America doesn't win the next era because

it's brilliant. It wins because everyone

else is screwed. What's that mean?

Doesn't exactly fit on a bumper sticker,

but yeah, that broadly works. Uh, you

got two big things that are going on.

Uh, number one, in the globalized world,

it's all about who you can access

safely. And in the Western Hemisphere,

we really don't have to worry about any

security threats from a trade point of

view. So, people always talk about, oh,

if the US and China get into a war,

won't that be bad for X, Y, or Z? say I

don't mean to suggest it would be a

piece of cake, but that the Chinese are

dependent on trade and we're not. Uh

it's really that simple. And if we can

nail down Canada and Mexico in a

productive relationship, you know, we

used to call that NAFTA or NAFTA 2.

We're now having second thoughts. Uh

that's half the hard work right there.

Uh in addition, we export food, we

export energy, the Chinese import both,

biggest in the world in fact. Uh and so

maintaining supply chains for us is an

issue of building the industrial plant.

And while you can't just wave a magic

wand and make that happen overnight,

we've done this several times before.

Every country on the planet has. Of

course, we can do it again. It would

just be nice if we started sooner rather

than later. Uh the other piece is that

the Chinese stopped having babies about

45 years ago, and they're now on the

verge of running out of 50-year-olds,

and there is not an economic model that

humans have yet to dream up that will

work with where they will be

demographically in less than 10 years

time. So, we are living in the

equivalent of like 2006 subprime where

everyone's like all ooh and ah and it's

all about to go tits up. [laughter]

uh appropriately apocalyptic from you uh

to start. Um the stuff about China is is

that a challenge of just geography

uh vyro biome top soil just sort of the

the constitution of where they are is

that that's sort of one of the

fundamental problems.

>> All of that all of that is a legitimate

concern. uh the river where most of them

live on uh the Yellow isn't navigable.

They have never been able to use it for

trade. So, they've never internally

traded among themselves. Uh the one

river they have that is navigable, the

Yang Sea, has always been an

independent, well, I should say always,

but often been a political uh an

independent political entity going back

for 3,000 years of Chinese history. And

down in the south and the tropics where

you've got Hong Kong, you've got

citystates on little enclaves of flat

land that have always looked to the

outside world rather than the Chinese.

Uh the soil sucks. uh the northern part

where 70% of the population lives, it's

lowest soil in a drought zone. So if

anything ever happened to logistics or

distribution, what would go down in

northern China would be what has gone

down in northern China 27 times before

and that's civilizational collapse. If

we were talking about any country that

had fewer people than the Chinese have

always had, you know, that would just be

the end of them. just that there have

always been enough Chinese in the past

to pick up the pieces and move forward

on the other side of the break. But that

requires you having children. And so

this really is an end to the concept of

China and the concept of even the Han

Chinese because we're in a situation now

where where probably they have more

people over age 54 than under. And I'm

sorry that just doesn't work. Uh and

very soon it will be over. That's before

you consider the broader geography of

China versus the rest of the world. You

got the first island chain off the

coast. So the Chinese have never ever

ever been able to be a global commercial

power except when the United States when

it created the global system told

everybody that they couldn't bring guns

to trade talks. And that one decision

that we made allowed the Chinese to play

on the global field in a way that they

just never could until that point. And

so lo and behold, this is the one era of

Chinese history where they're unified

and successful.

>> Tell me more about the guns to the

meetings rule and how that helped.

>> Sure. So before World War II, it's a

good break. Um, we basically had an

imperial system where if you wanted

links to resources and markets and

populations that were outside of your

home country, you had to build a navy

and you went and took it. You built your

empire. And those empires attempted to

not trade with one another if they could

help it. They just traded within their

own network. Uh that model generated

what we like to call history and it led

to World War II when all the empires

crashed and burned at the same time

fighting for dominance. Well, at the end

of World War II, the only navy that was

left that was worthy of the name was the

American Navy. And we had never been a

trading power because we more or less

had a continent to ourselves and we're

still digesting the continent. So we had

this idea that we will use our navy to

protect everyone and we will allow

everyone to trade with anyone else and

we will allow our market to be open to

your goods if if in exchange we get to

write your security policies so we don't

get another conflict like this again.

And so one of the things that people

want to break down the trade

relationships and say that it's unfair

for the United States, what they forget

is it was supposed to be unfair to the

United States from an economic point of

view. We bribed up an alliance. And if

you remember your history, it wasn't

just Britain and Germany and Japan and

Korea and Taiwan and Italy that were

allies during the Cold War. It was

China, too, because it was all about

boxing in the Soviets. And it worked

beautifully. Uh the idea that this

should be reccalibrated in a post cold

war environment, perfectly reasonable,

but if you don't want to pay people to

be on your side, they need another

reason to be on your side. And so what

we're seeing in American politics right

now is this kind of um cognitive

disconnect where we [snorts] still want

everyone to do everything we say,

but we also don't want our market open.

And that is not a viable long-term plan.

>> Okay. So, Chinese demographic collapse.

You've said China will be gone in 10

years. China as we currently understand

it. Yeah. There'll still be some Han.

Give it 50 years there might not be.

>> Uh so, China very populous. Uh people

would might say, well, if I just look at

the numbers, you said before that

numbers were the solution last time.

There's more numbers now. I'm going to

guess that the issue is that the numbers

are trending in the wrong direction.

that it wasn't a good so bad. So bad.

[laughter]

>> So um

since I talked to you last there there

seems to be this reckoning that's going

on in the statistical community in can

in I said Canada. Where'd that come

from? Sorry you picked me up right after

doing another project in China. Uh the

issue appears to be that um

they now believe the stata stat

statisticians now believe that the local

and regional governments have been lying

about their demographic data for over 25

years. Uh and so after let me back up um

after Tianaan Square you know 10,000

people killed by tanks in the in

downtown Beijing the Chinese Communist

Party is like well that was no fun

whatsoever. Let's try to not ever have

to do that again. Uh, one of the ways

we're going to make sure that happens is

we discovered that, you know, there were

kind of two kinds of protesters. You had

the white collar workers that just made

signs and they were really easy to run

over with tanks. And then you had the

ones that were kind of scary that

brought wrenches and guns. So, you had

white collar and you had blue collar.

So, why don't we move our entire economy

from a blue collar economy to a white

collar economy? Problem solved. Because

white collar folks live in high-rise

apartments. You can cut off their water.

You can bolt them into their house. You

know, there's lots of ways you can deal

with white collar protesters. Blue

collar a little different. So, they

started advancing their STEM work. They

started secondary and tertiary education

systems. And, you know, well, this

wasn't a stupid plan. Uh, we can

critique how successful the transition

was and why they were a manufacturing

economy and still are and really weren't

ready for that kind of fast transition.

Different topic. But the thing is when

you go to primary school and secondary

school and tertiary school, the first

time you pay taxes is typically when

you're 21, 22, or 23. So there's a

delayed gratification here, which as

Americans like to say, the Chinese have

no problem with. It's false, but

whatever. So

the first big crop of these new white

collar workers who were supposed to be

working at high paid jobs and paying

lots of taxes that was supposed to

manifest in calendar year 2019

but then there was co and in China co

lasted a lot longer and they really

didn't get recovery until 2023 maybe

even early in 2024 and so they didn't

get any good data and then when they did

get the data they're like whoa

tax receipts are down. That's the

opposite of what's supposed to be

happening. And when the statistitians in

Shanghai went and looked back at

everything like, okay, here's the

problem. In a first world country, there

are dozens, hundreds of touch points

where the government becomes convinced

that you're a real person. You know, you

your mom goes to neonatal, you're born,

every immunization, metriculation for

every grade level, you pay taxes, you

you get your driver's permit, you get

your driver's license. There's thousands

throughout your lifetimes. The first

three in China, not birth because until

recently, not all Chinese were born in

hospitals. The first one was when you

get a single battery of immunizations at

some point around 6 months old. What

they discovered was that the doctor who

was giving the shots got paid per shot.

