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All right. It's a lot in the docket, but

there's kind of a very unique thing

going on in the world. David, everybody

knows about AI doomerism. Basically,

people who are concerned uh rightfully

so that AI could have some, you know,

significant impacts on the world. Dario

Amod said he could see employment spike

to 10 to 20% in the next couple years.

They're 4% now as we've always talked

about here. He told Axio that AI

companies and government needs to stop

sugar coating what's coming. He expects

a mass elimination of jobs across tech,

finance, legal, and consulting. Okay,

that's a debate we've had here. And

entrylevel workers will be hit the

hardest. He wants law makers to take

action and more CEOs to speak out. Poly

market thinks regulatory capture via

this AI safety bill is very unlikely. US

enacts AI safety bill in 2025 currently

stands at a 13% chance. But uh Sax, you

wanted to discuss this because it seems

like there is more at work than just a

couple of technologists with I think

we'd all agree there are legitimate

concerns about job destruction or job

and employment displacement that could

occur with AI. We all agree on that

where we're seeing robo taxis start to

hit the streets and I don't think

anybody believes that being a cab driver

is going to exist as a job 10 years from

now. So there seems to be something here

about AI dumerism but it's being taken

to a different level by a group of

people maybe uh with a different agenda.

Yeah. Well, first of all, let's just

acknowledge that there are concerns and

risks associated with AI. It is a

profound and transformative

technology and there are legitimate

concerns about where it might lead. I

mean the future is unknown and that can

be kind of

scary. Now, that being said, I think

that when somebody makes a pronouncement

that says something like 50% of white

collar jobs are going to be lost within

2 years, that's a level of specificity

that I think is just unknowable and is

more associated with an attempt to grab

headlines. And to be frank, if you go

back and look at Anthropic's

announcement or Daario's announcement,

there is a pattern of trying to grab

headlines by making the most

sensationalist version of what could be

a legitimate concern. If you go back

three years ago, they created this

concern that AI models could be used to

create bioweapons.

And they showed what was supposedly a

sample I think of claw generating an

output that can be used by a

bioteterrorist or something like that.

And on the basis of that it actually got

a lot of play and in the UK Rishiun got

very interested in this cause and that

led to the first AI safety summit at

Bletchley Park. So that sort of concern

really drove some of the initial AI

safety concerns. But it turns out that

that particular output was discredited.

It wasn't true. I'm not saying that AI

couldn't be used or misused to maybe

create a boweapon one day, but it was

not an imminent threat in the way that

it was portrayed. There have been other

examples of this. You know, obviously

people are concerned about could the AI

develop into a super intelligence that

grows beyond our control. Could it lead

to widespread job loss? I mean, these

are legitimate things to worry about,

but I think these concerns are being

hyped up to a level that there's simply

no evidence for. And the question is

why? And I think that there is an agenda

here that people should be concerned

about. So, let's start with maybe

Freeberg things that we all agree on

here. There are millions of people who

drive trucks and Ubers and lifts and

door dashes.

You would, I think, agree the majority

of that work in but 5 to 10 years, just

to put a number on it, will be done by

self-driving, robots, cars, etc.,

trucks. Yeah, Dave, I think it's that

might be the wrong way to look at it or

I wouldn't look at it that way. And

maybe I'll just give frame it a

different way, please. If I'm deploying

capital, let's say I'm a CEO of a

company and I can now have

software that's written by AI. Does that

mean that I'm going to fire 80% of my

software engineers? Basically, it means

one software engineer can output, call

it 20, 50 times as much software as they

previously could by using that software

generation tool.

So the return on the invested capital,

the money I'm spending to pay the salary

of that software engineer is now much

much higher. I'm getting much more out

of that person because of the unlocking

of the productivity because of the AI

tool than I previously could. So when

you have a higher ROI on deployed

capital, do you deploy more capital or

less capital? Suddenly you have this

opportunity to make 20 times on your

money versus two times on your money. If

you have a chance to make 20 times on

your money, you're going to deploy a lot

more capital. And this is the story of

technology going back to the first

invention of the first technology of the

caveman. When we have this ability to

create leverage, humans have a tendency

to do more and invest more, not less.

And I think that's what's about to

happen. I think we see this across the

spectrum. People assumed, "Oh my gosh,

software can now be written with one

person. You can create a whole startup.

You don't need to have venture capital

anymore. In fact, what I think we're

going to see is much more venture

capital flowing into new tech startups.

Much more capital being deployed because

the return on the invested capital is so

so so much higher because of AI." So

generally speaking, I think that the the

premise that AI destroys jobs is wrong

because it doesn't take into account the

significantly higher return on invested

capital, which means more capital is

going to be deployed, which means

actually far more jobs are going to be

created, far more work is going to get

done. And so I think that the

counterbalancing effect is really hard

to see without taking that zoomed out

perspective. To to to respond to Sax's

point, I do think anytime you see a

major change socially, society, there's

a vacuum. How's the system going to

operate in the future? And anytime

there's a vacuum in the system, a bunch

of people will rush in and say, I know

how to fill that vacuum. I know what to

do because I am smarter, more educated,

more experienced, more knowledgeable,

more moral. I have some superiority over

everyone else. And therefore, I should

be in a position to define how the new

system should operate. And so, there's a

natural kind of power vacuum that

emerges anytime there's a major

transition like this. and there will be

a scrambling and a fighting and a whole

bunch of different representation.

Typically fear is a great way of getting

into power and people are going to try

and create new control systems because

of the transition that's underway. Okay.

You're going to see this around the

world. Yeah. I mean, uh, so Chimath,

it's pretty clear, you know, Freeberg

didn't answer this question

specifically, so I'm going to give it to

you again. You would agree jobs like

driving things are going to go away. If

we had to pick a number somewhere

between 5 and 10 years, the majority of

those would go away. he's positioning,

hey, a lot more jobs will be created

because there'll be all these extra

venture capital and opportunities, etc.

But job displacement will be very real

and we're seeing, I think, job

displacement. Now, you had a tweet

recently, you know, you were talking

about entry level jobs and how that

seems to be going away in the white

collar space. So, where do you land on

job displacement? Freeberg's already

kind of given the big picture here, but

let's step back to for people who are

listening who have relatives who drive

Uber or a truck or are graduating from

college and want to go work at a, you

know, I don't know, the Magnificent 7 or

in tech and they're not hiring and and

we know the reason they're not hiring

because they're leaning into AI. So,

let's talk about the job displacement in

the medium term. I'm going to ignore

your question and I'm going to Why

should you be any different than the

other? So I now content on this podcast.

There's two people not wanting to answer

the question about job displacement.

Interesting trend. No, no. We'll go back

to that. Let me start by just saying

that it seems that these safety

warnings tend to be pretty coincidental

with key fundraising moments in

anthropic journey. So let's just start

with that. And if you put that into an

LLM and try to figure out if what I just

said was true, it's interesting, but you

find it's relatively accurate. I think

that there is a very smart business

strategy here. And I've said a version

of this about the other companies at the

foundational model layer that aren't

Meta and Google because Meta and Google

frankly sit on these money gushers where

they just generate so much capital that

they can fund these things to infinity.

But if you're not them, so if you're

OpenAI or if you're anthropic, you have

to find an angle. And I think the angles

are slightly different for both. But I

think what this suggests is that there's

a pattern that exists and I think that

that

explains some of the framing of what we

see in the press, Jason, and why we get

these exaggerated claims. Perfect.

