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Transcript of our conversation with Alec Stapp:
More than two thirds of the federal budget are just entitlement spending. So things like Social Security, Medicare, Medicaid, medical benefits for veterans, those are the parts of the budget that are growing the fastest over time as well.
00:00:11:15 - 00:00:32:11
And so unless you're willing to touch entitlements and or defense spending, you really not going to make any meaningful progress on, the national debt, you could zero out all discretionary spending that funds all of our federal agencies. But if you don't touch defense and entitlements, then you're going to not make any real progress. And so, it's totally misguided.
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And and then, ironically, the things have the biggest social returns for our country are things like basic science research relative to increasing entitlements for, you know, the elderly population or something like that.
00:00:48:11 - 00:01:02:03
Hi everyone. Welcome to the Founders in Arms podcast. I'm Raj Suri, co-founder of Lima and Tribe. Today Immad is unable to make it. And our guest is Alec Stapp, co-founder of the Institute for progress. Welcome, Alec.
00:01:02:03 - 00:01:03:15
Thanks for having me. Excited to be here.
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Alec you and I met maybe a couple of years ago now, and I was really impressed by, you know, what you're doing at the Institute for progress.
00:01:11:14 - 00:01:24:15
You know, you know, kind of really championing some of the points that technologists in Silicon Valley care about. You know, in DC. Well, why don't you give us, you know, our audience just a quick background on what are you trying to do at Institute for progress?
00:01:24:15 - 00:01:54:19
Yeah. For sure. So we started about three and a half years ago. Now, here in Washington, D.C., we're an innovation policy think tank. We're bipartisan in nature. And so we work both with Democrats and Republicans here in DC. And we really focus on the most important, innovation policy issues out there. And so things like high skilled immigration, biotech, AI infrastructure, and meta science, and we think these are the key drivers for improving human welfare and human flourishing in the long run.
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And so we think the US is the R&D lab for the world. And these are the key drivers to, to improving outcomes in the long run.
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And you know, people, anyone who's been a founder, you know, it has to deal with regulation or, you know, any kind of government issue. Knows how important this work is because, you know, regulations can really, you know, accelerate the field. Or they can also, hampered dramatically. And, you know, the crypto industry has been through a lot.
00:02:22:21 - 00:02:42:16
The last few years. In my industry, I has also been through a lot, of ups and downs and, you know, immigration affects everyone, in the industry. You know, it's a form of regulation, too, you know, and, you know, so founders, whether they like it or not, they're going to have to deal with these things.
00:02:42:16 - 00:02:58:12
And what I was really impressed with, Alec when I met you was like, how granular your work was to actually get stuff done, like actually pass stuff. I mean, like, you're actually, like, talking to staffers on the Hill. You're like, you're trying to get stuff into bills. Is that right?
00:02:58:16 - 00:03:06:04
Yep. Correct. You both work? Both, on Capitol Hill and legislation. And also with the executive branch, and executive action stuff.
00:03:06:09 - 00:03:21:13
So it was good. No. When we were talking, it was a Biden administration. And, you know, you are the Institute for progress. So, you know, I'm guessing there is, you know, probably a natural, affinity to, you know, the left. But how are you dealing with this new administration?
00:03:21:17 - 00:03:40:09
Yeah. So, maybe a bit of clarification, which is, pretty common in our experience. Progress here is actually referenced to progress studies that often in DC, I gets conflated with progress and progressive. But we come from the progress that is community is which was launched, I think, 5 or 6 years ago now by Tyler Cowan and, Patrick Collison.
00:03:40:11 - 00:03:59:23
In an Atlantic essay. And it's really about just the idea that economic growth, like long run sustainable economic growth is the most important thing for improving, social welfare. And it's like understudied like, what are the key sources of progress? Where do they come from? We know, like pretty widespread agreement that it's related to science, technology, innovation.
00:03:59:23 - 00:04:19:19
But how do you make those things go faster? Why do we seem to be slowing down since the 1870s in terms of the rate of, productivity growth and, and economic growth? And what can we do about it at the policy level to actually improve things and make things go faster? And so that's the kind of progress that we focus on and technological progress and industrial progress.