So the doctors lied about the number of

shots that they got. [snorts]

The second point is when you enroll in

kindergarten. Well, local governments

get subsidies from the federal system

based on how many students metriculate.

So the local government's lied about

that. The third point is when you pay

pay national taxes for the first time,

which is typically 17, 18, 19, unless

you switch to tertiary education, then

it's 21, 22, 23. So, you get to calendar

year 2024

and the Chinese realize that the

children that they thought started to be

born in the late 1990s were never born

at all.

And so the question they have and

there's no way to get the data is um did

we overount our population by 100

million people or did we overount by 300

million people

or more?

So even according to the official

statistics, China is no longer the most

populous country. That's India. Has been

for a while. Probably has been since

about 2006. The Chinese are now publicly

admitting that their birth rate has been

lower than the United States's since

1991.

And it looks like it might be

significantly worse than that. So yeah,

10 years, high confidence.

Wow. Um, since the last time that we

spoke, AI has taken on even more of an

important role. Uh, yeah, I'm aware. I'm

aware. [snorts] like just I think one of

the

it's it's an odd uh it's not happening

and it's good that it is uh sort of

scenarios that happens especially when

it comes to birth rate decline is

whether it's we don't need more people

on the planet we're a scourge on the

earth fragile world hypothesis climate

change in future it doesn't matter in

any case capitalism life's miserable and

I don't want kids or young people to be

born into

>> everyone's trying to shoehorn it into

their existing world view

>> correct yeah yeah the demand for answers

outstrips their supply. So they

repurpose old answers into a new

problem. Um, one thing that I am

interested about is uh some of the

losses in productivity uh being offset

by increases in efficiency enabled

through robotics and AI. China seems to

be pushing pretty hard on this stuff and

not bad at stealing AI technology when

push comes to shove and repurposing it.

I mean honestly it's it's software. It's

really easy to steal. You just need a

jump drive.

>> Yeah. Um

how much could that be a lifeline uh for

somebody like China and then also for

the rest of the world when we think

about demographic decline uh more

broadly?

>> Sure. Well, let's start with the

obvious. Um 80% of applications for AI

that I have seen and the other 20% are

not a different category. They're just

in in flux. But 80% I've seen it's not

about where we have the work shortage.

It's about white collar workers. It's

about making white collar workers either

redundant or more productive. And if

you're into some degree of data

coalation and assessment, uh you're in

real trouble. Uh if you have the brain

power to take the data in front of you

and make something of it, you're

probably fine, at least for now. So

right now, if you're like say a

parallegal, oh god, you're screwed. that

whole job category is going to go away

because your job is basically to

research multiple cases and bring the

information together for someone who

will then take it and do value ad. Your

job is to collate and AI can do that in

seconds. Um once you start doing the

value ad, uh the way my doctor put it is

it's kind of like 8020. It's like 80% of

it's pretty good and 20% of it is really

not. And when you're prescribing

medications, the 20% really matters.

So doctors are fine, but the people who

do the research for them maybe not so

much. That's not where the job shortages

are. The job shortages in the advanced

world, especially in the United States,

are all blue collar. They're welders.

They're electricians. They're not

coders. Uh so it's not that this is a

negative from my point of view. It's

just it's getting a little overhyped.

And most of the people who are doing the

the writing and the panicking about it

are of course white collar workers. Um,

and that colors the discussion. Uh, it

doesn't mean that it will always be like

that, but that's where we are now. And

the pace of improvement, while it's very

noticeable, I would yet I would not yet

call it revolutionary or particularly

impressive. Uh, I mean, I use it, but

I'd like to think I'm pretty good at

that 20%.

>> All right, that's piece one. Uh, piece

two, the Chinese. Um, the Chinese

problem is that they've run out of

people under age 50. And it's people

under age roughly 45 that do the

consuming and have the kits. And there

is no way that a can AI AI can help with

consumption or child rate.

So the robotic systems that the Chinese

are working on, not that they're not

important, but AI only helps to a degree

there. Uh AI is cannot physically move

things. Um it can learn from systems. It

can design systems even to a degree

again 8020. uh but it can't actually

produce.

Artificial intelligence is a completely

different technological suite from

automation.

And even if automation could s solve the

production side of the equation as the

Chinese run out of workers, robots don't

pay taxes.

>> Mhm.

>> And they can't raise kids

and they can't consume product. And so

even if the Chinese could maintain their

production levels without people,

they'd still be dependent on

international trade that they can't

guarantee and on the large asset of the

United States in the long term. Doesn't

change their core problem.

>> Yeah. AI isn't going to be able to fix

the top soil.

>> No. No. I mean, not as we understand it.

>> Yeah. Well, may you give us 50 years.

We'll see. Um

>> Yeah, we'll see.

>> Uh Japan, South Korea,

>> 50 years, that is the right time frame.

I I haven't talked to anyone who's

involved in Silicon Valley at all who

expects us to get general thinking AI

before the 2040s. And based on what's

going on with the large language models,

that date keeps getting moved back. This

is not a technology that's leading us in

that direction.

>> Interesting. the sort of uh

technological progress that typically

you see at this exponential curve with

AI seems to be doing what history does,

crawling and then leaping and then

crawling and then leaping and it makes

it kind of inherently unpredictable. I

don't think many people saw what was

going to happen with LLMs in advance. I

remember reading Nick Boston from Super

Intelligence what a decade ago I think

that came out maybe. Yeah, a decade,

let's call it 10 years ago, something

like that. And uh that was the best

minds on the planet contributing to the

best mind on the planet trying to work

out whether or not. At no point was it

well, you know, these sort of things are

going to predict what you're going to

say next and then if you just scale that

up enough and Nvidia becomes a $3

trillion company, maybe you'll be f

maybe maybe we're going to get it that

way. Nobody saw it coming. Um, so yeah,

there were some

>> considering considering that you can fit

the entire algorithm set and training

data for chat GPT on a thumb drive

that's about half the size of this. No,

it's like it's like I look at Nvidia's

uh valuation like you know this I mean

great for them but you know this is this

this is the very definition of a bubble.

All it takes is a couple of corporate

thefts and everything that's special

about them goes away.

>> Wow. Yeah. the uh the security must be

intense for that. Okay, so uh Japan,

South Korea, Italy hitting new fertility

lows even more than in the past.

Interesting that this has now sort of

come across into into Europe. When when

will the media and sort of the wider

world accept that birth rates are as big

of a priority as they are?

