The Exchanges

Q over the last, over the last few decades. This could actually make productivity growth going up. You actually didn't start on productivity growth. You started on the fact that we all get personalized coaches and education and all these other things. Was this partially a rhetorical tactic to appeal to people, or do you actually think productivity growth is not the most important thing? How are you thinking about this?

A Well, productivity growth is the most important economic thing, right? Um, productivity growth is how technology expresses itself in the economy. Um, productivity growth is the source of effectively all economic growth. Um, and so therefore technology is the source of practically all economic growth. And that's been the case for hundreds of years. Like that, that just is, that kind of is what it is. And the nature of the technology is obviously changed over time, but, you know, fundamentally, if you just have the same resources and the same people, and you don't have new ways of doing things, which is what technology is, Um, then you have stagnation. If you have technology, you have the potential for growth. Um, so it's the most important economic thing. It's therefore the most important thing for material progress right in the world, right? And so if you just want to make people materially better off, um, you know, this is the thing that you focus on.

AI assessment note: “productivity growth is the most important economic thing, right?”

Q of people do in London, they hate it overall. But one of the bright sides may be that they escape Europe's terrible regulatory regime on AI. Maybe it frees them from it, ironically, and helps out. Like, what are the actual biggest dangers for countries with AI? Like, is Europe going to be left behind? And how do we think about the race with China in that regard as well?

A Yeah. So, I mean, look, Europe seems, I'll just take them at their word. They seem determined. They seem enthusiastic about being left behind. Um, they seem to really badly want that. Um, you know, look, the data, here's one where the data is clear, which is, you know, 25 years ago, if you did a list of the 50 biggest tech companies in the world, like a pretty significant number of them were European. It's like, I don't know, probably 15 of the top 50 or something. You know, today you're, you're basically down to Spotify, um, which is great. I love Spotify, but like, it's not, you know, that's not, that's not what the European tech sector used to be. Um, and so, you know, they, they have sort of deliberately disarmed and turned away from technology and progress and capitalism in really profound ways for a long, you know, for decades now. And, and yeah, look, the EU is designed to do this. That's kind of the whole point of the structure is to impose these kinds of controls and stop, you know, stop, stop these kinds of things. Um, and yeah, they, they, I mean, they, they, they're very vocal about it. Like they, they very much want it. I think they would be very happy if AI didn't happen inside the EU. I think they'd be very happy if social media didn't exist. I think they'd be quite happy to shut up the internet. Um, and so I, I think the, you know, the citizenry of the EU have a…

AI assessment note: “Europe seems, I'll just take them at their word. They seem determined. They seem enthusiastic about being left behind.”

Q wage and create more. You know, so Mark, we're speaking at the forbidding courses here. I want to shift a little bit, ask you about how Silicon Valley, which, you know, has really been one of the greatest engines of innovation in human history. How did it become so illiberal? Awoke, we call it. And how do we, how do we fix it? How do we break out of that?

A Yeah. So it's a real, you know, it's a real puzzle. Um, I, I think there's a very straightforward explanation for the why it happened. Um, which is basically it has to do with, uh, uh, one of the, one of the fundamental personality traits of human beings, uh, called openness, trait openness, uh, which is one of the big five kind of personality traits, uh, openness, which is by definition, um, you know, people who are super into technology and entrepreneurship are, you know, we're, we're highly open people. We love new ideas and we love doing new things. Um, and then there's just on the political spectrum, it just openness is, is openness is a trait of the left. Um, and, uh, and then, you know, the, the, on the other side on the right is conscientiousness. Um, you know, it's just structure and order, which is a, a trait on the right. So, so we just, and by the way, this is not just tech. This is true in the arts. Any, any, any time you have a clustering of people who are high in openness, inevitably they're, they're on the, they're on the political left and usually very far, uh, to the political left. And so I, I think we're, we're, we're just a classic example of what happens when very open people cluster together. Um, you know, you read these kind of, again, these kind of hysterical things in the newspaper or whatever, that Silicon Valley is a, you know, hotbed of, you know, l…

AI assessment note: “there's a very straightforward explanation for the why it happened. Um, which is basically”

Q Isn't it your or my job? I mean, Hamant's buying a hospital now with billions of dollars, trying to make it more productive to scale. Isn't it our job to kind of get in here and kind of force it in here and show people? That our answer is better? Is that, is that, you see that, or is that, is that too hard, or how do you approach that?