00:04:19:21 - 00:04:39:16
And so we've in practice in the three and a half years we've been an organization, have worked relatively equally with Republicans and Democrats, a bit more with Democrats, you know, in previous years, a bit more with Republicans now. But also a lot of these things require bipartisanship. So, for anything that's non budgetary in nature, it requires 60 votes in the Senate.
00:04:39:18 - 00:04:56:15
Neither party almost ever has 60 votes. And it's unlikely to happen in for the foreseeable future. And so you need Democrats or Republicans to be on board. And for some of these executive action things, it's nice to get a win in the short run. But if the other party wins away the white House and rolls it back, then that wasn't really a durable policy change in the long run.
00:04:56:15 - 00:05:08:13
And so we focus on things that are quite technocratic in nature, that are ideally universally appealing and can actually, like, remain in the long run, want to make the change happen.
00:05:08:22 - 00:05:27:20
I love it. I mean, I think every every person who's building new things would love that. I everyone working, you know, as a founder in tech field, like, you know, believes in technology and its power to to transform society. And, I mean, it's been the major driver, you could argue, for the last almost 200, you know, 250 years.
00:05:27:20 - 00:05:49:17
Right. And this is the Industrial Revolution. And, you know, it. We've seen just amazing, changes in society because of it. I was I saw a stat or I saw like a quote recently that if you had like, you know, three life, three life span, the goal was 240 years ago, right? It's like a 380 year old people put together, you know, and, you know, the world over.
00:05:49:17 - 00:06:05:09
So different right back in the early 1700s than it is today. And there's still so much more to come. So I love that. I'd love to hear from you about, like, what are a few things you're excited about? And then I also love to hear a few things that you're concerned about when it comes to societal progress.
00:06:05:09 - 00:06:16:13
Like what is something that you're seeing that like, we seem to be doing really well as a country, but what are some things that where you're really worried about that, maybe were being held back one for some, for whatever reason?
00:06:16:20 - 00:06:42:05
Yeah. So I would say first thing comes to mind in terms what we're doing really well, I think we're doing well in the global competition to lead the artificial intelligence revolution. Obviously, we have, the vast majority of the world's leading AI companies are here in the US. Maybe partial exception for DeepMind being based in the UK, but obviously owned by Google here in the US, and then deep seek in China seems to be, a formidable competitor, but not at the bleeding edge.
00:06:42:07 - 00:07:02:03
And so I think we're in the driver's seat when it comes to AI and the full tech stack. When it comes to AI technology. So obviously have Nvidia here in the US as well. And we're doing better at producing chips domestically as well. After the Chips act is I think if we keep our export controls. Right.
00:07:02:03 - 00:07:27:13
And I think overall we're getting the balance there pretty, pretty good. Then we are really in the pole position to control the future of artificial intelligence, to make sure that it's compatible with liberal democratic values, and that the benefits are diffused throughout the economy to benefit as many people as possible. And so I think we're thus far mostly getting that right, and it's just about maintaining that lead and making sure that, we don't make unforced errors.
00:07:27:13 - 00:07:48:00
And so some things we're excited about are potential executive orders that are in the pipeline in terms of like accelerating the build out of AI infrastructure, particularly power generation. Clearly we're getting to the level of gigawatts scale, data centers do training runs and to do inference. And, and yeah, and just also updating the diffusion rule.
00:07:48:00 - 00:08:05:05
So where can we sell American technology to which countries and how do we make sure that chips that are sold to Malaysia aren't making their way into China, by smugglers, things like that. So overall, very feeling very good about artificial intelligence, policy in the US. So where things are going at least how they've gone so far.
00:08:05:07 - 00:08:33:09
And then on the more concerning side, definitely on immigration and science policy, this is no surprise. But, I think there is a viable, sustainable bipartisan agreement in theory, that skilled immigration, legal immigration, controlling the border. This is the kind of thing when you survey the American public has 75% plus approval. The vast majority of Americans want a secure border, and and they want skilled immigration, legal immigration.