>> I mean, everything with demographics is

glacial. It takes decades for it to

arrive and so everyone's just like, you

know, hurry up and wait, hurry up and

wait. and then the day it arrives it's

too late because you are now a bloody

smear under the glacier. Um in the case

of Japan we actually have a culture that

saw this coming and they have done a

number of things over the last 30 years

to make it easier to have children to

stay in the workforce longer and so

their birth rate is actually right risen

quite a bit nowhere near replacement

levels. I don't want to oversell it but

it's now higher than not just China and

Japan and Taiwan and Germany and Italy

but also the Netherlands and India and

[laughter]

Thailand. Yeah, India India is aging. Uh

so the the math is going in a different

direction. Um everyone is still sliding

but we're all sliding at a little bit

different rates and you play that out

over decades and it really matters. So

China probably with the data we have

right now is in the worst shape and

after that it's a kind of a three-way

tie between or among Germany, Italy and

Korea most likely.

The fact that this bleeds across into

Europe sort of west is um I don't know

it feels it it definitely feels like

it's coming home to roost in a way. It

it's way less theoretical uh with the

fact that it's it's already spread over

here.

>> Yeah. At at the moment, most people are

when they think about demographics at

all, they think about it in terms of

federal budgets and the baby boomer

retirement and how much it costs to pay

for pensions. And you know, that's

that's part of it, but that's just the

leading edge. Uh the baby boomers are

aging out. The last of them are going to

be retired in 5 years. Uh and in most of

the world, there wasn't an echo

generation like the millennials in the

United States. So, we really are at the

beginning of the end here.

Are we entering a labor shortage that no

one's ready for? Is there is there any

country that can handle demographic

collapse the best better?

The bottom line is if you still have

people in 30 in your 30s uh that you

still have a chance to have kids. So

when I look at countries like say you

know not just the United States but

Germany no excuse me not just the United

States like India or Mexico or Poland or

Brazil you know these are all places

that have not passed that Rubicon just

yet. And so with the way we understand

economic theory and the way that we

understand biology and parenting they

don't require a reinvention. they just

need to encourage their young people to

have kids for some in some way for

whatever reason they want to modify uh

the language. But once you pass that,

once your average age slips past 40 and

especially past 45, there's no longer a

traditional biological path.

>> It's about smoothing the decline,

stretching it out. And a number of

European states have proven to be very

good at that. Japan has proven to be

surprisingly good at that, but it's

still a bit of a starvation diet in the

long run unless you change the economic

model. So whether it's fascism or

socialism or capitalism, everything is

based upon the balance between labor and

capital and supply and demand. That's

how we understand economics, how we have

understood them for a millennia, half a

millennia. [gasps]

If you can come up with something new,

and I'm all ears, then maybe it will

work in a different demographic profile.

Um, at the moment, the leading theory,

and it's it won't work, is of course,

um, modern monetary theory. Uh, that

just shuffles those four factors. It

doesn't really change the math. What

[snorts] the Trump administration seems

to be trying, whether or not they're

doing this consciously or not is a

question, uh is some sort of um metered

demand, a restricted demand model where

your demand is only met if the

government greenlights it and other

people's demand that just doesn't count.

That doesn't factor in. I'm not saying I

think this is a good idea. I'm saying

it's like the only thing that I've seen

in the last decade that might

theoretically apply to a future society.

I I keep on hoping for some sort of

fantastic hopeful

legup, some lifeline that's going to be

thrown. And every time that I do deeper

and deeper research into it, it it just

gets kind of worse. Well, I guess what

I'm interested from a geopolitics

standpoint is how a shrinking workforce

changes the relationship between

countries. We understand sort of what it

does within countries. Um, but how does

that change the geo part of the

geopolitics?

>> Countries that are aging out but haven't

yet crossed that line, they've run out

of consumption but they're not yet a

retirement home. Those countries are

really, really dependent upon exports.

And Korea is probably the poster child

for that. China is very close second.

They need an open globalized world

because they can never consume what they

produce. And so if they're going to have

any income and any long-term tax

capacity, it's going to come from

selling stuff to other countries. thing

is of course

>> the the countries that have the youth

India, Brazil, Indonesia, Turkey haven't

risen in wealth to a level to absorb

global manufacturing capacity. The only

first world country of size that's left

that is still a net consumer is the

United States. And while I can say a lot

of negative things about the Trump

administration, one thing that they

really do understand is the consumer

base of the United States is a tool of

geopolitical power and extending or

denying that to other countries is a

very powerful negotiation tactic. I

mean, we we needed to negotiate a second

round of Bretonwoods, a second round of

globalization. This is one way to do it.

>> Wow. I totally Yeah, that that makes

complete sense. If you have a shrinking

population internally and you don't want

your GDP to just fall through the floor,

you need to get people who do have spare

people, you do have countries that have

spare people to buy your stuff.

>> The alternative is absolutely limitless

mass immigration, which from a cultural

point of view, no one's a real fan of.

>> No. Uh, how much of a solution versus a

crutch is immigration when it comes to

stemming the tide?

>> At this point in time, it's at best a

like a really thin cane. Uh, if you

[laughter]

if if your goal is to use someone else's

young people to pad your demographic so

you don't fade away, you need to start

before you have a problem. And this is

one of the reasons why the settler

societies have always had faster growth

than the rest of the world. So the

Aussies, the Kiwis, the Americans, the

the Canadians, uh this has been less of

a problem for us because none of us are

from where we're living now. And we've

been bringing in waves of people over

and over decade and decade into the

centuries. Um but if you start it today,

so let's let's just take Germany because

the numbers there are really clear and

the Germans are great with numbers. So

we can trust them. You know the Germans

just to hold where they are average age

of like 50 just to hold here already

export dependent just just to not slide

anymore. They need to bring in 2 million

people a year that are under age 25

forever

in a country that only has 80 million

people.

>> Wow.

>> Fast forward 20 years and the Germans

are less than a third of the population.

>> It's not viable anymore. Had they

started back in the 50s be a different

conversation.

Yeah, that's crazy. I didn't realize the

numbers were that bad. Okay, you

mentioned uh Trump administration there.

What do you make of Mandani's New York

win? Is it remarkable? Is it indicative

of some important trend?

>> No. I mean,

if if there is a trend for Mandani, it's

the same trend for from Trump. These are

two people who never had a real job in

their lives and all of a sudden are now

political leaders. We should not expect

this to go well.

in New York, just like it hasn't exactly

gone well in Washington.

>> I'm I'm interested in whether or not

there is something

remarkable or or unique, noteworthy uh

happening with elections and and

populism and sort of rising nationalism.

You've got uh US election cycle

volatility, a little bit of that. You

got farmer protests in Europe. You

mentioned migration and a ton of people

having problems with that.

>> I wonder whether that could be driving

some political change, not just inside

the US, but I'm I'm interested in what

you think about um those dynamics and

the others impacting how the world at

large generally thinks about populism,

nationalism,

internal politics.

>> Well, a couple broad demographic

thoughts. As a rule, the younger cohort,

25 and under, tends to be more

politically radicalized, more

classically, excuse me, not classically

liberal, more projoratively liberal,

woke, whatever you want to call it, uh,

and uh, much more in favor of things

like redistributive economic policies

because they don't have anything to

lose. They only have the possibility of

gains. It's it's just it's age math. And

that has been true in every part of the

world throughout the entire modern era.

Nothing's weird there.

Flip it. When you turn 65, your income

goes away. You're now either on a fixed

income or the assets you've accured over

your life, that's all you have. That's

all you will ever have. And so you get a

little crotchety. And so the environment

we're in today in most of the world, the

young cohort is getting smaller and

smaller and smaller and more brittle and

more desperate, whereas the older cohort

is getting larger and larger and larger

and more oified and more unwilling to

make any compromises.

