All right. You guys were uh talking

about the fun shenanigans you were

having in San Francisco and at Mark Beni

off's Dreamforce. Did you see Brian

Johnson was at Beni off's CEO dinner?

>> Oh, I didn't see him.

>> Yeah.

>> Matthew McConey was at our table at

dinner.

>> All right. All right. All right.

>> All right. All right.

>> McConey is fabulous. He is funny.

>> Did you see where I was sitting at that

dinner?

>> Yeah. Table one.

>> Right next to the king himself. The king

himself. Exactly.

>> The king who? The king and I. Benny off

is a king.

>> Well, he's the king of San Francisco

>> at his party.

>> He's the king of San Francisco.

>> Yeah. I mean, obviously he has to bend

the knee to the king of kings, which is

Trump, but

>> I was sitting next to Bennett off there.

>> It got weird.

>> It got a little weird. No. Well, what

happened was did you see that SF

standards? Yeah. I don't even know how

they can write a headline like this. So,

>> well, it's a San Francisco standard.

>> Yeah. So Beni off interviewed me at

Dreamforce and somehow this was like

headlinew worthy for SF Standard and

they said that Mark Beni off dodges

political questions then fawns over

David Sax on Dreamforce day one. That

was just referring to the interview we

did. So we trolled them by taking that

photo.

>> That's um Yeah, it's a little weird.

I thought the fireside chat you guys did

was great.

>> It was great. Yeah, it was just an

interview.

>> It was really good actually. He's a very

good interviewer.

>> Mhm. Yeah, totally. But apparently to SF

Standard, it's like some sort of

transgression

that I was even interviewed.

>> They didn't get the memo that cancel

culture is over.

>> Yeah.

>> They can't.

>> I know. That's what it feels like,

right? Where they're like trying to

They're trying to jin up some sort of

>> brewhaha over the fact that I was

speaking.

>> Yeah. Oh, you can't talk to David Saxs.

He's in the Trump administration. Not

allowed to talk to him.

>> About 100 people a week who say that.

>> Literally the AI guy and the AI CEO

shouldn't talk to him. It's like,

>> you know, like what the AI company, I

should not talk to the government's AI

person,

>> right? By the way, did you see that

there was one other uh very important

conference in town at the same time as

Dreamforce?

>> Okay.

>> I discovered this on my ex feed.

>> Feel like a cold open about time. What?

The Young Socialists or was it the

Republicans?

>> It was called SlutCon.

>> Oh, Sluck Con? Really?

>> Oh my lord. Look at this website.

>> Oh, this is the agenda. How to be good

at sex with Aaliyah. Uh, let's see.

>> You cannot do this. Cut this out.

>> Women venting. Oh, Sachs, that one's for

you.

>> I would have planned an or

Freeberg here. Freeberg's giving a talk.

A fluffer's guide to jobs by David

Freeberg. Is that a panel or is it a

fireside freeberg? Which one?

>> Reinforcement learning. Ho feedback

small groups.

>> Oh, you could reandwrite your positions.

I see that. reunderwriting your sexual

positions by

>> Jamal's uh the last one. The VIP room.

>> Oh, VIP room. Yeah, that's Jamal. That's

for sure. Jamal

>> Sax, how did you hear about this? Don't

tell us that you ran out of bed. You

went over to the East Bay.

>> Sax, were you are you on the mailing

list?

>> No, my invite you to speak.

>> My ex feed just, you know, it's the new

AI algorithm is just trying to find

things you might be interested in.

>> Sax also keynoting this. My ex seed

showed me slutcon. So I clicked on it

and now it's been nothing but slutcon

for a couple of days.

[Music]

>> Let your winners ride.

[Music]

>> We open sourced it to the fans and

they've just gone crazy with it.

[Music]

>> Jimoth, what did you think about walking

around San Francisco? So, we went on a

walk around downtown San Francisco.

>> Well, we were trying to find a place to

get a drink in between the Beni off

dinner and Sax's talk. We ended up at

the W Hotel, but uh I was worried for

Chimath because it was his first time on

the streets of San Francisco walking

around with his own two legs. How was

it, Chimat?

>> Did you throw out those shoes? The lower

piano shoes.

>> I burned them.

>> The souls I'm sure were sullied beyond

repair.

>> I burned them. Those are one use for

Chimat. Those are single use lower

pianos. Once I got in the car, I I gave

Eugene my shoes and I said, "Burn these,

Eugene. I never want to see these ever

again. They've touched the pavement of

San Francisco." And all I said was,

"Yuck."

>> Why don't you just have your domestic

staff carry you on their shoulders? I

don't understand.

>> Why the crowd? It makes no sense.

>> So Ben off pulls off this awesome

convention, this conference, and then

Trump does this press conference

yesterday saying he's going to send

troops into San Francisco. Did you guys

see this?

>> Yeah.

>> Well, yeah. But no, but the Benoff thing

happened first, right? So Ben off made

news because he said, "Send in the

National Guard to clean up San

Francisco." But I actually I talked to

him about it and got a little bit of

context,

>> which of course

>> misqued or

>> Well, no, he wasn't misqued, but it

happened in a more innocuous way. He

wasn't trying to weigh in on a political

issue. Basically, what happened is I

think he was describing the security at

Dreamforce and how they bring in a

couple hundred extra offduty cops to

provide security. So then the reporter

tried to stir the pot by saying, "Well,

would you bring in the National Guard?"

And Ben off said, "Sure, if they can be

cops." And that was kind of the end of

it. And then and then it turns into this

massive story that Ben off is supporting

the National Guard coming to San

Francisco, which I think he should

support it, but

>> it's not exactly what he said. He was

saying for Dreamforce he would hire

them.

>> Yeah. I mean, who knows exactly what he

was trying to say, but the point is that

>> he could have just been talking. Yeah.

>> He wasn't seeking to make the news that

ultimately he made,

>> but it's not a bad idea. It's actually a

good idea. Do you think Trump teed off

on that press cycle when he was doing

that press conference and it was kind of

off-the cuff sacks when he said, "Oh,

they should send the National Guard in

to San Francisco next."

>> Well, I don't know.

>> Yeah,

>> I wasn't there for that. But San

Francisco is a pretty obvious city to

send in the National Guard because we

have this downtown area where, you know,

it's like that zombie city area, the

Walking Dead part on on Market Street.

And everybody understands that it's

because they won't stop the drug

dealing. So you've got open air drug

markets there on the main business

thoroughfare of town, which is Market

Street. And by the way, let me just back

up and say that we have the best mayor

we've had in decades now.

>> Dan Lori.

>> Dan Lur's great. And I think Brooke

Jenkins was the DA that we supported to

replace Chase Beauty and after we were

called him. So I think she's good, too.

But they're still working within the

confines of a legal system here which is

very left-wing. You've got all these

leftist judges and I think they're

somewhat constrained or hamstrung in

terms of what they can do. Again, the

evidence of that is that you've got

hundreds of these drug dealers who are

just operating with impunity in downtown

and you've got this sort of zombie city

of people who are so sick with drug

addiction that they're pretty much

living on the street. So, I think it

would be a relatively easy thing to

clean up if if they send in the National

Guard.

>> I would argue that they're like, cuz

I've been working in San Francisco and I

think it's gotten a lot better this

year.

