Marc Andreessen: The US is in a AI Arms Race & It Decides The World's Future

We're at this very specific and important and fundamental and I think profound turning point in technology, is the rise of AI. How do we explain this to people? Because a lot of Luddites are going to attack this. Do we want The US to be an industrial superpower or not? These are choices.

These are policy choices. AI is only happening in two places. Like, it's only US versus China. China's basically been running the American system playbook. But there's another turn on AI that's coming, is the turn to embody physical AI, which is robotics.

Because we have billions, tens of billions, hundreds of billions of robots of all shapes, sizes, descriptions running around doing all kinds of things. What we should do is lean hard into the manufacturing jobs of the future, which is designing and building all of these new things. If you don't do this, you're living in a world of Chinese robots everywhere. A few weeks ago, I got a chance to interview my friend, Mark Andreessen, at the first annual Ronald Reagan Presidential Library Economic Forum. This forum is a competitor to Davos, the World Economic Forum.

It's a gathering of a lot of top leaders who are interested in capitalism, in markets, in American dynamism, and really has kind of a more pro builder mindset than we see in Europe. We had a great chat with Mark. He's been really interested in US economic history, Hamilton, studying McKinley. Whose policies changed, of course, to be more reciprocal from its original tariffs. And there's some interesting questions today from these people.

You know, our economy, we talk about started off focused on industrial economy, on manufacturing. It shifted to a more of a services based economy with a lot of policies starting in the nineteen sixties. And now today, sixty years later, it's shifting again from manufacturing to services and now to AI and energy. An AI driven economy looks very different than a services economy. What are the right policies on trade, on immigration, on regulation?

Mark's really bullish on robotics and what that does, especially for rural areas versus city. What are we going to see with productivity growth? How do we make sure we share this wealth we're creating the right way with everyone so it lifts everyone up in The United States? Here's some really interesting important policy questions that are gonna determine the future of our country. And Mark Andreessen's the right guy I talked to about it.

Excited for you to hear from him. Welcome to our our first annual Reagan Economic Forum. It's an honor to have you guys here. You know, we talk a lot here, of course, about about Reagan's economic pillars and and policies, which include deregulation and lower taxes and lower spending, all of which are very relevant today. But, Mark, I wanna start off asking you about someone I know you've been reading about and president Trump's been reading about from a hundred years before, which is which is William McKinley.

And William McKinley, of course, was a staunch protectionist at first. And and is this historic historical example of how to revitalize American industry relevant today? Is it relevant to everything we're doing in AI and and energy? Like, how do you think about this? Yeah.

So I've been doing my best to kinda spin up in the history of this. And so there there was something in the nineteenth century, actually originally created by Alexander Hamilton, when he was treasury secretary called the American system. And and and really what what they were and this is even, you this is like eighty years before McKinley, ninety years before McKinley. You know, what they were dealing with was the the the the British Empire. Right?

The UK was the preeminent industrial power. You know, they they were the first, like, giant industrial power, on on on planet Earth, and had built this, you know, very commanding economic, technological, military position. And, of course, America, you know, at the time of the revolution, it was mostly farmland. And then there was this raging debate between Hamilton and Jefferson as to whether you'd you'd want America to be an industrial, you know, kind of urban, financialized power, which is what Hamilton wanted, or a kind of a rural, you know, kind of rural farming aristocratic, power, which is what Jefferson wanted. And, you know, and Hamilton won that debate.

And so that led to what was called the American system. The American system led to, you know, the creation of The United States as an industrial power that developed over the course of the nineteenth century. But it really took off at the tail end of the nineteenth century in what was called the it's called the Second Industrial Revolution. And so between, call it 1870, 1880, and like 1930, basically everything we view today as the modern world was basically invented then. And and like you could almost look around the room here today and you could say basically every piece of physical infrastructure, everything around us, you know, literally everything.

The airplane, you know, manufacturing techniques to be able to make to be able to make, you know, modern modern, you know, glassware, at scale, air conditioning, you know, television, radio, you know, auto or the automobiles we drove to get here. You know, it it all was result of the second industrial revolution. And then the McKinley presidency was right in the middle of that of of that period. It's really when the whole thing catalyzed. And so it was really the point at which America became the the the world's industrial superpower.