Throw that against a globalization. We

have the time where we're looking

through some of the most radical

economic transformations because of

what's going on with globalization and

deglobalization at least in our lives.

Certainly since the 70s I'm sorry

certainly since the 40s probably since

the 1870s and based on definition maybe

since the 1500s. At the same time we

have our first ever as a species

demographic inversion. Of course it's

going to be a shitow.

Yeah. I wonder whether

I wonder whether the increased

radicalization will have some sort of a

bump when those young people become

slightly older. If their economic uh

situation doesn't improve by as much as

they'd hoped, as much as their previous

generations has hoped, I wonder whether

that will hold on to some of that sort

of progressive radicalization uh or tamp

down

>> be the first time in history if it

happens.

>> Yeah. uh t down the inevitable

trajectory that goes from higher

openness to lower openness, higher sort

of liberal worldview to more

conservative worldview. Um but yeah, I

mean the the prospect that the future is

going to be owned by the people who have

children and the only people who are

having children really fascinating stats

I'm sure that you saw um looking at

where the birth rate decline has come

from if you organize it by political

cohort inside of the US and from 1990

it's almost exclusively been taken out

of people that are left-leaning. So that

>> no there's a couple problems with that

data point. Um I saw the same study.

Number one, they the way they defined

left lead. Okay. The um the classic

Democratic party in the United States.

There are three clusters to it. You've

got racial minorities, you've got

organized labor, and you have the the

educated coastal elites. The way that

study defined it, it was just that third

group.

[laughter]

>> And interesting,

>> the first two groups tell us something

different. Uh number one, the uh the

middle group, the organized labor,

they're socially conservative, always

have been. And now they're voting that

way. And they really like I would well

really like Trump. Might be a bit of a

stretch, but Trump is not a pro business

guy. He's probably the most anti-

business president US has had in my

lifetime.

And the unions love it.

Then you've got the racial minorities

and blacks and Hispanics and Asians

agree on nothing. Um, Asians tend to be

much better educated, much more wealthy,

not necessarily politically conservative

or liberal, more likely to be

independent.

>> African-Americans tend to have been

locktop into the Democratic party for

quite some time, but they voted for

Trump in the biggest uh percentages

we've ever seen in modern history. and

the Hispanic split right down the middle

this last election. Uh they are

economically

for a degree of redistribution not

anything like uh the coastal elites. Um

they tend to be the most upand cominging

part of the United States. So they're

most likely to shift economically

conservative which doesn't put them in

the Republican party either anymore

because that's not what the Republican

party is today. But at the same time,

they're the most anti-immigration group

we have. They want family reunification

for their family and no one else.

So the Democratic Party has shattered as

an institution. And when people start

talking about conservative or liberal,

you really have to ask what it is

they're how they define those terms

because the way America defines those

terms has changed radically in just the

last 5 years.

>> It is crazy. the the top line of data

that we're seeing at the moment. I'm

seeing more and more graphs from stuff

like our world in data and and like we

got the stats etc. uh being posted on

social media. There's a great great guy

from the FT that's doing a load of stuff

in terms of data visualization. His

stuff's getting shared around a lot. Uh

but there always are nuances and when

you dig into those you find out that the

story might not be the story as is

>> politics has always been messy and now

we're in a time of change so it's really

messy. M uh speaking of Trump, Trump

elevates Saudi Arabia to major non-NATO

ally status. That sounds like the the

most ligious slap on the wrists that I

can think of. Uh but is that a big deal?

Like what US Middle East tensions are

they important? How how much should we

be concerned? [sighs]

>> I'm not going to say they're unimportant

because that would just be rude. But um

the idea that Saudi Arabia is an ally is

a real stretch. And I'm not just saying

that because uh Muhammad bin Salman

ordered the dismemberment and cooking of

a journalist and then used the same

barbecue pit for a diplomatic party for

300 people later.

>> And they cooked Jamal Kosigible as well.

>> They I mean they didn't eat him. I was

cooked him.

>> Yeah. They [clears throat] dismembered

him. They put him in a giant barbecue

pit. They burned all the evidence. And

then later that day, they held a

diplomatic barbecue event using that

barbecue pit to make sure they could

destroy all the forensic evidence.

>> So there was little little particles of

Jamal Kosigible probably inside of a

little bit of the barbecue.

>> Yeah. Let's just put that to the side

for the moment.

>> Seasoned with journalist. What a [ __ ]

horrendous story.

Uh

the rulers of Saudi Arabia are literally

the house of Saul. It's a family and MBS

is a member of that family and King

Abdella of old was part of that family

and it is this family that created the

global jihadist movement that the world

has had so much heartburn with. It is

this family who their support created

things like al Qaeda and ISIS

and is indirectly at worst responsible

for things like the 9/11 attacks. So the

idea that Saudi Arabia is an ally in any

way requires an immense stretch unless

you go back to the cold war when we

needed Saudi crude to fuel the tanks of

Germany and Italy and Britain and Japan

and Korea and China in order to fuel the

alliance. So if you want to rebuild that

world,

Arab oil to fuel an alliance to fight

whoever, you know, there's a

conversation to be had there on

strategy.

But anything else, uh, this is not a

country that has been our friend for a

very long time.

>> Wow.

What do you make of the future of

energy? EV demand slowing a little bit,

shale production and stuff's going on,

nuclear renaissance. What's the future

of energy look like in your opinion?

uh any country where

EVs are not subsidized, there are no

EVs. So, uh that hopefully would tell

you everything you need to know about

that supply chain. Um that doesn't mean

that all green tech is stupid. Just that

one piece. As for green check large, if

you're in a sunny place, put up solar.

If you're a windy place, put up wind. Uh

you know, I would like to think that

that's not a particularly complicated

conversation.

If you're not in a sunny place, maybe

you shouldn't put up solar. Why people

have trouble with that statement bothers

me. I mean, I I I live at 7,500 ft above

Denver. I get 330 days of sunshine a

day. Of course, I have solar panels on

my roof. But if I lived outside of

Toronto, I would get the solar radiation

per year. Why would I be so stupid as to

put solar panels on my roof in Toronto?

It's like this this idea that the

technology works everywhere is really a

problem. Uh and that goes for the others

too. Natural gas, oil, nuclear, all of

them. Um because if you you have to have

the infrastructure that goes with it and

that infrastructure is there, why would

you burn that power source? Nukes are

getting interesting. Uh the United

States seems to in bits and pieces being

moving on from 1973 finally. It's only

been 51 years to 52 years.

Uh the hope is that the small modulars

will work, but right now we still have

yet to build a prototype. And so until

there is a prototype, I can't tell you

what the supply chain might look like.

But the the sexy nature of it is if you

can fit a nuclear reactor into a 10 20

foot container unit and just plug it

into a decommissioned coal plant's

transformer network and basically

produce as much power as the old coal

plant did for 5% of the cost of building

a new power plant. Well, that that

sounds great.

If the technology works, let's build it

once and then we'll talk about it.

How far away from that technology are

we?

>> We were supposed to get the prototype

last November and then the company doing

it went belly up. We've had three more

countries, excuse me, three more

companies say that they're working on

it. Uh I have not seen what I consider

to be a reliable time frame for when

their prototype will come online.

>> The labs are involved. People are

working on it. But I'm sorry.

>> Without that is nuclear dominance not as

inevitable.