So there are people who are doing this

for nefarious reasons is I I guess where

you're sort of getting at here. It's a

way to market. It's smart. It's smart.

If you fall, it's up to you. Yeah. Okay.

Well, there's also an industrial complex

according to some folks that

are backing this. If you've heard of

effective altruism, that was like this

uh movement of a bunch of I don't know,

I guess they consider themselves

intellectual sachs and they uh were kind

of backing a large swath of

organizations that I guess we would call

in the industry astroturfing or what do

they call it when you make so many of

these organizations that they're not

real in politics and flooding the zone

perhaps. So if you were to look at this

article here, Nick, I think you have the

AI existential risk um industrial

complex graphic there. It seems like a

group of people according to this

article have backed to the tune of 1.6

billion, a large number of organizations

to scare the be Jesus out of everybody

and make YouTube videos, Tik

Toks, and they've they've made a map of

it. There's some key takeaways here from

that article where it says here that

it's an inflated ecosystem. There's a

great deal of redundancy. Same names,

acronyms, logos with only minor changes.

Same extreme talking points. Same group

of people just with different titles.

Same funding source. There's a funding

source called Open Philanthropy which

was funded by Dustin Moskovitz who is

one of the Facebook billionaires. Jim,

you worked with him, right? I mean he

was wasn't he like Zuck's roommate at

Harvard or something and one of the

first engineers made a lot of money so

he funded this he he's he's an EA and he

funded this group called Open

Philanthropy which then has become the

feeder for essentially all these other

organizations which are almost different

fronts to basically the same underlying

EA

ideology and what's interesting is that

the guy who set this up for Dustin

Holden Karnovski who is a major

effective altruist and was doing out all

the money. He's married to Daario's

sister and she she's I guess associated

with EA and she was one of the

co-founders of Anthropic. So these are

not coincidences. I mean the reality is

there's a very specific ideological and

political agenda here. Now what is that

agenda? It's basically global AI

governance if you will. They want AI to

be highly regulated but not just at the

level of the nation state but let's say

internationally supernationally to

well if you just do a quick search on

global compute governance it'll tell you

what the key aspects are so number one

they want regulation of computational

resources this includes access to

GPUs they want AI safety and security

regulation they want international you

call from globalist agreements and they

want ethical and societal considerations

or policy built into this. Now, what

does that sound like? That sounds a lot

to me like what the Biden administration

was pursuing. Specifically, we had that

Biden executive order on AI, which was

100 pages of Bernson regulation that was

designed to promote AI safety, but had

all these DEI requirements. So, you

know, it led to woke AI. You remember

when Google launched Black George

Washington and so forth, they had the

Biden diffusion rule which created this

global licensing framework to sell GPUs

all over the world. So extreme

restrictions on proliferation of servers

of computing power. They created what's

called the AI safety institute and they

again fostered these international AI

summits. So if you actually look at what

the Biden administration was tangibly

doing in terms of policy and you look at

what EA's agenda is with respect to

global compute governance, they were

pushing hard on these fronts. And now if

you look at the level of personnel,

there were very very

powerful Biden staffers who now all work

in anthropic. So probably the most

powerful Biden staffer on AI over the

past four years was a lawyer named Tun

Chabra and he now works at Anthropic for

Daario. Elizabeth Kelly who was the

founding director of the AI safety

institute in the government now works at

Anthropic. Like I mentioned Daario's

sister is married to Holden Karnnowski

who dos out all the money to these EA

organizations. So if you were to do

something like create a network map, you

would see very quickly that there's

three key nodes here. There's the

effective altruist movement of which Sam

Bankman Freed's the most notable member

but which I think Dustin Mos is now the

main funer. There's the Biden

administration and like the key staffers

and then you've got anthropic and it's a

very tightly wound network. Now why does

this matter? Let's get Yeah. Also the

goals I think is Yes. Well, the the

goal, like I said, is is global compute

governance. It's basically establishing

national and then international

regulations of AI. Now, but they would

claim, let's just pause here for a

minute. They would claim the reason

they're doing it. And so, we we'll we'll

save if we believe this or not, but they

are concerned about job destruction in

the short term. They're also concerned

as science fiction as it is that the AI

when we get to like a sort of

generalized super intelligence is going

to kill humanity. That this is a nonzero

chance. Elon has said this before.

They've sort of taken it to a almost

like a certainty. Yes, we're going to

have so many of these general

intelligences. But they only believe

that when they're raising money. Well,

that's what I'm sort of getting at.

Like, so I think they believe it all the

time, but maybe maybe the press releases

are time for for the fun building. But

let me let me answer that. Right. Yeah.

Yeah. Look, I mean, it is a great

product. Claude kicks ass. I'm more

interested in the political dimension of

this. I'm not bashing a specific product

or company. But look, I think that there

is some nonzero risk of AI growing into

a super intelligence that's beyond our

control. They have a name for that. They

call it X risk or existential risk. I

think it's very hard to put a percentage

on that. I'm willing to acknowledge that

is a risk. You know, I think about that

all the time and I do think we should be

concerned about it. But there's two

problems I think with this approach.

Number one is X-Risk is not the only

kind of risk. I would say that China

winning the AI race is a huge risk. I

don't really want to see a CCP AI

running the world. And if you hobble our

own innovation, our own AI efforts in

the name of stomping out every

possibility of X-risk, then you probably

end up losing the AI race to China

because they're not going to abide by

those same regulations. So again, you

can't optimize for solving only one risk

while ignoring all the others. And I

would say the risk of China winning the

AI race is, you know, it might be like

30%. Whereas I think X risk is probably

a much lower percentage. So there are

there are other risks to to worry about.

And I I do think that they are

single-mindedly focused on scaring

people with some of these headlines

around first it was the bioweapons then

it was the super intelligence now it's

the job loss and I think it's a tried

andrue tactic of people who want to give

more power to the government to scare

the population right because if you can

scare the population and make them

fearful then they will cry out for the

government to solve the problem and

that's what I see here is that you've

got this elaborate network of front

organizations which are all motivated by

this EA ideology. They're funded by a

hardcore leftist. And by the way, I

became aware of Dustin's politics

because of the Chase Bodin recall. I

found out that he was a big funer of

Chase Bodin. Remember this? Yeah. Dustin

Mossmus and Carrie Tuna, his wife.

Also, Reed Hastings just joined the

board of of Anthropic. remember when he

back in 2016 to tried to drive Peter

Teal off of the board of Facebook for

supporting Trump. So, you know, these

are like committed leftists. They're

Trump haters. But the point is that

these are people who fundamentally

believe in empowering government to the

maximum more government and empowering

government to the maximum extent. Now my

problem with that is I actually think

that probably the single greatest

dystopian risk associated with AI is the

risk that government uses it to control

all of us. To me like you end up in some

sort of Orwellian future where AI is

controlled by the government and out of

all the risks we've talked about that's

the only one for which I've seen

tangible evidence. So in other words, if

you go back to last year when we had the

whole woke AI, there was plenty of

evidence that the people who were

creating these products were infusing

their left-wing or woke values into the

product to the point where it was lying

to all of us and it was rewriting

history. And there was plenty of

evidence that the Biden EO was trying to

enshrine that idea. Was basically trying

to require DEI be infused into AI

models. and it wanted to anoint two or

three winners in this AI race. So, I'm

quite convinced that prior to Donald

Trump winning the election, we were on a

path of global compute governance where

two or three big AI companies are going

to be anointed as the winners. And the

quid proquo is that they were going to

infuse those AI models with woke values.