And then, of course, that led to America being able to become a huge player in both World War one and World War two. You know, ultimately, you know, you know, winning winning World War two and and and becoming the, you know, of the democracy. It all kind of flowed out of that period. And and so and and the and the American system is something that people really don't like to talk about these days because it it was heavily protectionist. And the whole theory of it was you don't industrialize just with like a single technology or a single company, you industrialize by having an entire ecosystem.

Right? You industrialize by having, you know, not just three car companies but by having all the thousands of part suppliers that make all the parts for the cars. And so the Brits had done this. They had run a very heavily protectionist program to be able to boot up the first industrial revolution in The UK. You know, they then advocated for free trade when exports became more important.

McKinley was the inheritor of the American system and so he was heavily protectionist to build up the second industrial revolution and then he actually switched to become more of an advocate for free trade because as American exporters were becoming more successful, they needed export, they needed they needed foreign markets. And then by the way, in the twentieth century basically every industrial revolution in every other country that has worked in the last hundred years basically follows that model as well. So it's the same thing Germany did, it's the same thing Japan did, it's the same thing Korea did, it's the same thing China is doing right now. China's basically been running the American system playbook in China. And so, and then this goes to tariff policy and like, and I'm not here to like make an argument like, it's like in favor of tariffs, but more of like a historical observation that there has been this phenomenon over time that if you want to have the kind of clustering effect that leads to industrial preeminence, it is not unusual to have, you know, a combination of tools and, you know, kind of tools and methods used to do that.

You know, it it has been historically characteristic that tariffs would be a part of that. But it's also historically characteristic that there there becomes this point when you also therefore want to go for exports and you want to go for free trade. And and and McKinley specifically, you know, he ran for office very much on the idea of having a high and permanent tariff. Once he was in office, he switched more to a model of what he what he called reciprocity. Right?

And and basically it was, you know, we we start out by tariffing but the goal actually is to get everybody to lower their tariffs. The the, you know, the goal is to get a a world of much more free trade and then therefore these American exporters are able to to succeed globally. And and of course, he was able he was able to use tariffs as American tariffs as a lever to get other countries to drop their tariffs. And so in that sense, what we're going through right now in The US is is sort of very characteristic of that. And what makes maybe the whole thing, you know, kind of more poignant is, you know, there is this kind of fundamental underlying question which is do we want The US to be an industrial superpower or not?

Right? And in the nineteenth century, they were like completely clear that they wanted that and in in our time, you know, I I think we're we're still ambiguous about it. It's interesting though because, mean, and you've said this yourself in other contexts, we had this manufacturing wave and then in starting the nineteen sixties, services really drove a lot of our growth the last sixty years, which obviously was not as tied to that. So the elite maybe were not thinking about these issues as much. And I guess the question is today, are we shifting into something else?

Is it an AI driven economy? What is it? And, you know, it seems like Trump's camp's a little bit split. You have really two visions. One vision, you'd say maybe more like the Bannon side is more focused on reviving traditional manufacturing through tariffs, through industrial incentives.

Then you have the other side is more about tech acceleration via AI, via chips, via energy. So so how how do these things play into I mean, it are we gonna be able to copy the past or is it a new policy here? Yeah. So this this is I mean, is sort of the central question I think. So so my my read of the the of the trajectory basically is call it between 1870 and 1920, The US economy was heavily based on industrialization, all the stuff I just talked about.

By the way, very high immigration environment at the time, very rapid rate of immigration and then and then actually very high tariffs. And and and by the way, an annual growth rate of you know, something like three x, you know, the current growth rate of The US. You know, with with a much smaller population and with with much less fewer tools to work with. Then there was sort of the 1920 to 1970 period where the growth rate was maybe something like two x the rate that we have now and that was the space race and rockets and electronics and the beginning of the computer industry and it went quite well from an economic growth standpoint. And then around the time I was born around, you know, 1971 basically the The US economy permanently down shifted its growth rate and both in terms of productivity growth which of course measures technological transformation of the economy as well as as well as economic growth.

And we went from like super high growth to like high growth to low growth. That low growth coincided with this shift, right, with all the shifts that happened in the nineteen seventies, you know, many of which Reagan was a reaction to but many of those shifts happened and many of those shifts have continued. As you said, less industrial enthusiasm, more what they call services. And by the way, the good news of that transition is the transition to knowledge work has worked really well and we live and work in places like Silicon Valley and Austin and others that have done phenomenally well because you've got all these tech companies that are global exporters of technology and the AI revolution is happening in The US, you know, and it's absolutely tremendous. But, you know, we've we we transformed the American economy to basically have knowledge work on the high end and then financialization, you know, and and banking and currency and and and being the the safe bond asset on the other hand.

