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Language: en
The United States and China are locked
in a highstakes cold war for global
dominance. And the winner is going to
shape the future of innovation, economic
power, and geopolitical influence.
America's internal divisions, however,
the toxic tension between the left and
the right are weakening our national
unity and our ability to compete with
them globally. To secure our position,
we have to find a unified path forward.
I asked political analyst and media
expert David Pacman to join me. He's
here to explore why our discourse has
become so dangerously polarized. He
breaks down echo chambers, tribalism,
and the erosion of shared truths,
revealing what he believes is really
dividing us. We don't always agree, but
my hope is that our disagreements will
help us all triangulate on a more
effective path
forward. My question becomes, uh, why is
it broken and deranged and what can we
do to fix it? One of the things that I'm
trying to kind of explain in the book is
that sometimes the north star or the
ideal for people is to eliminate bias,
partisanship and whatever, right? To be
these kind of like almost mathematical
uh uh instantiations of objective
analysis of every fact. I think that
it's a waste of time to even really talk
about that because the influence of our
upbringing like I said in terms of
economic class, the families,
communities, rural versus um uh urban
and all these different things, the
effect is so significant that for me the
north star is some kind of framework to
recognize, oh, you know what I'm doing?
I'm doing confirmation bias. You know
what I'm doing? I'm applying like me as
an immigrant. I'm applying my history as
an immigrant somewhere where you could
evaluate the situation differently. And
so I think the awareness of these
tendencies and a foundation in critical
thinking and media literacy is actually
the north star. I don't think it's even
reasonable or realistic to say let's
eliminate bias and partisanship.
Yeah. I I don't think there's any
conceivable way given the nature of the
human mind that you could do that. Um
the getting people to be able to think
critically I think is very important. Uh
educating people so that they understand
how to navigate the modern world is
clearly not happening. And so being able
to do that I think would be wonderful.
Um however as we start to look at like
if I were going to go through your book
chapter by chapter um one of the things
you say at the very beginning that is
just critically important is I this is
not me quoting you though you did say
this earlier in the interview. Um I
don't think it is possible to define
what is true in the realm of human
perception. What is true is physics,
cause and effect. What is human
perception is basically everything else.
So everybody has a frame of reference
and I will certainly give you a chance
to debate that and I come to this with
man if you can improve my thinking I
will take it all day long. Uh but for
now the highest predictive validity way
to think through it I have seen is this
that figuring out what is true is next
to impossible because so much of quote
unquote truth is perception. We look at
something and we see two different
things. Like we're seeing the same thing
we can explain it in the same way but
yet we walk away with different
conclusions about what it really is or
the consequences of that thing. How do
you want to see um people come to an
agreement about what is true? I think
there is more
to objective truth that's good enough
for figuring out a lot of policy. Now I
think that you are right that physics
provides a sort of truth that is
different than economic theory,
psychological theory. I do think that
there is a difference there. But just
like as an example to open the
conversation a little bit, cutting taxes
for the rich, stimulating the economy by
trickling down. The reality and what I
would love to be true with regard to tax
rates don't seem to coincide. I would
love to have a lower tax rate, right?
That's my I would just I would love to
keep more of my money. Why not, right? I
mean, it would be a great thing. If I
look at the last 150 years of looking at
tax rates around the world, changes to
GDP, you know, doing like what we would
consider a re reasonably detailed
analysis, I can't find any evidence that
when you cut taxes for the rich, it
trickles down the way some people
believe. Now, is there an environment
possible where that could happen? Yeah,
I mean I think it's possible, but for
the purposes of figuring out policy in
2025 in the United States, for example,
I do think that 150 years of economic
history gives us a good enough sense of
the truth. It may not be physics. It
might not be wave theory or chemistry.
Like I I acknowledge that, but for the
purposes of decision makers, I think
it's probably good enough.
It's interesting. So this is a case
where we look at the same thing and we
come away with something completely
different. So when I look at that I'm
like uh taxes. Yep. It's very
interesting and I do think that it
matters in terms of um certainly giving
people the ability to decide what they
want to spend their money on versus
forcing them to you're going to spend
your money on this. But by way of making
the economy better for people in the
long run, people are barking up the
wrong tree with taxes up or taxes down.
The thing that they need to be thinking
about is money printing. Because here is
one of my foundational beliefs. The
average person does not understand the
economy, nor will they ever understand
the economy. They may not be
intellectually capable, and they
certainly aren't interested even if they
can. Which is why I think it's 50% of
people in America own assets and the
rest don't, which is insane to me. Uh
when you inflate somebody's money, you
force them to buy an asset and it is the
only way to keep up with inflation.