>> Yeah. nuclear. If you're going to build

a large plant, let's just put the

regulatory and the the nimi concerns to

the side for a moment. From the day that

you put a shovel in the ground and you

have every dollar that you need to get

it set up, you're talking about 4 to 8

years, probably closer to eight. And

that assumes that the power grid can

take the power. One of the problems we

have in the United States is because the

period from roughly 1985 until roughly

2020 was a period where we were moving

towards higher and higherend industry

that used more precision labor and more

equipment uh but less smelting and

electrical work. It meant that the

amount of stuff that we were producing

was actually going up in value but the

amount of power that we needed to do it

was going down in value. And as we move

from manufacturing and agriculture to a

services economy, same thing. Power

demand stagnated or dropped until very

very recently, largely because of AI,

but also because of the

re-industrialization effort we're now

going through because of the Chinese

problems and decolonization. So for 35

years, we really didn't build out the

grid because we didn't need to. Now we

need to. And the biggest thing that is

missing is high voltage long range

transmission lines. Something that's

like 70 kilovolts or higher. The only

part of the country right now that has

spare transmission capacity is this

little triangle from Pittsburgh to St.

Louis to Chicago, uh, Appalachia, coal

country. Because in the ' 60s, '7s, and

' 80s, we had a [clears throat] number

of administrations who realized, here's

where the coal is. It's cheaper to move

electricity than coal. So, let's burn

the coal locally and send the power out

to the population centers. You basic

math. Uh so the federal government

stepped in and helped push through all

of this development work. And so now

this zone has like quadruple the long

range transmission that they're using.

In some places less than a fifth.

[gasps] Uh it's the only place that

could really build out what we need

quickly. Um everyone else in the country

needs to build those lines before they

think about things like nuclear power.

Because if you build nuclear power, you

might be able to supply your city right

there, but you're not going to be able

to ship it anywhere else.

>> That's in part a regulatory issue, but

it's mostly just hardware.

>> How effective is nuclear when it comes

to the um excess capacity from the grid?

I have a friend who helps to build uh

crypto mining facilities in West Texas

and one of the things that they do which

is supposedly of a massive benefit to

the grid is they are able to turn on and

turn off their requirement for buying

energy. So there is additional energy

that's available on the grid and he

pushes a button or the people that he

builds the plants for push a button and

they go we'll take your cheap energy.

Fantastic. We'll go and mine us some

more Ethereum. Um

how uh how much tolerance how much foot

on foot off gas do you have with nuclear

plants? Do you know?

>> Uh from a technical point of view, you

can go up and down whatever you want.

But going up looks a lot to the nuclear

regulatory commission like a meltdown.

So functionally, no, not at all. So

nuclear is only for base load in the

United States. And I think that's

broadly a good way to look at it. Uh so

for data centers, nuclear is a good

match because data centers churn 24

hours a day. Nuclear goes 24 hours a

day. Solar and wind for data centers are

some of the stupidest things I've ever

seen people put on paper. Uh because to

make that work, you need to build five

times the solar and wind that you would

need to power the center and then build

a massive at least 24hour duration

battery system. By the way, no one in

the country has more than 10 minutes

and just the cost is just extreme and

even then it wouldn't be stable or

reliable. Uh so nukes, yeah, nukes would

work for that. You mentioned EVs when

they're not subsidized.

No bueno.

What are the underlying d is that

consumer demand? Is that cost? Is that

prohibitive ability to produce? Like

what what are the underlying dynamics?

>> It's electricity. It's really simple.

Electricity is easy to generate. It's

kind of squirrely to transmit and it's

almost impossible to store in an

economically viable manner. You need a

supply chain that is among the most

sophisticated that humanity has ever

produced that produces and processes a

dozen major elements. And in order to

do the transition the United States

under the B administration said that it

wanted to do get to a majority EV

situation in less than 25 years, we

would need every scrap of lithium and

copper and malipium and tantelum

[sighs] and graphite and all the rest

from the entire planet and no one else

could have any at all just to do EVs

just here. So, no, it was always [ __ ]

moronic.

Uh, that

and the cost that's attached to it is

ownorous. So, of course, if you aren't

if you have to pay for it all yourself,

sales are basically dropping to zero. Um

Tesla

Musk talked to good game not viable

economically not viable geop viable

geopolitically and we don't have the

processing materials uh here in the

United States to do it anyway.

>> So that suggests assuming that Elon

isn't

ignorant of this I I have to assume that

he isn't. He tends to do his researcher.

You should think of everything that he

says in that light. But the that the

knowledge that this is the future of the

EV market that in order to be able to

make this work within the US, you need

this absurd volume of rare earth

minerals processed in the right way,

capacity, all the rest of the thing. Not

only did the stars need to align, but

you also need to align a bunch of weird

rocks in one of those rock towers on the

ground.

that is betting the entire future of the

com company on the direction of the

country and

is he basically in your opinion is he

making an assumption that the subsidies

will continue to roll in because that

makes Tesla very

uh

>> it's a nonviable company by any normal

math

>> but if you get continuing support

because there is a push toward green

because EVs are seen as the best way to

help climate change so on and so forth

it it is riding that the EV revolution

is riding off the back of subsidies

coming from any government. Is that the

way to look at it?

>> Uh for for for Tesla at this moment as

we understand physical chemistry. Yes.

Uh there's nothing viable at Tesl there

there's very little that's viable at EV

large anyway even before you consider

the cost of the supporting

infrastructure buildout which is a

couple of trillion dollars on top of

everything else. Uh just the vehicles

don't do what they were have been

advertised to do. uh they're also net

dirtier than gasoline because of the

production cycle on the front end. Now,

if you change the electrical system in a

way that I don't understand today, I

reserve the right to change my mind. If

you move away from lithium as the core

component of battery storage into

something that is less environmentally

damaging its production and more energy

dense and can take the vibrations

better, I reserve the right to change my

mind. But in the last five years, I

haven't even seen a prototype system for

suggested for any of this. The closest I

would say would be the slow motion move

from lithium cobalt batteries to lithium

iron batteries.

That might help with energy storage at

the grid level. Might really make a

difference. But for transport, no. It's

less dense than what we had.

>> Where does the net dirty come from? What

what is the dirty? Well, people always

forget that the electricity comes from

somewhere. And if let's say I I've got

an 11 kilowatt system on my house. If I

had a Tesla and the sun shone for 24

hours a day at my high altitude noon

peak, took me 2 and 1 half days to

charge the car.

So you're not using solar and wind to

charge your car. You're using fossil

fuels. And so the only potential gain

that you're getting is that an EV engine

is more energy efficient than a gas

engine on a mile per mile basis. But the

cost, the carbon cost of generating the

vehicle in the especially the battery in

the front end is just so much more. Uh

and if you're living in a place that's

predominantly coal and you're driving an

American style sedan, you're over the

long term generating a lot more carbon

than anything before. Now those are some

very broad statements and there are a

thousand exceptions to them based on

local situation. So for example the

Chinese vehicles uh from a weight basis

are less than half that of the American

vehicles. They would never pass our

safety tests but they're smaller and

they kill a lot of people but because

they're so much lighter a lot of what I

just said does not apply to the Chinese

situation. So a Chinese e Chinese EV can

break even on a carbon cost basis within

10 years maybe

>> but at the price of a few pedestrians.

>> Societies make choices when they start

crafting policy. [laughter]

Okay. Um

what are the what are the other sort of

damages with with regards to production

when it I know I understand about the

the lithium. Uh I I remember Joe had

some guy on his show talking about

cobalt mining and it was [ __ ]

disgusting. It was insane. Um

>> it's disgusting in every sense of the

word. Yeah. Environmentally, chemically,

and socially.