And then we basically, you know, we we we chose to de industrialize. Right? And we chose to de industrialize through a set of explicit policy choices, you know, not not least of which is, you know, we made an we we made a lot of industrial activity illegal over time. And and I would argue, you know, number one, like that formula has not first of all, it just hasn't worked that well in terms of growth. Right?

If if it doesn't pay off in terms of productivity growth and economic growth, like how is it actually going? And of course the the the problem, the irony of this is if if you don't like populism, the way that you get populism is slow growth. Right? Because you because slow growth puts everybody in the mind of of of zero sum. Right?

Everything becomes a zero sum, you know, kind of fight for resources because people don't think that there's a lot of opportunity in the future. And so, you know, we it's like the formula that kind of all the smart people did, you know, actually created the preconditions for the sort of resurgence of populism on both left and the right. And then the other kind of really critical thing happening right now that you see just happening kind of everywhere in our politics and society is this just giant divide between the cities and the countryside. And I'm sort of a weird example of this myself. I grew up in rural Wisconsin you know, in what was sort of, you know, originally farming and then sort of light industry, you know, kind of world.

And then, you know, and then when I, you know, graduated college I moved to California. I did a jump to, you know, kind of the polar opposite kind of culture and kind of world. And, know, of course, when I was in Wisconsin, I was like, wow, that, you know, those those smart people on the coast must be must be so much better and smarter than we are. And then I got I got to the coast and I was like, wow, these people on the coast really hate everybody where I grew up. This is interesting.

Knew they didn't like us. I didn't realize they despised us quite to this degree. And so now we have this like just like raging cultural, social, economic disconnect between the cities and the countryside, which I, you know, I think is quite dangerous. Let's be controversial and dig into this a little bit more in cities. So I think a lot of us have noticed that our cities are deeply dysfunctional.

They're they're broken in our society. Right? You have I think we have a candidate who's like a socialist Islamist who's in danger of taking over New York very soon right now. And we we have we have all sorts of problems. People can't afford to have kids in cities the way they're set up.

I think there's this cost disease for everything. Like like, what went wrong? What's going on with these cities? And and what's what's an optimistic take on it, Mark? How how can we fix Yeah.

So the guy in the guy in New York is interesting, and, he's, you know, kinda running slight slightly behind Cuomo for New York mayor, but he's literally running a platform among other things of having, city owned, grocery stores. Right? And so and so the, you know, the joke is, you he's reinventing bread lines, you know, for the twenty first century, you know, really That's impressive. Really tremendous tremendously tremendous platform. The Seattle is another case study of this.

Seattle, to give you a sense of crazy things are, the the district in Seattle, the City Council district where the most Microsoft and Amazon executives lived live, elected a city councilwoman who's ran a platform of nationalizing Microsoft and Amazon. Right? And then, you know, in the Bay Area I've got, know, I live in ground zero of dysfunction and collapse and I've got thousands of stories from the Bay Area. Yeah. So, like I think there's like a very fundamental political economy thing happening which which is which which falls out of this sort of economic transformation that's happened and this policy transformation that's happened and so the there's a guy, there's a French there's actually a French writer, geographer who has I think the best analysis on this and has written a great book on it called Twilight of the Elites and he what he basically observes is if you look at all the Western countries through this process of sort of de industrialization and financialization and technology, you know, sort of technology knowledge work you know becoming preeminent at the high end of the economy, you sort of have this pattern where basically like in an agricultural economy or in a manufacturing economy you kind of have to spread everything out throughout the country because like natural resources really matter and energy really matters and physical infrastructure matters and access to you know trains and all these things, know, really in rivers and water and so forth really matters.

But if you're if you're gonna replant your the sort of commanding heights of your economy on knowledge work, then what you're gonna do is you're gonna slam basically all economic growth into the cities. Right? Because you're which is what what Silicon Valley has done. Right? So you want all the software developers in one place and and you want them, you know, they're gonna the good news is they're gonna eat at high end restaurants and they're gonna employ a lot of nannies but like fundamentally they're gonna be sitting in conference rooms, you know, design designing software together and and you want that to happen in in a single concentrated place.

