Top White House Advisor: The US Empire Is DYING And Socialism Is Coming Next! | David Friedberg

The Diary Of A CEO with Steven Bartlett

David Friedberg, a scientist-entrepreneur and advisor to President Trump's Council of Advisors on Science and Technology (PCAST), discusses

Key takeaways

• The U.S. empire is in decline due to unsustainable government spending and inefficiency.
• Socialism may emerge by 2028 as a response to systemic failures in wealth distribution and social safety nets.

Main topics

• Decline of the U.S. empire
• Emergence of socialism in America

Notable quotes

"It's inevitable that socialism will happen in America, but I don't want to lose my agency, my liberty, my freedom."

"The more government has tried to create services for people and help bring them up the ladder, the more expensive those things get."

Conclusion

Friedberg concludes that while systemic challenges like empire decline and rising socialism are inevitable,

Transcript preview

Speaker 1 (0:00) It's inevitable that socialism will happen in America, but I don't want to lose my agency, my liberty, my freedom. Speaker 3 (0:04) Do you think the U.S. as an empire is in decline? The Speaker 1 (0:06) answer is Speaker 2 (0:07) yes. Speaker 1 (0:07) I was appointed to President Trump's Council of Advisors in Science and Technology. And one of the great lies is that the government will save you. But the more government has tried to create services for people and help bring them up the ladder, the more expensive those things get. 63 % of Americans live paycheck to paycheck. People can't afford to pay their bills and it needs to be fixed. What will ultimately happen? So all my politician friends are about to chop my head off about this, but... Speaker 3 (0:33) David Freberg, what is the most important subject of our time? Speaker 1 (0:36) AI. We're entering this golden age and people don't realize we're in it. And I don't buy into the narrative that Dario, Elon and Sam end up having all the value in AI. Because in the next 10 years, there will be a billionaire that will emerge that has zero net worth today, downloaded open sourced AI and built a company that made them a billionaire. And they're going to be someone that's going to come from nowhere. And there's going to be a lot of these sorts of stories. But Speaker 3 (0:55) this narrative that AI will take jobs away, you don't believe it. So Speaker 1 (0:58) from data, from evidence, over all periods of technological revolution like this, We've never seen jobs decline and the average person doesn't see it. But oh my God, the stuff we can do is unbelievable. Right now we have a billion people in the world that are starving. We have hundreds of millions dying from curable disease. These are the sorts of things that are going to get resolved because AI unleashes this capacity for human advancement and it's transforming every aspect of biology and our understanding of life sciences. Speaker 3 (1:22) So I wanted to ask you, do you think we're going to be able to live forever soon? The truth is... Speaker 3 (1:30) Guys, I've got a favour to ask before this episode begins. The algorithm, if you follow a show, will deliver you the best episodes from that show very prominently in your feed. So when we have our best episodes on this show, the most shared episodes, the most rated episodes, I would love you to know. And the simple way for you to know that is to hit that follow button. But also, it's the simple... easy, free thing that you can do to help us make the show better. And I would be hugely grateful if you could take a minute on the app you're listening to this on right now and hit that follow button. Thank you so, so, so much. Speaker 3 (2:04) David Freeberg, you're someone that graces lots of different subjects. If you were to sort of self-define who you are and what you do, now this is difficult because you've got to kind of put yourself in a label here. What would that label be? How would you self-categorize yourself? I would say I'm Speaker 1 (2:19) deeply curious about the world and the universe and how it works and why it works the way it does. And I'm a big believer in human agency to affect the universe around us. And that's kind of my... core kind of driving motivation. A lot of the other stuff ancillary is about how do you enable that? And I think that that's sort of probably where I also spend some time is in the enablement of those things. Speaker 3 (2:42) Got a nice cute photo here of that kid that wanted to be Einstein. Speaker 1 (2:46) Yeah. And then Speaker 3 (2:47) as it relates to how that manifested into like a professional journey, what's Speaker 1 (2:50) your Speaker 3 (2:50) professional journey been for anyone that might not know? Speaker 1 (2:52) I started in college, majoring in math and physics. And then I changed my major to astrophysics. And it was during the time I was in college is when the dot-com boom happened. In the heart of Silicon Valley, there was a kid in my dorm room who started a website selling DVDs online. And he sold it for a million dollars in our junior year of college. That was like an unbelievable, unfathomable amount of money. And so... There was this change that was happening in the world. And I got enamored with this idea of businesses and how do you use businesses to change the world, not just use scientific discovery as a method to change the world. So I decided to go work in Silicon Valley. I interviewed for jobs. I didn't get a lot of offers, but I played a lot