Otherwise, they are going to lose their
purchasing power and it is distressingly
fast. So at whatever 2% inflation,
you're losing 20% of your purchasing
power in 10 years. It's crazy. So
because it's a compounding effect. Uh so
if that's true, now you've created a
situation where people are
disincentivized to save money. So don't
save money. you need to get into assets,
but they're not going to get into assets
because it's too complicated. So then
the government begins spinning a story
and they say, "Hey, the American dream
is to own a house. Go buy a house." But
then to make good on that, they start
deranging the marketplace by doing
things from making it harder to build
additional homes to government sponsored
loans to too big to fail and going in
and backstopping people when they do
lose their money on a house. And you
create a housing bubble. And now the
people that already own the homes, the
price is going up and the people below
that just can't get on the property
ladder. And when I look at that, I'm
like, this problem is not going to be
changed by taxes up, taxes down. This
problem's going to be changed by
economic policy that says you can't
inflate the currency, which using my
vernacular is to steal from the people
and force them to gamble in assets. So
that's where it's like, okay, we're both
looking at the same problem. I honestly
I think people do care about tax
objectively. However, people would care
about tax a lot less if when they got
taxed they got the things out of that
that they wanted. Not that everybody
will agree. It's when you're getting
taxed and not getting the things you
want that I think people really get up
in arms. So, we've got the tax code
we've got and yet the wealth uh the
wealthy continue to get richer and the
poor continue to get poorer. But that
has nothing to do with tax. Everything
you mentioned about economic policy is
true. Those are all different levers.
But it doesn't change that there is a
debate in the political system where
there is discussion as to what should
the top tax rate be and what should the
next tax rate be. To the extent that
that discussion continues to exist, all
the other stuff you mentioned also
exists. If there is a debate about what
the tax rates should be, and there is,
it is a political question. It would be
awesome for you to come in and convince
everybody it's the wrong debate.
Awesome. But it it still is a debate. I
for the purposes of saying can we know
some truth. I do think that looking at
150 years of history and saying can we
tie a tax cut for this group versus this
group versus this group to growth GDP
changes inflation changes etc and say
has that worked before in order to
inform whether we do it again as a
concept as a heruristic I think it's
acceptable. I'm not denying all the
other things you said are also
important. If you're taxing people, do
they invest more or less into their
companies? Now, I would say that there
is a reason somebody like Jeff Bezos is
like, I'm going to run Amazon at break
even all the time, and the reason that
I'm going to do it is the government is
the world's worst capital allocator, and
I am one of the best capital allocators
of all time. So, this money is far
better off in my hands so that I can
reallocate this capital to things that
the world wants. Now I don't have the
data in front of me to be able to show
you that other than to say again America
and the companies and the value that
they've created um seems correlated even
if not positive. A lot of the things
that work great about the American
economy we are absolutely on the same
page about. I think where we maybe
disagree or there are people in your
audience who disagree with me about is
that given all of the things that work
really well about this economy, the
relative cost to instead of like do we
need 50 bases for the military in
Germany? Maybe we'd be okay with 20,
right? But everybody has health care and
nobody goes hungry and veterans have a
place to live and food to eat. The
relative cost of that is so small
compared to the innovation that you and
I agree exists and how market forces
have generated so much of this
innovation and wealth. I don't even know
if we disagree, but my argument is that
it's a relatively small ask and it's
only political will that prevents those
issues from being solved. It's not that
we don't have the money. Um it it's
really just a question of political will
and logistics and a lot of the people in
this country don't want to do it. And
and so I see that as the problem. I
think if if more folks better understood
the relatively small lift that fix
financially that fixing some of these
issues would be. But also from a selfish
standpoint, it is demandside stimulus.
When you give more people security and
money that they can then go and spend in
communities, it's good for every
business owner. It's demand side
stimulus, which I'm a far bigger
supporter of than the trickle down
supply side stuff. But we saw in COVID
that doesn't work. What ends up
happening is you put money in people's
pocket and they either gamble it. So
they go in, oh my god, I'm flushed with
cash. I'm going into crypto and I'm
going to get rich overnight. Uh or they
go buy tennis shoes, bracelets, etc. And
they make the um asset holders more
wealthy. This is one of those where I
feel like it it is so brazenly obvious
how COVID was the greatest theft from
the poor and middle class to the wealthy
ever. You're getting this from a wealthy
guy. So, you've got to ask why the
does he care? Why is he ratting
everybody out? And the reason is if you
do not have a thriving middle class, you
are racing towards people getting behead
beheaded in the streets. Uh, also, I
just want to see people thrive. And if
you want to get rich, sell to the middle
class. There's just so I just don't know
that I agree with the facts on that
though, Tom, because yes, I mean, I know
that the luxury watch market and luxury
cars, it went crazy during co as money
was pouring into that. Uh and and also
you are true that some people gambled on
crypto but savings rates for every
quintile did go up and so yeah but if
you want me to obliterate somebody have
them save their money. What I'm saying
is when you are saving your money in the
modern monetary theory system that we
live in you are You are dead in
the water. You were doing the only thing
you can't do. You're saying because of
inflation 100%.