>> Yeah. Um what what else what else is

there going into EVs which are a little

uh byproducts we wouldn't realize?

>> I didn't top off my study for this. A

big one's graphite. Uh graphite is

basically a synthetic form of carbon.

[clears throat]

Uh there is a natural graphite which is

vastly preferred but the chemical

structure is very limited to a few

specific minds. So the cost goes up as

it's more of it's used. There's a

synthetic version. Uh basically you're

using it for the electricity regulating

the electricity flow in a battery. And

if the graphite is not the right kind,

you basically get the electricity

starting to leak out into the battery

itself, which can get a little blammy,

but more likely it's just going to be a

huge efficiency loss. Um, copper,

obviously, anything that uses

electricity is going to use a huge

amount of copper. Lithium, we've already

covered. Cobalt's a mess. Uh, manganese

using a lot of alloys for both copper

and steel. Um, sometimes you're going to

put this in the electrodes as well.

>> There just there's a lot of moving

pieces. Um, and that's one of the

reasons why I'm a little hopeful because

a lot of people are playing with a lot

of different chemistries to see if they

can kind of come up with something

better. We just haven't hit it.

Isn't there a rule in the UK that they

want to go completely

gaspowered vehicle free by 2030? That

there's no more or is that is that

elsewhere?

>> Lots of countries have announced that

either for their cities or for their

countries and unless they're willing to

subsidize it to a huge degree, it's not

going to happen anywhere. Um, that

doesn't necessarily mean that I have a

problem with those goals. I mean, lots

of time, well, you know, let me use the

California example. California gets a

lot of [ __ ] California deserves a lot

of the [ __ ] that they get. But when it

comes to regulation, uh the state

legislature has empowered their

regulatory bodies to create these

regulations to say, you know, we want to

be carbon-f free or we want to on the

grid by this year, we want to have no

non-EVs sold in the state by this year.

And as time moves on, if the technology

is not manifesting, make that policy,

the regulator has the authority without

going back to the state legislature to

move the date or change the mandate. Uh

it's a little bit more intelligent than

most people give California credit for.

And we're going to probably see a lot of

places climbing down. Uh we've seen a

lot of countries in the last couple of

years back away from a lot of what

they've done with EVs because it's just

not working out.

Which country do you think is closest to

being wiped out by energy shortages?

Which one is the most precarious

at scale? The Chinese are the ones in

the in the biggest pickle. Uh they

import about 70% of their oil about

similar number for natural gas and the

major vast majority of that comes

through the straight of Mala probably

were originating in the Middle East. And

so if you ever have a real dust up with

either Japan or the United States or

India, Vietnam or Australia or Sri Lanka

or Pakistan or Roman, that all stops.

It's really easy to cut completely. Um,

for more traditional places, uh, the

Europeans are getting clever. I'm not as

worried about the Europeans as I used to

be, uh, three years ago.

>> There's plenty of reason to be worried.

[snorts]

Uh three years ago when the Ukraine war

started uh the Europeans were in the

situation where they thought that if

they didn't side with the Russians that

the lights were going to go out but in

the three years since they've built a

lot of infrastructure to bring in carbon

energy [clears throat] from other places

and it has been broadly successful. Uh

and so they've backed away from a

political

goal that was questionable economically

and made a very clear strategic decision

that is broadly working out for them.

But they didn't sacrifice all of their

plans. So they realize, you know, maybe

solar and wind does not work in the

world's

least windy, least sunny continent.

[laughter]

But conservation and efficiency are

still very good plans.

>> So you you've seen some change in

mindset and a little bit more realism in

the policy and it's it's showing

benefits.

>> I'm interested in sort of what the

future of the green energy movement

looks like. This sort of green

transition and it's how possible it is

at the current levels of stability and

technology and rollout and instability.

There are no EVs. There are no battery

chassis. There is no solar. There is no

wind. There is no nuclear without

globalization. Too many of the parts,

too many of the materials come from a

different continent. And so if we're not

all doing this together, none of that

happens. And so you should move on. Uh

if you're in the Western Hemisphere

where there is more mining than

consumption, that's probably going to be

a little easier. But for the Eastern

Hemisphere, hard pass. It's just not

going to work. Now again, if you change

the technology on me, I reserve the

right to change my mind. But that's

where we've been for the last 25 years.

>> How much of the Eastern Hemisphere being

card carrying, flag waving, we are going

green people? It seems to be mostly a

western thing in any case. No,

>> for the most part, yeah.

>> How hopeful are you for a green

transition in the west?

If the technology is not ready and if

westerners are not leaving living living

in places where the technology can be

applied in a way that actually drops

your carbon. Putting up a solar panel

doesn't make you green. Putting up a

solar panel that reduces your carbon

footprint that makes you green. And most

people who live in the west don't live

in a place where that is true.

I think that's one of the reasons why uh

there is a lot of criticism in the UK

around the sort of green movement that

we've had a very viciferous government

uh pushing hard toward this as an

outcome that they want and a country

that really doesn't seem to be

particularly well suited for most of the

technologies like I I you mentioned

Toronto's sort of 1/5ifth of the amount

of sun that you got I I have to assume

that the UK is maybe even worse. We have

to go down. We have to go south in order

to get to Toronto if you fly from the

UK. So, we're further up. Um,

>> believe it or not, London actually gets

a little bit more sun than Toronto, but

like just minuscule. Glasgow though.

God, no.

>> Yes. And I was from 3 hours away from

Glasgow. So, yeah. I

>> wind offshore wind in the North Sea is

brilliant. Look at Norway. I mean,

Norway has been subsidizing. I don't

mean to suggest that they're not, but

they get over half of their electricity

from wind now. Now, because of the

dispatchability issue, they're probably

pretty close to peaked on that. They

probably can't do much more.

>> What's dis dispatchability?

>> The availab ability just to flip a

switch and more electricity surges into

the system. You can't do that with green

tech at all. You can do it with

batteries, but batteries are not good

enough to store more than a few minutes

of power on a grid level for most

places. So, the first half for the for

the Danes was easy. The second half, I

have no idea how they're going to do

that.

>> How interesting.

What is uh what's an important mineral?

What's the most important mineral that

no one's paying attention to?

>> I mean, it's really unsexy, but copper,

it's like you want to expand your grid,

you need copper. You want to do more

industry, you need copper. You want to

do anything with green tech, you need

copper, and you need a lot of it. Uh the

United States wants to double the size

of its industrial plant. The United

States, in order to do that, needs to

increase its grid by half. That means we

need to consume about 12 times as much

copper for the next 30 years as we have

for the last 30.

>> Where does that come from? Where where

is most of the copper in the world?

>> The only country in the world that has

what you would consider maybe surge

capacity to increase output on anything

less than a 5year time frame is Chile uh

the outcome the desert. Uh number two is

the United States. Uh number three is

Canada. Number four is Mexico. But

>> is that good for the US then that all of

it?

>> That's great. But that's the ore. Then

you got to turn it into copper metal.

That's China and India.

>> So either way,

>> we can't keep it. We can't keep it

domestically and then convert it over

here.

>> Well, I mean, we could. We've chosen not

to. But um and you know, it's not a new

technology. This dates back to like the

early 1800s. You basically heat it up,

you boil off the sulfur, uh you heat it

up some more, you purify into metal, and

then you turn it into other things. Uh

there's nothing that to stop us from

doing that except for the cost, the

footprint, the pollution. These are real

things and to this point, America has

chosen to just let someone else do it.