of poker during my college days. That's how I was able to make money. I read all the strategy books on playing poker. I actually spent a year working in a pool hall and the manager of the pool hall and the bookie. invited me to their home poker game, took all my money that I made at the pool hall. I was making four bucks an hour, 4.25 an hour. And so I was like, I'm going to learn poker. So I learned it. That's how I made money. And I put that on my resume when I applied for jobs after college. And I got interviews with investment banks. And the investment banks were like, oh, we want to talk to a kid that knows how to play poker. Because this was before internet poker, before ESPN poker. So it was like an interesting thing. And so I ended up getting a job working in investment banking and then worked on tech companies. So then I got to learn business, finance, accounting, mergers and acquisitions, all this sort of stuff. And then I ended up working at Google. I worked at Google when it was started when it was just under a thousand employees. And I left a couple of years later, started a business called the Climate Corporation. And so I've been in Silicon Valley my whole career. Speaker 3 (4:24) And that company you end up starting does pretty well. Speaker 1 (4:27) The Climate Corporation? Speaker 3 (4:28) The Climate Corporation. That Speaker 1 (4:30) one we sold in 2013. So we sold it for a little over a billion dollars, which was a great outcome for investors and shareholders. And today, you know, it's software for farmers. And today that software is now owned by Bayer, which is the big kind of pharma slash ag company. It's used across 200 million acres every year. That's Speaker 3 (4:50) a Speaker 1 (4:50) pretty sizable amount of farmland that uses that software still. So yeah, it's done fairly well. Speaker 3 (4:55) So I'm 33 now. You were 33 when you sold that? I was 33. 33. A lot of money, $1.1 billion. And you've done lots of other things since then, which we can go into. But you've also, I think from March this year, you were appointed as an advisor to Donald Trump? Speaker 1 (5:08) Yeah, I was appointed to President Trump's Council of Advisors in Science and Technology. Speaker 3 (5:13) What does that mean in reality? Speaker 1 (5:14) So if you look back in the last couple administrations, there have been different themes over time on who is appointed to PCAST. In historical context, like Bill Clinton had a PCAST that was set up just for the internet. PCAST. President's Council of Advisors in Science and Technology. And so he set one up focused on the internet. And this current PCAST under this administration is heavy in AI. So it's like Mark Zuckerberg, Mark Andreessen, Sergey Brin. That's kind of the cohort. that's on this advisory council, but it's always included folks that are involved in things like biotechnology, sciences, and to help guide science policy for the administration. So it involves having conversations with people in the administration on things that are happening in industry, things that are happening on the frontiers of science and technology to help guide some of the policy decisions that the administration is trying to create or enforce. Speaker 3 (6:05) And what is the most important subject of our time? Speaker 1 (6:07) AI. And right now, The big question in the United States from a policy perspective seems to be the regulation of AI. What role should the government play in determining where AI goes, how it gets built, how it gets deployed, who gets to use it, who owns it, where the value lies? A lot of these factions that emerge inside a government, even today on the same political party, on whether or not, for example, to allow Chinese open source models to be used by American businesses. These Chinese models are as good as, or in many cases, better than private American models. And because they're open weights, you can download them and run them on any computer you want that works. A lot of companies want to use those because they're cheap. You can pay effectively 50 cents for a million tokens of output, which is a measure of how... productive the model is, you know, this token is kind of like a word versus $50 from Anthropic, which is a private model. So the question is, do we allow these Chinese models to kind of become ubiquitous in industry? And if so, what does that do to American AI? What does that do to our capacity to compete? Is there security risk? So there's a lot of this kind of debate underway. And that I think is probably the hot topic du jour. I don't know if it's the hot topic tomorrow, but today that's kind of the big thing. But all of this administration, I think from a science and technology policy perspective, will probably be viewed as, on the one hand, what's the... of enablement, acceleration, regulation of AI. And on the other hand, you know, there's this question still on what is science today? In an era of AI, science is also changing. And so there's this kind of, I think, big shift underway. Speaker 3 (7:55) We'll go into those subjects, specifically the subjects on AI and everything that it interfaces with. But I think it's important also to get kind of like a backdrop of the economic state and like the social state of the nation, because all of these things feed into... these big questions on AI. And they also inform everyone's biases on the subject. Because if you're at a different sort of socioeconomic position, or if you're feeling a different thing, your perspective on AI is going to be radically different. So if we started then first on like, if we just focus on the United States, which in some respects is a little bit of a proxy for the rest of the Western world, where is the United States at this moment in time in terms of is it on the rise, inequality? What are the sort of pertinent factors here that help us understand the backdrop of this nation? Speaker 1 (8:38) The biggest drivers for this nation at the moment in terms of what public policy and private markets will do is, number one, the unaffordability crisis. What does that mean? 63 % of Americans live paycheck to paycheck. They don't have enough savings to pay for a fiscal emergency in their household. 