Silicon Valley’s Ultimate Exit: Arguments for and Against the Network State | Balaji Srinivasan
The Hidden Forces podcast features long form conversations broken into two parts, the second hour of which is made available to our premium subscribers, along with transcripts and notes to each conversation. For more information about how to access the episode overtimes, transcripts, and rundowns, head over to patreon.com/hidden forces. You can also sign up to our mailing list at iddenforces.io. Follow us on Twitter at Hidden Forces Pod and leave us a review on Apple podcasts. And with that, please enjoy this week's episode. What's up, everybody? My name is Demetri Kofinas, and you're listening to Hidden Forces, a podcast that helps investors, entrepreneurs, and everyday citizens get an edge by equipping themselves with the knowledge needed to anticipate the challenges and opportunities of tomorrow. By sharing my critical thinking approach and by challenging consensus narratives about the power structures shaping our world, I help you make the connections to see the bigger picture, empowering you to make smarter investment decisions. On this week's episode, I speak with Balaji
Srinivasan, an angel investor, entrepreneur, and prominent futurist who's views on crypto, the future of education, and the network state put him at the forefront of innovation and disruption in money, business, and politics. I invited Balaji on the show to help me work through some of the thoughts and feelings that I've expressed in recent episodes related to the state of our markets and our politics. And while technology and culture may seem tangential to these larger forces that tend to dominate the frame and govern the news cycle, I would argue that they actually run directly through both of them because I think Silicon Valley culture and the ongoing disruptive dynamics associated with social networks, mobile devices, automation, and now cryptocurrencies are not only restructuring and remaking the commercial world, but they are increasingly encroaching upon the traditional assignments and obligations of governments and the state. We see this perhaps most notably in the case of privately issued digital currencies, but I would argue that this culture of disruption runs much deeper and its consequences for society are much broader than most of us realize. In fact, I would argue that what we are living through today is nothing short of a political revolution, and while I think our systems of government are ripe for disruption, I'm concerned that the solutions being put forward by Silicon Valley entrepreneurs, financiers, and the broader commercial sector do not adequately reflect the interests or the concerns of the vast majority of people whose lives would be most affected by these changes. Nor do I think
the implications of such a world for democracy and civil rights have been properly thought out. The second part of our conversation would normally be released on our overtime feed, but Balaji and I didn't begin to get into the network state part of this discussion and its implications for society until the last 35 minutes or so of the first half. So, instead I've put that part of our conversation behind the pay wall and released the second half for everyone to listen to on the main feed. I think it's an absolutely illuminating conversation and Balaji was incredibly generous with his time. If this episode makes you want to dive deeper into the topics we discussed today and you want a transcript of this conversation, as well as all the source material, notes, and questions that I put together and relied on in preparation for this discussion, you can access all of that, either directly through our website at hiddenforces.io, where you can also go through our episode library, or by visiting our Patreon page at patreon.com/hiddenforces.
There are links to both the website and the Patreon page and the episode summary as well as a link with instructions on how to connect the overtime feed to your phone so you can listen to our premium conversations just like you listen to the regular podcast. And with that, please enjoy this enlightening and highly educational episode with my guest, Balaji Srinivasan. All right, Balaji, welcome back. Great to be here. So we were talking about the ... I was trying to focus in on the deeper organizing principle or issue that would make this possible or not possible or create friction, and that ultimately is power. I mean, nation states, nation states are arguably the most powerful
entities on the planet. They control physical space, they can apply pretty much whatever laws they want domestically so long as they can either get consent from their people or they can crush them, one way or the other. Actually, this makes me think about something. Have you ... I mean, you must have seen the Matrix, obviously. Sure. That's one sort of analogy. Have you read Theodore Kaczynski's Industrial Society and Its Future? I am familiar with it. I have a riff on that from a different direction if you're interested, which is ... Sure.
I actually think, I mean, so that happened only about 30 years ago, right? A Unabomber basically went and mailed bombs for a bunch of people to get his manifesto in the Washington Post, I believe, right? And if you think about it, he willing to go and kill a bunch of people for the distribution, and I think about that a lot. For the distribution, what do you mean? Yeah. Well, so in tech and this took me a long time to articulate ... Oh, to get his pamphlets distributed? Yeah.
What a fascinating way to think about that. Right? Wow. So he literally ... At the time, distribution was so scarce that he had to kill multiple people for the distribution.
Fascinating. 30 years ago, right? And now today, anybody can go and set up a YouTube channel and have whatever a million viewers, right? And so distribution went from this incredibly scarce thing that you needed to kill people to get a Washington Post op ed into like ... Or not you needed to, but this guy decided to, into something that was much more abundant where people are now trying to crack down on that, right? And what I think about often when I think about Twitter is I'm like, there's a lot of people who aren't Ted Kaczynski, They might not want to go and kill someone for the distribution, but they'd certainly scream at them online for the distribution. Yeah. Right? And so if you
think about a power law, like when your Kaczynski is all the way out there, their sentence is parse, right? Kaczynski's sentences are grammatical and there are some interesting ... I mean, he's a genius mathematician and he put out some interesting ideas, but he's also a lunatic, right? And I think that that actually describes a significant fraction of the people on Twitter who are extreme attention hounds and what have you, right? Because it shows that this guy is willing to kill for the distribution, what would other people do if not kill? Yeah? Something I've thought about a lot. That's really brilliant. I really like that. Yeah, I tried to get Ted on the show. Really?
When I watched the ... From jail? Oh dude, I tried. I mean, I had developed a good relationship with the warden. Wow. Of this federal penitentiary in Colorado. He was one of the very first guests I wanted on because when I started the ... Was this Supermax? Supermax, yeah.