>> So, I looked up after all this benny off

bruhaha and the National Guard thing

that Trump said yesterday. And so, the

city's publication shows crime down 30%

citywide and down 40% downtown.

Homicides on a 70-year low this year.

There are record lows of the number of

tents left on the street. They've

cleaned up all the tents. And I've seen

this cuz I drive to my place in the city

and they're all gone. And for the first

time in seven years, they've actually

got a net gain in total police officers

on the force. And now they've got

convention bookings up 50%. With hotel

bookings up 60% because of it. And so

here's what DA Jenkins put out. She said

felony convictions in cases this year,

narcotics, 88% of cases have resulted in

convictions. Robbery, 85% have resulted

in convictions. Burglary, 72% in

convictions. And gun possession, 70% of

cases result. And all the car break-ins

are down to a 25-y year low. And so I've

noticed it acutely in my experience in

the city. So it felt a little shocking

to be like, oh, we need the National

Guard. This is like a city on the

upswing in my opinion. And I think

things are getting much better

anecdotally. and the statistics

represent it too. So, you know, it feels

it feels like there's a little bit of a

runaway narrative with San Francisco

relative to what I think we those of us

who are in the city are experiencing.

>> Let me thread these two stories together

and hand it to you, Sax. So, the the

interesting thing when Sax and I were um

ousting Chess Bodin, one of the things

we learned was Chess Bodin had this

famous quote where he was saying, "Oh,

well, we can't get rid of the fentinol

dealers. I'm for drug regulation but not

for fentinyl because it's a super drug

that kills people very quickly. And it

turned out he said all these Honduran

nationals were victims.

>> Yeah.

>> Which I guess theoretically could be

true, but it's kind of like in that what

do they call it? U suicidal empathy

category.

>> But it turns out this is something where

ICE and the DEA have done some work.

They actually started deporting these

people last year and because the people

in San Francisco pre Dan Lori refused to

do it. So the the the federal government

actually has been taking action on this

specific issue. And we've also been

taking out the boats bringing the drugs

here. Pretty

>> you're not seeing a city government try

to block federal action either, which is

different than what you see in other

cities. By the way, this is a good

forewarning of what Mani's New York is

going to look like when Mondani's New

York kind of, you know, takes off.

Imagine what's going to come into the

city because there's now going to be

permissive culture and, you know, kind

of permissive society to do this sort of

stuff.

>> Yeah. So, I mean, this is this is where

we'll get strong alignment and agreement

like deporting Honduran fentinel

dealers. Like, what's taking so long? I

would ask the administration to take a

beat on the San Francisco thing because

this city is like making major

improvements and I feel very good about

the direction. It's not like other

cities that are on the down swing and

also I think AI companies are setting up

in San Francisco.

>> Money's coming back. Yeah.

I say the power move by Dan Lori would

be to say to the Trump administration,

hey, can we get I don't know three

months of National Guard just to be in

every BART station and then on these

four corners in the tenderloin just as a

deterrent.

>> You know what people would do if they

did that? People would protest and riot

because they're like we don't want

federal policing of our city. Like it's

going to be

>> for sure. I think you would get like 10

20% even in San Francisco rioting. I

think the rest of the people would be

like okay it's a short duration. It's on

these corners for this purpose. Okay,

bring it. That's why I think the the

Democrats are making a stupid decision.

>> But if the city's doing their job and

the city's improving, why do you need

that? It's getting better. You know,

like this is not the

>> Yeah, that's if things are worse and

you're in a spiral. It

>> is a back stop.

>> Sure.

>> Yeah. I mean that maybe the reason it's

getting better is because that backs

stop is there.

>> What? The National Guard back stop?

They're they're hiring more police. They

haven't done that in seven years in San

Francisco. They're finally adding to the

police cop under

>> and they're enforcing and they're

getting convictions. It's kind of

working.

>> Well, I'll partially agree with both of

you.

>> So, I agree with Freeberg that we have

the best mayor we've had in decades with

Daniel Lurri and I think he is making

progress and the city is bouncing back.

I think we probably had the lowest low

during co and so a lot of that is just

the finally the bounce back and then we

got the AI boom which is creating a lot

of wealth and it's bringing a lot of

people back to the city and it's

starting to absorb all the vacancy we

have. So in any event all those are good

things. Nonetheless, we still have this

problem of this blighted area of Main

Street where of all people Gavin Newsome

proved that we could clean it up.

Remember when President Xi came to town

from China for that summit

>> and all of a sudden magically that whole

area was cleaned up in 48 hours

>> and you know all the drug addicts and

all the drug dealers basically

disappeared. I don't know where they

sent them to. So it shows that there is

a way to clean this up virtually

overnight and I think that somehow the

mayor and the DA are constrained in what

they can do. So you could have a

targeted operation here by the federal

authorities to go in and clean that up.

And I think that'd be a good thing.

>> What do you think would happen in the

city if they did that with respect to

the population? Are they going to

welcome or not welcome federal policing

of their streets?

>> Well, again, I don't think we should be

held hostage by lawb breakakers who

basically threaten violent protests and

chaos in response to law enforcement

authorities doing their job. I don't

think we should be blackmailed by that

or threatened by that or held hostage by

that.

>> But they're getting convictions. They're

making arrests.

>> I think that's awesome. I'm I'm

applauding their efforts and I'm not

criticizing them. What I'm saying is we

still have this intractable problem of

this area of downtown where like Jal

said, there's a network of drug dealers.

Just to build on your point, Jacob,

about the Hondurans, there's actually an

article in the San Francisco Chronicle

talking about this where the majority of

the drug trade in San Francisco comes

from a single town in South America.

>> And so, yeah, it's like why couldn't you

just round up this whole network in a

very targeted operation and deport them

and that would clean up a huge part of

San Francisco. I think there's an

opportunity here. If you look at the

cities where it's been very successful,

so Muriel Bowser, who's the mayor of DC,

obviously she wasn't thrilled about the

president sending in the National Guard

and she said so publicly. That being

said, she also cooperated with it and it

redounded to the benefit of all the

citizens of Washington DC. So I think

there's an opportunity here for the

mayor to cooperate with the Trump

administration and do a targeted

exercise and clean up the streets of San

Francisco. I think

>> or he can do it himself up himself for

Did you guys see this interview with

this woman in DC who was describing what

it's been like in DC over the last 40

years and see the changes.

>> Yeah, she feels safe.

>> Elon retweeted it. Nick, I sent you the

link on Signal. Just listen to what she

says. It's really to your point, Sax,

it's like it's just such a nobrainer

thing to do. The question now is I think

is a political calculation. Who wants to

take credit for it? Because everybody

should be doing this.

>> Oh, let's listen to this. I'm always got

to be the person to say it and I don't

want to be the person to say it.

But Donald Trump has been president for

nine months. Nine months. And I'm seeing

videos from Chicago,

DC, where people like, "Yo, I feel safe.

My kids feel safe. This is the best

thing he ever did for us." So, what was

happening all these years that this like

literally I'm I've known DC and Virginia

to have this type of going my whole

life, and I'm I'm in my 40s. Okay.

Almost touching it. So what was really

truly going on if a mother became

president 9 months ago

and cleared that out with just a flick

of a pen. I'm just thinking like did

y'all really ever care?

>> Exactly. So I think that the point she's

making there is we don't have to live

this way. This is a choice. Okay.