And there was plenty of evidence for

that. You look at the policies, you look

at the models. This was not a

theoretical concern. This was real. And

I think the only reason why we've moved

off of that trajectory is because of

Trump's election. But we could very

easily be moved back onto that

trajectory. If you were to look at all

three opinions here and and put them

together, they could all be true at the

same time. You've got a a number of

people, some might call useful idiots,

some might call just, you know, people

with god complexes who believe they know

how the world should operate. Effective

altruism kind of falls into that. Oh, we

can make a formula that that's their

kind of idea where we can tell you where

to put your money, rich people, in order

to create the most good and you know,

we're these enlightened individuals with

the best view of the world. They might

be, who knows, maybe they're the

smartest kids in the room, but they're

kind of delusional. The second piece

I'll do here is I think you're

absolutely correct, Chimat, that there

are people who have economic interests

who are then using those useful idiots

andor delusional people with god

complexes to serve their need, which is

to be one of the three winners. And then

sack

Inherent to all of that is they have a

political ideology. So why not use these

people with delusions of grandeur in

order to secure the bag for their

companies for their investments and

secure their candidates into office so

that they can block further people from

getting H100s cuz they literally want

to. By the way, that's the part that's

very smart about what they're doing

because you know it's not like they're

illquid. They're full of liquidity in

the sense that you're bringing in people

that are very technically capable and

you're setting up these funding rounds

where a large portion goes right back

out the door via secondaries and so

there's all these people that are making

money having this worldview and so to

your point Jason it's going to cement

that worldview and then they are going

to propagate it even more aggressively

into the world. So I think the threshold

question is should you fear government

overregulation or should you fear

autocomplete and I would say you should

not be so afraid of the autocomplete

right now it may get so good that it's

an AGI but right now it's an

exceptionally good autocomplete. Yeah.

And I just think that again it's a tried

and trueue tactic of people who want to

give immeasurably more power to the

government to try and make people afraid

and they stampede people into these

policies. Right. And it gives them

power. Exactly. Now, why do I think this

is important to talk about? On last

week's show, I talked about the trip to

the Middle East and how we started doing

these AI acceleration partnerships with

the Gulf States who have a lot of

resources, a lot of money, and they're

intensely interested in AI. and the

Biden administration was pushing them

away. It basically said, "You can't have

the chips. You can't build data

centers." And it was pushing them into

the arms of China. The thing that I

thought was so bizarre is that the

various groups and organizations and

former Biden staffers who wrote this

policy have been agitating in Washington

and they've been trying to portray

themselves as China hawks. And I'm like,

wait, this doesn't make any sense

because this policy again, there's

there's basically two camps in this new

cold war. It's US versus China. you can

pull the Gulf States into our orbit or

you can drive them into China's orbit.

So, this to me just didn't make any

sense. And what's happened is that

frankly, you've got this EA ideology

that's really motivating things, which

is a desire to lock down compute, right?

They're afraid of proliferation. They're

afraid of diffusion. That's really their

motivation. and they're trying to

rebrand themselves as China hawks

because they know that in the Trump

administration that idea is just not

going to get much purchase. Right. And

your position as ZAR is a level playing

field. People compete and the good guys,

you know, the West should be supported

to hit artificial general intelligence

as fast as possible. So the bad guys,

China, don't get it first. That that's a

well open competition. I don't know if I

would frame it around AGI specifically,

but what I would say is that look, I

think our policy should be to win the AI

race because the alternative is that

China wins it. And that would be very

bad for our economy and our military.

How do you win the AI race? You got to

out innovate. You got to have

innovation. That means we can't have

overregulation and red tape. We got to

build out the most AI infrastructure,

data centers, energy, which includes our

partners. And then third, I think it

means AI diplomacy because we want to

build out the biggest ecosystem. We know

that biggest app store wins, biggest

ecosystem wins, right? And the policies

under the Biden administration were

doing the opposite of all those things.

But again, you have to go back to what

was driving that. And it was not driven

by this China hawk mentality. That is

now a convenient rebranding. It was

driven by this EA ideology, this

doomerism. And so this is why I'm

talking about it is I want to expose it

because I think a lot of people on the

Republican side don't realize where the

ideology is really coming from and who's

funding it. They're obviously Trump

haters and they need to be lumored quite

frankly

when we look at they do they need to be

lumored. I mean, you know, Freberg, I

want I want to come back around again

cuz I respect your opinion on, you know,

how close we are to turning certain

corners, especially in science. So, I

understand big picture you believe that

the opportunity will be there. Hey, we

got people out of fields, you know, in

the agricultural revolution, we put them

into factories, industrial revolution,

then we went to this information

revolution. So, your position is we will

have a similar transition and it'll be

okay.

But do you not believe that the speed

because we've talked about this

privately and and publicly on the pod

that this speed the velocity at which

these changes are occurring you would

agree are faster than the industrial

revolution much faster than the

information revolution. So let's one

more time talk about job displacement

and I think the real concern here for a

group of people who are buying into this

ideology is specifically unions job

displacement. This is something the EU

cares about. This is something the Biden

administration cares about. If truck

drivers lose their jobs, just like we

went to bat previously for coal miners,

and there were only 75,000 or 150,000 in

the country at the time, but it became

the national dialogue. Oh my god, the

the the coal

miners. How fast is this going to

happen? One more time on drivers

specifically. Okay, coders, you think

there'll be more code to write, but

driving, there's not going to be more

driving to be done. So is this time

different in terms of the velocity of

the change and the job displacement in

your mind? Freedber the velocity is

greater but the benefit will be faster.

So the benefit of the industrial

revolution which ultimately drove lower

price products and broader availability

of products through manufacturing was

one of the key outputs of that

revolution. Meaning that we created a

consumer market that largely didn't

exist prior. Remember prior to the

industrial revolution, if you wanted to

buy a table or some clothes, they were

handmade. They were kind of artisal.

Suddenly, the industrial revolution

unlocked the ability to massproduce

things in factories. And that dropped

the cost and the availability and the

abundance of things that everyone wanted

to have access to, but they otherwise

wouldn't have been able to afford. So

suddenly everyone could go and buy

blankets and clothes and canned food and

all of these incredible things that

started to come out of this industrial

revolution that happened at the time.

And I think that folks are

underestimating and underrealizing the

benefits at this stage of what's going

to come out of the AI revolution and how

it's ultimately going to benefit

people's um availability of products,

cost of goods, access to things. So the

counterbalancing force Jcal is

deflationary which is um let's assume

that the cost of everything comes down

by half. That's a huge relief on

people's need to work 60 hours a week.

Suddenly you only need to work 30 hours

a week and you can have the same

lifestyle or perhaps even a better

lifestyle than you have today. So the

counterargument to your point, and I'll

talk about the pace of change in

specific jobs in a moment, but the

counterargument to your point is that

there's going to be this cost reduction

and abundance that doesn't exist today.

Give an example. Let's give like some

examples that we could see automation

and food prep. So we're seeing a lot of

restaurants install robotic systems to

make food and people are like, "Oh, job

loss, job loss." But let me just give

you the counter side. The counter side

is that the cost of your food drops in

half. So suddenly, you know, all the

labor cost that's built into making the

stuff you want to pick up, everyone's

freaking out right now about inflation.