ADX Florentine? No, I don't think that's the one. Maybe that's the one. Okay. I mean, maybe. I can't remember now the name of it. That's fine. But it was in Colorado and it was a Supermax and they printed out my emails presumably and gave them to him because I find him so fascinating because I think though he was clearly disturbed and in ways deranged and clearly his tactics were immoral to kill people and maim them. He was in many ways I think prescient, and if you read his work between some of the clearly sort of odd deranged kind of insane writings.
Sure. There's this lucid prognostication that I think has in many ways really come true. Now that we're kind of moving off a little bit from the network state, but let's ... Let's talk about this actually, because it is related. Yeah. And essentially if I'm to slightly rephrase what you're saying, Kaczynski is one of the most articulate exponents of what we might call anarcho-primitivism.
And Luddite-ism. Yeah, and anarcho-primitivism, maybe it's a bigger word for the same thing, but it's essentially the idea that technology was a mistake, that the natural state of humanity should be basically being in greenery, that we just need to destroy it all and stop and go back to Eden, right? And the thing about this is the reason that has appeal to some chunk of people is humans, in my view, aren't built to think quantitatively so they aren't built to think about the fact that the nature that they enjoy is a very tamed version of nature, and that truly being in the wilderness with rain lashing down and tigers around is actually not fun, and humans are actually built to be technological species. That's why we don't have fur or claws. Over time, a lot of those things have been pushed off of the mainframe or into devices.
Actually, there's this good book called How Cooking Made Us Human by Richard Wrangham, I believe, where he argues that fire externalized certain enzymes so we didn't need as much energy to digest things. I don't know if you know this book, right? No, I'm actually familiar with that theory. Okay, great. And so probably also true for tool use or whatever. Anyway, so ... That essentially the technologies that we use transform us biologically. Correct. We evolve along with the changes that actually come from our brains.
That's right. That's right. And with that said though, because people like nature, they sort of think oh, this is my map to the anarcho-primitivism kind of camp, right? They think yeah, tear it all down, it'll actually be better. And I actually think that this taps into limbic system things where burn it all down, that's a human thing. Nature,
that's a human thing. Utopian thinking of this kind is a human thing. So, it taps into some limbic system stuff where the natural enemy or the natural opponent of the anarcho-primitivist is a transhumanist, which is much more my camp, right? And interestingly enough, just to kind of maybe abstract that a bit, could you also say that it's really the evolution, the evolution of the human being to such a degree that what you're looking at is a different species, is a different animal. Yeah. Well, so the thing is that how would you measure progress by the year 3000, okay? A thousand years from now. I thought about this a lot and I actually think that the single best ruler, in the sense of a ruler to measure things, like a measuring stick, the single best ruler would be how much math do we know? Do we know new theorems? And the reason is math is cumulative, math is abstract, math is digital. If there's an alien intelligence species, it would know math. If you've seen the movie Contact, it's actually pretty well done in terms
of communicating in terms of ... Sure. Communicating in terms of prime numbers, right? Prime numbers are a universal and a very powerful thing. And so if you say okay, we are advanced in math, that would encompass a transition like the transition from the human ancestor to homosapiens, right? Or there may be multiple human ancestors. There's evidence that Neanderthals are [inaudible] and there's introgression and so on. So, the reason is do we become half machine intelligence? Is CRISPR rolled out? Do we genetically modify ourselves? There's all kinds of possible human futures that may not look very human at all, but how could you say that we've actually leveled up? Well, if you're better at math by the year 3000, then your civilization has advanced in a very fundamental sense. Now there are a bunch of people who'd be like, "Oh, that's so horrible. Oh, I now am back in within the anarcho-primitivists." Right?
But that's kind of like the choice in the sense of we're either going to go towards the stars or everyone's going to kill each other and we're going to regress to this stone age mentality. And I have been surprised as to how many people have romanticized the stone-age thing. They do so, of course, from their fast internet connections and their iPhones and their climate controlled apartments or they're manicured lawns, but romanticize it, they do.
And of course, there's someone who might say, "Well, why can't we just stick in the middle? Why can't we just have washer dryers and cars and lights, but not this crazy like limb regeneration, ocular restoration, brain machine interface type stuff that you guys want? And kind of the answer there is it's pretty hard to stop technology. I mean, you can. You can tear down the Roman empire, you can stop it for a while at the expense of destroying society, and that may be the goal of many folks. And then there's the goal of transcending, and this is kind of what Thiel talks about, which is the race between politics and technology, between those people who basically just want to tear it all down, who would vibe fundamentally with the anarcho-primitivist mentality, and then those people who want to transcend. This is really freaking fascinating. It took us this long to get here. So, I have a number of things I want to point out or questions I want to pose, many or all of which are philosophical. One is all progress good? How do we decide is it universally good simply to progress, and how do we define that? I'm just going to throw that out there.
Then there's another question about what is the good life, right? How do we measure the quality of a human life? What is good? I don't know if you're familiar, you probably have read Nick Bostrom's Superintelligence. This gets funneled directly into thinking about designing intelligence systems and AI. Do we ... And kind of a way to maybe crystallize it is I wouldn't want to go live in the year 3000 with an alien species that derived from human beings, that's very different from me. Maybe they're incredibly intelligent mathematically, but on a sort of psycho-spiritual level, there's no connection there. But would you want to go back to the year negative 500,000, or actually I should look back at the exact history. Would you want to go back
and live with the protohuman ancestors? Live as a muskrat. Yeah, exactly. That's right. No, but I mean, so that's a really great point, and so I guess one of the questions is ... I guess, for sure, this is really interesting. I mean, there's ... A lot of this just has to do with just an innate tension that comes out of moving forward, out of progress and identity, but I think maybe, Balaji, maybe what I'm picking up on here is really when things begin to move too quickly. Well, let me put it in a different way. Like speed.