>> Yeah. And we don't have to live in San

Francisco with our main drag, our main

street, Market Street, basically being

an open air drug market where you've got

hundreds of people who are addicted

doing drugs in the street, you know,

doing other things in the street. And

again, Gavin Newsome proved that it

could all be cleaned up very, very

quickly. So, look, I think it's great

that Daniel Lur and Brook Jenkins and

the new administration are doing a

better job, but they're still

constrained and hamstrung by their own

>> by the city's hold on by the city's

>> liberal mindset, extreme liberal mindset

towards what's possible. And I think

like that person just said in the video,

Trump just did it with a stroke of a

pen. This is a choice. We don't have to

live this way.

>> It's the biggest unforced era since

opening the southern border. These are

just the two stupidest decisions the

Democrats ever made. And obviously the

easiest thing to do to split the the two

approaches here, Freedberg, is

>> to have Dan Lorie say,

>> "Thank you for offering Trump.

>> We would like to have it for this period

of time in this location." Then you

could communicate to the people of San

Francisco, it's just a test. It's just

on these streets. When it comes top down

and you don't have a choice and JB

Pritsker does what he did, which is I'm

going to ban you from coming in and

reducing crime. Like, do you hear

yourself, Pritker? Like, I want to stop

you from lowering crime.

>> There's something else we got to do as

well, which is we got to stop funding

the drug addiction because the city

provides something like $2 billion a

year to these NOS's who are supposedly

there to quote take care of this

homeless/addicted

population and they manage them like

their flock because for every addicted

person they add to the flock, they get

paid more money. And so, obviously, this

is why we have this problem here. And in

fact, the homeless we have in San

Francisco are not predominantly from San

Francisco. They're from all over the

country, all over the surrounding area.

They come here for the benefits. So, we

create the magnet for all these people.

So,

>> part of it is law enforcement, then also

part of it is just cut off the flow of

money that's funding their drug

addictions.

>> You are 100% correct on that. I

completely agree with you on that point.

And I think that forced treatment center

transitions is needed. Obviously, you

know, we have a program, I've mentioned

this on the show before, but for those

who haven't heard about it, to hear

about the absurdity of these programs in

San Francisco. There's a program called

the managed alcohol program. $5 million

per year out of the San Francisco city

budget is spent on this program where uh

you can walk into a hotel, they have

free beer. You ask for a beer, they give

you a beer.

>> What?

>> You drink the beer, you go out, you

party, you come back, you get another

beer. So they have all these studies

that rationalize this program which is

oh this is a way to help alcoholics

recover from alcoholism when they're

homeless and they need this treatment

but here you can see this is from last

year being beer.

>> Yeah. So the treatment is beer and

>> that works for alcoholism I've heard.

But it's one of these absurd things

where now it's kind of a joke because

there's also this close part of downtown

where you know it's a little bit of a

kind of do what you want where they kind

of keep folks it's like hey you can use

your needles here then folks will get a

drink they'll play music they'll go

after the thing. It's really sad how

these programs obviously

well-intentioned initially become of the

most absurd.

>> If you want more of something keep

spending money on it. Uh, in fact, there

is a program for people who are addicted

to gambling and they they give Chimoth

free flags and cranberries at the win to

help him with his crafts advent.

>> Yeah, it's amazing. If you uh if I keep

going, one's going to land.

>> You send a private jet and extend a

massive credit line. It's amazing how

how many gambling addicts you you'll

attract to your casino.

>> By the way, did you guys see that JB

Pritsker disclosed his income from 2024?

And

>> oh, let's guess over under. Give us an

overunder.

>> Out of the 10.3 million, 1.4 million of

it was gambling winnings from Vegas.

>> What? Yum yum. Okay. All new respect.

>> 1.4 million playing black. So, he's

counting cards. Yeah, definitely.

Definitely counting cards with sachs.

Yeah.

>> Well, no. I I'll just tell you like look

to win $1.4 million in black basically

you basically need to be betting 100k a

hand.

>> Even I don't do that. That's the only

way you can win that much, which is a

lot of money per hand. Not judging. I'm

just saying.

>> I mean, that's Dana White level. He's

He's Dana White level that David Sachs

at Caesars.

>> No, I'm not I'm not at that level.

>> Come on. David plays at the $100 a hand

table. He's got great. Uh, by the way,

just to put some numbers behind it.

>> Speaking of Vegas, aren't we going next

next month?

>> Yes. Yes. Yum. Yum.

>> Yum. Yum. Just to put some numbers on

it, homeless budget, San Francisco,

unbelievably

high estimate like 800 million, lower

estimate 700 million. And uh low

estimate for homeless people is like

8,000. High estimates like 20. If you

cut in between these two, they're

spending $52,000 a year per homeless

person. $52,000

a year. It is a solve problem. Well,

that is an incentive to solve the

problem because again, a lot of the

money goes to NOS's and they get paid

for every addict they can add to their

flock. Thomas had a great line about

this. He said that you get as much

homelessness as you're willing to pay

for.

>> Well, and your point before is other

places don't give the services. So

therefore, the homeless uh slashjunkies

converse about this and then they pick

the right.

>> We don't have to live this way. I

appreciate the mayor. I appreciate the

DA, but we don't have to live this way

and there's more that can be done.

>> That is exactly it. You do not have to

live this way.

>> Yes. Do not stand for it, folks. Okay,

here we go. Lots of topics. The USChina

trade battle is continuing. Uh, and this

time we have a new wrinkle. Trump and

she are set to meet in South Korea later

this month. They're going to work out a

grand trade deal. And this would be

their first in-person meeting since

2019, 6 years ago. But last Thursday,

China announced new export controls on

12 of 17 critical rare earth minerals

effective December 1st. Obviously, we

need these for EVs, batteries, your

AirPods, everything. And on Friday,

Trump threatened 100% tariff on all

Chinese imports on top of the existing

tariffs as of November 1st and accused

the CCP of trying to quote hold the

world captive. Stock market tanked,

recovered on Monday when Trump told

everybody, "Don't worry about it. It's

going to be all good." So far this week,

things have mostly deescalated. Friend

of the pod, Treasury Secretary Scott

Bessant said the Trump meeting is still

on track and quote, "We have

substantially deescalated." Also, he

said the 100% tariff does not have to

happen. However, on Wednesday, Vesscent

called the export controls unacceptable

and that it's China versus the free

world. Let's take a pause here.

Freeberg, thoughts on price controls

generally, and if you want to expand

into the overall relationship with China

as it relates to rare earth metals, go

for it. Bessum's comments on the price

controls speak to what he calls a

non-market economy, meaning that the

Chinese government is intervening and

creating artificial surplus in the

market, which drives prices down and

effectively eliminates competition. And

so the Chinese push in the '90s,

supported by the CCP, ultimately

eradicated competition and made it

non-competitive for US companies. So

they exited the market and now the

United States finds itself completely

dependent on Chinese suppliers.

Particularly as it relates to rare

earths, there was this company called

Molly Corp that ended up going out of

business. The asset, the Mountain Pass

mine that Molly Corp operated, became MP

Materials, which Chimoth knows well and

did this big deal recently with the US

government as they've tried to

revitalize production at this mine and

increase output. Freeberg, can you

explain price floors for people just in

case?