Oh my god, it's $8 for a cup of coffee.

It's $8 for a latte. This is crazy,

crazy, crazy. What if that dropped down

to two bucks? You're going to be like,

man, this is pretty awesome with good

service and good experience. And don't

make it all dystopian, but suddenly

there's going to be this like incredible

reduction or deflationary effect in the

cost of food. And we're already starting

to see automation play it way in the

food system to bring inflation down. And

that's going to be very powerful for

people. Shout out to uh ita cloud

cushions and cafe X. We all took swings

at the bat at that exact concept is that

it could be done better, cheaper,

faster. One of the amazing things of

these vision action models that are now

being employed is you can rapidly learn

using vision systems and then deploy

automation systems in those sorts of

environments where you have a lot of

kind of repetitive tasks that the system

can be trained and installed in a matter

of weeks. And historically that would

have been a whole startup that it would

have taken years to figure out how to

get all these things together and custom

program it, custom code it. So the flip

side is like when Uber hit those people

were not drivers. Think about the jobs

that all those people had prior to Uber

coming to market. And then the reason

they drove for Uber is they could make

more money driving for Uber or now

driving or Door Dash and the

flexibility. So their lifestyle got

better. They had all of this more

control in their life. Their incomes

went up. And so there's a series of

things that you are correct won't make

sense in the future from a kind of

standard of work perspective. But the

right way to think about it is

opportunity gets created. New jobs

emerge, new industry, new income, costs

go down. And so I keep harping on this

that it's really hard today to be very

prescriptive to Sax's point about what

exactly is around the corner. But it is

an almost certainty that what is around

the corner is more capital will be

deployed. That means the economy grows.

That means there's a faster deployment

of growth of new jobs, new opportunities

for people to make more money, to be

happier in the work that they do. And

the flip side being things are going to

get cheaper. So, I mean, I know we're

waxing philosophical here, but I think

it's really key because you can focus on

the one side of the coin and miss the

whole other. And that's what a lot of

journalist commentators and fearongerers

do is they miss that other side. Got it.

Well said, Freeberg. Well said. I think

I've heard Satcha turn this question

around about job loss saying well do you

believe that GDP is going to grow by 10%

a year because what are we talking about

here I in order to have the kind of

disruption that you're talking about

where I don't know 10 to 20% of

knowledge workers end up losing their

jobs AI is going to have to be such a

profound force that it's going to have

to create GDP growth like we've never

seen before. That's right. So, it's

easier for people to say, "Oh, well, 20%

of people are going to lose their jobs."

But wait, are we we're talking about a

world in where the economy is growing

10% every year. Like, do do you actually

believe that's more income? That's more

income for everyone. That's new jobs

being created. It's an inevitability.

We've seen this in every revolution. You

know, prior to the industrial

revolution, 60% of Americans worked in

agriculture. And when the tractor came

around and factories came around, those

folks got to get out of doing manual

labor in the fields where they were

literally, you know, tilling the fields

by hand. and they got to go work in a

factory where they didn't have to do

manual labor to move things. Yeah, they

did things in the factory with their

hands, but it wasn't about grunt work in

the field all day in the sun. And it

became a better standard of living. It

became new jobs. And today, it became a

5day work week. It went from a 7day 7day

work week to five, 100 hours a week to

45, 50 hours a week. And now I think the

next phase is we're going to end up in

less than 30 hours a week with people

making more money and having more

abundance for every dollar that they

earn with respect to what they can

purchase and the lives they can live.

That means more time with your family,

more time with your friends, more time

to explore interesting opportunities.

So, you know, we've been through this

conversation a number of times. I I know

I'm not No, it's important to bring it

up, I think, and and really unpack it

because the fear is peing now, Sachs.

People are using this moment in time to

scare people that hey the jobs are going

to go away and they won't come back. But

what we're seeing on the ground saxs is

I'm seeing many more startups getting

created and able to accomplish more

tasks and hit a higher revenue per

employee than they did in the last two

cycles. So it used to be you know you

try to get to a quarter million in

revenue per employee than 500. Now we're

regularly seeing startups hit a million

dollars in revenue per employee,

something that was rarified air

previously, which then speaks to your

point, Freeberg, that there'll be more

abundance. There'll be more capital

generated, more more capital deployed,

with more capital deployed for more

opportunities, but you're going to need

to be more resilient. I think yeah, I

think it's actually very hard to

completely eliminate a human job. the

the ones that you cited and JK you keep

citing the same ones because I actually

don't think there's that many that fit

in this category the drivers and maybe

level one customer support because those

jobs are so monolithic but when you

think about even like what a salesperson

does right it's like yes they spend a

lot of time with prospects but they also

spend time negotiating contracts and

they spend time doing postale

implementation and follow-up and they

spend time learning the product and

giving feedback I mean it's a

multifaceted job and you can use AI I to

automate pieces of it, but to eliminate

the whole job is actually very hard. And

so I just think this idea that boom, 20%

of the workforce is going to be

unemployed in two years. I just don't

think that it's going to work that way.

But look, if there is widespread job

disruption, then obviously the

government's going to have to react and

we're going to be in a very different

societal order. But my point is, you

want the government to start reacting

now before this actually happens. We

don't need to be precogs and predict it.

Yeah. It's a total power grab. It's a

total power grab to give the government

and these organizations more power

before the risk is even manifested. And

let me say this as well with respect to

all these regulations that were created,

the 100page by NEO and the 200page

diffusion rule, none of these

regulations solve the excess problem.

None of these things actually would

prevent the most existential risk that

we're talking about. They don't solve

for alignment. They don't sign for the

kill switch. None of that. Yeah. If

someone actually figures out how to

solve that problem, I'm all ears. You

know, look, I'm not cavalier about these

risks. I understand that they exist, but

I'm not in favor of the fear-mongering.

I'm not in favor of giving all this

power to the government before you even

know how to solve these problems.

Shimath, you did a tweet about

entry-level jobs being toast. So, I

think there is a nuance here. Uh, and

both parties could be correct. I think

the job destruction is happening as we

speak. I'll just give what one example

and then drop to you, Chimath. One job

in startups that's not driving a car or

you know super entry level was people

would hire consultants to do recruitment

and to write job descriptions. Now I was

at a journal last night talking to a

bunch of founders here in Singapore and

I said how many people have used AI to

write a job description? Everybody's

hand went up. I said how many of you

with that job description was that job

description better than you could have

written or any consultant? And they they

all said yes 100% AI is better at that

job. That was a job a highlevel HR

recruitment job or an aspect of it sack.

So that was half the job, a third of the

job. To your point, the chores are being

automated. So I do think we're going to

see entrylevel jobs. Shimoth, the ones

that get people into an organization,

maybe they're going away. And that was

that your point of your tweet, which

we'll pull up right here. If a GPT is a

glorified

autocomplete, how did we used to do

glorified autocomplete in the past? It

was with new grads. New grads were our

autocomplete. And to your point, the

models are good enough that it

effectively allows a person to rise in

their career without the need of new

grad grist for the mill, so to speak.

So, I think the reason why companies

aren't hiring nearly as many new grads

is that the the folks that are already

in a company can do more work with these

tools. And and I think that that's a

very good thing. So you're generally

going to see OPEX as a percentage of

revenue shrink naturally and you're

going to generally see revenue per

employee go up naturally but it's going

to create a tough job market for new

grads in the established organizations.