And so what happens is basically the city has become a magnet for basically two kinds of people. One is sort of the upper class which is to say kind of the highly educated elite in the knowledgeable professions who make enough money where they can afford to buy $3,000,000 houses. And then you've basically got the so you've got basically like super expensive homes and then you've got public housing, so called public housing, right? And council estates in The UK or section 88 h or whatever it is housing here where you've got, you know, basically public housing. And so and then the public housing is basically it's people who are very low paid, kind of on the low end of the service economy and then that's the city.

And then who's squeezed out of the city is basically right, the entire middle class is squeezed out. Just to give you an example of this in the Bay Area, if you're a cop or a firefighter in the Bay Area and you work in Palo Alto, you can be three hours both ways. Just to be able to like have a house and afford a family. Right? And then of course you look what's happening in the cities and like it's, you know, there's there's like lots of dogs, there's very few Right?

And it's like, you know, what on earth is that about? Well, you you can't buy a house. You you you can't you can't you can't have a family. You may not even own a car. Like, are gonna get kids anywhere?

But what happens is from a from a political standpoint is the cities then are run right there in in in their local democracies. It's these super high end kind of, you know, very progressive elites and then it's sort of the clientele underclass. Right? That, you know, of of, you know, in The US, it's Hispanic immigrants or African Americans. You know, in Europe, it's it's, you know, their their their other kind of clientele class that they've developed in places like Paris.

And so you've got this high plus you you've got this kind of old political kind of structure of of, know, sort of top plus bottom, you know, kind of configuration. What you've done is you squeeze the middle and you've ejected the middle out of the cities into the countryside but you've de industrialized. And so there's no new economic activity happening in the countryside for all the middle class people to This this so far is not an optimistic panel, Mark. Sorry. Sorry.

Let me try to make it optimistic. Sorry. Let me try to make it optimistic. I okay. Let me try to make it optimistic.

These are choices. Like, these are choices. These are policy choices. Like, the way this stuff gets painted is that these are just like impersonal economic forces or technology forces and of course, you know, I get this a lot. It's like, you idiot.

Don't you understand that like, you know, it's it's just like, you know, manufacturing's old fashioned. We have this all this new stuff we shouldn't eat, you know, what what no. These are choices. Like, there were specific choices made. So the classic choice the classic choice that was made, I'll beat since I'm at the Reagan Library, I'll beat I'll beat up on Nixon.

So Richard Nixon, the year I was born, 1971, he proposed something called Project Independence. He he actually visionary visionary president. He saw the energy crisis coming and he said it's a national imperative to build a thousand new nuclear power plants in civilian nuclear power plants in The US by the year 2000, cut the entire US electric grid over to nuclear. Right. It would by the it would have gotten us to electric cars, you know, probably thirty, forty years faster and would have completely separated us from strategic involvement in the in the in The Middle East for for for energy.

So that was the good news. The bad news is he created the EPA and the Nuclear Regulatory Commission which then prevented project independence from happening and, of course, the no new nuclear power plants got built. But but that was a policy choice. Right? And and I'm sure he that was not the out that was not the result that he intended, but that was a policy choice.

And so, you know and and by the way, a lot of this is happening right now in in Washington. Like, is an opportunity to look at everything from nuclear power, minerals, natural resources. I was on a call this morning on natural resources with very promising progress being made. You know, rare earth metals, there's, you know, construction. We we have a project to build a new city in California.

We bought, you know, four times the acreage of of Manhattan in Solano County. You know, we we had the opportunity to build like entirely new cities in this country. You know, we like, there's any number of things, any number of these policy decisions that we could make that would cause revitalization. So we're so we're gonna fix better policies. There's something else going on though, which I think you and I are both very bullish on, which is which is this AI wave and AI services.

Right? And so I think I think one thing that's very interesting right now is, obviously, we all know there's major cost disease in our society. Health care is becoming more and more unaffordable. I think people are talking about our 36,000,000,000,000 debt. It's actually 150,000,000,000,000 more if you include our health care promises, much bigger problem.

We obviously education, housing, all these things are becoming less affordable, but but you and I have both seen that a lot of these new technologies are gonna turn some of these services into much more affordable products, I think we're making big bets on that. So tell tell us about this. So first of just a moment on AI. So you you asked a question earlier, which is like, is is there like a there's a traditionalist view of like we need to go get the jobs that used to exist. We need to somehow bring them back.