A Uh, so, you know, HL Mencken said democracy is the system of government by which the common man knows what he wants and deserves to get it good and hard. So, like, at the core of it is, like, the voter, like, at the core of it is the citizenry as a whole. And, you know, look, it's, it's the great paradox of government, right, that is in front of us today, which is, uh, you know, uh, 90% of us like our congressmen and 10% of us like congress. Right, and it's just like, okay, like, so we're, you know, we're getting the result that we all vote for. The answer, the answer, though, is what you said. Like, the answer is what you said, which is basically brave people just have to step up and basically demonstrate that there's a better way. Like, that, that's the only way that things can pop changes. Yeah.

AI assessment note: “brave people just have to step up and basically demonstrate that there's a better way”

Q But there's over a thousand laws at state level we've been trying to fight and stop that would screw this up, right? So there's a lot of people who are against this.

A California state government almost passed a law to outlaw AI in California six months ago, which is an indication how crazy California is. But yes, that we can, it's like everything else. We can have it if we want it. Uh, these are all choices. But like, AI is happening, and AI is only happening in two places. Like, it's only US versus China. There's a whole competition thing there. But like, the US is like, very powerful on this. And then, by the way, the US is benefiting a lot, because Europe has basically made AI illegal. Like, they're regulating themselves to death. And so, the smart AI people in Europe are moving to the US. Um, and so, like, the, the US really is ground zero for AI. Um, today, AI is software, right? And so, when you use AI, you use ChatGPT. It's an app on your phone, right? It doesn't, there's no manufacturing kind of component. You know, really, you know, people are building giant data centers, but, you know, it's, it's not a huge generator of, like, middle class jobs. Um, but there's another turn on AI that's coming, which is the turn to, the turn to embodied physical AI, which is robotics, right? Um, and this is a transition that has already happened. It's already actually happened in drones, uh, where drones went from being human piloted to actually be, you know, autonomously piloted. They, they now fly themselves. Um, it's a transition that's happenin…

AI assessment note: “California state government almost passed a law to outlaw AI in California six months ago”

Q together to fight these special interests to actually fix the regulatory state? Because it's not like the administration could just do it, right? We have, it's gonna take a lot of effort. Like, what does that coalition look like of the, of the, of the good guys against this kind of broken regulatory cartel in all these industries? Is that, is that something we're going to all have to fight?

A Yeah, so the, the way I think about this is there's basically, right, three components to the American dream, right? There's house, you know, have a, have a house, have a house for your kids, where, and, you know, kind of a definition, this goes back to the geographic lens. The house needs to be, like, near a place where there's, like, great job opportunities, right? So it can't be, you get a house in the middle of nowhere, it has to be a house where there's gonna be great jobs, um, and, you know, a safe environment and so forth. Um, number one. Number two is, is, is healthcare. You need, you know, great healthcare for you and your family. And then three is education. You want to send your kids, kids to good schools. Um, if you disaggregate sectors of the economy over the last 25 years, what you find is basically everything that technology touches basically collapses in price. Um, and so television sets and, you know, computer games and, you know, everything, you know, anything, anything with electronics in it, basically the, the, the, the prices, productivity growth in those sectors has advanced very fast. Product prices have, have, uh, have collapsed. Everything is, is much cheaper. Um, but if you chart, uh, housing, education, and healthcare, Um, the prices of those things are skyrocketing, right? And we all, we all, we all see this. It's just the price of housing is explodi…

AI assessment note: “the way I think about this is there's basically, right, three components”