And so what should new grads do? They

should probably steep themselves in the

tools and go to younger companies or

start a company. I think that's the only

solution for them. Bingo. The most

important thing for whether there are

jobs available for new grads or not is

whether the economy is booming. So

obviously in the wake of a financial

crisis, the jobs dry up because

everyone's cost cutting and those jobs

are the first ones to get

cut. But if the economy is booming, then

there's going to be a lot more job

creation. And so again, if AI is this

driver and enabler of tremendous

productivity, that's going to be good

for economic growth. And I think that

that will lead to more company

formation, more company expansion at the

same time that you're getting more

productivity. Now, to give an example,

one of the things I see a lot discussed

online about these coding assistants is

that they make junior programmers much

better because, you know, if you're

already like a 10x programmer, very

experienced, you already knew how to do

everything. And you could argue that the

people who benefit the most are the

entry-level coders who are willing to

now embrace the new technology and it

makes them much more productive. So in

other words, it's a huge leveler and it

takes an entry-level coder and makes

them 5x or 10x better. So look, this is

an argument I see online. The point is

just I don't think we know how this cuts

yet. I agree. And I just think there's

like this this dumerism is premature and

it's not a coincidence that it's being

funded and motivated by this hardcore

ideological element. I'll tell you my

hiring experience. We have about 30

people at 8090 and the way that I have

found it to work the best is you have

senior people act as mentors and then

you have an overwhelming corpus of young

very talented people who are AI native.

And if you don't find that mix, what you

have instead are L7s from Google and

Amazon and Meta who come to you with

extremely high salary demands and stock

demands and they just don't thrive. And

part of why they don't thrive is that

they push back on the tools and how you

use them. They push back on all these

things that the tools help you get to it

faster. M this is why I think it's so

important for the young folks to just

jump in with two feet and be AI native

from the jump because you're much more

hirable frankly to the to the emergent

company and the bigger companies you'll

have a lot of these folks that see the

writing on the wall may not want to

adapt as fast as otherwise. Another way

for example that you can measure this is

if you look inside your company on the

productivity lift of some of these

coding assistants for people as a

distribution of age. What you'll see is

the younger people leverage it way more

and have way more productivity than

older folks. And I'm not saying that as

an aegis comment. I'm saying that it's

an actual reflection of how people are

reacting to these tools. What you're

describing is a paradigm shift. It is a

big leap. Is you know it's like when I

went to college, when I took computer

science, it was object-oriented

programming. It was like C++. It was

compiled languages. It was gnarly. It

was nasty work. And then you had these

highle abstracted languages. And I used

to remember at Facebook, I would just

get so annoyed because I was like, why

is everybody using PHP and Python? This

is like not even real. But I was one of

these old lights who didn't understand

that I just had to take the leap. And

what it did was it grew the top of the

funnel of the number of developers by

10x. And as a result, what you had were

all of these advancements for the

internet. And I think what's happening

right now is akin to the same thing

where you're going to grow the number of

developers upstream by 10x. But in order

to embrace that, you just have to jump

in with two feet. And if you're very

rigid in how you think the job should be

done technically, I think you're just

going to get left behind. Just a little

interesting statistic there. Microsoft

announced 6,000 job layoffs, about 3% of

their workforce, while putting up record

profits while being in incredible cash

position. Total confirmation bias. It's

like now every time there's a layoff

announcement, people try to tie it to AI

to feed this doomer story. I don't think

that's an AI story. I well I actually

think it I don't think it's an AI story.

I think it is because the people they're

eliminating are management and I think

the the management layer becomes less

you're saying it was it was entry level

employees. Now you're saying it's

management. This is total confirmation.

I think those are no no I think those

are two areas that specifically get

eliminated. Entry level it's too hard.

It it's too hard to give them the grunt

work. And then for the managers who are

old and I've been there for 20 years.

Hold on. Let me finish. Th for those

people I think they are unnecessary in

this new AI management. What are you

talking about? What what is the AI agent

that's doing management right now in

companies? Oh theory doesn't even make

sense. Oh no it it totally does. There

are tools now that are telling you this

is these are the most productive people

in the organization. Shath just outlined

who's shipping the most etc. who's using

the tools. And then people are saying,

well, why do we have all these highly

priced people who are not actually

shipping code who are LSAs? You're

totally falling for some sort of

narrative here. This makes no sense. I

don't think I am. Yeah, let me be very

clear what I'm saying. What I am saying

is AI natives are extremely productive.

They use these tools. They're very fil

with them. I think it's very reductive,

but what you see is the older or more

established in your career you are in

technical roles, what I see is that it's

harder and harder for folks like that to

embrace these tools in the same way.

Now, how does it play out in terms

of jobs? I think that just these tools

are good enough where the net new

incremental taskoriented role that would

typically go to a new grad, a lot of

that can be defayed by these models.

That's what I'm saying very clear

specifically and I don't think that

speaks to management. I agree with Sax.

It doesn't do Sergey said Freeberg when

he came to uh our F1 that management

would be the first thing to go. I was

talking to some entrepreneurs last night

again here in Singapore and they are

taking all the GitHub and and Jira cards

and and things that have been submitted

plus all the Slack messages in their

organization and they're putting them

into an LLM and having it write

management reports of who is the most

productive in the organization. And in

the new version of Windows, it's

monitoring your entire desktop. Freeberg

management is going to know who in the

organization is actually doing work,

what work they're doing, and what the uh

result of that work is through AI. That

is the future of management. And you

take out all bias, all you know,

loyalty, and the AI is going to do that.

Couldn't disagree with you more saxs on

that, but Freeberg, you wanted to wrap

somewhere on this point. My point is

that AI managers are not losing their

job because AI is replacing them. I

didn't say that AI wouldn't be a

valuable tool for managers to use. Sure,

AI would be a great tool for managers,

but we're not anywhere near the point

where managerial jobs are being

eliminated because they're getting

replaced by AI agents. We're still at

the chatbot stage of this. Literally,

Sergey said he took their internal

Slack, went into like a dev

conversation, and said, "Who are the

underrated people in this organization

who deserve a raise?" and it gave him

the right answer. So, wait, that doesn't

allow you to cut 6,000 people. I think

it's happening as we speak. It's just

not over. You You fell for this

narrative. You grasped onto this

Microsoft restructuring where they

eliminated 6,000 roles and you're trying

to attribute that to AI now. I think it

has to do with AI. I think management is

looking at it saying, "We are going to

replace these positions with AI. We

might as well get rid of them now." It

is in flux. We'll see who's right in the

coming months. Can I make another

comment, Freick? wrap this up here so we

can get on to the next topic. This is a

great topic. This is I want to make one

last point which I think and Sax you may

not appreciate this so we can have a a

healthy argument about this. I think in

the same way that all of this jobs are

going to get lost to AI fear-mongering.

There's a similar narrative that I think

is a false narrative around there's a

race in AI that's underway between

nation states. And the reason I think

it's false is if I asked you guys the

question, who won the industrial

revolution? The industrial revolution

benefited everyone around the world.

There are factories and there's a

continuous effort and continuous

improvements in manufacturing processes

worldwide. That is a continuation of

that revolution. Similar if I asked who

won the internet race, there were

businesses built out of the US,

businesses built out of China,

businesses built out of India and Europe

that have all created value for

shareholders, created value for

consumers, changed the world, etc. And I

think the same is going to happen in AI.