And and, know, and here you get into this argument of like, well, you've got, you know, Chinese laborers working for a dollar an hour or whatever, you're not gonna get those jobs back. It's just not cost effective to bring those jobs back. What we have though is we're we're at this very specific and important and fundamental and I think profound turning point in technology which is the rise of AI. And I would say the the good news let's make the panel optimistic. The good news is The US is like by far the leader on AI.

Now, by the way, we need to decide whether we wanna be the leader in AI because there's like a lot of forces in The US and in the US government that are trying to prevent that from happening. 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. California state state government almost passed a law to outlaw AI in California six months ago, which which is an indication how crazy California is.

But, yes, that we we we can it's like everything else. We can have it if we want it. These are all choice. But like AI is happening and AI is only happening in two places. Like it's only US versus China and 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 lot because Europe has basically made AI illegal like they're they're regulating themselves to death and so the smart AI people in Europe are moving to The US and so like the The US really is ground zero for AI. Today, AI is software, right? And so when you use AI, you use ChatGPT, it's an app on your phone, right? There's no manufacturing kind of component, know, really, know, people are building giant data centers but you know it's not a huge generator of like middle class jobs. But there's another turn on AI that's coming which is the turn to embodied physical AI which is robotics, Right?

And this is a transition that has already happened. It's already actually happened in drones where drones went from being human piloted to actually being autonomously piloted. They they now fly themselves. It's a transition that's happening in cars right now. Right?

Where cars went from, you know, basically purely products to now basically being rolling computers that drive themselves. And if you if you haven't tried this yet, if go to go to if if you ever have the misfortune of finding yourself in San Francisco, take a Waymo. It's amazing to live in a cyberpunk future reality where you're in literally a state of the art self driving car that's literally out of the Jetsons driving fast people who are dying of fentanyl overdoses on the sidewalk. I recommend having the experience at least once. But but the self driving car really does work, like it's really happening.

And then what's gonna happen, you've you've all probably seen, you know, Elon has this Optimus robot that he's building, these humanoid robots. Like the the the general purpose robotics thing is going to happen and it's gonna happen in the next decade and it's gonna happen at giant scale. And I I I think there's a plausible argument which Elon also believes that robotics is gonna be the biggest industry in the history of the planet. It's it's gonna be gigantic. There's be billions, tens of billions, hundreds of billions of robots of all shapes, sizes, descriptions running around doing all kinds of things.

Those robots need to get designed and built. Right? And so my view is, you know, we don't try to get the old manufacturing jobs back. What we try what we should do is lean hard into the manufacturing jobs of the future which is designing and building all of these new things. Right?

By the way, which includes drones and cars, right, and robots. And, you know, we shouldn't be building manufacturing lines that have people sitting on a rubber mat for ten hours screwing screws in by hand but we should be building, you know, what Elon calls he calls alien dreadnought factories, right, which is like these super sophisticated factories with like tons of robotics. But you can imagine thousands and thousands of different categories of industrial production that have to happen all across The U. S. In order to make this happen and would cause just like enormous economic growth throughout the country.

We get a huge payoff from all the tech investment that the coasts are making but we generate many tens or hundreds of millions of jobs in the countryside and then The US would lead, it would be the third industrial or fourth industrial revolution, we would lead in the development of all these new things. And then you get to the national security side of this, which is if you don't do this, you're living in a world of Chinese robots everywhere. And that has, you know, very profound consequences for let's just say, yeah, profound consequences. It's an important policy point. And I I wanna I wanna dig into this a little bit more.

A lot of I just in an interview up there, like, we gonna destroy tens of millions of jobs? Isn't AI scary? A lot of people are very scared right now with the disruption. I'm very excited about the higher productivity because I see it being disinflationary. I see it creating more jobs.

How how do we how do we if if assuming we're aligned, how do we explain this to people? How do we explain this is actually a really good thing for the country? Because a lot of Luddites are going to attack this. They are gonna try to stop it. Yeah.

So the the Luddites the the Luddites are wrong. The neo neo Luddites are wrong. They're wrong in the sense of like that then for the reason they've always been wrong, which is the reality is we have not, in the last fifty years, been in an era of fast productivity growth, technological change. We've been in an area of slow productivity change, slow economic growth. AI, if it works the way that actually people either hope or fear that it's going to work, it's going to cause productivity growth to shoot up.

That will naturally accelerate economic growth. But look, if if it just stays a software, then the result of that is just gonna make the cities much better off. Right? It's gonna it's gonna make San Francisco and LA and and New York much better off and Austin much better off but it's still not gonna answer this question of what happens in the countryside. To answer the question of what happens in the countryside, you need you need to get to the next thing.