Yeah. No, I mean listen, there are two
different parallel conversations here.
One is it's the same argument why you
shouldn't give the rich a tax cut
because their marginal propensity to
consume is so much lower. They are also
just saving the money and the economic
multiplier is lower. On the other hand,
when you're talking about financial
irresponsibility, I'm not now arguing
about the uh drag effect of inflation.
I'm just saying your assertion that
everybody gambled their money on, you
know, watches and crypto just is not
borne out by the fact. These are two
different conversations and we can have
either. If people understood exactly how
the rich get richer and the poor get
poorer, I think people would be like,
hold on a second. Most people do not
understand that flywheel. They think the
rich get richer because they're not
paying taxes. That is not how the rich
get richer. The rich get richer by the
the price of their assets maintaining
with inflation, just maintaining. And so
everybody else, their net worth is going
down. Even if you still see $100 in your
bank account, now it's worth 90, now
it's worth 80, 70, 60. But if you own
assets, that price appears to be going
up, but it's not. It's actually just
keeping up with inflation. And so if
your house used to cost $100,000, now
it's 200,000. That's a commentary,
barring you being in a very lucky
neighborhood, that's a commentary on the
dollar lowering in value through
inflation. It is not your house actually
going up in value. And so if people
really could internalize that, then it's
like, okay, hold on. The game that we're
trying to play here, because I
understand I get I don't want the rich
getting richer and the poor getting
poor. It is dangerous. Like even if you
you're just trusting me to be selfish,
we can't have it. We have to solve that
problem. But when I hear people say tax
the rich, I'm like it won't work. You
could tax the rich at 100%. It is not
going to get you where you want to go if
you allow them to keep printing money.
First solve the underlying problem.
Money printing is the underlying
problem. Then we can start talking about
uh your ideas, which if your ideas bear
out, I love it. If we could stop
spending money on certain things,
balance the budget so that we could
start spending money on other um safety
nets, I'm totally here for it. But when
people want to do that by printing
money, doesn't work. You just ratchet up
the rate at which you steal from the
poor and middle class. Yeah. I think
we're now like at three tangents away
from the original concept of truth,
which is fine. But just even on the
facts of some of what you're saying, I I
think neither one of us has the data in
front of us, but when you say I hope
that during co people use their was it
1600 bucks or something to pay down
debt. Consumer debt did go down during
co and so I I I just think that a lot of
these things did happen the way you're
hoping they did rather than the way
you're saying they did. But we I I just
don't if you look at the data, the data
will tell you this. I assure you asset
prices skyrocketed
uh and asset prices skyrocketing is not
a function of people got richer. It is a
function of the dollar got weaker. That
much I'm confident the data could not
possibly say anything else. Everybody um
understands that when you have the same
amount of goods fighting for an
increased supply of dollars, the cost of
that thing goes up. That is the equation
of inflation.
That is that that part is true. Going
back to the book, one thing that um I
wanted to talk to you about is and if
you think I'm misreading this, now is
the time. I'm very open to I just
misinterpreted, but reading the book, it
felt like you were saying that the echo
machine is specifically the right. That
there is something happening on the
right that is not happening on the left.
And that if we're really going to get
ourselves out of this problem, we have
to address the right.
Yes. Um well, the proactive echo
machine, not this passive echo chamber
in which we must might be, but the
proactive echo machine, uh I think is
disproportionately on the right, but to
a degree it's that way because they're
just better at a bunch of this stuff.
And and I explain that in the book. Um,
a lot of the political
shorthands for policy positions are way
simpler, pathier, and more salient
sounding from the right. I mean, good
for them. They they've done that better,
right? I mean
prolife has inbuilt in it at a
linguistic level something that is much
clearer and pathier and more salient
than what happens on the pro-choice side
which is of course we have to understand
fetal development and bodily autonomy
we've lost. Okay. Right. Like we're
we're already at a disadvantage. So
number one, tax relief from the burden
of taxes. On my side, I don't go I want
the highest taxes possible. I actually I
want the lowest taxes possible while
being able to afford the basic services
that I think that any well I've lo I'm
we've lost. Right? So this is a
structural thing. And so this is like
part one of the echo machine that the
right is just better at. Secondly, and
we I talk about this in the book, but a
lot of this happened kind of like after
I turned in the manuscript, so it's sort
of like an addendum, the right has
become way better at building and
funding media ecosystems than the left.
And I understand that now I'm using the
same shorthand, left and right, that I
said doesn't work. But like we I I'm,
you know, to have some way to still
communicate w with the audience, I'm
still using these these words. You know,
when you saw during the election, Trump
and Vance, they go and they talk to Lex
Freriedman and they're hanging out with
Rogan and they're talking to the Neelk
boys and it's relaxed. It feels genuine.
Even though I would argue I could fact
check a hundred lies an hour that they
tell. Doesn't matter. The point here is
who's better at the game. That created
an environment where it's like this
seems relaxed and cool to some degree.