I don't think that there's a finish line

in AI. I think AI is a new paradigm of

work, a new paradigm of productivity, a

new paradigm of business, of the

economy, of livelihoods, of pretty much

everything uh every interaction humans

have with ourselves and the world around

us will have in its substrate AI and as

a result, I think it's going to be this

continuous process of improvement. So,

I'm not sure. Look, there there are

different models and you can look at the

performance metrics of models, but you

can get yourself spun up into a tizzy

over which model is ahead of the others.

Which one's going to quote get to the

finish line first? But I think at the

end of the day, the abundance and the

economic prosperity that will arise from

the continuous performance improvements

that come out of AI and AI development

will benefit all nation states and

actually could lead to a little bit more

of a less resource constrained world

where we're all fighting over limited

resources and there's nation state

definitions around who has access to

what and perhaps more abundance which

means more peace and uh less of this

kind of resourced world. your thought on

the kumbaya theory exposed by Freeberg.

Yeah, exactly. Um I I'll partially agree

in the sense that I don't think the AI

race is a finite game. It's an infinite

game. I I agree that there's no finish

line, but that doesn't mean there's not

a race going on. So for example, an arms

race would be a classic example of a

competition between countries to see who

is stronger to basically amass power and

they might be neutralizing each other.

The balance of power may stay in

equilibrium even though both sides feel

the need to constantly uplevel their

arms, their power. Yeah. And so I think

that to use the the term that Mir

Shimemer used at the all-in summit, we

are in an iron cage. The US and China

are the two leading countries in the

world economically, militarily,

technologically. They both care about

their survival. The best way to ensure

your survival in a self-help world is by

being the most powerful. And so these

are great powers who care a lot about

the balance of power. And they will

compete vigorously with each other to

maintain the greatest balance of power

between them. and high-tech is a major

dimension of that competition and within

high-tech AI is the most important

field. So look, there is going to be an

intense competition around AI. Now the

question is how does that end up? I mean

it could end up in a tie or in it could

end up in a situation where both

countries benefit. Maybe open source

wins. Maybe neither side gains a

decisive advantage. that they're

absolutely going to compete because

neither one can afford to take the risk

that the other one will develop a

decisive advantage. Prisoners dilemma.

Nuclear proliferation is a good analogy.

I would argue nuclear deterrence led to

a more peaceful world in the 20th

century. I mean is that fair to say Sax

that ultimately what happened with

nuclear is that the actual underlying

technology hit you know an asmtote right

it plateaued right and so we ended up in

a situation where in the case of the

United States versus Soviet Union where

both sides had enough nukes to blow up

the world many times over and there

wasn't really that much more to innovate

so you know the the the underlying

technological competition had ended the

the dynamic was more stable and they

were able to reach an arms control

framework to sort of control the arms

race, right? I think AI is a little

different. We're in a situation right

now where the technology is changing

very very rapidly and it's potentially

on some sort of exponential curve and so

therefore being a year ahead even 6

months ahead could result in a major

advantage. I think under those

conditions both sides are going to feel

the need to compete very vigorously. I

don't think they can sign up. This is a

system of productivity right for an

agreement to slow each other down. I

just don't nuclear was not a system of

productivity. It was not a system of

economic growth. It was a system of

literally destruction. And this is quite

different. This is a system of making

more with less which unleashes benefits

to everyone in a way that perhaps should

be calming down the conflict in the

potential. You got to admit that there's

a there is a potential dual use here.

There's no question that the armies of

the future are going to be drones and

robots and they're going to be AI

powered. Yeah. And as long as that's the

case, these countries are going to

compete vigorously to have the best AI

and they're going to want their leaders

or national champions or startups and so

forth to win the race. What's the worst

case, Saxs, if if China wins the AI

race? What is the worst case scenario?

Ask what it means first. Ask Sax. That's

literally what I'm asking. Like what

would that scenario be? Would they

invade America and they dominate us

forever? What does it mean to citizen?

Yeah. What does it mean to win? Yeah. To

me, it would mean that they achieve a

decisive advantage in AI such that we

can't leaprog them back. And an example

of this might be something like 5G where

Huawei somehow leaprogged us, got to 5G

first and disseminated it through the

world. They weren't concerned about

diffusion. They were interested in

promulgating their technology throughout

the world. If the Chinese win AI, they

will sell more products and services

around the globe than the US. This is

where we have to change our mindset

towards diffusion. I would define

winning as the whole world consolidates

around the American tech stack. They use

American hardware in data centers that

again are are fundamentally powered by

American technology. And you know just

look at market share. Okay? If we have

like 80 to 90% market share that's

winning. If they have 80% market share

then we're in big trouble. So it's very

simple. It means like yeah but if the

market grows up by 10x it doesn't matter

because the world will have every

individual in every country will now

have more they will have a more

prosperous life and as a result it's not

necessarily the framing about if we

don't get there first we are necessarily

going to lose I get that there's an edge

case of conflict or what have you but I

do think that there's a net benefit

where the whole world suddenly is in

this more prosperous state and this is a

classic example of a dual use technology

where there are both economic benefits

and there are military benefits. Yes,

GPS would come to mind in this example,

right? Like my summary point is just

that it's not all about a losing game

with respect to this quote race with

other nation states. But at the end of

the day, yes, there is risk, but I do

think that if the the pace of

improvement stays on track like it is

right now, holy I think we're in a

pretty good place. That's just my point.

Okay. Some positivity. Okay. Look, I I

hope that the AI race stays entirely

positive and it's a healthy competition

between nations and the competition

spurs them on to develop more prosperity

for their citizens. But as we talked

about in the AI summit, there's two ways

of looking at the world. There's kind of

the economist way that Jeffrey Saxs was

talking about and then there's the

balance of power way or realist way

which Mir Shmer was talking about. And

when economic prosperity and survival or

balance of power come into conflict,

it's the realest view of the world that

it's the balance of power that gets

privileged. And I just think that's the

way that governments operate is that

prosperity is incredibly important. We

want economic success, but power is

ultimately privileged over that. And

this is why we're going to compete

vigorously in high-tech. That's why

there is going to be an AI race. Okay,

perfect segue. We should talk a little

bit about what was the topic of

discussion yesterday. I had a lunch with

a bunch of family offices and capital

allocators uh government folks here in

Singapore and they were talking about

our discussion last week about the big

beautiful bill and the debt here in the

United States. It's permeating

everywhere. The two conversations at

every stop I've made here is the big

beautiful bill and the balance sheet of

the United States as well as tariffs.

So, we need to maybe revisit our

discussion last week. Chimath, you had

uh and Freeberg did a an impromptu call

with Ron Johnson over the weekend, which

then spurred him going on 20 other

podcasts to talk about this. Steven

Miller from the administration has been

tweeting some corrections or his

perceived corrections about the bill.

And Sax, uh, I think you've also started

tweeting this. Where do we want to

start? Maybe. Well, I think there are

just a couple of facts that should be

cleaned up because Okay, so facts from

the administration, their view of our

discussion. Well, even though I was

defending the bill last week on the

whole, I wasn't saying it was perfect. I

was just saying it was better than the

status quo. Yeah, you were clear about

that. Yeah. Yeah. But even even I in

doing that was conceding some points

that I think were just factually wrong.