Let me jump in for a second, right? Yeah. Yeah, yeah, yeah. The fundamental issue is I really wouldn't care that much if the anarcho-primitivists just wanted to go and live in the jungle by themselves and destroy all their possessions or what have you, but that's not what they want, they want to destroy yours too. They want to burn the whole thing down, right? Like fire-- Well, like Kaczynski says you might as well basically scrap the whole freaking system and start over. Exactly. And so these folks are essentially civilizational suicide bombers, right? Yeah.
They are not content with just killing themselves, which you might try to argue them out of it, but it's ultimately their right. You can't stop someone from doing that really. Euthanasia is legal in many places and if someone's really motivated, it's really hard to stop them. Well, also though understandably, they can't live their lives unless they have everyone else adopted as well, because there really is no longer any ... There are very few places where
human beings haven't actually entered and altered the landscape, so I understand their perspective. So, I mean, I understand it, I'm less sympathetic to it because if they want to just take off all their clothes and go and wander in the Rockies or the wilderness and be like Ug and live with stones and try to make fire from that or whatever they can do that, right? Kaczynski actually kind of did that, he had some skin in the game, right? Yeah, yeah, yeah. He was a mountain man for a while. But we know just historically that civilized more technologically advanced societies ultimately encroach on more Aboriginal nativist groups. That's what happened to the Americans. They simply weren't technologically advanced enough to protect themselves from the Europeans, and they ultimately lost their civilization.
Oh, that's true, but this kind of person, the anarcho-primitivist is not really even pro a primitive tribe, right? They're not pro anybody because they don't respect other people's wishes. As I said, if they just wanted to get a group of people and just go ... I mean, you're right, that over the long sweep of history, civilization tends to expand into "uncivilized areas" but there's tons of tundra out there, right? If you've seen a satellite map, there's a lot of space out there which is just basically wilderness and they could go and live there. Well yeah, except there you run into two issues. One, there's very little wilderness. Two, ultimately that level of the way that human beings operate in such vast expanses was because population density was very low. Sure.
Ultimately, the planet's got way too many people to live that kind of life so you'd have to blow it up if you really wanted to live that way. Well, so this is the logic of the anarcho-primitivists. I mean, the thing about it is I encourage it. I mean, it's funny to put it this way. I encourage them to follow that in VR, right? Where they can basically be ... Like Neuralink, in an interesting way. Do you know what Neuralink is?
Sure, of course. Brain surgery. Yeah. Neuralink may give them what they want in a way that they didn't realize it because it gives them a brain machine interface that they can visualize themselves traipsing through the jungle, and they've got their fruits or whatever, and it's the idealized hunter gatherer where they're always perfectly shaved and they never get gangrene. So here ... Basically like ... Go ahead. No, no. You understand my point of view.
I do. I do. I do. So, I mentioned The Matrix. This brings us perfectly to The Matrix. Before we go down this road, I do just want to throw out again, because I think it's an important observation. How much of this is really not about having a problem with progress and change, but when change comes too quickly. Sure. We see this in politics and I think this is what's scary to people as well, it's scary to me as well, that we move into a world where people very quickly disassociate with the physical world. And then I think is ultimately destabilizing and dangerous because we do actually live in the physical world. Sure. So, let me be more sympathetic here. Right?
So as I said, the anarcho-primitivist thing, the reason I bring that up and transhumanism is those are two ... That's actually I think the real pull, that's where I think society is realigning towards. Let's call it technological progressive and technological conservative, right? Interesting. That I think is the real pull, where it is do you push faster? Do you push nuclear power, brain-machine interface, genetic modification, space travel, the internet, cryptocurrency, life extension, limb regeneration, bionic eyes, right? Bionic limbs, all of this awesome stuff. We're going to have sex like they did in Demolition Man.
We're going to put some helmet on and ... Who knows? Who knows, right? But basically do you push all of that stuff or do you pull in the other direction and try to hang on to the current situation, be as Amish as possible, or what have you, or do you try to forge, of course, like the triangulation of some ... Okay, well, we go for it but not quite so fast, and so on, right? Okay. And the way I kind of think about this is
a lot of it boils down, but what's actually kind of interesting is the west is Black Mirror in a way that the global south and much of Asia is not, okay? I think if Asia, especially let's say India, Israel, these countries are more like bright sun than Black Mirror. You're saying we can look at the same objective phenomenon and one, the west, views it in a negative way and the east views it in a more positive way. Well, it's not just the same ... It's maybe the same devices and some of the same technology, but there's a fundamental difference, which is the introduction of these devices, of the internet and the mobile phone and so on, one of the most important facts of the early 21st century is that in China the technological and political capitals were basically in the same place, namely Beijing, right? Because the government saw fit to make sure all the CEOs were in Beijing. I mean, Shenzhen's a capital as well, but it's not the same as Beijing, right? All the CEOs are in Beijing so they can call them all in for a meeting if they need to, the firewall is operational, they kind of set all it up in that way, right? Whereas in the U.S., the technology and political capitals are 3,000 miles apart, DC and SF. And what that resulted in is it results in a situation where tech basically developed its
own culture, right? And one of the things is there weren't enough people who had careers in New York or DC or Boston who had a spouse who went vertical when Google went vertical. And if that had been the case, you might've had a degree of intra household, intrafamilial, offsetting of text appreciation with the collapse of traditional media and traditional academia and whatnot, right? The academia collapse is about to happen. It's in process, but media has certainly happened. Had that happened, had that occurred, had there been a greater degree of not just economic but societal alignment, then the gain might've been ... That the loss might've been outstripped by a gain, and they might've been happier with it, but instead it was 3,000 miles away and it was also something where a tech is very largely populated by immigrants. So, depending on your count,
60% or 70% of tech is it's Indians and Chinese people and Persians and Korean people, Vietnamese, South Americans, Nigerians, Palestinians, Israel, people from all over the world, right? Work in technology, or came to Silicon Valley, right? And so those are just different social networks. They're absolutely not the old money of the east coast, right? They're not the backscratching, they're not the nepotism, they're not the families who were here since the Mayflower or the Civil War. They weren't in the country for a hundred years, they may not even be in the country for 10 years. And so it wasn't continuity. All of these nouveau riche people were not married in, they were not aligned with these old families on the east coast, and so the east coast has just seen its fortunes crater and plummet as a function of this new technology, which is why they're all Black Mirror on everything. Now I recognize by the way, that Black Mirror itself comes out of the UK and so on, but let's say that their vibe is one of Black Mirror because they feel with some justification, right? That basically the east coast or the U.S. can no longer win in a game of free markets and free speech. Wait, wait. So, you're saying that, because this
is something I'm not familiar with, what you're saying is that in the east and Japan and China and Singapore and Taiwan and Hong Kong, et cetera ... Japan is a little different, leave them out for a second, but go ahead. Okay. In rising Asia, but also ... In the tigers and China. In the tigers, in China, in India, and also to an extent, in South America, Africa, a place of Africa, big parts of the Middle East, they've risen with technology.