>> Isn't it an interesting oraborous thing

that in order to be able to increase the

capacity of the grid to be able to move

to something like nuclear, which would

be a cleaner fuel, you need to do

something which on the front end would

look like pissing out more pollution

into the atmosphere and would cause an

awful lot of protests. Because look at

these big we shouldn't be doing our

copper ore at home. Look at the big

black clouds. It's perspective being

able to see over big timelines is uh is

is

>> one of the many many many and that

assumes it works and the green

technologies that we have right now

don't. So spending $30 trillion or

whatever the most current number is to

achieve net zero in the United States by

2050 assumes these technologies actually

do what they say they're going to. And

we already know that they don't. We have

plenty of math to prove that. This is

why I'm really big on physical chemistry

because we need to find new ways to do

things. And we don't know what chunks of

the land on the planet we're going to

need access to to make those

technologies work until we've built some

of them. And

>> yeah, this one is based on gadalinium.

This one is based on whatever the [ __ ]

>> Yeah. Until we know the answer to that

question, we don't know how to prepare.

>> How fascinating. What do you think? What

do you think the biggest surprise in

energy is going to be over the next

decade or two, it seems to me, at least

based on what you're saying, the

technology that is promised is not able

to deliver that which it is promising.

Uh, so will the surprise be

disappointment or will the surprise be

an actual surprise?

>> It's going to be one of each. Uh, let me

give you the bad and then the good. Uh,

first [laughter] first the bad. Uh,

we're we're very close and we have been

very close for three years to a

significant break in international

energy markets. Whether it's the Russian

stuff going away or something happening

in the Persian Gulf or something

happening in Malaa or something

happening to China, the

production of vast volumes of crude is

going to fall away. And the consumption

of vast volumes of crude is going to

fall away for demographic and

geopolitical reasons. And I can't tell

you which one's going to happen first. I

can tell you that whichever one does

happen first will then lead to the other

one. And [ __ ] will get real in a lot of

places very, very quickly. uh and for

those of us who still want electricity,

we will then basically have to fight to

get access to the fossil fuels that will

allow us to have it. And that will look

different in every part of the world.

>> Second thing, at some point in the next

decade, our physical chemistry is going

to improve to the point that we have a

new idea that we will then want to apply

whether it's in generation,

transmission, or storage. I don't know,

one of the three, maybe more than one,

that will generate a completely new

arms race in order to access that

technology and apply it. And whoever can

figure that out leaves the old problems

behind. I mean, the petroleum age was a

was a mess. I understand why people

would like to go beyond it. The green

age, if it happens with today's

technologies, would be worse.

But that's not going to stop us from

trying to invent something new. And as

soon as we do, maybe it's a capacitor,

maybe it's a battery, maybe it's power

beaming, I don't know.

>> We start with a completely new set of

goals, needing a completely different

set of materials and different

concentrations, and that changes the

geography of what we are concerned

about. So we might 10 years from now be

more obsessed with Bolivia than we right

now are with Saudi Arabia and Iraq.

[laughter]

All depends upon where the technology

goes.

>> Well, it's interesting. America was

obsessed with Bolivia for a little

while, but for a different type of

substance that they were exporting.

>> Yeah,

>> we're good.

>> Bring back those days. Um,

>> cocaine. Sorry, I just had to say that.

>> That's okay. That's a statement that

needs to be made. Unless it can power an

electric vehicle, in which case, has

anyone tried that? Who knows? Um,

>> I'm sure somebody in New York has.

>> Yeah. Um, global. So this increasing

reliance globally because if you're

going to increase capacity it means that

you need to uh coordinate more and you

need to be more reli I didn't I totally

didn't realize the fact that just

because you have the raw material

doesn't mean that you can process it

where it is it can be sent away and then

come back. So global supply chains are

more important than ever. Been a few

years since we spoke. What's happening

with the state of global supply chains?

I've heard you say that they don't

survive without a global security

guarantor and that that era is over.

>> Yeah. Right now the ore comes from one

place. It's primarily processed in

China. It's sent to a third loca

location to be purified to a degree that

you can then actually use it and then it

gets turned into an intermediate

product. Uh so step one no matter who

you are, no matter where you are, uh

that second that first processing step

that's done in China, that has to be

done somewhere else. uh if we don't get

that right, we don't get to try at

anything else.

>> What about the rest of the global supply

chain? Uh global food systems, other

stuff like that. What what what else has

changed?

>> Uh I've been pleasantly surprised about

global f fuel food systems. Um the

sanctions against the Russians have not

yet uh impacted the fertilizer supply

system. and fertilizer as a category.

There's like 11 different kinds, but

fertilizer as a mass category. Russians

are still the world's largest exporter.

Without that, there is no food

production in Brazil at all. And it

looks pretty dicey in the Middle East,

North Africa, and especially um the

South Asian zone. We haven't had that

problem. Uh in the meantime, the

Americans continue to spin up more and

more nitrogen fertilizer because that's

primarily made from natural gas. and the

Canadians continue to spin up more and

more potachsh fertilizer because they've

got that in Saskatchewan. So, we're

seeing other suppliers come into the

system. Uh they realize that it's a

race. Uh and so far that's working out.

Um long-term still a real problem, but

we're not facing the acute crunch that

we were. [sighs] Uh Trump's tariffs are

pushing manufactured goods for

agriculture the other direction. Um,

basically oversimplifying here, but the

more complicated the se the uh the more

complicated the manufacturing supply

chain happens to be, the more steps

there are, the more players. If you have

a high tariff system, it pushes your

steps out into somewhere else because

otherwise you're paying the tariff every

time something crosses your border. Yep.

>> And so easier to take the handful of the

steps that you do and do them somewhere

else and just pay the tariff once when

the thing comes in finished. for simple

manufactured products that only have a

half dozen steps or so that tends to

come to you because that's easier to

collate. So when it comes to things like

plastics and textiles and furniture,

Trump's tariffs have reshort

manufacturing, but when it comes to

aerospace and computing and electronics

and automotive, it's pushing stuff away.

And agricultural equipment is definitely

in that se second category. So, we're

seeing John Deere, for example, has

already cut more jobs in the last 10

months than it did in the previous 20

years.

>> Wow. I did not know that.

>> Yeah, it's it's getting pretty bad in

the Midwest right now.

>> Shipping disruptions. How big of a deal

is that?

>> Yeah. Right now, the Asians realize that

this is where their bread is sputtered

and they're going out of their way to

get along. Uh the Chinese have not

interrupted any uh shipping. And in

fact, they've even leaned on the

Houthies and the Iranians uh to stop

[ __ ] around in the Red Sea because

they realize they're the ones who would

be most screwed if that gets broken.

[sighs and gasps]

>> So far,

>> good news.

>> Yeah. Well, look, you mentioned you

mentioned Russia there. Uh the last time

that we spoke, that was that was sort of

front page news. What is happening with

the Russia Ukraine conflict? Is it

entering a new stage at the moment?

What's going on?

>> Every three months we're in a new stage.