63 % of Americans. And the cost of things is rising faster than wages are increasing. So things feel less affordable to most Americans. And then there's this wealth inequality concern, which I would say is both kind of a perception issue. There's definitely policy issues that has allowed it to happen. And we can talk about those. But I think America is in this kind of crisis of classism, this crisis of us versus them. And it manifests in a lot of different ways. So, you know, you had Ray Dalio on. And if you think about Ray Dalio is kind of like. cycle of empires. This is this idea that there's been six empires in the last 500 years, and the United States is on the decline and China's on the rise. And it can be measured across a number of different dimensions, one of which is this crisis of internal struggle, which manifests often with external struggle, the Iran war. Why can't we stop having external wars? Well, a nation that's happy with itself generally doesn't go to war. A nation that's not happy generally does go to war. And so a lot of this stuff gets tied up, I think, in this economic distress that the United States is feeling. My contention, which may not be very popular, is that the more government has tried to create services for people and help bring them up the ladder, the more expensive those things get. Are you socialism? Policy in the United States, and this is one of the great lies, and I think there's a series of great lies. in U.S. policy over the last half century. But one of the great lies is that the government will save you. The government will help you by giving you these essential services that you want more of. Education, healthcare, housing. And as the government has entered into those markets, because remember, there are people making those things, offering those services, and there's someone paying for it. So as the government enables more money to flow into those markets, the cost of those things has just gone up. And you can see how this plays out, for example, in education. So higher education. If you want to go to college in the United States, and I'll just give you a statistic, 30 years ago, administrative staff were like 10 % of colleges. Today, they're like 60%. In just 30 years. Give me a rational reason why we should have 6x the administrative staffing at colleges and universities. There isn't a good reason why. The real reason is that because the federal student loan program doesn't discriminate against the university on how well they do with their graduating students or the degree or the individual that's taking out the loan, the federal student loan program has just allowed more money to flow in to universities. Now, if you're a university administrator, there's no constraint on how much you can charge for tuition. So, hey, we'll raise tuition 5 % this year. We'll raise it 8%. We'll raise it 10%. And we'll hire more people. And if people hire more people, they get a higher salary. If you think about the individual, I don't get to make more salary until I'm a manager. Now I want to be a director. Now I want to be a senior director. And the organization grows. That's very natural for any organization, whether it's a nonprofit, a university, or a private company. You want to grow, and people want to make more money year after year. So they, because they can collect more money, can charge more for tuition. There isn't a natural market force that says your tuition is too high now because the government has provided unlimited funding to higher education through the federal student loan program. So as a result, education has gotten so vastly expensive that everyone now looks at it and says, we got to do something about this. And both parties seem to say, well, here's what the government's going to do to do more. And it's like putting fuel on the fire. So the challenge right now is people are feeling left behind. There's massive wealth inequality. Things are extremely unaffordable. And the solution that's being embraced is for the government to do more, which de facto leads to socialism. What is wrong with socialism? I would argue that the key measure of a country's success is how many people are transitioning from labor to capital each year. What does that mean? That means every year I'm working paycheck to paycheck. I'm collecting check. I graduated college. I had $19,000 in debt. I went and worked. I got paid. I saved up. I paid down my debt. I was able to get out of it. Then I worked at Google. We had an IPO. Suddenly, I had assets. I had stuff. I had money in the bank account. And it was like an incredible moment for me. And I said, I could live off that money. I don't need to live off a paycheck every month. I now have savings. I have assets. That is capital. And everyone talks about capital versus labor. But the real