That's very interesting, and that makes sense, I guess, right? Because their development cycle, they came into developed world status with the recent information technological revolution and the collapse of the Soviet Union and the opening up of global trade coincided with all of that. So, they're more ... Yeah. That's fascinating. That's not something that I'd ever put together, ever. Yeah. So, it's huge. So, I mean, and now would you call them developed world versus I think actually that term doesn't even apply anymore because I now think of it in terms of how many times have you heard of over the last year, year and a half, people say, "Wow, the U.S.
is behaving like a third world country." Right? Well, I've said that before sometimes. You've said it sometimes. Yeah, yeah, yeah, exactly. Because you see the power going out in Texas, you see the fires in California, you see the fact that the public health has gone out. By the way, the public health going out is like the power going out, it's like a public utility. It means the commons are a tragedy, it means the state has failed, right? So when the health has gone out, just like when the power has gone out, you don't expect someone to operate a restaurant. When the health has gone out, they're operating in this biohazard thing where the state was supposed to control that. Public health is both a technology and a state thing, right?
So all these people are saying oh, the U.S. is like a third world country, and so on, and the origins by the way, the term third world came from the Cold War when there was the U.S. and the USSR and the non-aligned countries. Non-aligned countries, yeah. Yeah, or really NATO Warsaw Pact, non-aligned countries, right? First, second, and third world. And third world just became a synonym for poor country, messy country, slums, dirt, et cetera. And today though, really, I think it's better to think about it in terms of ascending world and declining world, because the U.S. is absolutely part of the declining world.
Most Americans don't understand this yet because they haven't been either overseas or they're in denial or it's code for something. How so? Can we distinguish between culture and power? So are you saying, because I would agree that in many ways culturally, the U.S. has been in decline, relative in power it has been in decline, but in the world that we're moving in today, I would argue that the country that's going be best positioned is actually going to be the United States because of its geo-strategic positioning and its geography, and it'92s also its rule of law, its natural resources, et cetera, et cetera, et cetera. Okay, so I actually did a whole thing with Mark Lutter on this because some of what you're saying sounds like the Xi'an thesis. Yeah. Yeah, it is. Yeah. Yeah, it is. It borrows from Xi'an. And others, Tim Marshall and other people who it's very, very geo-strategic geographically focused.
Okay, so there's some good things in ... I have no beef with Xi'an, nothing personal there or anything like that. And there's, I don't know, 10% or 20% of his book that I think has some good stuff on shale oil, and I do agree that that at high enough prices reduces dependence on Middle Eastern oil, right? That part I agree with. However, I disagree with almost all of the rest of it and I can give you certain reasons. Sure. Fantastic. Right? Okay. So, first, basically, so I mentioned this in a Charter Cities podcast a while back,
I can give some links. Which podcast? Charter cities podcast. Okay. With Mark Lutter, but I'll give the quick version. Okay, so first the idea that lots of people is a huge advantage is simply not the case in a robotic era, and like Xi'an quotes, he says, "Oh, China's getting old, and so on." I'm like, China's going to get robots and so are a bunch of the rest of the world. And if you think about Instagram and how Instagram with 12 people was able to beat Kodak, which had probably more than 12,000 at that time, I don't know the exact number, but it's in that ballpark, the scale of people, the number of people you need to do something when it's digital is just far less. And I don't know ... Yeah, in some ways you could say that
lots of people becomes a liability. You could also see it that way. Exactly. Exactly. You are bringing us back by the way to build joy, why the future doesn't need us, where he was quoting Ted Kaczynski and Ted Kaczynski talked about how in such a world people would just become useless eaters and they'd become a liability of the state structure. And then, this was actually going somewhere where I want it to go and I'll just throw it out there so it's there, is are we moving in a world where the elites are going to basically either decide to call the population or they're going to pacify them through VR and narcotics and other neurological interventions. Culled would be obviously really bad. Yeah. I hope not. But what I actually think happens is human needs and wants are endless, and so what I actually think happens is neither of those two, I think if the 1800s was farming and the 1900s was manufacturing, I think the 2000s is going to be the obvious replacement that it's non-obvious is going to be investing.