And on the other side, we heard about
how uh Kla Harris just couldn't make it
work to appear on Rogan's show. I don't
think that would have won her the
election, right? But it's just kind of
like representative of the problem. When
she did the interview with Alex Cooper
on Call Her Daddy, it ended up where
Alex Cooper had to fly to Harris to some
contrived one-time use studio that
wasn't even the normal studio and it was
much shorter than the episodes and
Right. So my point here is they are just
better at a lot of this stuff. And then
on the funding they've got Turning Point
USA, they have Daily Wire, they have a
lot of this infrastructure. We have
nothing on the left. Like I'm audience
funded and I have some advertisers and
then you know we're part of like the
YouTube system and I'm not complaining
like we we do fine but we just don't
have the machine that they have built.
So, I know that you kind of opened this
by saying, "Am I just saying the right
is in the wrong for this stuff? They're
succeeding with what they've built." And
so, to a degree, it's like I I'm not I'm
not envious, but I think that they've
figured out something that the left just
has not figured out yet. Is this a
winnable game for the left? I I you know
to some degree I hate to even buy into
this winnable thing because really for
me it's just like how can we improve the
lives of as many people as possible. So
that that's that's my goal. It's less
about gamifying it. But to the extent
that there is a competitive gamified
aspect of it. The answer is we're going
to find out in the next three and a half
years. Um, the things that make me think
it's winnable include since Harris lost
in November, um, I was invited to go to
the White House, met with top Biden
advisers and Biden himself to talk about
what they didn't do right with regard to
how they deal with us. Calling us on
October 15th. Tell me the what was your
punchline? What did you tell them? Well,
what I what I said is I've said all this
stuff publicly. starting to engage with
us on October 15th for 12minute
interviews where someone is standing
just off camera going pointing to their
watch doesn't work like that. It's just
not going to it's not going to create an
environment or a community or an
ecosystem like you can't that that
certainly doesn't work. Um, I am
cautiously optimistic because now
they're they're engaging with me and
with kind of our little circle of of
people who do what I do significantly
more than they were in the previous four
years, just in the last two months.
There seems to be a desire to get on
message without five bullet point plans
that are just sort of like, what are you
even talking about? you know, if you
start a business, you'll get a
$5,000 deduction and then a credit. And
people are like, "What's the difference
between a deduction?" Like, it's this is
a losers game, right? So, uh, you know,
from my perspective, this is where my
partisanship comes out. Where are we on
Listen, they are offering you nothing.
Trump promised a health care plan in
August of 2020. That was two weeks away.
We still don't have the damn health care
plan. Their only plan is get rid of
Obamacare. Elon Musk is here not out of
the goodness of his heart to improve the
lives of people in in Idaho and Ohio. He
is here to turn the government into a
tool for his gain for his business.
Right? So we you don't have to agree
with me on this stuff, but the point is
there needs to be a more coherent
message that is not about PowerPoint
presentations and bullet points that go
into the ether. And so I think it is
winnable. I'm seeing some of the
turnaround, but the proof will be, I
guess, November of 26 will be the first
test. We'll get back to the show in a
moment, but first, let's talk about the
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selling today. And now let's get back to
the show. From my perspective, what has
really broken about politics has been
that we waste a lot of time not agreeing
on the basic facts which should serve as
the start of a conversation rather than
the area that we are debating. We waste
a lot of time with what I see as
contrived issues that often distract
from really improving the day-to-day
lives of as many people as possible when
it comes to poverty, class mobility,
access to health care, education. Now,
depending on one's political leaning,
you would see the problem in these areas
differently, and I'm completely
sensitive to that. In my book, I lay it
out as I see it. But fundamentally the
the big break and the big problem and
what makes me hate politics as I write
about in the book um is that we are a
rich enough country with enough smart
people to be able to agree on the facts
and move on to figuring out the policy
and solving the problems but but we get
stuck without a shared understanding or
agreement as to what the facts are or
what the problem is. And it's a very
difficult place to be if you want to fix
problems. M so if the fundamental nature
of this is that we can't agree on what
is true um how do you navigate that in
your life and do you see this as a
scalable problem that can be solved or
is this just the nature of people? Well,
as I say in the book, by the time people
are 25, 35, 45, 55, in a sense, it's
kind of too late. And that doesn't mean
as a as an individual thing, we wouldn't
want to engage with whoever and try to
get people on the same page. But at
scale, a lot of what I talk about in the
book relates to the lack of critical
thinking and media literacy, which you
really have to start at at age 8, 9, 10,
just like really fundamental questions
about how can you determine for yourself
whether something you've been told is
true. When you get a message from a
media outlet, how can you ascertain what
biases or inaccuracies they may be? It's
like really structural stuff. And again,
I I am both a partisan person and that I
have an opinion like anybody else, but I
also want to be as objective as
possible. So like on the question of are
Democrats or Republicans better at the
media literacy aspect, the the data I
found shows that Democrats are better,
but barely, right? Like I'm not coming
in here saying this is only a problem on
the political right. Democrats have it
all figured out. a bunch of the studies
I looked at on are you good at
identifying whether statements are
statements a fact or opinion which is
like a critical aspect to media
literacy. Am I listening to an opinion
or something that is presumably a report
Democrats are a little bit better but
like everybody's pretty bad at it. So
this is not aside from my my personal
leanings being on the left relatively
moderately so I would argue and maybe
maybe we'll get into that. This is an
issue for across the political spectrum
that we need to solve.