>> So price floors are that the government

is going to mandate that things have to

cost at least X. So they increase the

price of inputs and basically make it

more difficult for China to undercut

pricing which increases the rationale

for capital to invest in starting

competitors because now they can have a

guarantee of revenue or guarantee of

price. But the problem is that I would

argue the government's role maybe

shouldn't be in setting price floors

because that creates, you know, a very

bad effect long term on the market. The

government should deregulate and create

a more free market in the US. A large

reason why mining and processing of the

ores moved offshore was because of the

regulatory environment in the United

States which made it difficult to

compete with China. We could argue about

the environmental laws and how extensive

and how relevant they may be today

relative to the '90s, but this created a

real challenge for companies to compete

because it was so much more expensive to

operate in the US. So I would argue we

should be focusing not so much on

setting price floors to create an

incentive for folks in the US to get

involved in the industry, but rather to

deregulate and to provide perhaps tax

incentives and other economic

incentives. So you don't inflate the

cost of things, but you create a much

more kind of liquid market and drive

much more volume and interest in in

building on this side.

>> All right, price flaws. When we were

talking about Kla Harris running for

president, she was asking for price

flaws and price fixing and making sure

the government got involved in this. How

is this different, sex? Well, look, as a

general matter, I agree that the federal

government shouldn't be setting the

prices of goods and it shouldn't be

picking winners and losers in the

economy. But I think this is a different

situation because over the past 30

years, we haven't really had a free

market in rare earth. What's basically

happened like Freeberg was saying, China

has been allowed to dominate this

industry. And specifically what they did

is starting 30 years ago, they

identified rare earths and rare earth

magnets, the rare earth processing as a

very strategic element in the supply

chain. And they set out to dominate it.

And they did that by massly subsidizing

their businesses and driving all of the

US competitors and the global

competitors out of business. And they

were partially allowed to do that by

stupid WTO rules that allowed quote

unquote developing nations to subsidize

their own industries even though China

is not developing. I mean their economy

is comparable to ours. And yet these WTO

rules allowed them to effectively cheat

by subsidizing their industries at the

expense of our industries. And the

result of this is that they do now have

course of leverage over the supply

chain. And over the last few weeks, they

just used that imposing this vast new

export control regime on rare earth. And

their idea is to tighten the screws when

they feel like it and to use rare earth

as a form of leverage in the

relationship with the United States. So,

we're well past economics here and we're

into international relations. We're into

the balance of power. We're

international security. And I don't

think that the price floors here are

designed to make the government the

mediator of what prices should be in the

free market. They're designed to create

enough certainty for US investors that

they can reinvest in rare earths and

reshore the processing and the casting

of rare earth magnets. And I just don't

see another way to be able to create the

incentives for investors because they

know that if they invest a lot of money

in rare earth processing that all China

has to do is slash the prices and drive

them out of business. And China

continually uses that tactic. So I think

you have to address that if you want to

alleviate the American dependency on

this critical resource which China

currently has control over. This started

in 2007 or eight with Huenta and what he

basically said is we're going to create

six or seven national champions and he

wanted to create them in the critical

areas that they needed to dominate over

the next 20 years and one of those was

rare earths. Another one was batteries

and EVs and yet another one was around

the active principal ingredients or APIs

that are the core inputs for

pharmaceuticals. So what do they do? And

when Ji came into power, Xi Jinping

continued that huge gental strategy.

What did they do? It's exactly what Sach

said, which is they have this very

aggressive form of mercantalism. How do

they affect that? They are willing

through provincial balance sheets,

through federal balance sheets, through

loan guarantees, through organizations

that are quasi public private

partnerships. They step into markets and

they can effectively change the spot

price on demand. Now, why is that

problematic in America? I'll tell you

the example of one of our businesses.

You do these deals that are called take

or pay agreements. So, MP has a deal

with General Motors, one of my

businesses that makes LFP cathode. Same

deal with GM. You do what's called a

take or pay, which means that General

Motors steps up and says, "Great, I will

buy X amount of volume from you at Y

price.

And so you go and you take that deal to

Wall Street and you say, "I need

financing to build a factory or a

capability." Contrast that to the

Chinese company who just goes to the

government and the government says,

"Here's a bunch of incentives and money

and price breaks. Just go build it." So

already we're a little bit behind, but

it's much more free market and it's more

transparent. So you take a deal, you go

to Wall Street, they give you money, you

start building it, you start to produce

it, and then you expect General Motors

or Ford or Tesla to start buying this

stuff. But as Sax said, if all of a

sudden China sees it, what they do is

they enter the market and they will dump

an enormous volume of that product into

the spot market. What happens? The price

craters. Now all of these end buyers are

in a really tough position because their

competitors can buy at a much bigger

discount that they can. They have to

flow that price through their products.

Their prices are more expensive. They

have less demand. And that's the huge

negative cycle that China has complete

control of. So why is the federal

government stepping in to create what is

essentially a last resort buyer of

record? It is so critical in these

markets because the US balance sheet is

the only one that can create a strategic

reserve around these inputs. Not

dissimilar to how we do with petroleum.

We can nominate now things that are

critical dispos

all of these things that can now absorb

the price shocks that China may

otherwise be able to affect. So I think

this structure where we now have these

public private partnerships frankly is

the only practical antidote to dealing

with this issue. Otherwise we're always

going to be prone to this very clever

and accurate and smart mercantalism from

the Chinese. So I'm I'm a big fan of

this general market structure. It's the

only way that you cannot be theoretical

and actually respond to the conditions

on the ground. Yeah, we've been doing a

little research on this and here is

neodyinium.

>> This is one of the one of the two inputs

for for magnets for permanent magnets.

>> And uh you can see here $50,000 for a

ton back in 2020 during CO it spiked

almost up to a quarter million dollars

and then it came back down. So look, you

can you can imagine like it's incredibly

difficult when there's that much

volatility

>> to try to buy capex, to try to plant

opex, to try to extract from the ground,

go through all of the regulatory

rigomearroll that western countries have

to go through and then all of a sudden

have a sale price that you can't

control. And if you look at the cost, we

were just doing some research on it. You

know, if you get your AirPods, it's one

or two% of the cost of that. medical

devices, it's a lot more. But even in a

Tesla Model Y, it's it's le it's 10

dips.

>> It's less than I think this is an

inaccurate way of looking at it. You

have to look at the actual mass.

And so the real problem is in in cars,

in engines, you're talking about tens of

kilos ultimately, and that's where the

real costs build up. And then

separately, the permanent magnets that

go into cars, you can work your way

around. The real in future markets that

really matter is in robotics because

these permanent magnets are the key

input to the actuation mechanism of the

robots. Meaning how do the robots move?

How do the joints move? Through

actuation that happens because of rare

earths and permanent magnets.

>> And as Elon said at the summit, he's

building all those himself.

Right now, only 7% of the known deposits

of it have been found. There's plenty of

it out there. But to your point, I came

to the same conclusion as you, Chimath,

which is we should be building a

strategic reserve of these. And if you

look, we could be, you know, buying them

when these things are down and deploying

them

>> when we need to do something different.

I think instead of trying to like time

the market, I think what the United

States can be much better at is having a

broad forecast of demand, knowing how

many million tons of this stuff we will

need and just thoughtfully and

methodically being a purchaser of record

to create these strategic reserves. And

then the worst case that can happen is

you can do a swap

>> with these customers. So Tesla all of a

sudden can't go into the spot market.