00:08:33:10 - 00:09:02:11
And obviously the Trump administration so far has been overcorrecting and, really not prioritizing that type of of grand bargain. I think they're starting to roll back some things. Potentially they're seeing the negative effects of their current deportation strategy. But overall, we've been disappointed. By the balance there striking. And then similarly, on science policy, we've long been critics of the established scientific institutions were advocates for reform.
00:09:02:17 - 00:09:25:14
The whole idea of meta science is that we should be studying the scientific institutions themselves, applying the scientific method to how we funded and incentivized science. And we think there has been a lot of low hanging fruit to improve the actual science foundation, the National Institutes for health. We have our own proposals for that. We have a partnership with National Science Foundation, where we help them study, how they do scientific grant making and try to help them improve it.
00:09:25:16 - 00:09:47:05
But thus far, the Trump administration's obviously chosen a different approach in terms of kind of slash and burn, very antagonistic. And we're still hopeful that that can pivot and change over time. But, definitely don't think the scientific institutions are worth burning down. On average, they produce enormous value. This is the kind of thing that's, ideal for government investment.
00:09:47:05 - 00:10:01:05
Just going to basic research that the private sector is not going to invest in, naturally. It's a clear market failure. So we support reforms of the current institutions, but, well, recognizing they still have enormous value even in their current form.
00:10:02:06 - 00:10:21:05
Yeah, I mean, I, I, I'm a little bit further away from that last piece where you talked about, which is like the, you know, government funding, you know, research. I think a lot of people probably hear Silicon Valley will be like, well, you know, government should be funding research. It should be companies funding it. But why is it so important for government, you know, to fund this type of research?
00:10:21:06 - 00:10:46:06
You think there's just no market to fund these things? Like do you think the big companies will not, you know, put you know, when I was at MIT, like there was a balance between government and then there was also private companies like, you know, I was a chemical engineer. Dow and DuPont were like big, funders of of like, you know, ExxonMobil was a big funder of like, you know, like all the fracking technology, all that stuff was actually being research at MIT as well.
00:10:46:08 - 00:11:05:05
And, I'm not sure if like, something like fracking actually came out of, like, government funding or, you know, corporate research. But obviously that's been a game changer, right, for, US's, energy independence. But, yeah. Well, what is the right balance between, corporate and, government
00:11:05:12 - 00:11:31:15
Yeah. So just to use your fracking example, we published, a couple pieces on this. We did a, research series on geothermal energy and how to apply some of the same physical capital, human capital and technology from the fracking revolution in oil and gas to next gen geothermal technology. And what we learned in the process of looking into this history is that there was a very tight relationship between the public sector and the private sector when it came to, innovation in fracking.
00:11:31:20 - 00:11:57:00
And there were key tax credits that defrayed the cost of early exploration when it was completely unprofitable to be experimented with. This new method, as well as they were like joint testing facilities where the government was, was deeply involved in some of those early tests. And so I wouldn't discount the participation of the private sector. There was, I believe, Mitchell Energy was the main company, doing the early fracking, and they had boots on the ground in terms of actually running the facilities and doing the testing.
00:11:57:06 - 00:12:24:22
But it was premature and a high risk bet that, I think government collaboration and investment, at least made it likely that they would keep trying and, doing experimentation that I think that's a good model. We also saw that with Operation Warp Speed, which I think was a major success in terms of getting multiple safe and effective Covid vaccines early, where it's government money, government kind of breaking down barriers to that sector, but also having, you know, private sector companies lead that innovation effort.
00:12:24:22 - 00:12:45:06
I think it worked really well. But in general, I think you look at the history of technology and the earliest stage stuff often comes from curiosity driven basic research. The kind of timelines for returns are ten years plus, and venture capital has long returns, but not not as long of, timetable as as government can operate on.