You need you need to make AI hardware as well as software. And and you're right back to that same prescription of basically re industrializing the country. And again, not re industrialize the country on the stuff that has already left. Re industrializing the country based on all the things that have to be invented and built. And it's just like we know, I mean, I'm like incredibly highly confident that there's going to be these giant industries of computerized everything, AI powered all kinds of hardware of all kinds of shapes, sizes to descriptions.

You're funding a lot of that kind of thing. I'm funding a lot of that kind of thing. I mean, the entire defense base has to get rebuilt around this. We're going to redo the manufacture. We're going to build roads and tunnels and everything cheaper.

It's going to be exciting. Yeah. And so this is the thing to do. To me the path on this very clear because we have to do this because it's necessary from a national security standpoint. We have to do it because we need the economic growth.

We have to do it because we need an answer for the entire population of the country not just the cities. And yeah, and we have to do it because if we don't do it, China's going do it and we don't want to live in that world. So I want to circle back to another controversial topic, which, you know, over the last several decades, you mentioned this, we've kind of pursued de industrialization, financialization. We've also pursued mass immigration And, you know, that the view from the tech world has almost always been, we need more of the smartest people to come here and build with us. A lot of my smartest friends are immigrants and they've built great things.

But at the same time, some of this mass immigration has really affected the working class in certain ways that's that's maybe not great. I know your views have evolved on this topic. Like, what is the right immigration policy and how does it tie into what what you're seeing for the next few decades? Yeah. So separate it, you know, the classic split between so called high skilled and low skilled immigration.

So on the low skilled immigration side, it's it's it's the it's the it's actually the the a lot the AI doomers kinda have this split personality where they're like, AI is gonna eliminate all the jobs and we need to import another 100,000,000 people from the third world as fast as possible or we won't have any, you know, so so so there's a bit of a there's a bit of a a weird kind of disconnect I think in the logic in the logic on that. You know, look, the the country went through this before, you know, as as I said earlier, the there was very high immigration between like 1870 and 1920, you know, they closed the gates in 1925 and, you know, look, 1925 to nineteen seventy seventy, you could argue it would have grown faster with higher immigration but they grew a lot faster than we've grown. Right? And so I like I do think there is this, like if if you have advanced, if you have AI, if you have advanced high productivity growth, if you have lots of robots running around, I do think there is a question of exactly how much low skilled labor you need in the country which bears on a lot of the immigration debates.

The high skilled immigration debate is the one that's coming and it's not really top of mind right now but it's the one that's coming and the reason it's coming is because, I mean, look, we need talent of course to build all the AI, build all the robots and do all these things and you see this in the debates around the universities with the move that the administration's doing on foreign students and so forth and there's this kind of very one-sided argument that's happening on that right now, which is you kind of need a limited, you know, you need limited high skill immigration from the rest of the world or you're not gonna have like the smart people building stuff here. And I would say, you know, look, like Joe, you know, our portfolio at our firm is like the United Nations, it's founders from a 100 countries, you know, I benefited enormously by working in a place characterized by very high high skilled immigration. The the thing that's really coming to roost though is sort of this this fundamental issue which kinda nobody wants to talk about but I've started to talk about which is it's it's the intersection of DEI and immigration that has really, I think, warped, I think our perceptions on high skilled immigration over the last fifty years, which basically, and you see this by the way in like this, you you look at like the foreign enrollment rates of the top universities, which went from, you know, like or three or four percent fifty years ago to whatever, twenty seven or thirty or fifty.

And Columbia is over half, right? 70% or whatever it is. And so there's been this massive transformation in who gets educated. And then there's been this massive transformation of who gets admitted through affirmative action. And then, you know, we now know at DEI.

And again, this goes straight to the political divide in the country, which is if you're a family, you know, if you're a family, if your parents have a kid where I grew up and you've got a smart kid and you think you're going to get them into, you know, a top university in this country, like you are fooling Like, there is no chance. Right? Because they've got their well, the top universities basically the top universities have basically an admissions program that looks like this. It's like DEI for white people, which is the donors and all the fake sports. Right?