Everybody becomes an investor and the 99% this century are investors and the 1% are ... So, 99% are capital and the 1% are labor, because investing in something it's very similar to just clicking the buy button on Amazon. It's an unskilled process to just click the button. There's skill of course in picking the investments, but you can just follow a fund manager and give them a cut. And then the 1% are labor, which are the people who are actually motivated and capable of going and building new things. What does that though do for the social contract, right? So we've evolved a sense of morality in politics and a certain sense of obligation, the obligation to the community around us. You're describing an extreme ownership society,
in some ways you're describing almost a narco capitalism, but it's basically a society where everything is based on ownership. Is that roughly correct? And then what does that do for people's standings, quality of life, et cetera? So here's the thing. So, I would actually not call myself someone who idolizes crypto anarchy. I actually believe in crypto civilization. And what I mean by that is there's a lot of good things about crypto in terms of being able to decouple and being able to be "sovereign individual," et cetera. But I think the sovereign
collective has a lot of power to it, more power than a sovereign individual. And also it's more legitimate in a bunch of ways. And it's also more likely to be able to sustain itself. The problem with Ayn Randian objectivism or what have you, I find her books entertaining and so on. I'm not going to be like, "Oh, everything Ayn Rand sucks," but fundamentally just from a
leverage champion, one person can't stand against 7 billion, but a group of people can often, right? And they have a common culture and a common alignment. So, in terms of what does that future look like? I think it looks like something where there are thousands start-up states around the world, start-up cities and city-states and digital states that you can choose from, and you get to the age of majority and just like you choose a university today, you choose the city or cities that you want to go and migrate to. And essentially everybody talks about democracy and capitalism. Those are very important. That's voting with your ballot and
your wallet respectively. But the third force is migration, which is voting with your feet. And with technology today, with the internet, we can design political systems that actually use all three forces and just set the sliders differently. The way I actually think about this is if you think about the root of democracy, the whole concept is based on consensual government, the consent of the governed. And so what I think we want to strive for, what I believe in is 100%
democracy as opposed to 51% democracy. So, in a 51% democracy, 51% can outvote the other 49%. Do you know what Fosbury Flop is? No. If you Google a Fosbury Flop, you've seen it, it's a pole vaulter who just barely clears the bar.
A 51% democracy is like a Fosbury Flop where you just barely get over the bar. It's a minimum amount of consent. And what happens is 49% of people did not consent to that leader. And so therefore they tug and they resist. And so you have to use more coercion and coercion leads to backlash and in the next election- Direct democracy, rule by majority, majority rule, that would be what you're describing.
Exactly, and a bare majority rule is the best technology we had for a long time, because we've had- We've have a Republican democracy, there's not bare majority rule. And it isn't even about the electoral college. And we have a Constitutional government with a Bill of Rights. So, there are lots of things that the majority cannot take away from us as individuals, which is an important distinction. So I think that a lot of that stuff, a lot of the American stuff is great for 1776.
The reason I don't think it applies today, for example, is the entire concept of representative government, well, a lot of it was invented because of constraints of space and time. It wasn't just about being informed. It was that not everybody could make their way down to DC to vote on every issue at every moment. But in theory, you could poll everybody every time.
Now to be clear, I'm not necessarily saying I'm not advocating for 100% direct democracy. I am however saying that some of the reasons that it was designed were due to the paper constraints of what you could do at that time. When people think, oh, how do you modernize the political system? They're like, "Oh, let's put voting online." Right? And that is similar to what we talked about earlier, where you've got paper and you have a scanner, and then you go to a digitally native file and you start thinking about it truly digitally from first principles. So, you have offline voting and you have Estonia, which has e-voting, but it's basically the same system. And then you can think about it from first principles. What does a digital state look like? And so I think a digital state
starts with the consent of the governed and a real people. So, that's a problem today is we always think about politics and why do we think about politics, you're thinking about the law. You're thinking about the state, you're thinking about coercion. You're thinking about a gun as the most fundamental thing. And we've been so habituated to this. I think the way to get something done is to try to get a piece of the state, to be mayor of this, or head of that, czar of this, president of that. And then you've got a
gun to point at everybody who gets in your way. You can coerce, you can mandate, et cetera. If you're CEO of something, though, what you quickly find is your ability to say, "I'm CEO, do it exactly how I want," is actually fairly limited. You have to persuade most of the time. You can't really mandate. And the more your mandate- But you're doing that within a legal structure
that ultimately has the coercive use of force that keeps order. Yeah. Except the thing is so that we are relying way too much. Coercion is a last resort. I'm not an anarchist, but a minarchist or someone who believes, not even just a minarchist, but just from a pragmatic standpoint, the more you coerce, the less legitimate you are. I agree with that. And unless you can coerce, right. And so what we have done is we've gotten ourselves into a state where people don't consent anymore and the less consent, the more coercion and the more coercion, the less consent.