00:12:45:08 - 00:13:12:00
And, you know, you have to think about the appropriate ability of the research. There's good evidence from, William Nordhaus, The Economist that, people who patent innovations on the, end up earning, like, less than 3% of the total value of the innovations. They're massive spillovers, innovation in general. We're going to under invest in it, especially the earliest stage, basic kind of curiosity driven research that can pay off in the long run.
00:13:12:02 - 00:13:24:05
I mean, look at things like DARPA being an early player in technology, the internet, I think there's an ideal form of public private partnership that often works quite well, but can obviously go off the rails.
00:13:24:08 - 00:13:38:18
Yeah. And the main reason they're cutting off this funding is because, you know, they're trying to, like, you know, reduce the debt, I guess. Right. But it's not a really big portion of the budget, right? I believe that, how much you put on research in return?
00:13:38:18 - 00:13:52:03
tiny percentage. And so it's, as a share of GDP, it's been falling over time in terms of public R&D. Yeah. And this is, just a category error for people who don't understand DC or don't understand the federal budget. But
00:13:52:03 - 00:14:03:16
more than two thirds of the federal budget are just entitlement spending. So things like Social Security, Medicare, Medicaid, medical benefits for veterans, those are the parts of the budget that are growing the fastest over time as well.
00:14:03:18 - 00:14:24:14
And so unless you're willing to touch entitlements and or defense spending, you really not going to make any meaningful progress on, the national debt, you could zero out all discretionary spending that funds all of our federal agencies. But if you don't touch defense and entitlements, then you're going to not make any real progress. And so, it's totally misguided.
00:14:24:14 - 00:14:36:18
And and then, ironically, the things have the biggest social returns for our country are things like basic science research relative to increasing entitlements for, you know, the elderly population or something like that.
00:14:37:01 - 00:14:56:11
And it makes a dramatic, you know, difference to our defense, right? Like our security as a country. So it's almost like part of our, security as a, you know, nation. And, Yeah, it seems, highly misguided. What do you say? I'm just curious. I have this debate all the time with, you know, my founder group chats about, like, the debt.
00:14:56:13 - 00:15:09:18
You know, some people are like, no, no, we should have got austerity. What? You know, some people think, like, okay, well, we'll just inflate our way through this. What is your thoughts? You know, how do we handle the debt like I. You think it's a crisis? How do you think we should have it?
00:15:10:02 - 00:15:30:17
It's the potential for a crisis. And then I have here we don't work, specifically on national debt issues, but it's worth paying attention to and thinking about. And I'm of the opinion this is one of those things of, like, it's uncertain at any given point in time when the bond market loses confidence in your country. It's hard to predict at what that level and what set of policies that starts to happen.
00:15:30:17 - 00:15:40:23
We're seeing the early signs of it with spiking, interest rate on US treasuries. And it's better to be safe than sorry on this. And so we have US dollar hegemony.
00:15:40:23 - 00:15:51:00
People historically have wanted to subsidize our country by buying our debt. And so it hasn't been a problem thus far really. But now we're starting to see interest payments as a share of the national debt go up.
00:15:51:02 - 00:16:09:14
This year, for the first time, I think a long time, if not in history, we spend more on, interest payments, on the national debt we do on national defense. And so it's it's becoming a problem. And ideally, we would solve this through productivity growth and for actually goosing the parts of the economy, that enable productivity growth.
00:16:09:14 - 00:16:16:20
So that's like science and technology, skilled immigration, these are things that could dramatically help improve our debt situation.
00:16:16:20 - 00:16:33:03
And then I don't really work on entitlement policy, but there are things you could do on the margin. There to make those more sustainable programs. But, we're really focused on increasing the productivity of the U.S. economy, because if you think about the ratio you care about, it's not just the debt number, but the debt to GDP number.
00:16:33:05 - 00:16:39:06
And so you can reduce the debt and deficits or you can grow GDP. And I'm a big fan of the grow GDP option.
00:16:39:12 - 00:17:00:19
Yeah. No. I think all of us are are, focused on that. But, you know, there is, there's a school of thought that you have to, you know, take your medicine at some point, right? And you have to pay down the debt. And, but, you know, you know, there is a hope that AI is going to help us grow faster and we're going to get a lot of, benefits from that.