advantage of America is enabling people to go from labor to capital. Every individual that works, saves, invests, does whatever they need to do to accumulate enough capital ends up in the capital bucket. And then you're no longer stuck needing to go paycheck to paycheck to pay your bills. That's the dream. That's the real American dream. It's not just about owning a house. If you own a house and you have a bunch of debt and you got insurance payments to make and you still got to work every month to make those payments, you're not necessarily living the American dream yet. The American dream is being freed of that burden. Speaker 3 (13:52) Because you can live off the interest of your assets. That's Speaker 1 (13:55) right. And so you're earning income. Let's say you have $100,000 saved and you can make 10 % a year on that. That's $10,000. Suddenly, if you get to $1 million saved, you can make $100,000 a year and you can live on that. That's economic security. That's financial security. That's what we should give to every American, is the ability to own assets that give them freedom to choose what they want to do in their life rather than be stuck in work. And the problem with socialism is it takes away that transition moment. It eliminates it because it says everyone has to be labor all the time for the rest of their lives. And then no one has freedom. And that's what America was founded on was this ability to find through freedom of choice, through agency, the ability to transition from labor to capital. And I think our goal as a country should be get 2 % of Americans across that line every year. Then I think we'll be successful going forward. But if everything's all about like... give people more stuff and have the government do it. We're just going to keep raising the debt, making things more expensive, inflating the costs away. And it's inevitable that socialism will happen in America. It's absolutely inevitable. Do Speaker 3 (14:55) you think the US as an empire is in decline? Speaker 1 (14:58) In terms of the power of the dollar, in terms of prosperity of Americans, the average American, a majority of Americans, the answer is yes. But the potential hasn't been deleted, meaning decline is not inevitable. To be very clear, we are not yet at a point where it's a runaway train. In the history of democracies, there's never been a place like America where an individual like myself, moving here from South Africa, going to public college, graduating with debt, and then being able to work my way out of the debt and find myself in the position I'm in today. With no nepotism, with no handouts, with, I mean, you could argue about privilege and all these other sorts of things that I was vested over my life. But, like, it's an amazing place that that sort of story can be told a million times over. That there's not just one or two people that this has happened to, but there's millions of people. The problem is it's all the other hundreds of millions that didn't get to live that opportunity. And if we can fix that, America is not in decline. America is a prosperous nation and has centuries ahead of it. Speaker 3 (15:59) When you look at this... You're talking about runaway trains. When you look at the national debt, though, it does look very much like a runaway train. Speaker 1 (16:05) Want to know where inflation comes from? That's where inflation comes from. By printing more dollars to pay for that debt, which is what happens, the Federal Reserve buys the debt and they issue dollars to the bank system to buy the debt from the government. Remember, the Federal Reserve is separate from the government. The Federal Reserve can print dollars. They can send dollars to banks and now the banks can loan money out and it makes its way into the economy. Now there's more dollars in the economy. And that money was... you know, owed back to the government at some point, but the Federal Reserve may never get paid back. They may just keep adding and adding and adding and adding. And they're just printing more and more dollars. Is that Speaker 3 (16:38) sustainable? No. So I don't understand the force that's going to intervene to stop this sort of compounding debt. The Speaker 1 (16:44) outcome of this is socialism. That's the moment we're in right now. That's why we're seeing this wave of socialism. I've been saying for five years, we're going to face a wave of socialism. And after Donald Trump was elected, My prediction for the next year was that the next wave in politics in America will be socialism. And people thought I was crazy. And I'm like, it is absolutely inevitable. If you look at this, this is where we're headed. It is de facto socialism when the government employs roughly one half of the people of the United States. Right now, if you look at all the... federal, state, local agencies. So the people that are employed, the people that are contractors of those agencies, and then the people that live off of some sort of government pension or social security system, the total amount is close to 50 % of Americans. So we're getting to a point where people are like, the only place I can go is more money from the government. And then eventually the government becomes the whole economy. Speaker 3 (17:33) If the outcome of socialism was to cause capitalism? Speaker 1 (17:36) It's a great question. I think it was capitalism plus policies. Let's say you have a million dollars. Yeah. you're making, say, 10 % a year. Next year, you have $1.1 million. The next year, you have $1.21 