Okay. So, uh, one thing that haunts me,
I'm beginning to toy with a hypothesis
that I find interesting. I don't,
there's not enough data to back it up
yet, but that Neanderthalss and humans
existed at the same time. Neanderthalss
had a bigger brain, conceivably, uh,
higher intellect, uh, more sophisticated
tools, uh, potentially earlier usage.
I'm not as clear on that part, but that
one possible hypothesis for how Homo
sapiens out competed the potentially
smarter Neanderthalss is that we used
tribal thinking to be able to group up
in much larger numbers to defeat uh
superior intellect. The reason that
freaks me out is I'm always looking for
ideas that have high predictive
validity. And you can use that looking
backwards. And if I look backwards at
exactly how humans have gotten here, I
see uh a lot of tribalism. Do you worry
that tribalism and tribalistic thinking
is baked into the architecture of the
human mind? It's more complicated than
this. And so what the way I like to
approach it in terms of the outco
competing of Neanderls, which is a
really interesting topic, is to look at
someone like Robin Dunar's work. I don't
know if you're familiar with Dunar's
number, but it's this idea that once you
get to groups of 150 people, those are
that's kind of the natural limit to the
number of relatively close relationships
or acquaintances that we can manage how
you can organize without some kind of
centralization of control. So there's
this idea, it's not a magical number of
150, but is it 120, is it 180? And so
what we might say from one perspective
is there's like an evolutionary
adaptability to tribalism. The other
side of it would be that there's just a
natural physiological limit in terms of
the relationships we can manage. And
once you get beyond that 150, you need
to specialize and centralize to some
degree or the groups got to break down
into subgroups. So where I think I do
agree with you Tom is that there is
something inherent to homo sapiens about
once you get to certain group size you
do have to in some sense break down into
groups teams cohorts organizations. Now
we can put a projorative label on it and
say it simply leads to tribal thinking
and it's bad. the science side of it
might actually say it's a necessary way
to actually grow as societies and
develop technology and specialization.
That's part of the debate. But so I do
think that you are right to a degree if
we agree that tribal thinking is innate
to the human mind. That's just going to
be that. And one additional thing that
I'll add is that part of how this gets
exacerbated and just turns into this
flywheel is that we're all looking for
heruristics, shortcuts. I don't want to
think through all these problems. I'm
just trying to raise my kids. I'm trying
to have a nice life. Uh so just tell me,
I know what team I'm on. Just tell me
how that team thinks. And now it becomes
very easy for the um oligarchs to use
that in the way that it translates
literally as in just the the few uh that
lead. And so the leaders end up cramming
down information into the masses that
they can control through narrative. And
so now we're living in a world where we
have hyper velocity of information
because of social media. uh we have
teams and we have the shortorthhand that
each team is feeding to the other team
of like, hey, we think like this, they
think like this. Uh we're the good guys,
they're the bad guys. And so it sounds
like we pretty much agree on that. And
I'll add one more thing I haven't heard
you say, but I think you'll agree that
those two teams because of the setup of
the modern world and that this is a
populist moment, they're racing away
from each other at at a rate that for me
is quite terrifying. So when you think
about that's the problem set, what
becomes the way that we address that
problem set? I don't think I agree with
the last premise that these two groups
are racing away from each other faster
than ever. I think that there is that
perception because of something called
the narcissism of small differences
which looks to focus in only in the
areas where there is disagreement and it
looks to exacerbate the disagreement and
where I would pull in you know you use
the term oligarchs we could use the
robber baron billionaires the oligarchs
the elites everybody has some shorthand
for what we're talking about but there's
a degree to which if we are talking
about what was it bud Hudlight or if we
are talking about the trans sports issue
or we are talking about what I would
consider the pime mostly contrived
issues. We aren't talking about how the
disproportionate amount of so many of
the tax cuts go to the richest people.
We aren't talking about how education is
being deliberately made dysfunctional to
justify its privatization, for example,
or insert whatever is important to you.
But the point I'm trying to make is I
think we're a lot closer than the
perception is. And your perspective
about these two groups are rushing away
as fast as possible. I think that that's
a a deliberately contrived perspective
meant to divide people when we are much
more united on a lot of these issues
than you might believe if you watch a
little bit of Fox News or MSNBC.