It's a negative feedback loop. And so a way around that is you build internet polities. So, let me give you a concrete example. A lot of the stuff is in my book, but a concrete example. So, Austin, Texas is running out of power. San Francisco has this terrible school board. What you could do with the internet is rather than wait for an antiquated two or four or six or whatever year election cycle, et cetera, you can just set up the shadow school board. You set up the shadow government of whatever region. And you just start
organizing people in a hierarchy where just like you start a company, you declare yourself CEO, you declare yourself the head of this community organization. You don't necessarily need to call it the shadow government. You can call it whatever name you think is suitable. Maybe it's the community of work or what have you. And then you start acquiring people and you might say, "Well, what do they do?" Well, you're not a government, are you? You can't tax people. You can't point a gun at people. You don't have police or whatever. And you say, "Well,
guess what? You focus on everything you can just convince people to do through volition rather than coercion," which is actually a lot of things. For example, you can organize everything from babysitting and childcare when folks need to rotate because they're working from home. You can organize meetings where people align on what the curriculum is. Right. But the world... So, what I'm challenging is that,
first of all, we know historically that there's a point of inequality in quality of life, at which point people will begin to employ violence in order to obtain what you have. Does that make sense what I'm describing, or do you not agree with that? I think that that is actually more elite on elite violence in the sense that I think most of the people who you hear, if you actually go and analyze it, and you actually look at who the author is of a given piece, most of the people you hear talking about the rich are the folks who are angry that there's some people who are richer than them. Many of these people who are so angry are born to old money, especially- What about labor movements in the late 19th century? Well, actually, I mean Marx or Engels those guys were-- They became...they became very violent. Marx or Engels--
No, not Marx or Engels. All the workers in the-- Yea, yea, but the leaders of those movements. Yeah. But they were tapping into a popular movement. They created that popular movement. But you don't think- Okay. Ok, so, let's say, do you think Donald Trump created the Trump movement, that he wasn't actually capturing and politicizing something that was already deeply there? Yes, there is public sentiment. But I think that a lot of demagoguery taps into something that is a mile wide and an inch deep, and most of it is emotionally aligning people against something rather than economically aligned them for something. It's actually
relatively easy to get people mad about, whether it's immigrants or entrepreneurs or this or that group of the day, and to get them to destroy something. And of course the US, now that a big chunk of the country doesn't like immigrants and a big chunk doesn't like entrepreneurs. It's not a great place to be an immigrant or an entrepreneur. I haven't sat out to plot this, but I would imagine that there's a very tight correlation between economic conditions, economic disparities, et cetera, and the rise of populous demagogues and even international conflict between countries. So,
could Hitler have taken over Germany if he hadn't come in 1933 and it was 2000? In other words, there is a strong correlation between the underlying conditions and the emergence of a authoritarian figure who taps into deep rages. I think there is something to that, but I think it was more the initial frame on it that I wanted to poke on, which is you think of the Magna Carta. That really wasn't the King versus the peasants, even though it's often framed like that. It was the nobles versus the King, right? And so a lot of this stuff is really intra elite as opposed to the poor versus the elite. But those elite grabbed their power, historically have taken their power from the people. If they can align themselves with the people, then they're able... And that's actually what populism is, because the existing elite have control of the institutions and the infrastructure and the military and the populists offset that by basically commandeering the power of the population.
Right. And here's the thing though. Basically, normally the way this is phrased is, oh, these folks in the US are going to go after these tech guys. And there may be something to that, but here's the thing. Americans are actually the global 4%. 95%, 96% of the world is not American.
And Americans have been rich for a long time. And it is actually, once you're post peak and start declining, you're going to hear, I think, a lot more about American privilege. And everybody who is mad about Iraq and about the US throwing its weight around abroad and so on, you're going to hear way more of that this decade, because the US has the relied on coercion for so long and so aggressively, that it's less able to convince. I mean, this reached an apotheosis-
That's a great observation. I certainly agree with the general observation that America has wrecked its credibility and it has made it very difficult for it to have the moral leadership to command the world internationally and to set the moral agenda. Exactly. And so here's the thing, normally the kind of frame that you hear on this is,
oh, we're going to take money from these rich Americans and so and so. And I'm not saying that something like that may not happen in the US. But the next step is going to be the world wanting to take money from the rich Americans. And that's going to manifest in many, many different ways. Basically America is no longer the leader of the free world. This is not one presidency or what have you. This has been going back decades and decades. But most people don't realize this, COVID was like a military defeat of the US, in the sense that if you go and Google 2018 national biodefense strategy, there is this whole document which purports to here, I'll just Google it, the exact thing, national biodefense strategy, 2018, I think is the thing.
So it's supposed to prevent against both manmade and natural threats. Yeah. Here it is. New biodefense strategy combats man-made natural threats, defense.gov, by Jim Garamone. And so this was something where it was touted as being able to protect against the biological weapons part of WMD. And there was a steering committee and so-and-so is chairing it. And they even mentioned the Spanish flu and the anthrax and Ebola. And on paper, it sounded like, dude, we're totally prepared. We've got a plan for a plan for a plan, et cetera, et cetera. Of course there was no plan, or rather maybe there is something written down on paper, but there's no execution on that plan.