million or whatever, and you keep adding it up. That's called compounding. After a couple of years, your million dollars turns into $10 million. And you never have to sell shares along the way. You can just own the shares and whatever's going up. Your value just keeps going up. You've never paid taxes along the way. Boom, boom, boom, boom, boom. And suddenly, fast forward a couple of years, instead of having a million, you've now got 10. That's capital compounding over time. Meanwhile, if you're working, every paycheck, taxes are taken out. Every time you get a check, every time you get more money, more capital, taxes are taken out. So if you don't get capital, if you don't get enough savings to allow you to compound, you are never going to get there. So from a tax policy perspective, labor working for your money should have never been taxed higher than earning returns on your capital. So you're saying tax the rich? I'm saying tax capital at a rate that's equivalent to labor. Wealth taxes? Wealth taxes are asset seizures. Definitely no. So one of the principles of the United States and the principle of what this country was founded on is private property rights. If you go back to England, right, like 500 years, or let's just talk Europe broadly. There were very few places where you as an individual citizen had rights to own private property. There were very few places where you could say, I have this thing and it doesn't belong to the king or it doesn't belong to whatever the local lord is. Like everything was the property of the lords, of the higher class, of the upper class. It was endowed to them, it was vested to them by birthright for centuries. Same in Asia, same in the Middle East, same in Africa. I mean, like every nation started out with this system where people didn't have rights to private property. Those who had kind of these systems above could decide who got what. So the United States was founded on one of the principles of private property for an individual. I think when they were drafting the Declaration of Independence, it was about life, liberty, and the pursuit of property. And they later changed it to pursuit of happiness. And the pursuit of property was really the measure of what you've accumulated as an individual. You now have a right to accumulate things. You now have a right to build value, to build wealth, to build a house and have your family in your house and have all these things. That was a principle of the United States. I'm all for taxes when people transact, when they turn their stock that they've held for a couple of years into cash and buy something with it. Boom, tax. You get taxed on that. If that's the right model, that's when you should get taxed. Right then, when you're able to turn that asset that you own into another asset. So that's what we do today. That's an income tax or a capital gains tax, like when you realize that gain. But if I go into your shares and I'm like, hey, I'm going to take 5 % of your shares, what are you losing? Well, you can't use those shares to buy anything. Because as soon as you try and buy something, you owe tax on those shares. So by taking away your shares before you've actually transacted with them, before you've actually sold them, or taking away your private property, your home, or giving the government the right to come in your garage and audit everything you own and say, hey, this year we're doing a 2 % tax, that is antithetical to what the United States was founded on, which was a founding principle of private property. Now, if your property goes up in value, and then you eventually turn it into some other property, that's a transaction, and that's when you get taxed. That's how the system's set up. So if we have an issue with people having too much wealth, that's the moment to increase the tax rate. That's capital gains tax, income tax on high earners. Those two things can get you 97 % of the way there, and you're not really going to gain much. Separately, we can kind of talk about the numbers on this, but tax the rich, all for it, but tax the rich when they transact. when they sell, when they have a capital gain, if they borrow against their assets. This is another thing that's wrong about our system today. If I'm very wealthy, I own a bunch of stock, and I've never sold any of the stock. If I borrow against my stock to go buy a yacht, I don't pay taxes. That should be a taxable event. We should fix that. That's an easy fix in the tax system. I'm not taking away your private property, but as soon as you borrow against that, it's effectively like transacting on that property. So that's a moment to pay a tax. And if we think that the rich aren't paying enough taxes, you can raise income tax or capital gains taxes to get them to pay more. Speaker 3 (21:51) This is what I was going to say, but you arrived at it, was most people that own stock in big companies will just borrow against their stock and they never pay a tax. I didn't know this until I was, I'm going to say 26. And my company had gone public and this bank in Europe approached me and said, by the way, we'll give you 20%. of whatever the value of the stock you have in my company called Social Chain AG is a tax-free loan. I was like, explain this to me again. So you'll just send me millions of pounds and I don't have to pay tax. You Speaker 1 (22:22) don't Speaker 3 (22:22) have to Speaker 1 (22:22) sell your shares. Speaker 3 (22:23) I don't have to sell anything. I said, well, look at the rest of my portfolio. And