economy

  • Elon just gave a talk saying we still need oil and gas - he’s the leading innovator for renewables - but still saying we need oil and gas for civilization right now

  • Its not just global warming - more severe events that are hurting bottom of Maslow’s hierarchy - food security, safety, etc

  • Because of gas prices going up in Europe, fertilizer prices are going up, because of Ukraine war, so no CO2 from by products of fertilizer production - so can’t use that for Beer - Germans will be sad about not being able to heat their homes and no beer for Octoberfest

  • Scientists in 1988 said ice caps will melt by 2000

  • Political leaders who are trying to create an imminent crisis own beachfront property and fly in private jets

  • There will be a severe impact to food and manufacturing supply chain because of climate change

  • Streams and water flow has slowed in Sichuan so hydroelectric power gone, so factories stopped - so electronics hit - so rippling effect through supply chain

  • China had 70 days in a row of record setting temperatures - assessing crop damage

  • 1/3rd of ammonia supplies have been hit

  • CA grid cannot support electricity consumption - CA Governor Newsom asked people to stop charging electric cars

  • Private market will resolve this problem - people need electricity and food

  • Producers and technologist will see the problem and solve it

    

  • This tongue-in-cheek meme illustrates what is happening

  • Cost of electricity has gone up 46% in the last decade and will go up another 40% in the next decade

  • So 2010-2030 cost will double

  • Even though cost has dropped 90% in renewables

  • We have to spend $2T in the next decade for power lines

  • Hydrocarbons are the only credible bridge fuel we have else we will economically erase parts of the world

  • Net Zero by 2050-2060 is not possible - have to take small incremental steps and many of them

  • Cannot let people guilt trip you - entire continent of Europe made this mistake of listening to stupid people

  • CA has decided to keep Diablo canyon reactor going

  • Green Nuclear Power succeeded in keeping nuclear reactor going

  • Japan will build more nuclear power plants - they had Fukushima (Germans stopped their reactors because of Fukushima, Japanese are creating new ones)

  • Fukushima happened because of insane tsunami that triggered an earthquake

  • Organizations were shamed into turning these things off - that is not the way to make decisions

• Gorbachev death 😟
  • Political Reform - Glasnost, Economic Reform - Perestroika
  • Margaret Thatcher told Reagan to reach out to Gorbachev and so they wrote a bunch of treaties
  • Watch “The Day After”
  • Reykjavik Summit
  • 1989 the Berlin Wall came down, Warsaw Pact, then Soviet Union collapsed
  • Gorbachev got a lot of credit for helping end the Cold War
  • And now 30 years later we are back in a Cold War
  • Have the successors of Reagan and GHW Bush done a good job - Reagan ended the Cold War and we are back in the Cold War
  • Gorbachev won Nobel Prize
  • Precursor to Perestroika and why he did it
  • He ran an open politburo with debate and promoted a lot young people
  • USSR at the time had poor work ethic, terrible productivity and horrible goods
  • At the end of USSR people thought they had no agency in the outcome
  • If governments get too actively involved people get dissatisfied
  • Nanny states do not work
  • Soviets used to use 5 year plans run by the government - this did not work
  • Free economy won the battle 30 years ago
  • And now 30 years later politicians want to do socialism again inspite of example after example of how it doesn’t work
  • People here don’t get it - Russia had food lines and rations with long lines in the 1980s
  • Gorbachev knew the system was collapsing
  • He wasn’t a democratic freedom fighter necessarily and he capitulated before he lost
  • He acted decisively - didn’t use violence and repression to keep things going
  • But if he wanted to keep communism going he would have
  • Reagan deserves credit for arms build up - he was on top of a productive capitalist system that helped him - he took the chance at a deal when Gorbachev gave him
  • Biden cancelled American energy independence when Natural Gas and fracking were banned
  • Let capitalists and free market economy go, it will solve your problems for you
  • Politicians in CA think they can run fast food businesses better than the people running them
  • We will know in 3-5 years that these policies won’t work and will accelerate hell scape these people are trying to avoid
  • Free market system leads to more wealth and national prosperity - we are forgetting this - we are now abrogating every treaty that Reagan and Gorbachev signed - now our nukes are pointed at each other - why get rid of the arms control treaties
  • We are 15 times richer than them - but they have 6000 nukes
  • Gorbachev was a communist and an heir to Stalin and yet Reagan was able to sign a deal with him - we don’t have to believe that Putin is a madman and uncontrollable
  • Gorbachev was asked about NATO expansion - “you cannot humiliate a country this way and not expect no retaliation”
  • Baker made the promise to Gorbachev - not 1 inch eastward
  • Ronald Reagan won the Cold War without firing a shot, gave US biggest economy it ever had, ended inflation/stagflation of 1970s
  • Reagan and Clinton since 1950 - easily top 2
  • Happy Birthday Chamath!