And so this was a military defeat. It wasn't just that state, local, and- Does that imply also that you think this may have been a bio weapon? No. No, I don't. I don't think it's a bio weapon. I think it's possible to escape from a lab that maybe the US government funded, by the way, like the Wuhan Institute of Virology got some- There was some connection between Duke, I think. Yeah, exactly. Like, it's the gain of function stuff and- Yea, the gain of function stuff. There is a lot of credible... That is not crazy. If you're a PhD, I've looked at a lot of the
stuff, I talked about it actually early last year, and now there's been actually some pretty good work by a doctorate at MIT on this. I'm forgetting her name. I think Alina Lu, I think that is... Is it Alina Lu? I may be misremembering it. But anyway, the point is that the origins of the virus aren't actually what I'm focused on right here. It's more that local, state and federal government failed, public health failed, police failed, fire failed, power failed, public schools failed, the US failed internationally. It was just absent. And what you heard from people were things like, which is actually kind of remarkable, if you mentioned that X country or Y country was doing better, people would sort of snarl at you. And I understand why, because you're under stress and so on, COVID's a stressful time. But they wouldn't even be like, "Okay, we can learn from
that. Maybe we can do X or do Y." They'd say, "Well, are not a Patriot," or "We're not last." Being first, and the "leader of the free world" is extremely different than not being last. "Hey, we're not number N" is not really like this great rallying cry that people might think it is. And people would say things like, "Oh, New Zealand, well, that's an island, China, that's a totalitarian dictatorship," blah, blah, blah. At the same time that the US is carbon copying China, because the Italians had locked down as a copy of the Chinese and the Americans copied the copy without acknowledging that they were doing a copy. And that was the worst of all worlds because,-
Well absent the locking people inside their buildings, and the Chinese lockdown was on a whole different level than what the US did. Here's the thing. So, we don't know which of those videos is real versus what have you, but it's absolutely the case that they took it extremely seriously. And here's the thing though, and this is important thing, when it's China versus the US, people get crazy and irrational. How about Taiwan versus US? How about democratic Asia and
Australasia? How about the fact that- Or Japan? Yeah. Australia is conservative and New Zealand is progressive, but they both managed to get this under control. Oh, they're islands. Okay. And you start going down this list of excuses and fundamentally it's basically just something where DOS is just not... It doesn't have high stake capacity anymore. It doesn't have the ability to manage or build infrastructure or come to
enough alignment on what to do. It's not really a country anymore. It's just a group of people in a physical area that don't share anything in common. It's very hard to think of something that every American shares in common beyond the fact that they're governed by this empire and that they value the dollar. If you're trying to think of a value, it not like
99.9% of people salute the flag or believe X or believe Y, that's just not the case. So I know that sounds harsh, but I'm making some observations. I'll drive to a conclusion. Let me pause there and see if you disagree with any of those observations so far. First of all, I love how you engage intellectually. It's so satisfying. I love how you think openly. As you were talking, what I started to get more clear on here
is, and I don't want to divert anywhere from where you're going. I agree that we're dealing with a huge amount of dysfunction. I think my response to that has been, can we fix it? I think your response and the response of other people that you align with intellectually, philosophically is, can we exit? Can we build something better? Can we build something new? And I think where the tension exists, because I'm actually theoretically okay with that. I don't know that I necessarily have an attachment
to the red, white, and blue. But I think the real thing for me is what do we value? You said it in terms of what do we share in common? What do we have in common? And I think that's where I find myself increasingly at odds with, I don't know if it's what the term would be, this cross-section of crypto and trans humanism or futurism or Silicon Valley. What concerns me is that Silicon Valley's values are very different than the values of many people who live in Western Democratic countries. I think that- I'm sympathetic to that and let me offer some thoughts. Basically I think the first network state is the kind of place, let's say we're successful in this project, is very focused on technology simply because of... It's like when Twitter started, it was mainly tech people doing it. Lots of these things, when crypto started, it was mainly tech people. And then eventually
it grew into other kinds of markets. Financier's, human rights activists using it abroad and so on. And in the same way, I think that the first network states, I think will probably be focused on things like trans-humanism. But the second and the third and the fourth and the fifth might be veganism, CrossFit, maybe the Benedict option where people can live a Christian life. Maybe anarcho-primitivism where they just get a nature preserve and they can all be... Which is fine with me so long as they're just doing it on their own. But here's the question though, Balaji, that I think suggests, or that assumes that we can live in a world where we don't need to solve major collective action problems. And I am of the mindset that we are moving into a time
where we're going to have huge problems of the commons that require collective level solutions, where we need strong governments in order to solve those problems. So, go ahead. You may want strong governments in order to solve those problems, but you can't get those strong governments or at least in the West without being able to start new ones. Because that's the thing is it's not about the strength of the government in terms of how much it can coerce. We're so loaded on that. We're so like, "Oh, let's get more power"- Not more competent. I mean also competent, strong government.
Competent, exactly. Because here's the thing. Why is it the case that private companies could develop these vaccines so much faster? The US government, everybody has mental model of the US government from movies, which is probably more valid from, let's say 1933 to 1968. Independence Day in 1994. Yeah, exactly. So, the period from Hoover Dam to Manhattan Project to Apollo. That was a period when technology favored centralization and mid-century you had one telephone company and two superpowers and three television stations. Yeah, monopoly. Yeah. All the talent went to these gigantic
countries and it was all focused at the state and the state allocated it and so on. And so you get these books which I very much disagree with like Innovative State, which says all innovation comes from the state, all due to the state. But if you rewind the clock further backwards in time, of course there's physics before NSF. There was engineering before any departments of engineering, railroads, aviation, automobiles, those things grew largely out of the private sector.
Obviously there's a public sector involvement in railroads, but the Wright Brothers went and did their aircraft, their first one without any grants to my knowledge at least. And if you go back further in time, like Cisco mechanics came out of actually the empirical study of steam engines. So, to was the apply that led to the theoretical rather than vice versa. So, you go back further in time and yes, science, technology exists without the state, mathematics existed without the state, certainly without the US government. It is not a necessary condition. In fact- What I would say though, is that the European Enlightenment and also all previous intellectual flowerings were very closely connected to the state, because the state of course was the organizing economic principle of society up until the last few hundred years. I disagree with that in many ways. For example, the Wild West, you didn't have a strong state.
It was organized by capitalism to a greater extent. That was closer-- Well, that means, I was saying after--I'm talking about past the last few hundred years with the rise of capitalism. Well, even the Renaissance Period was all of these competing principalities. It wasn't a giant centralized state. In fact, there's an argument- Right, but they were principalities in other words and there's an interesting point about the rise of the merchant class. And that goes back to, again, the beginning of this movement of capitalism. Yeah. There's a good book that also gives a counter argument here, Where's My Flying Car.