I had some Facebook stock at the time. They're like, well, we'll give you 50 % to 60 % loan to value on that. I.e. if you have a million dollars of Facebook stock, we will transfer you today 700 grand tax-free. And I can do with that whatever I want. And I thought, fucking hell, this is what the rich do. Speaker 1 (22:40) That's exactly right. And the truth is that no one talks about behind closed doors. Everyone knows that it needs to change. Speaker 3 (22:47) But no one wants to say it because... Speaker 1 (22:49) I'm saying it. Yeah. Gotta change. Speaker 3 (22:51) What's interesting about that is say that I have 10 million of Facebook stock and I take a loan and they give me 5 million in cash. What a rich person then does is they take that 5 million and they go and buy other assets. Exactly Speaker 1 (23:01) right. Speaker 3 (23:01) And then they start acquiring more and more assets. That's Speaker 1 (23:03) what's unfair about the system because then when you have capital... You're accumulating more capital while labor, if you haven't made that cross that chasm from labor to capital, you're still here grinding every month, grinding every week, trying to pay your frigging bills. And then these guys have all these shenanigans that are going on. Yeah. It is wrong and it needs to be fixed. The answer though, is not taking private property. Yeah. Speaker 3 (23:24) As Speaker 1 (23:24) soon as you start taking private property. Those gates are open. By the way, it's not even going to be constitutional in the United States. The Fifth Amendment has this taker clause. You know, it's not it's legally like not going to win in federal court. It could work in some states, some states. There's seven states that actually have a constitutional ban on private property tax like this. There's, you know, 43 states where it's game on. And we'll see how they play out in the courts as they try to pass these wealth taxes as well. But these are asset seizure taxes. You can have a wealth tax by raising capital gains. make high income or high asset people pay more taxes or whatever when they sell stuff or when they buy stuff. There's a lot of ways to tax wealth. But taking assets from people after they've paid their taxes or before they've paid their taxes is not the right way to do it. What will ultimately happen? So the ultimate outcome will be that 51 % of people will say, hey, give me all the stuff that the 49 % have. What would stop them from doing that? Because ultimately, you can take as much as you want. from a minority of people and distribute it to the majority. And that minority starts out with a few billionaires, then a couple more 50 millionaires, then a couple more 10 millionaires, then millionaires, then 100,000aires. And there's no limit to where this thing goes. And that is socialism. Speaker 3 (24:35) And what does that do in terms of how talent moves? How people, you know, move to different places? Speaker 1 (24:43) I know billionaires. Yeah. Many of them have moved or are planning to move out of California. Just on the thread of this. Speaker 2 (24:51) And Speaker 1 (24:51) people say, F them, good riddance, get rid of them. You know, the top 1 % of taxpayers in California pay the majority of taxes in the state. I think it's probably, it's definitely north of 40%, but it's probably the majority. The Speaker 3 (25:04) top 1 % of earners pay 40 to 50 % of California's total personal income tax, depending on stock market capital gains performance. Speaker 1 (25:12) There you go. So that 1 % are the people I'm talking about that are leaving the state because they see where this is headed. I don't think California wants that. Those are very productive people for the state. They're people that create companies, that hire people, that pay well, go to fancy restaurants, pay for cars. I mean, they support the economy. It's not just the taxes, but they're a big part of capital flowing through the economy. We saw this happen in France. You know, France had this wealth tax, and then their total tax revenue declined by more than they were making on the wealth tax because everyone left France. Then they stopped doing the wealth tax and everyone came back and the income came back. So this is a well-studied kind of case. So I don't think that a wealth tax or an asset seizure tax is the solution. I think we've got to fix all the other stuff that we've talked about, and we've got to fix the government spending problem. And if we can do those two things, then I think we can bring inflation down. We can bring the wealth inequality down and give more people the ability to make that transition. But I do think every politician should be talking about the focus on what percent of people in the United States every year are moving from labor to capital. How many people can say, hey, I've got enough cash to retire if I wanted to. That's what we want to try and get everyone towards, not just convincing people. And this is one of the great lies, convincing everyone that the great American dream is to own a house. When owning a house for a lot of Americans ends up putting all your capital in one asset. And you've got to basically get the price of housing to go up every year to keep everyone moving up the ladder. So now, fast forward 30, 40, 50 years, young people can't afford to buy a house anymore. Because we've pushed the asset value up so much to try and make sure that everyone's got good household wealth. Speaker 3 (26:43) We are told that. I mean, that's the sort of central