Okay. So, walk me through that because
when I look at the world, I see both
evidence of what I'm saying plus I it
matches the foundational building blocks
of my belief system. And so you get that
onetwo punch of this is how I believe
the world is which predicts that people
will in a populist moment begin racing
away from each other and I see we're
actually again my perspective racing
away from each other. So um walk me
through like if what you're saying is
true and it's a very hopeful message so
I want it to be true. Um how would we
show people no no you're you're falling
for essentially propaganda. The reality
is that there are very small differences
between us and let's talk about them.
How would you um go about messaging
that? Well, one thing I would mention is
what you just described as why you are
reinforced in your initial belief by
what you see. That's textbook
confirmation bias. And we're all victims
of it. Right? In other words, what you
just said is the definition of
confirmation bias. You have a belief
about how the world works. And when you
look around, all you see is stuff that
makes you more secure that you are
correct. Whereas someone who comes in
with a different initial belief will
say, "I only see things that reinforce
what I already believe." That's textbook
confirmation bias. That's one of the
things I write about. I would say, and I
I don't know how far we want to derail
on this, but um confirmation bias from
where I'm sitting is where you apply a
greater likelihood of truth to something
that you already believe. Um and I would
say that's an emotional phenomena that
ties back to heristics. your emotions
give you a signal that you don't need to
think any more deeply about this. It
feels right, therefore it is right. Um,
very much not how I approach the world.
So for me, I'm always looking for
disisconfirming evidence and I'm looking
I'm basing the things that I believe on
and still a heruristic, but does
believing this thing give me a higher or
less degree of ability to predict the
outcome of my actions or somebody else's
actions? Often, by the way, looking
backwards. So, oh, if I adopt that
belief, can I make sense of the last 50
years of history? So, I certainly
understand that my mind is primed to
give me a positive emotional reaction
when I encounter something that I
already believe. Um, but because my
northstar is efficacy of prediction,
um, I'm at least running things through
that filter. Put aside the rhetoric for
a while, you know, oh, Biden was a
communist and Kla was a communist. Put
put all of that aside for a second. For
the most part, if this is the spectrum
of economic ideas, and I'm holding my
hand several feet apart, where the
majority of the disagreement is, listen,
just about everybody agrees the military
should be socialized. We shouldn't have
a variety of different militaries that
the US will contract out to depending.
We have the US military for the most
part. Uh for the most part, we agree
that firefighting and police should be
socialized. We agree about the vast
majority of this stuff. The difference
over which people are, you know, at
knives over socialism versus capitalism
is like, should healthc care be a little
more the purview of the government?
We've got Medicare and Medicaid. Should
we just put everybody in there? That's
an example of how the debate is
socialism and capitalism. And then we
kind of get down to them. and go. Okay.
So, it's like healthc care is one of the
areas of disagreement, but for the most
part, everybody agrees making cell
phones should be part of the market
economy. Uh the military should be
socialized and under the umbrella of the
government. And there's like three or
maybe four areas in the middle which are
really the disagreement. So, this is
just an example to kind of illuminate
how the rhetoric is of dramatically
different perspectives. In reality,
we're talking about mostly agreement on
what shouldn't be socialized than what
should with a little bit of disagreement
in the middle. That's a lot closer to
reality. It doesn't make for good
television.
Heard definitely understand that. I
would say though, there is something
else going on. Um, and I found this when
I had multiple business partners and I
would see these two very intelligent
guys going at each other saying the
other person was stupid. Like, it just
very confusing to me. And I was like,
okay, what does it mean when two highly
intelligent, very sincere people look at
the other person and go, "This guy's an
idiot." Um, that's when I realized, oh,
we're all writing on the back of base
assumptions. And so, we have base
assumptions, we have core values. Uh,
base assumptions being a form of belief,
and it seems like we're we're just a
little bit off. But if you understand
that your value systems are very
different, you understand why within the
scope of what humans believe, yes,
you're you're going to be relatively uh
close. Even somebody who's just a
diehard communist, to me, I would say
they simply violate some of my core
beliefs about the way the human mind
works, even if I I grant that rather
than being a psychopath that they
actually want good things for people, um
it it violates one of my core beliefs
about the physics of the human
experience. And so now I'm gonna fight
viciferously with anybody that even
though like we're pretty close, but it's
like the the value or the core belief
upon which you base that we should do
XYZ thing to me is so anathema to the
reality that that cannot help but play
out in a horrible way. And so that's
where I think some of the things
that despite how reasonable you sound
right now, I know that there is this
underlying belief having read your book,
you and I have a a fundamentally
different foundational block that
because we have this very different
foundational block around
um where things go when you begin to
socialize them that to you it seems
morally self-evident that we should be
um a social
democracy and to me it seems morally
self-evident that you want to avoid that
not at all costs because you are very
right that you I don't want no
government I don't want no regulation
you want light touch um but spilling
over into that categorization as you
define it in the book not me straw
manning the way that you see it um now
violates something I think is
fundamentally true about the human mind
and because that now just just as like a
sanity check so we're on the same page.