And so A lot of fake sports. Like, have a friend who got into Yale to play varsity croquet, which let me just say is not a sport that we played a lot in rural Wisconsin. And then you've got, you know, DEI generally for for the other groups, and then you've got this you've this immigration influx. And as a consequence of that, like, is nearly impossible for somebody coming from like a Midwestern or rural background or southern background to get into The US. By the way, this doesn't just affect white people.

This also obviously now we now see how it's affecting Jewish people. It it but it it actually also affects African Americans in a very interesting way which is actually both the universities and the corporate employers are literally this is true. They're literally they literally import Africans so that they don't have to hire African Americans because they they they still count as black. There was a great story. The thing that woke me up to this, there was a story in the New York Times twenty years ago about Harvard.

This is Harvard admits, you know, black students but which ones? Back when the New York Times could talk about these things honestly. And I quoted actually Henry Louis Gates and Lanny Guinier at the time at Harvard Law School basically observing that African Americans were not benefiting from affirmative action because Harvard had figured out that they can import Nigerians. Right? And again, it's just like, great, Nigerians are great, they're very smart, they're very productive, it's fantastic.

You know, all other things being equal, you'd like to have as many of them in your country but like is that really why we're doing, you know, the set aside programs? And so, like there is this really fundamental question which is like what level of untapped talent exists in this country that a combination of DEI and immigration have basically cut out of the loop for the last fifty years? And how long can we have this story to everybody in the Midwest and the South that says, you know, sorry, you're you know, because of historical oppression, your kids are SOL. And this is this is the angry populism people are worried about this affecting our politics. Yeah.

This is what I've really come to appreciate from growing up in the one place and now being in the other place, which is if you if you're if you're in the if you're in the center of the country, you're just like, wow, these people really hate me. They really hate my kids. Like they're really out to get me. And like that's just such a toxic dynamic. Like that's a very, bad thing for that to continue.

So I guess to finish on a more positive note, we have all these challenges you've outlined. It's fair. Think in order to be optimistic, you first have to say, what are the challenges and diagnose it and then say, what are the ways? Well, here's an optimistic thing, is we have talent in this country that is like, we have so many smart people in this country who are not being properly trained, properly educated, and properly employed. We we really genuinely do.

We have tons of smart kids running around, who have all kinds of potential, who have been completely cut out of opportunity for the last fifty years. So so we're gonna have this wave of productivity growth. It's gonna be in the real world with robotics. We're gonna start to build, hopefully, if we get the policies right, and it's gonna lift all these people up. What are the bottlenecks or things in the way of doing that?

There's we have the amazing secretary of energy here. Energy is obviously a really key thing to get right. There's obviously the chips. There's the critical minerals you mentioned. Reg regulatory stuff is insane in this country.

It needs to be fixed. Like what are the biggest ones you're focused on and how are we going to get those to a place we need that it ends up with the optimistic outcome? So I say yes, those. So, I mean, good news on this is a lot of it's obvious. Right?

The minute you look at it, you're just like, well, obviously we have to do these things. If you talk to anybody built, know, running businesses in any of these they'll tell you right off the right off the bat the thing the things the things that need to happen. And so, you know, I think I think, you know, and and, you know, the current administration I think is pretty devoted to a lot of this. You know, look, the other I would just say the other positive thing is happening. There's this new book out called Abundance from, from Ezra Klein, who I would say I disagree with on approximately zero of everything.

But I think this book is really good. And I think he and his co author, you know, outline you know, they they don't necessarily have the policy prescriptions I would outline, but they, you know, they make this point of like, it's like, know, liberals used to believe in building things. Right? Well, I mean, you go all the way back, like communists really believed in building things. Right?

Like all, like, Soviet iconography a hundred years ago was all like rockets and skyscrapers and cars and motion and energy and it was all amazing and they built all these huge things. And then, you know, liberals, you know, up through I don't know, up through the '19 you know, until basically the nineteen seventies, you know, really believed in they really believed in building things. They really believed in building the future. And so Ezra and Derek Thompson are trying to recapture that. And there's a bunch of by the way, there's a bunch of leaders of that party in Washington that are now, you know, pushing that quite hard.

And so maybe, you know, although it seems hard to believe these days but, know, there may be an opportunity for some actual bipartisanship here. And again, it makes look, it just makes sense. If the country is growing faster, it's going to be a happier health it's gonna be a happier it's gonna be a fundamentally happier place because people whoever whichever side of the political spectrum you're on, there's gonna be Reagan, mister Reagan said there's gonna be a sense of optimism. Right? There's gonna be a sense of mourning in America.