They should be able to come to the

strategic reserve and be able to buy

lithium. you know, General Motors needs

something, whomever, right? Figure

robots need something. I think that

mechanism is the only way we can compete

effectively on a day-to-day basis with

the Chinese.

>> I mean, I would argue I think we

actually if we let the market work and

we create the necessary kind of

structure to allow the market to

operate, meaning the regulatory barriers

are diminished to develop mines and to

conduct the processing of the ores. So

there's two sides of the equation when

it comes to this kind of industry of

rare earths. The one is mining the ore.

You know this mountain pass site which

is kind of on the border of California

and Nevada which is now MP materials.

They've got this rare earth ore called

bastnite. That's the ore that you get

out of the ground. And then you have to

process that ore to get the elements out

of the ore that you want to use in

manufacturing. The processing steps. I

kind of went a little bit deep on this

over the last week because I got really

interested in why we don't do this

anymore in the United States. And there

is so much nasty

output from this process. You're using

very strong acids to do leeching. You do

processing, you do extraction,

refinement. All of the material kind of

gets separated out from the rock and

it's dirty. And as a result, there's

byproducts and waste and environmental

exposure, but also human personnel

exposure. But the technology hasn't been

deeply developed in 40 years. It's still

kind of 40-year-old chemical engineering

technology. And we stopped developing it

about 40 years ago in the United States.

>> It's not even technology. It's no

>> Yeah, it's not. It's just it's just

metallergy and chemistry. But but there

are techniques now that can be applied

that can do this in a kind of scalable

safer way without any of the

environmental hazards. But this is

largely why this shifted over to China

is they didn't have the sort of

regulatory um burdens that we have in

the United States which made it much

cheaper and the labor cost was much

lower. But with automation and certain

systems we can actually process this

ore. It's not super complicated. It's a

series of well understood steps of

chemistry and mechanical separation. So

we could process ores. The other kind of

important point is there could be well

over a thousand times the proven

reserves of rare earths in the existing

proven reserve catalog using new

discovery techniques. So USGS, the

geological survey in the United States

has this kind of earth MRI system where

they're trying to do new mapping. But

there's also several private companies

that can use radar and microwave imaging

and then you can use the system of

interferometry where you actually put

multiple beams down underground and you

can get a better read or a better

understanding of where these ores might

lie. And there are unproven reserves in

Texas, in Wyoming, in Colorado, in

Missouri, all over the continental

United States. So if we did decide, hey,

this is strategic to us, I do think one

of the important points is that we could

unlock both new kind of discoveries and

new refinement systems in the United

States and actually be truly competitive

with China if we put the will behind it.

So I think like this is a good moment

for the United States to observe what's

going on and not just kind of be, you

know, focused on China's production. I

think we could outpace them and and um

and accelerate through this if we chose

to. So, Saxs, where does all of this fit

in to the broader agreement? And do you

think that they're going to go to South

Korea and come out with a deal? And do

do you have a sense of like what the

contours have to be to make this a

success?

>> Well, the Treasury Secretary, Scott

Besson, who we know, just said that the

Trump meeting is still on track and he

also said that we have substantially

deescalated and that the 100% tariff

does not need to happen. So, he says

it's still on track. By the way, I think

he's doing a phenomenal job here. he

really understands the intricacies of

this trade relationship and I think he's

capable of both applying pressure but

then also finesse. So I think he's doing

a great job on this. But in any event, I

think the reason why you want to have

the leaders meet, President Trump and

President Xi, is that I think that this

relationship, this bilateral

relationship between the US and China

will work best when there's an agreement

at the top. And what I mean by that is

that when you just let the various

bureaucracies deal with each other,

you're more likely to have

misunderstandings or or food fights. So

let me give you an example. Over the

past few weeks, obviously you've had

this Chinese Ministry of Commerce passed

these export controls on the rare earth

which created the possibility of greatly

limiting the access of not just American

companies but companies all over the

world to Chinese rare earths. They've

sort of backed away from that.

Separately in the US, you had movements

by our government to greatly expand the

export control list. And basically,

there was a interim final rule that was

issued by the commerce department on

September 29th that said that if a

Chinese company is on the export control

list, that restriction should also apply

to any of its affiliates or subsidiaries

that are more than 50% owned by that

company, which is kind of obvious,

right? You don't want a Chinese company

like Huawei to circumvent the entity

list by simply setting up a shell

organization. And so I think it was a

perfectly reasonable rule to issue, but

then China reacted to that very

strongly. And so there's just such a

high chance of the two sides

miscommunicating with each other and

over escalating when you just allow the

bureaucracies to talk to each other. And

I think what's most needed right now is

to have a grand bargain between

President Trump and President Xi. And

that will then calm down the

relationship. And obviously this is

going to be a very competitive

relationship for as far as the I can see

because there's both security and

economic competition going on. But I do

think that when you have an

understanding at the top, it creates

conditions for more stability.

>> All right. Traders on poly market think

or know depending on the situation that

we are going to see cooler heads

prevail. 15% chance of the 100% tariff

on China going into effect by November

1st. In other words, 85% chance it's not

going to happen. 73% chance of USChina

trade agreement by November 10th.

>> Who do you think has the greatest

incentive to decouple?

The US or China?

>> I think both sides understand that they

can no longer be dependent on the other

for things that they consider to be

critical. So, I mean, the US has

realized, wait a second, we can't allow

China to have a monopoly on rare earths.

And by the way, it's not just the the

rare earth, the processing, it's also

the casting of the rare earth into

magnets. So there's this long tale of I

don't know 20,000 different kinds of

magnets that are made from rare earth

that are used in the industrial supply

chain. And if China were to cut those

off, then it would greatly impede

manufacturing of pretty much every

different kind of electric motors from

cars to other goods. So in any event, my

point is just the US clearly cannot be

dependent. I'm sure that China is

reaching a similar conclusion. That

doesn't mean that trade can't happen

between the two countries. I'm sure it

will continue. But I don't think either

side wants to be in a position where the

other side can use its leverage beyond

just economic terms into geopolitics.

But with respect to the belt and roads

initiative, like don't you think China's

been planning for the decoupling in kind

of a very long viewed way relative to

the United States and they're more I

would say prepared and active to execute

the decoupling whereas the US still is

waking up to the fact that there are

certain kind of critical supply chain

dependencies that we have with China and

maybe we shouldn't be decoupling as

quickly as we stated our intention to.

Like it feels like they're in a pretty

advantaged position. Sachs and both the

buy side and the sell side.

>> They have 20% youth unemployment. They

have a demographic time bomb that's gone

off. They have a pretty morabund real

estate market. They have very little to

none foreign direct investment. So I

don't agree with you.

>> Okay.

>> Well, I I would just say that I think

what China has been doing

>> meaning they're they're just as

challenged as we are. They have

different challenges.

>> Yeah. No, it's good it's a good point.

Yeah.

>> I would just say that I think that China

is a rising great power. I think that

over the last decade their economy grew

to the point where it's roughly the size

of the US's economy. Certainly on a on a

PPP basis, it might even be bigger,

>> right?