And the big one was that I said I was

disappointed that Doge the Doge cuts

weren't included in the big beautiful

bill. What Steven Miller has pointed out

is that reconciliation bills can only

deal with what's called mandatory

spending. They can't deal with what's

called discretionary spending. And since

the Doge cuts apply to discretionary

spending, they just can't be dealt with

in a reconciliation bill. They have to

be dealt with separately. There can be a

separate recision bill that comes up,

but it can't be dealt with in this bill.

And just to be very clear, look, if the

Doge cuts don't happen through recision,

I'm going to be very disappointed in

that. I really want the Doge cuts to

happen, but it's just a fact that the

Doge cuts cannot happen in the big

beautiful bill. It's not that kind of

bill. And I think it's therefore wrong

to blame big beautiful bill for not

containing Doge cuts when the Senate

rules don't allow that. You know, it all

goes back to the the Bird rules. There

are only specific things that can be

dealt with through reconciliation, which

is this 50 vote threshold, and it has to

be quote unquote mandatory spending.

discretionary cuts are dealt with in

annual appropriations bills that require

60 votes. Now look, this is kind of a

crazy system. I don't know exactly how

it evolved. I guess Robert Bird is the

one who came up with all this stuff and

maybe they need to change the system,

but it's just wrong to blame the big

beautiful bill for not containing the

Doge cuts. That's just a fact. Okay, so

the other thing is that the BBB does

actually cut spending. It's just not

scored that way because when the

bill removes the sunset provision from

the 2017 tax cuts, the CBO ends up

scoring that as effectively a spending

increase. But tax rates are simply

continuing at their current level. In

other words, at this year's level. So if

you used the current year as your

baseline, okay, and then compared it to

spending next year, it would score as a

cut in spending. So it's just not it's

not correct to say this bill increases

spending. It does actually result in a

mandatory spending cut, but it's not

getting credit for that because we're

continuing the tax rates at the current

year's rates. Do you believe Sachs that

this administration which you are part

of in four years will have spent will

have balanced the budget. Will it have

reduced the deficit or will the deficit

continue to grow at 2 trillion a year?

What is your belief because there's a

lot of strategies going on here. Yeah.

My my belief is that President Trump

came into office inheriting a terrible

fiscal situation. I mean basically that

he created and that Biden created. They

both put 8 trillion. They both put 8

trillion on the debt. It's a big

difference. It's a big difference to add

to the deficit when you're in the

emergency phase of

CO for that. Sure. It's emergency

spending. It was never supposed to be

permanent and then somehow Biden made it

permanent and he wanted a lot more.

Remember build back better? He wanted a

lot more. So, you know, it's it's tough

when you come into office with a what is

$2 trillion annual deficit. So, to my

original question, now look, hold on.

Would I like to see the deficit

eliminated in one year? Yeah,

absolutely. But there's just not the

votes for that. Well, I asked you for

there's a one vote margin here in the

House and the Democrats aren't

cooperating in any way. So, I think that

the administration is getting the most

done that it can. This is a mandatory

spending cut and I think the Doge cuts

will be dealt with hopefully through

recision in a subsequent bill. I'm

asking you about four years from now.

Will we be sitting here in four years?

Will Trump have cut spending by the end

of this term? In another three and a

half years, will we be looking at a

balanced budget? potentially is that the

goal of the administration or will we be

at 42 44 45 trillion at the end of

Trump's second term? David said, listen,

if you want that level of specificity,

you're going to have to get Scott Besson

on. Okay, this is just not my area. I'm

not going to pretend to have that level

of detailed answers. But what I believe

is that the Trump administration's

policy is to spur growth. I think that

these tax policies will spur growth. I

think that AI will also be a huge

tailwind. It'll be a productivity boost.

I think let's stop being doomers about

it. We need that productivity boost and

I think that the net result of those

things will be to improve the fiscal

situation. Do I want more spending cuts?

Yeah, but look, we're getting more than

was represented last week. Let's put it

that way. Okay, fair enough. Sax, thank

you for the cleanup there. Chimath, our

bestie Elon was on the Sunday shows and

he said, "Hey, the bill can be big or it

can be beautiful. It can't be both." He

seems to be, I'll say, displeased or

maybe not as optimistic about balancing

the budget and and getting spending

under

control, but he he still believes in

Doge, obviously, and and and hopefully

Doge continues. You seemed a little bit

concerned last week. A week's passed.

You've heard some of Steven Miller's

opinions. Where do where do you net out

seven days from our big beautiful budget

bill debate last week, a week later?

Well, I mean, I think Steven's critique

of

how the media summarized the reaction to

the bill is accurate.

And I think it's probably useful to

double click into one thing that Saxs

didn't mention, but that Steven did. A

lot of this pivots around the CBO, which

is the Congressional Budget Office, and

how they look at these bills, and

there's a lot of issues with how they do

it.

In one specific case, which Sax just

mentioned and Stephen talked about, is

that they have these arcane rules about

the way that they score things. And what

they were assuming is that the tax rates

would flip

back to what they were before the first

Trump tax cuts, which obviously would be

higher than where they are today. What

that would mean in their financial model

is we were going to get all that money

now to maintain the tax cuts where we

are. They now then would look at that

and say, "Oh, hold on. That's a loss of

revenue. Why are all of these things

important?"

I downloaded the CBO model, went through

it, and what I would say is at best it's

Spartan, which means that I don't think

a financial analyst or somebody that

controls a lot of money will actually

put a lot of stock in their model. I

think what you'll have happen is people

will build their own versions bottoms

up. Do you trust it, the the CBO's

version of this, or do you largely trust

it? I don't think the CBO really knows

what's going on to be totally honest

with you. Okay. I think that there are

parts of what they do which they're also

opaque on. Nick, I sent you a tweet from

Goldman Sachs. So, here is what Goldman

put out. Now, the point is when you

build a model, what you're trying to do

is net out all of these bars, okay?

You're trying to add the positive bars

and the negative bars, and you figure

out what is the total number at the end

of it. Now, in order to do that, when

you see the bars on the far right,

that's a 20 $34. That's very different

than a 20 $25. The CBO doesn't disclose

how they deal with that. They don't dis

disclose the discount rate. So you can

question what that is. The CBO makes

these assumptions that, you know, as

Steven pointed out, are very brittle

with respect to the tax plan. That's not

factored in here. So those are the

issues with the way the CBO scores it.

So you have to do it yourself. Now,

Peter Navaro published an article which

I think is probably the most pivotal

article about this whole topic.

Peter of tariff fame. Yeah. Yeah. Here I

think he nails it right in the bullseye,

which is the bond market needs to make a

decision on one very critical assumption

when they build their own model. Okay,

so let's ignore the

CBO's kind of brittle math and the Excel

that they post on their website. People

are going to do their own because

they're talking about managing their own

money. But Navaro basically points to

the critical thing which is listen those

CBO assumptions also include a fatal

error which is they assume these very

low levels of

GDP. What you're probably going to see

in Q2 is a really hot GDP print. If I'm

a betting man, which I am, I think the

GDP prints going to come in above three.