Very much worth reading. That guy would be a good person to bring on your show by the way. Also The Roots of Progress guy, Jason Crawford, also good. He wrote a book review of the first one who wrote Where's My Flying Car, and his premise, which I agree with, is that the centralization of science, we don't have the counterfactual. We do see, and I did see, a lot of this being choked through bureaucrats. And if you look at the average age of, example, the NIH grant recipient, you actually see this bell curve-ish thing, moving upwards in time, roughly by one year as the years tick on. It's like a cohort of people who've all just award grants to each other. Just ages with time. And that is science by bureaucracy, which if you wrote an NIH grant, I did this 15 years ago or thereabouts, but it's probably the same, I hear it's the same today.
You really have to have done much of the work prior to even putting in the grant. And so you're getting the money for something that hasn't been done, because otherwise the reviewers will say, "Ah, this is impossible or it's not feasible," et cetera, et cetera. And it's this whole stupid, bureaucratic process. And it's fighting for actually relatively small sums of money. I remember pulling somebody out from academia. I'm like, "Why are you spending all this time on a $200,000 grant when your colleague here has a $200 million in VC to go and do something real?" And so the point is that bureaucratic science has a whole set of megaphones to herald it, and I'm not saying that there aren't successes. Obviously there's what people will list, which are
true. You've got the internet and you've got the human genome and you've got the self-driving car, which came out of DARPA and whatnot. But we don't have as counterfactual, which is what happens when you have instead 50 individual billionaires who can do things like what Yuri Milner is doing with the Breakthrough Prize or what Elon is doing or what Jeff Bezos is doing now at Blue Origin.
I think we're going to see something different, where it's not bureaucratic anymore. It's based on you don't have just one NIH, you have 50 people who can fund at that level. And frankly, much of the scientific research establishment is just to make work program where there's a relatively small number of people who produce really innovative research and were simultaneously too elitist and not elitist enough. Too elitist in the sense of
lots of smart people aren't getting these grants or research jobs, not at least enough in the sense of a lot of people who are "full- time scientists." For example, in biomedicine, because you have these sort of slave labor wages that people are paying post-docs, you don't have the incentive for laboratory automation. You have people who are literally still manually pipetting 20 years into robotics, when that's an obvious application for industrial robotics, when diapers.com in Amazon warehouse has happened a long time ago. But I'm not saying this as a theoretical thing. You can see a video. I built a robotic sequencing
factory with some of my colleagues. This is something which can be done. Can every single step be automated? Well, you might need micro fluidics for certain pieces and so on, but more and more of it can be. However, if you have these postdocs who are just paid small amounts of money, grad students are paid small amounts of money, there's incentive for automation, isn't there? Okay. What am I pointing out? Coming back to the stack to say a lot of the idea that, oh, the state is so great and so on, oh, we have to reform the state. The reason people think
you have to reform the state or you have to do centralized science is because alternatives don't exist yet. We have to build those alternatives and then you can have a true comparison. And then you can say, "Yeah, okay, starting something new sucks. We need to reform something." But here's the thing. Whenever we've been able to do that, because actually the most important innovation sometimes is the meta innovation of being able to do something new in the first place. How do you start a new currency? That was an insane concept in 2007. You walk into a VC's
office and say that they think you're crazy. Peter Thiel and Levchin did for PayPal. They actually did go in and say that, but that's not what they did. They built something that was difficult and invaluable and a hundred billion dollar company, but it wasn't a new currency. No, it was embedded in the system to begin with. It was embedded in the system, but it was great. I take nothing away from them. It was awesome. Still it was embedded in the system. So, 2008,
when Satoshi came up with a white paper in 2009 launching Bitcoin, that was a true zero to one an epochal thing, which innovated on how to innovate in the first place. Oh wow, you can start a new currency? That's within our capabilities? I didn't even know you could do that. And now a kid in a dorm room can start a new international cryptocurrency. That's insane. if you think about it, the growth of crypto, it's at a trillion dollars, Bitcoin alone, it's obvious that all of this innovation in the financial system, even just basic things like speed of settlement. Or the fact that you have
cryptographically protected wallets so the custody is local rather than all being centralized. All of these things, some are obvious, some are non-obvious innovations. All those things are being held back. And if you think about, my friend Alex Rampell is a partner at a16z, pointed out that, I think they got to T plus three settlement in the late '90s. And then they got to T plus two in 2017 or something like that. And he's like, plus 17 years between every T, in every time set. I forget the exact dates, but something along those lines.
And that's the glacial pace at which the existing system is moving. But within Ethereum, you settle in minutes and have done so for more than five years now. It's been operating 24/7. And that works in any country in the world, it works programmatically for pretty much any amount, modular fees. And they're working on scaling. And that's 10X better on several different dimensions when you can build something new rather than just be forced to reform the system. So a lot of people who say, "Oh, I want to reform the system," et cetera, they're only doing so because they don't actually have the option of creating a new one . And opening up that option is important for another reason as well, which is, if you think about Microsoft, the only way that Satya Nadella was able to gain the political capital to truly reform them from the inside was to show that Google and Apple and Facebook and Amazon had massively succeeded by doing things that Microsoft wasn't or couldn't do.
And so eventually after he took over, he could point to their massive undeniable successes in markets that Microsoft used to be dominant in, to say, " Hey, let's do open source. How about cloud? Maybe we should be multi-device rather than try to force everything on Windows." And so on and so forth. There were many deeply baked assumptions that had got Microsoft to where they were that were now holding Microsoft back that couldn't be overturned without the example to show that wouldn't lead to doom, but rather to great success. And in fact, staying intransigent and staying hooked on the past was going to lead to doom. Now a reformer like Satya wouldn't even
be able to come along without those external examples. Thing would just go into the ground. O
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