>> But on an international currency basis,

it's still smaller. But anyway, the

point being that as China has risen as a

great power, it sought to create its own

international institutions. And so if

you think about, you know, what the US

has, the US has NATO obviously and the

G7 and the World Bank and the IMF and

all that kind of stuff. And what China

has sought to do is create, you know,

they created the Shanghai Cooperation

Organization, which is a security

focused organization. I wouldn't call it

quite the equivalent to NATO, but it's

trending in that direction. They've been

probably the main sponsor behind bricks

and Belt and Road, I think, is part of

that. They're creating their own network

of relationships. are creating their own

international order and it is a

challenge to the US order. I mean during

the unipolar moment from say 1991 to I

don't know 2017 the US was the only

great power in the system and we

basically defined all the key

international institutions and China as

it's risen has done what all great

powers seek to do which is to create

their own order and so yeah I think they

do want to be somewhat independent of

the US they don't want to be dependent

on us and I think we're realizing that

we have to act the same way and the

shame of it is that when we were running

all the key institutions during the

unipolar moment like the WTO. We engaged

in so many foolish policies that allowed

China to dominate rare earths. I mean we

should never have let that happen.

>> Can I clarify one thing which is I think

that a lot of people don't know this

historical artifact which I think is so

fascinating which is I don't think China

is a rising power. I think China is a

reasscending power. And the reason I say

that is if you go back to 1500 to now,

over all of those years, China had the

world's largest GDP 70% of those years.

>> 70%.

So if you think about it in that

context, especially as a Confucian

society, I think the Chinese think about

this as hold on, this is reasserting the

dominance that we've always had. And I

think if you start to look at it through

that lens, that's why they view the

blending of public private partnerships,

the organizations that go and help backs

stop private companies in China. The

other interesting thing which I learned

studying China is how they allocate

capital. The capital allocation system

is both rigid, but it's incredibly

flexible. What do I mean? The way that

China allocates money is the following.

You have Xi Jinping and his close circle

of people. They dictate the priorities,

right? I think there was an article,

Nick, you can find it. But Xi is

personally right now helping to draft

the five-year business plan of China.

But what happens is is it goes from that

central group of like 7 8 n people to

the pala bureau. And when it gets

approved by the pala bureau, it gets

sent to all the provinces and then it

gets sent to the prefectures. So an

example was in 2006 and 7 when they

decided to prioritize EVs. What you

effectively have is a cascading set of

venture capitalists who are operating

against a national priority and then

they are rewarded for it. And so you

essentially have 300 VCs running around

organizing human capital in all of these

different provinces against all of these

different priorities. And at the end of

that you get a BYD or you get a Xiaomi

or you get these great companies. And I

think that that is what's so daunting if

you think about it. So that's another

thing that we have to factor as well.

They have

>> and they have they have one of those

plans Jamoth for every industry not just

so they have like an agriculture

five-year plan. They have an energy

5-year plan and in each one it details

out their forecast of not just like how

to catch up but what's possible and

that's why they're charting new new

avenues of innovation in nuclear power.

Yeah. It's about them, I think, getting

back to where they have been as opposed

to them realizing

that they could potentially be the

world's largest economy. It's more them

saying, "We were the largest for so

long. We took our eye off the ball and

now we need to get refocused." I think

that's more of a national pride kind of

motivation here. But it's obviously

different people, different country,

different governing structure, etc.

>> Isn't that incredible though? 70% of the

year since 1500 they had the largest GDP

in the world.

>> It is incredible.

>> It's stunning.

>> Yeah. I mean, there were these

innovations that drove some of these

ships. The technology of ships and

fleets of ships drove the Dutch Empire

to its prowess and then the British

Empire to its prowess. And there were

these moments of technological

innovation. But you're right, always on

the heels was China. And this may be

China's moment of resurgence across the

board.

>> The person who really saw this ahead of

the curve was Lee Kuan Yu from

Singapore. basically the founder of

Singapore

>> and Graham Allison wrote a book about

Lee Kuan Yu where he talks about his

insights and there's a couple of quotes

here that I think are are really good on

this. What Lee Kuanu said is that it's

not possible to pretend that this China

is just another big player. This is the

biggest player in the history of the

world and he also said that the size of

China's displacement of the world

balance is such that the world must find

a new balance. So

Jamath, like you're saying, China was

the biggest power in the world for

hundreds of years and then it was kind

of overtaken by the the western powers

and now it's kind of reasserting itself.

But in any event, this is why I think

that during the unipolar moment, the US

should have been a lot more careful

about facilitating China's rise

>> because we created a monster. And this

is the point that

>> professor Mirshimer has made many times

and he wrote about this going back to

2002 saying in his article about whether

China could rise peacefully and he said

the answer is no because if we

facilitate their rise we will create a

geopolitical competitor and we'll go

from being a unipolar world order to a

multipolar world order and that's

basically what's happened. But at the

time, just remember like when when they

were admitted to the WTO and the

motivation was really about lowering the

cost of goods and services for the

American consumer, which was like an

intrinsically reasonable motivation. It

wasn't like there was some nefarious

intention at the time, but it was

shortsighted in that it didn't do the

calculus. Fast forward 20, 30, 40 years

to determine, well, if we then kneecap

our ability to actually produce

anything, where are we going to be if

they do start to decouple? That's

>> it was hubris though. It was hubus

because we thought that there was only

one great power in the system and that's

the way it would always be. We thought

great power politics was off the table

and we thought that we were at the end

of history.

>> It wasn't hubris, it was greed. the the

CEOs at the time and the people who were

influential in making donations to

politicians wanted to make more money.

That's why they did it. They didn't do

it with anything other than a profit

motivation, which is greed.

>> Part of American like mindset at the

time was that we had a monopoly on

knowledge work, right? And this was I

think very key. This this speaks to the

hubris of the decision-m was that this

knowledge work is where you create a

separation of labor from intellect. and

that there was this idea that America

would move into a services economy fully

and not have to be in a labor economy

and the labor economy could be

outsourced.

Ultimately, that didn't yield true. The

the internet kind of created a rival to

knowledge work or a diffusion of

knowledge and diffusion of knowledge

capacity to societies around the world,

which really did create a different

structure than we anticipated at the

time.

>> I think that's looking in the rearview

mirror, Freeberg. I think the the CEOs

at that time were like how do we

increase the profit margin on an iPhone

on a a PC on any product being created

and the way to do that is find the

lowest I

>> labor source possible and that was China

they just did it out of just pure

>> so that was part of it but there was

another factor here as well which I I do

think the ideology was really powerful

and remember in the 1990s the leading

philosopher or international relations

theorist the most celebrated book was

the end of history by Francis Fukyama

and what he basically said is that we're

at the end of history because liberal

democracy has won and it's only a matter

of time before the whole world becomes

liberal democracies. And the theory

about China was that if they got rich,

they had become more like us, that

people would rise up and demand a

liberal democratic government as they

became rich. And so we then justified,

and there probably was an element of

greed to this as well, we then justified

helping China rise on the grounds that

somehow this wealth would turn him into

a democracy. And in fact, all that it

did was make them richer and more

powerful. It didn't change their

government. It just turned them into a

huge geopolitical competitor to the US.

The author who actually predicted this

and well there's Mir Shimemer who

predicted in the early 2000s also Samuel

Huntington wrote a book

>> called the Clash of Civilizations in the

mid '90s that was sort of the opposite

of end of you know end of history was

celebrated. Clash of Civilizations was

sort of reviled. But what Huntington

said is that what these other

civilizations want around the world is

not westernization. They want

modernization.

And as they modernize and become richer,

they're not going to basically

westernize. They're going to become

competitors to the western order. And

that's basically what happened.