idea once you leave university is to figure out how quickly you can get a mortgage or buy a house. Great Speaker 1 (26:48) lie. It's one of the great lies. And there's a lot of countries where people have been able to accumulate capital and jump that... ravine from labor to capital much more quickly when they don't buy a house because they can invest in stuff. They can buy, you know, the S &P 500, which you can just buy on an E-Trade or Robinhood account and you can just own it, on average will make you 10, 11 % a year. You just put your money in that, you're making 10, 11 % a year and it can go up every year. You don't have to pay taxes. You don't have to pay property tax. You don't have to pay insurance. You don't have to deal with repairs and maintenance, all that sort of stuff. So a lot of people would have been better off, depending on the markets that they're in. There are some markets that... that ballooned. But a lot of people would have been better off over the last 30 years actually owning the S &P 500 than owning their home and paying for the rent on a home. Speaker 3 (27:28) One of the things I see in the comment section whenever someone makes that point is you'll have someone who bought a house 20 years ago saying, well, listen, I bought a house 20 years ago for this amount. And now it's worth this. And this is every single time that I see this, this argument being made from financial advisors or investors, that is always the top comment. is, well, I bought one Speaker 1 (27:50) and I did good. Yep. It actually indicates a problem, which is if your house went up in price so much, that house is much less affordable to a young person that's going to buy it next. And that's what we've fundamentally done with this asset class, residential real estate. We've created a system whereby residential real estate prices go up so much, and there's a whole bunch of policies around making this happen. Speaker 3 (28:13) I've got a graph here showing all the things that have gone up, and you can see housing is one of them. Speaker 1 (28:17) Yeah, the stuff on the bottom, the government doesn't touch. The stuff on the top, the government touches. And so the more the government's involved, the more expensive these things get. But all of the policy around residential real estate has allowed the middle class in America... which has the majority of wealth, and I'll give you the statistics in a minute, to grow their asset base, to accumulate more assets, to become wealthier. All the boomers, they're so wealthy because they owned all these houses. And now young people graduating college can't afford a house. It is a bad fact that a lot of people got very wealthy by owning a home because it means that the next generation is going to say, I want socialism because I can't afford a home. That's the moment we're in. 40 million Americans. graduated from colleges in the United States in the last 10 years. 45 million. So if you do the math on this. That's a large number of people that are now, on average, encumbered with some amount of student debt, facing a challenging job market. And then the only way to buy a home is you've got to come up with a million bucks. And, you know, it leads to this problem where everyone's like, man, I need Mom Donnie. Speaker 3 (29:19) So what would you say then to people that are in that 62 %? Was it? Speaker 1 (29:23) 63. Speaker 3 (29:23) 63 % of people. And that Speaker 1 (29:24) statistic changes year to year, but that's roughly the number, 63 % of Americans. you know, less than $500 of savings and working paycheck to paycheck and can't pay for a fiscal emergency. Speaker 3 (29:35) So for those people, the 63 % who you're telling them that buying a house is now like unaffordable, it's potentially not a good investment. If they're trying to sort of cross that cousin and get over to the side where they have assets, what would your prescription be for them? What should they do? Speaker 1 (29:51) Man, that's Speaker 3 (29:52) a Speaker 1 (29:52) great question. People will challenge it, but I would have never thought that podcasting would be such a massive business. I would have never thought that being an Instagram influencer would be such a massive business or a TikTok influencer. I would have never thought that individual artists could publish online and make money without getting a record deal. I would have never thought that individual artists would be able to sell their work and make a living on eBay and Etsy. I would have never thought that craftspeople would be able to find jobs through the internet. I think the internet has been this incredible enabler of millions of new ways to work, of new ways to earn an income. And a lot of people will roll their eyes and say, but that's not what the system was supposed to have set me up for. The system failed us. Maybe the system did fail you. And maybe the government solution wasn't the right solution, but human agency is what got all these people there. They all got to this place. Did the government give you your job as a podcaster? Did the government teach you how to podcast and build this incredible media empire that you've built? I don't know if the government played much of a role in it. I think you played the role in it. I don't know. You tell me if I'm wrong. But I think that this is really important for a lot of people to observe firstly, which is the government isn't going to save individuals. The government's going to make things harder for individuals to find their path. If