Your takeaway from reading the book is
that I'm a capitalist or a socialist.
Uh you're very careful in the book to
say that you need a um wisely regulated
capitalist system and we are not going
to socialism. Right? In other words, I
am not a social like I I am flat out not
a socialist. Like I think that that for
this conversation to make sense, we have
to kind of start from that because I
think that when I the examples I talk
about in the book, which of course
there's always the cliche of Sweden and
Denmark, but in the book I talk about
Portugal and I talk about Germany and I
talk about Uruguay and and parts of
India. I make super clear like what I'm
talking about is a slightly more
regulated form of capitalism where
capitalism does make sense for the vast
majority of our economy. I just don't
want your audience that's not familiar
with me to think that I'm here
advocating for or a believer in
socialism. The socialists hate me. They
call into my show and they say, "Why
aren't you a socialist?" And you know,
we have that conversation. But I just
think for the conversation to be
fruitful, it's good to clarify that. I
think a yes, that's very smart. And b uh
given that we are now, without having
expressly said it, we are already
heading down the road of how we fix all
of this. Um just to reorient everybody
to that opening question set. um define
for people. So you're not socialist. You
you are very clear in the book. You've
been very clear right now, but define
social democracy for people because um
my foundational block was tripped by
your very careful and very reasonable
measured definition of what social
democracy is.
Put as simply as possible, social
democracy is an economic system where
capitalism is regulated to ensure that
nobody falls below a certain standard of
living and that we are appropriately and
of course appropriateness is in the eye
of the beholder and we'll talk about it
but appropriately regulating business in
such a way that we maximize the
innovation and fruits of
entrepreneurship while at the same time
protect those with less market power as
the term may be to protect and defend
themselves. So there's nothing in there
about you know uh socializing means of
production or shared ownership. Co-ops
are welcome in social democracy but they
are not mandated. I consider myself a
small L li libertarian like I'm not a
part of the libertarian party but on the
spectrum of authoritarianism and
libertarianism I want the government
involved only when I can make a good
case that it makes sense and so I think
in the vast majority of industries yes
we want some framework of regulation to
prevent bad actors from taking advantage
of people with no market power but I
think only when it makes sense for
government to be involved healthcare
the military, police, administration of
elections, etc. That's where I want the
government involved. Now, if I were to
extrapolate that out just to make sure
that we're in agreement, and you say
this in the book, so I don't think this
will be controversial, but you hold up
different European countries and some of
the other countries that you just
mentioned as examples of what this looks
like when it's done well. And so, that's
where I look at that and I say to me,
that's exactly the thing that I'm trying
to avoid. Okay? And the the building
block for me that so much of my world
view is predicated on is the belief that
you're only going to get the level of
innovation that we get here in America
when you try to be far lighter touch
that you really are a capitalist system
with guard rails. There's no doubt I
want to be very clear on my side.
unchecked capitalism will create a bunch
of winners who will ice out all of the
losers and it will become tyrannical and
horrible in monopolistic practices very
fast and so uh the human mind for better
or worse uh has good parts and bad parts
and so I am well aware that there's
pathology on both sides
so for me the northstar is human
flourishing for as many people as
possible if I were going to really
oversimplify and obviously we have long
form here so We can get deeper into it
as we go, but I oversimplify the thing
that leads us there as innovation. And
when you look at Europe and their
ability to generate companies that you
may or may not even like, but to me this
is a very positive signal. Europe does
not generate the number of companies
that have a value of over 10 billion at
anywhere near the rate of the US. the US
remains by orders of magnitude the place
that's able to output companies of that
kind of size and scale. Now if like I
you believe that things reach that scale
because they are creating something of
value that makes the world better which
is why people would rather have that
thing than the money. Um and that
innovation is the very thing that pulls
us forward. Uh and you look at China and
how did China finally stop starving its
citizens? have finally accepted, oh,
we're going to have to let in
capitalistic principles. Now, they do it
in a very different way, which I'm happy
to talk about, but um that ultimately it
is the people that are able to produce
these things, these innovations that the
world wants that drive us forward with
progress, innovation, and therefore lead
us to the most human thriving. And that
comparing Europe now, which protects
people on the downside, but caps their
upside, you just don't get that
innovation. When I was younger, I used
to be much more on economic issues. Wh
which a person that would align with
what you just said. I was always
socially very much on the left and
progressive libertarian. But on a lot of
this economic stuff, I took a much more
kind of traditional approach. And what
changed my view was going out and
looking at some of the talking points
that are often repeated about the
American economy as related to European
economies and finding out that a lot of
it isn't true. First of all, I'll give
you a couple of examples. First of all,
I don't think it's fair to compare the
United States to Europe because what's
going on in Serbia versus what's going
on in Denmark or Belgium or Spain, these
are completely different business
environments, totally different systems
in terms of uh how corrupt are
governments or the expectation that a
contract is going to be um upheld and
enforced by courts. I mean, these are
very different business environments.