Uh we're in something called the second

revolution in military affairs which is

applying digital technologies to

warfare. Uh the first phase was in the

1980s and 90s when the United States

started making things like smart bombs

or cruise missiles. Now it's going onto

much cheaper platforms because uh

lowcost semiconductors are ubiquitous

around the world and anyone can make a

drone. And so we've got Ukraine, which

inherited part of the old brain trust

from the Soviet missile and aerospace

things, combined with a country that's

desperate to survive, combined with

these new inputs that they can bring in

from abroad and making thousands of

drones a day. So every 3 months there's

a new page. Uh, first it was

singleperson drones, then it was

jamming, then it was drones with

missiles, then it was water-based

drones, then it was mass drones, then it

was Shahed drones, and it was Shahed

drones that could do a limited amount of

target selection. Now, uh, it's

something called the the Octopus drone,

which the Ukrainians are just starting

to use, which is a drone interceptor.

Uh, it's a new day every day, and I have

no idea how this is going to play. I can

tell you with the technologies that

existed pre-war exactly how this war

would have gone.

>> Those aren't the technologies that are

being used in the war anymore.

Isn't that so so interesting that all of

the dangerous assumptions people had

about modern warfare, all of the

predictability, I mean war war is

unpredictable enough, uh but when you

apply the uh growth curve of technology

to warfare, uh you just end up with I

mean that that weird evolution between

uh offense and defense that we saw

happen. Well, drones have come out and

this is better than using a Hellfire

missile. And then instead of using that,

you get a net and these drones are

defeated by a net. And now the drones

have a little thing on the front that

cuts the net. And now the nets are made

of this material. And now there's an EMP

that blasts them out of the sky. And now

there and the uh pace of innovation with

kinetic consequences

is it's mad. It re it's been absurd. Uh

>> right. But this is why it's called the

revolution in military affairs. Um, if

you go back to roughly 1935,

the technologies we were using then up

until 2022 with the exception of the

introduc introduction of the jet really

hadn't changed. I mean, it was guns, it

was artillery, it was tanks, it was

ships, it was subs, it was helicopters.

The jet was the only one that was

introduced and that was introduced late

in World War II, 1944.

We've had more technological evolutions

in the last 3 years just in Ukraine than

the rest of the world combined has had

since 1960.

>> Wow.

>> And so the rules we don't know. We are

only in the very very early stages of

developing the weapons much less the

doctrine much less being able to play

that against a battlefield. Um and we

are very fortunate in the west that the

Ukrainians will want to partner with us

because they are doing in real time uh

the sort of experimentation that is

costing lives that if we were doing this

in a broader conflict would have already

claimed a million people.

>> Yeah, I was going to say I wonder how

many countries are uh watching Ukraine

and Russia almost like a lab. Yeah, the

last time something at this scale

happened, a major conflict in which

people were watching, it was either the

Crimean War or the American Civil War,

because those were the two conflicts

where industrialized technologies first

really hit the field, whether it was a

Gatling gun or penicellin or the

railway.

And people are watching and thinking,

well, this is a good explainer, uh, a

good, um, sandbox for us to observe what

these new technologies are going to be

like. How how are these

>> say I'm dark? [laughter]

>> Well, look, I mean, yeah, I'm not saying

that Russia and Ukraine is being used as

an experiment for the rest of the world

to watch, but that's what the people who

are not invested in it directly will be

will be thinking, right? Look at this.

Look at look at look at the way that

this goes forward. I that seems to me I

was interested in what the most

dangerous assumption about modern

warfare was, but the uh the the

assumption that it is predictable or

that it follows any of the rules that

have been established in the past seems

to be a pretty [ __ ] good one.

>> Yeah. Now, we still need energy. We need

still still need food. When you're

talking about drones, you need

electricity specifically. So, that adds

another layer of things to it. But yeah,

uh the rules are changing very quickly.

What conflicts are more important than

Ukraine at the moment?

>> At the moment, that's really the only

one that matters because that has the

nuclear question because of the Russians

that deals with the northern European

plane. So, automatically draws in all

the Europeans. It has the issue of

uniting Eurasia under a single power.

So, the Americans get interested. Uh,

and then of course the Chinese are

providing the industrial base that's

necessary for the Russians to carry out

the war in the first place. So,

everyone's involved uh in some way. Uh

it is by far the most critical one out

there. Uh we'll probably have a few new

ones in the next few years. Um whenever

you break the economic model, politics

gets all wonky and security issues

naturally bubble up from that. And

that's before you consider a

technological change. So you know, maybe

we figure out what the next energy

technology is. We have something fresh

to fight over in a world where all of a

sudden oil is not as reliable. It's one

of many ways this could go. M what about

South China Sea stuff that was big deal

for a while.

>> I never found that sexy. Never. It's

just I mean just it's ringed by hostile

countries. Vietnam, Philippines,

Indonesia, Malaysia. Um it's not that

deep so subs don't play a big role. The

energy in it, the reserves are not all

that interesting. And the sand islands

that the Chinese have built are, as the

name suggests, built of sand. And so the

Chinese have already stopped stationing

aircraft on them because the runways

aren't functional.

And if you see this as a naval

projection issue, projecting through an

area rung by ringed by a half a dozen

countries who hate you, you put a few of

the new tomahawks that the United States

is developing that are truck mounted and

you can't do anything with that except

for loose ships. And even if you could

secure it, you have now made it 17th of

the way to the Persian Gulf. Big [ __ ]

deal. Uh the Chinese are boxed in. I

I've never found the South China Sea

interesting.

>> Wow. You I've seen so many uh video

documentaries and stuff talking about

these land grabs that breathless.

>> Yeah. Yeah. This is, you know, it's this

sort of um odd geopolitical red tape

loophole which is permitting China to

expand the size of its country by saying

this is us and this is us and this is us

and it's slowly going to engulf the

entire South China Sea. Uh

>> yeah, when public relations is your

strategic policy, it's not a very good

policy. Uh, if you want to take it

seriously, the Chinese have to conquer

Vietnam first, then we'll talk because

if they don't control the coast, there's

no point in controlling the water.

Surely based on your theory about China

being in a lot of [ __ ] over the next

decade and a metric ton of [ __ ] over the

next 50 years,

>> is there not the potential for them to

do something desperate, whatever that

means, silly, more aggressive, more rule

it out, but there's nothing that they

could do that would fix their underlying

core problems. They can't change their

geography.

They'd have to conquer the entire first

island chain to have a chance to project

beyond. And even then, they're not going

to have a two ocean navy because there's

only one ocean.

Um, they're not going to solve their

demographic problems with the war. The

only country where you could maybe turn

enough people into slaves to round out

your demographic structure would be

India. The Himalayas are in the way

independent of the fact that that would

be really hard. [gasps]

Uh, so there's nowhere they can go. Uh,

the resources aren't within easy reach.

The demographic situation requires Star

Wars style cloning and the strategic

situation can't be solved with a navy

that is anything less than five times

the powerful power of the American Navy.

And they're nowhere close. They have a

lot of ships, but whenever you see like

a tonnage per tonage comparison for a

ship, keep in mind that their ships suck

and are a lot heavier.

So, a 40,000 ton Chinese carrier and a

40,000 ton American carrier, this one is

an order of magnitude more powerful than

this one. They're slower. They can't

maneuver. They need too much fuel.

>> Uh before you consider things about the

hardware that they might launch,

>> okay, that does not necessarily preclude

them from doing something silly or

something kinetic or aggressive.

>> Exactly. just purely out of desperation

shape the environment on their way out

the door. I can't rule it out. But

generally countries don't die that way.

There has to be something that they

think that they can achieve.

>> The reason that I don't dismiss it