Not quite four, but above three. And so

what Peter is saying here is, hey guys,

like you're estimating 1.7% GDP. why

don't you assume 2.2 two or why don't

you assume 2.7 or any number or really

what he's saying is why don't you build

a sensitivity so that you can see the

implications of that and I think that

that is a very important point okay so

where do I net out a week later Jason

it's pretty much summarized in the tweet

that I posted earlier today so over the

last week as people have digested it I

think that there are small actors in

this play and big actors the biggest

actor is obviously President President

Trump. But the second biggest actor is

the long end of the bond market. These

are the central bankers, the long bond

holders, and these macro hedge funds.

Why? Because they will ultimately

determine the United States's cost of

capital. How expensive will it be to

finance our deficits irrespective of

whatever the number is. It could be a

dollar or it could be a trillion

dollars. That doesn't matter right now.

The point is what is going to be our

cost of capital? And what's happened

over the last little while is that

they've steepened the curve and they've

made it more expensive for us to borrow

money. That's just the fact. So how do

we get in front of this? I think the

most important thing if you think about

what Peter Navaro said is this plan and

the bill can work if we get the GDP

right. Okay. So how do you get the GDP

right? And this is where I have one very

narrow set of things that I think we

need to improve. And the specific thing

that I'll go back to is today

America is at a supply demand tradeoff

on the energy side. What does that mean?

We literally consume every single bit of

energy that we make. We don't have slack

in the

system. We are growing our energy

demands on average about 3% a year.

So I think the most critical thing we

need to do is to make sure the energy

markets stay robust. Meaning there's a

lot of investment that people are

making. On Tuesday I announced a deal

that I did building a 1 gawatt data

center in Arizona. This is a lot of

money. This is little old me. But there

are lots of people ripping in huge huge

huge checks, hundreds of billions of

dollars. I think the sole focus has to

be to make sure that the energy policy

of America is robust and it keeps all

the electrons online. If there's any

contraction, I think it'll hit the GDP

number because we won't have the energy

we need and that's where things start to

get a little funky. So, I think where I

am is I think President Trump should get

what he wants. I think the bill can work

narrowly address the energy provisions

and I think we live to fight another

day. So

Freiriededberg cynical approach might be

we're working the refs here. The CBO is

not taking into GDP. This GDP has a

magical unicorn in it. AI and energy is

going to spur this amazing growth. But

the bond markets don't believe it

either. So, are we looking at just a

GOP, a party, I'll put the

administration aside, that is just as

recklessly spending as the Democrats,

and they want to change the formula by

which they're judged in the future, that

there's going to be magically all this

growth and growth solves all problems.

And what we really need to do to your

point I think two weeks ago that this is

just disgraceful to put up this much

spending and we have to have austerity

and we need to increase uh maybe the

discipline in the country and both

parties have to be part of that. I'm

asking you uh from the cynical

perspective maybe to represent or steal

me on the other side here.

We had a conversation with Senator Ron

Johnson after we recorded the pod last

week and he was very clear in a key

point which is that this bill addresses

mandatory spending. Just to give you a

sense 70% of our federal budget is

mandatory spending. 30% falls into that

discretionary category. The mandatory

spending is composed of the interest on

the debt which is now well over a

trillion dollars a year on its way to a

trillion five almost a trillion a year.

Medicare, Medicaid, Social Security and

some other income security programs. And

as Ron Johnson shared with us over the

years more and more programs have been

put into the mandatory spending category

and so you can get past the

filibustering in the Senate to be able

to get budget adjustments done. The key

thing he's focused on and Rand Paul is

focused on and I've talked about is the

spending level of our mandatory

programs. The big beautiful bill

proposes a roughly $70 billion per year

cut in Medicaid. Okay, and that sounds

awful. How could you do that to people?

In 2019, the year before COVID, Medicaid

spending was $627 billion. 2024 it was

914 billion. So the $70 billion cut gets

you down to 840. You're still roughly

call it 40% above where you were in

2019. So is that the right level? And

fundamentally the opportunity to cut

those mandatory programs, which I know

sounds awful, to cut Social Security and

cut Medicaid, but the reality is they're

not just being cut from a low level.

They're being cut from a level that's 60

plus% higher than they were in 2019. And

I gave you another example which is the

SNAP program, the food stamp program.

Again, uh $15 billion of the 120 a year

that we spend on food stamps is being

used to buy soda and a whole another

chunk of that 120 is being used to buy

other junk food. So that they have

proposed in this bill to cut SNAP down

to 90 and it was 60 in 2019. So it's

still 50% above where it was in 2019. So

the key point that's being made by Ron

Johnson and others is that the spending

on these mandatory programs which

account for nearly threequarters of our

federal budget are still very elevated

relative to where we were in 2019. And

we are not going to get out of our

deficit barring a massive increase in

GDP without changes to the spending

level. Now I don't put the blame on the

White House. This bill passed with one

vote in the House. One vote. And so a

key point to note, and I've said this

from day one, and every time I've gone

to DC and every time we've talked about

Doge, I've said there's no way any of

this stuff's going to change without

legislative action from the Congress.

And here we are seeing Congress, for

whatever reason, you can listen to Ron

Johnson. You can listen to Rand Paul.

You can listen to others say, you know

what, we can't cut that deep. It is

going to be too harmful to our

constituents. We need to keep the

programs at their current levels or make

no changes at all or only modest

changes. And that's where we are. That's

the reality. Now, I do think that Navaro

did an excellent job in his op-ed for

whatever criticism we may want to lay on

Navaro for many other things. He pointed

out that the CBO projections in 2017 for

the next year's GDP growth numbers was

1.8 to 2% and it actually came in at

2.9%. a full one point higher because of

the tax and jobs act that was passed by

the Trump administration in 2017. So the

additional money that goes into

investments because lower taxes are

being paid fueled GDP growth. This is

what some people call trickle down

economics. People ridicule it. They say

it doesn't work. It's not real. But in

this particular instance, they cut taxes

and the GDP grew much faster than was

projected or estimated by the economists

at the CBO. So the argument that's being

made is that we are not capturing many

of the upsides in the GDP numbers that

are being projected. And I will be

honest about this. I don't think anyone

knows how much the GDP is going to grow.

We don't know the economic benefit and

effects of AI. We don't know the

economic benefits and effects of the

work that's being done to deregulate.

Another key point which is not talked

about by Navaro or anywhere else.

There's a broad effort to

deregulate standing up new energy

systems, deregulate industry and pharma,

deregulate banking. Besson talked about

this in our interview with him. All of

those deregulatory actions theoretically

should drive more investment dollars

because if you can get a biotech drug to

market in 5 years instead of 10, you'll

invest more in developing new biotech

drugs. If you can stand up a new nuclear

reactor in seven years instead of 30,

you'll build more nuclear reactors.

Money will flow. if you can um get a new

factory working because it's a lot

easier and faster to to build the

factory and cheaper, you'll build more

factories and production will go up.

People were really taken, by the way, by

your comment that you would shut up

about the deficit if we had like a

really great energy policy. We were

dumping a lot on top of it. I want to

build on the point that both Jamatha and

Freeberg made about growth rates. So,

there's a very important chart here from

Fred. This is the Federal Reserve St.

Louis. This is Federal Receipts. So

basically it's federal tax revenue as a

percent of GDP and this goes all the way

back to you know the 1930s 1940s. So if

you look in the postWorld War II period

you can see just eyeballing it that

there's a lot of variation around this

but the line is around

17.5% plus or minus 2%. And the

interesting thing is that this chart

reflects radically different tax rates.

So, for example, during some of these