There's going be a sense of opportunity. There's going to be the sense that your kids are going live better lives than you do. And and I don't think that's a particularly partisan view at the end of the day. And I think there may be an opportunity to maybe bridge the divide a bit. And I want to dig a little tiny bit deeper as we end into what that means because for me, for example, I think both of us see how healthcare doesn't need to take up 20% of our GDP.

Right? It's very obvious that AI can make these things half a third the cost for better outcomes. And yet, every one of our states in this country has very powerful provider and payer lobbies and has very powerful cartels that block competition. And so if we wanna go build something with AI, we're not allowed to right now. Like, do you see the left and the right tech working 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 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 gonna all have to fight?

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 by 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 the house in the middle of nowhere, it has to be a house where there's gonna be great jobs, you know, a safe environment and so forth, number one. Number two is healthcare, you need great healthcare for you and your family. And then three is education, wanna send your kids to good schools. If you disaggregate sectors of the economy over the last twenty five years, what you find is basically everything that technology touches basically collapses in price.

And so television sets and computer games and everything, anything with electronics in it, the prices productivity growth in those sectors has advanced very fast, prices have collapsed, everything is much cheaper. But if you chart housing, education and healthcare, the prices of those things are skyrocketing, right? And we all see this, it's just the price of housing is exploding, the price of education is exploding and the price of healthcare. I mean healthcare is 20% of the economy on its way to 50% and so the prices are exploding. And so it's like okay, what makes healthcare, what makes those three components the American dream have these exploding prices?

It's basically it's two things. Number one is, and these are interrelated, but number one is technology is not really touching them very much. And you could say the tech industry has done a bad job at addressing housing and healthcare and education or you could say that, you know, these industries have been resistant to it. But technology hasn't really touched them that much, which means that the productivity growth hasn't happened in them. And then the other thing is they're heavily regulated.

They're they're heavily dominated by the government. They're heavily regulated. And then in all three of those sectors, the government both restricts supply. Right? And so zoning laws and university certifications and so forth, right, mean that it's very hard to actually build new of of those three things.

And then the government responds to the political pressure caused by the rising prices by subsidizing demand. And of course, if you subsidize demand and if it's supply, get skyrocketing prices, right? And so every time there's a housing crisis, you know, it's a professional housing crisis in California, the answer always is subsidies for home buyers, which always has the effect of driving prices up further and making the problem Right? And so so so, like, that that that drives, you know, those are the microeconomics of of of what's happening. I don't think there's easy answers on this.

I but I think the acknowledgment that this is in fact what's happening, and then I think the the peep I think the people have to decide that they do not wanna live this way. I I I think like the the marginal American voter needs to decide. It's just look, it's just not acceptable that if I can't spend $3,000,000, I can't have a house that's in a good neighborhood with a good job attached to it. And it's just not acceptable that a four year college degree is gonna cost a million dollars, which is which is what it's on its way to doing. And it's just not acceptable that like this healthcare, you know, monster is running out of control.

And and so, you know, it it it you know, in many ways, like, this is like the fundamental, know, policy political question of our time, know, that kinda that kind of needs to be dealt with. Again, these issues become much easier to deal with in a high growth environment. Yep. Right? In an environment with very rapid technological development.

Let me give you the good news story on healthcare. Everybody talks about healthcare, can't break these curves. There's one area of healthcare that is incredibly sophisticated, technologically advanced and the price curve looks like Moore's Law. The price curve looks like video games. The price curve is just a straight line down and the quality of the service has gone way up and that's LASIK eye surgery, Right?

And and the reason it's and the reason that's the case is because it's it's outside the system, it's a discretionary purchase paid for by the consumer, you know, and the the LASIK eye studios are in like strip malls and they've got like, you know, three people and like a super advanced, you know, incredibly advanced like laser dye machine. And you go in there and you get zapped and you have perfect high-site and it every year it gets better and cheaper. And so that's like an example of what happens if you're able to touch these sectors with technology and if you're able to get them out from under all all the regulatory and government overhang. And so that potential exists, I think, throughout the system. But but fundamentally, we have to decide we want it.

And and fundamentally, the the population of country has to decide that that it wants it. Well, I'm optimistic more of the leaders in the tech and government sector are gonna be on our side and push through and fix these regulations, and the technology is gonna get us there. So thank you, Mark, for being here. Appreciate Good. Thank you, everybody.