>> I thought for sure you were going to say

Freriedman's the world is flat, which

was I think air cover for all this

because you would get the peace dividend

if everybody had McDonald's and

everybody was watching the same movies.

Go ahead, Shimat. You have some

thoughts.

>> That Huntington book is actually

exceptional. The thing with Francis

Fukuyama is he he writes in this

beautiful way, but he literally bats

zero. It's like you could basically read

a Francis Fukuyama book and understand

that whatever the opposite of what he

wrote is likely going to happen. That

anyway, that's neither here nor there.

But I just wanted to pick on what Jason

said because I agree with him. The thing

is you had a lot of this geopolitical

tension sacks which I think you

articulated it well like the elites were

coming together like we're going to

convert China we're going to do all of

this stuff and I think that was a trend

but then what hyperacelerated it in my

opinion was something that was very

tactical which Jay Cal mentioned which

is the compensation plans of most of the

executives and CEOs of these public

corporations started to get very tuned

to gameable metrics like EPS in and

around that same time. And so Jason's

right, the direct financial incentives

to basically think about this as a

monocultural global world where you can

just export things to every nook and

cranny of the world to optimize for the

flow of profits back to you, trap them

in any country you want because it

doesn't ultimately matter to your

compensation.

That perversion also happened at the

same time which I think accelerated what

otherwise would have given us maybe

another decade or two to realize that we

weren't in complete control of our

destiny.

>> So it gets um you can see it also in

Taiwan with like how in the world did

90% of the chips come out of one tiny

island? It's just capitalism like it's

the best place to do it at the cheapest

price, the most efficiently. And then

you have now this dependency on Taiwan

because we didn't think about redundancy

and supply chain. Freeberg, in related

international news, Trump is put up or

the Trump administration has put up

about $40 billion to help out Argentina.

Can you explain what's going on there?

>> They're trying to bolster the credit

rating of Argentina with the currency

swap that's related to the financial

condition the promise proponents would

argue he inherited. the opponents would

say, you know, he's making things worse.

The US is stepping in to support his

free market kind of principles that are

ultimately going to drive crossber

cooperation. So, I think that the swap

agreement puts in place a bolstering of

support. I thought this was related

directly to the to rare earths

>> to rare earths. I I'm not sure about

rare earth. All right, Jamal. Uh I saw

you retweeting some of this and there's

been a little bit of a back channel in

the last 48 hours. Kind of breaking news

here. data centers are spiking the cost

of energy or people are perceiving it to

be doing so in different geographies

here in the United States and I guess

not wanting to be hated or get into wars

with consumers some big tech companies

are standing down plans explain what's

going on here Chimathan if this is a

trend yet

>> I put this out there when I wrote that

because I I do think that this is the

beginning of a trend. Just to be very

specific, Google was planning a $1

billion spend on a data center in

Indianapolis County or Indianapolis. And

essentially what happened was there was

enough push back that it looked like if

it went to vote in the city council,

they would have voted against the

approval of the data center, against the

the necessary zoning and other

regulatory approvals. And so I think to

avoid what would have been an awkward

press cycle, Google just pulled it and

said, "Don't worry, we're not going to

do this here." And so that in and of

itself I think is an isolated incident

except that in this same week it

happened two other times

>> in Wisconsin there was a proposal very

similar to Google's but this time from

Microsoft where again those local

residents got pretty upset and in the

11th hour Microsoft pulled it and then

in the third example there was an

attempt by an Amazon data center to get

built near Tucson. That I think also was

mothballled. So why is this happening?

When I tweeted this out or when I posted

it rather, the comments were pretty

instructive. I think that there are

three things that I took away from it.

Thing number one is that people are

seeing their prices of electricity go up

in the local areas where the data

centers are being built.

The second is that people are worried

about the water consumption of these

data centers and the cost of water and

the access to clean water and that the

plans to be netneutral on water

consumption may or may not be real. So

there's a concern there. And then the

third that many of the people commented

was about the actual noise pollution

that it was creating. But I I took a

step back from this and my thought is

very simple, which is it actually speaks

to one of three very important

inflection points that we're dealing

with on the AI side, right? So one of

them we talked about last week, which is

you can't have 50 state laws, right? It

needs to come from the federal

government so that there's one set of

regulation and that there's clarity. So

effectively what Sax has been able to

execute on the crypto side, I think his

intention is to try to do this on the AI

side and I think the federal government

needs to be given a chance to do that.

Otherwise locally in the United States

the only winners are going to be lawyers

and then we're going to create an own

goal and China's going to win. Okay.

Second, we just talked about it is the

government needs to be the economic

backs stop to the US supply chain that

powers AI, right? And we talked about

all these things, the metals, the

minerals, the rare earths, so that the

tax that companies can extract are

mostly market driven and not

exploitative and doesn't create air

pockets in the funding cycle. Okay, so

we talked about that. But here's the

thing that nobody talks about. When you

look at these data centers, I think what

it's saying bottoms up is that these

hyperscalers need to get these

communities on their side. I think that

there is no understanding of what a

token is. What is a token? I don't think

if you ask the average person on the

street, they know what it is. What they

know is that tokens are not jobs.

And if AI is going to be embraced by the

public, I think what we need to do a

better job of is to show the tangible

economic benefits, especially in places

like Wisconsin and Indiana that may feel

like they're missing out. So, we can't

have this narrative that AI may take

your job away while it's also doubling

your electricity price because they're

not feeling and seeing the abundance

that we think that it can offer. This is

exactly right, Chama. If you think about

the average American citizen, you know,

they have somebody in their family who

drives for Uber or Door Dash, they have

truck drivers, they have Amazon factory

workers, and all those jobs are going

away. It's just a matter of when. And

some people believe we can handle the

displacement, others don't. ahead. Uh,

Freeberg

>> Jal, my idea, just sorry, my idea, my

idea is you have to use the balance

sheet of these big companies, use that

free cash flow and it can act as a

cushion for a lot of what needs to

happen. So,

>> they can pay higher tariffs for

electricity.

>> They can also just frankly go and pay

for some amount of the electricity bill

of these local folks. They could pay for

solar and storage if they wanted to.

There's a plethora of ideas here where

they probably are going to need to step

into market to get folks on their side

and I think they have to do it. It's

interesting you mentioned that because I

just had Zack Dell from Base Power on

this week in Startups last week and what

they do is they put batteries on the

side of your house outside their square

ones so they're not as felt as

industrial like industrial ones and then

they will fill those batteries when the

uh electricity is cheap. They'll deploy

it when it's expensive. They get the

arbitrage

>> and I said to him on the show like it's

only they only charge consumers I think

$500 or $1,000 to install it just so

they have some skin in the game. you

don't have to rip your roof apart and

put solar on. It's just batteries. And

they said, "Well, why don't you do that

and like do an entire neighborhood? Like

when they build these 3,000 home infill

neighborhoods, why don't you put them on

every single one and then create a

network for data centers?" And he said,

"Stand by. That's what exactly what

we're working on." So it kind of

combines your idea. Saxs, you're the

zar. What are your thoughts on what

Chimath points out is which is the

average working American and their

perception of AI? You have job loss, you

have electric bills going up, and then

you have, hey, fake news, the reality,

is this real or not? These sora slop

videos I'm seeing, it feels like there's

a little bit of a trend towards um a

negative framing of the AI innovation

and maybe it's not going to help the

bottom half of society. Uh, are you

seeing that? Do you believe it? And do

you have plans to counter it?