But let's just take the examples I use
in the book which are Sweden and
Denmark. One of the things that I often
believed before I investigated was that
you have significantly a larger share of
your income taken to taxes in some of
these countries. When you look into the
detail and you account for the fact that
college education and health care are
paid for through taxation for people of
average incomes and one standard
deviation to either side, the tax rates
are often identical or even lower than
in the United States when you account
for not having health care premiums and
co-pays and co- insurance and paying for
college etc. So like the first big
awakening for me was wow it's not true
that on balance you're just paying way
higher effective tax rates. Now at the
very top you are correct. It it is true
that
billionaires assuming you know that
we're not taking advantage of very
specific tax loopholes and mechanisms.
Billionaires in Sweden and Denmark are
going to pay more than in the United
States. That is true. But for the
average person you're really not. And
with college and healthcare included
it's not a bad deal. So then I went to
the next level and I said okay there
must be something that generates an
environment that is better for
entrepreneurship in the United States
than in these countries. So I started
looking into the business environment
and entrepreneurship and sort of
friendliness to startups. And it turns
out that Denmark especially but Denmark
and Sweden are considered as friendly to
entrepreneurship as the United States.
Now you might say how could that
possibly be? They don't have as many
many billionaires and and 10 billion
dollar companies etc. You do have to
scale that for their population. We are
talking about populations in Denmark and
Sweden that are like relatively small US
states and when you compare on per
capita basis it is a completely
different story. But for the most part
they're business environments which
include how bureaucratic is it to start
a business, how easy is it to raise
capital and sort of other factors. Can
you rely that the contractual system is
going to uh uh support the the legal
basis? It's really like fine. And and so
I don't want to go on and on, but the
the point was a lot of these things that
get repeated aren't really true when you
look into it. And I want I just want to
say one other thing on this. In the
United
States,
disproportionately, not even close,
those 10 billion dollar companies you're
talking about are coming out of the blue
states whose governments are much more
like Denmark and Sweden. And I think
that that's also something we we
shouldn't ignore when we say where in
the United States is most of that
innovation happening. It's California,
it's New York, Connecticut,
Massachusetts, uh, etc. Um, and that
mirrors much more the way that Denmark
and Sweden are organized. The reason
that I aggregated Europe was so that you
wouldn't make that argument that you
have to look at them on a per capita
basis. Once you roll Europe up together,
you're now approaching uh the same per
capita, not per capita, the same number
of people as you're getting in the US.
You have an economy that's roughly the
same size. So now the question, why
would you do that? It just doesn't seem
act it doesn't seem relevant. for the
same reason that you're saying that,
hey, there's a gotcha coming in and that
the blue states are actually turnurning
out better companies. So, you're asking
me to look at the different states as if
these are experiments in governance, but
you're saying don't look at Europe as
experiments in governance. No, I don't
think it's I don't think it's
systematically fair or unfair to either
group or disagregate, but I think we
would want to have specific reasons to
do it. I think if you wanted in Europe
for example, if you wanted to group the
UK, France, Germany, Denmark, Sweden,
countries that are more similar in
governance and you wanted to do the same
thing in the United States, group the
states that are more similar and look at
per capita on both. That seems like the
fairest thing to me. The entire United
States has these sub uh uh states that
in some cases do make sense to look at
in total or not depending on what we're
comparing. I would apply the same
standard to Europe. I think it's just a
details thing. It may or may not make
sense to separate or or uh combine
depending on what we're trying to say.
When it comes to the innovation aspect,
things are so different. Let me ask I
don't understand how you can look at a
group of call it 350 million people and
say cool compare these 350 million
people to these 350 million people and
tell me what answer you get. And the
answer is so overwhelming that it it's
not like the US has 10% more or 50%
more. It's hundreds of percent more. So
this is not a minor difference. And I
have a feeling though I have not run
this data specifically, but I cannot
imagine a universe in which you could
literally pick any state or even any
group of European states and compare
them to the US as a whole and they're
always going to lose. Just the sheer
volume of companies. Again, my belief is
companies get large by doing an
innovation that people care about. So,
America collecting the best and
brightest from all over the world
because they know this is the place that
you can go for those entrepreneurial
opportunities. Um, they flock here. And
so the question becomes, well, the one
thing we know, whatever hypothesis you
come up with, has to say that whatever's
going on in the US, whether it's
draconian blue states or the mix of blue
and red or whatever, but the US out
innovates Europe by a lot. And so now I
would say that it's pretty easy to
address why that's happening. And you, I
think, are very wise not to name the
countries that I'm about to name, but
like if you look at France and the way
that they get bogged down 20%
youth-based unemployment because a lot
of the stuff that's going on where you
hire somebody, you're not allowed