>> Well, what I see is that we just came

off a quarter of 3.8% economic growth,

of which 40% was attributable to AI. So,

in other words, if we didn't have this

AI boom going on, by my math, our GDP

growth rate in Q2 would have been 2.3%

instead of 3.8%.

So AI is the difference between having

great GDP growth, say around 4%. And

modest GDP growth around 2%. So it seems

to me that everyone who wants to have a

great economy should be supportive of

this AI boom that's happening. The job

loss narrative is just that. It's just a

narrative. It's a story. The media loves

to tell it. It's mostly theoretical.

It's mostly anecdotal. You can point to

a few jobs here and there, but there's

no evidence of widespread job loss. This

is just something that people are

prognosticating about the future. And in

every previous technological revolution

that we've had, yes, the jobs have

shifted, but they've shifted from more

rote jobs to more sophisticated jobs

that create a higher standard of living

for everybody. The best example being

that in the year 1900, 50% of the US

economy was involved in agriculture. In

other words, one out of every two people

were farmers. By the year 2000, that

number had dropped to 2%. The

difference, the 48% did not become

unemployed. They went off and did other

things. They worked in factories, for

example, and they went into the services

part of the economy. So I think what's

going to happen here is that AI is going

to enable people to shift their work to

more gratifying and less wrote parts of

the economy that will increase

productivity and standards of living for

everybody. Biology has a really good way

of explaining this and I think this goes

to the heart of why the job loss

narrative is a fallacy is because humans

are endto end. What makes them really

good and irreplaceable is that they can

do an entire job end to end and they can

pivot their objective and figure out

what their objective should be. AI is

not like that. It has to be told what to

do. It has to be prompted and then when

it gives you a result, that result has

to be validated to make sure it's not

hallucinating. And then frequently you

don't really get the result you're

looking for. So you have to iterate and

you have to reprompt and you go through

this loop where you do it over and over

again until you get something that's

valuable. So in other words, humans do

the things at the end. They do the

prompting and validation. AI does the

stuff in the middle. So as biology says,

humans are end to end. AI is middle to

middle. This is why fundamentally I

think that AI and humans will be very

synergistic. AI will not be a

replacement for humans. They're going to

do the stuff in the middle that humans

don't like to do and it's going to allow

humans to be much more productive. So

right now I'm very optimistic about this

boom. And I do think that people who are

criticizing it should really think about

whether they want the US to have 2%

growth rates or 4% growth rates because

that's what we're really talking about

here.

>> Freeberg, CEO of Uber and Tesla believe

the opposite. They think these driver

jobs are gone pretty quickly. Uh the

data showing there's a bit of a serious

problem right now with young people

getting jobs specifically because of AI.

And obviously GDP is not wages. The

people we're talking about who are

affected by these job losses don't own

equities. The top 50 55% of the country

own equities. So what do you think about

this narrative? Do you believe it's a

false narrative, a true narrative

somewhere in between? Okay, here here's

how I would think about what may happen

rather than think about someone quote

losing their job, which you know is a

term you keep using and others keep

using and

>> I think would be yeah

>> I don't what whatever it is it you're

you're acting like they're passively in

a victim state. We have the lowest

unemployment in history and there's an

extraordinary demand for new capacity of

work by humans to do stuff in the United

States right now because of the

extraordinary manufacturing buildout

that is underway driven largely by AI

and soontobe robotics and several other

industries. We just talked about rare

earths mining and processing. There are

many industries that are taking off in

this country that have not existed and

there is a demand for labor. And when

there's a demand for labor and there's a

shortage of people to do the work, the

employer typically says, "Let's go

recruit. Let's go spend. Let's go

train." And when you have an innovation

cycle like is underway right now, the

hiring for the new jobs happens before

the loss of the old jobs happens. So you

have to have someone that builds all the

Model T's before people stop becoming

horse buggy drivers. So who's going to

do all the Model T building? They're

going to get paid. they're going to get

offered money to go do those jobs. So

what typically happens in these cycles

is that there's a recruitment exercise,

a recruiting cycle that happens upfront.

And so rather than say all these drivers

are going to lose their jobs, another

way to frame it is that all of these

drivers are going to be offered new,

higher paying jobs before there's lower

demand for driving. And they're going to

say, I can go make twice as much money

per hour by going over to take this new

job. And then they're going to say, "I'd

rather do that than drive. I'm getting

paid twice as much and I get to work on

more interesting stuff. I like that."

That's how this is likely going to go.

That is the more positive view on how

what you're calling job displacement

actually plays out in the US economy in

the decade ahead. A recruiting cycle

precedes the elimination of old jobs

that aren't needed anymore. That

recruiting cycle is a net positive for

people. They say, "Wow, that is an

amazing improvement in my income, an

improvement in my lifestyle. I get to

work on more interesting things. My life

is better because of it. And then years

later, the demand for those old jobs

starts to die down, but at that point,

everyone's been recruited away anyway.

>> So, Freeberg, you mentioned the the

Model T putting all the horse and

buggies out of business. And if we had

today's media environment around back in

the days of Henry Ford, that's exactly

what they would have been bemoning is

that all the horse and buggy guys are

going to be put out of business. And

part of the reason why that would have

been a very bad take is because it's

easy to see the people who are being

displaced in the short term like maybe

the Uber drivers or something like that.

But it's hard to see all the new

industries and all the new businesses

and all the new jobs that don't even

exist yet that are going to be created.

So for example, what were the downstream

effects of the Model T? Well, first of

all, it created this new kind of

industrial assembly line which applied

not just to cars but to all sorts of

goods. I mean Henry Ford pioneered that

and that had huge ramifications for the

US becoming the industrial power that it

ultimately became which led it to

winning World War II. Then just in terms

of the car, you had things like the

build out of the interstate highway

system,

>> the tire industry.

>> Yeah. that just about the highways that

led to

>> to Holiday Inn and hotels and motel and

drive-through windows and McDonald's and

car culture

>> and

>> and the taxi cab industry itself

emerged.

>> George Lucas got his start as a director

by making the film American Graffiti

which was all about car culture in the

1950s. So that led to Star Wars. I mean,

there's all these butterfly effects of

the Model T being invented, which are

absolutely massive. And it would have

been impossible to foresee all of that

stuff a hundred years ago. When you have

these new industrial revolutions or

these new technological revolutions,

it's going to increase the capacity of

humans to design all sorts of new

products, create all sorts of new

businesses. And what we've seen is that

this lump of labor fallacy that you have

all these humans that we don't know what

to do with so you have to just keep them

busy has always proven to be a fallacy

throughout human history.

>> And by the way, those buggy drivers did

not ch did not lose their jobs. They

chose to go into one of these new

industries where they were offered more

money.

>> I don't think this is the issue at all.

I would say that when you look at

Arizona, Indiana, and Wisconsin, what

you are looking at are people whose jobs

are not at risk today, tomorrow or the

next day because of AI. I don't think

that's what it is. And I think that they

probably on the margins benefit. The

question is more how are they getting

information and how are they processing

their point of view so that they show up

to these local municipality meetings and

essentially cancel progress. That is a

very important thing to diagnose because

it is not isolated. So I'm trying to ask

the question which I think is a more

practical and important one is what do

we do to make sure that the narrative

and the facts are clear because right

now you're seeing very different and