00:17:00:19 - 00:17:18:00
And, you know, there's actually one big thing about AI that I want to talk to you about. This is, again, a debate I have all the time. We've had it on this podcast with a lot of, leading AI thinkers. You know, there is an outcome for AI where, you know, self-driving cars become ubiquitous. You know, truckers are put out of work.
00:17:18:02 - 00:17:34:14
You know, there is a different type of economy in the future where basically there's like, I do a lot of the grunt work for us. I mean, robots become ubiquitous as well. I mean, this is happening, we're seeing this already. Silicon Valley, that, like, as good enough to do 80% of, like, what a human does, right?
00:17:34:16 - 00:17:53:14
In many cases and some cases better. What does that future look like? What does that economy look like? If AI is actually able to do this, I mean, I mean, the trucking in the self-driving car thing is an obvious one. I think it's not like a question of if it's a question of when, and, what does that economy look like?
00:17:53:14 - 00:18:11:14
I mean, the, the debate that we've had is like, okay, the economy has to be restructured. It cannot be a market based economy anymore. And that's something that we've never seen before, really as a successful, thing. You almost need like a social economy or a social credit system. But have you thought about this? Is this a part of your research as well?
00:18:11:14 - 00:18:31:22
It's honestly part of our research but it's something we think about and are keeping an eye on in terms the implications of I, what I would say is like what I currently expect is that there will be massive disruption and change, but I don't think we're going to get double digit percent unemployment, overnight. We won't get there in the long run, but I don't think it'll happen overnight.
00:18:31:22 - 00:18:53:12
And so there's some time to adjust. It'll be a very difficult transition to handle. Well, but yeah, we obviously need is a much stronger and more robust welfare state to help people transition to this new future. I think there will be a lot of care based jobs for a long time. So things like health care workers, a way, a simple way.
00:18:53:12 - 00:19:14:23
And if you imagine an AI future where there's massive disruption, like we're talking about where you're automating whole sectors of the economy or one, this is an era of abundance and wealth and growth. And so we should think about how do we want to spend down that wealth or how do what we want to do with it? I think it's the obvious thing you could do immediately overnight is like childcare and, education.
00:19:14:23 - 00:19:34:06
Like, what if all classroom sizes were cut in half and you had twice as many teachers? Right. That in and of itself is quote unquote low productivity work. But I don't think we're even remotely close to AI automating the needs of childcare and automating the needs of education in our schools. Schools are both education and childcare at the same time.
00:19:34:08 - 00:19:55:11
So I think the care sectors of the economy can absorb, a lot more, of US labor. But like that transition obviously could be a rough transition in terms of people changing occupations, changing industries. So the government needs to smooth that transition. I do think my current model is that we're going to see massive, massive disruption in the digital economy.
00:19:55:13 - 00:20:11:02
For knowledge based work, will change dramatically. But I don't think progress in robotics is happening nearly as quickly. And so I don't think we'll have, you know, automated hospitals in the next five years at least, at least if not longer than ten years.
00:20:11:07 - 00:20:26:10
Yeah, I. I agree with that. I agree with that generally, but I do worry about this, the driving disruption, because you think of all the people who drive for Lyft and Uber, you think all people drive trucks? I mean, that is something that should be automated. It is like if you have been in a Waymo, it's way better.
00:20:26:10 - 00:20:42:22
Right? So like, and you know, that by itself is, you know, I think in the millions of people, you know, who will be out of work and like, okay, so let's so they can be coworkers, okay. So, you know, how are they going to be paid, right? Like, like is it going to be like a tax increase?
00:20:42:22 - 00:21:03:14
Basically, like we're cutting this size of pop, you know, schools in half. So our property taxes are going to go up to pay for these new people, basically is like, what's going to have to be the funding model for that? Because people who operate trucking companies and also people operate Waymo will make more money, right? Like they're they're going to, you know, their demand is going to go through the roof.
00:21:03:16 - 00:21:26:14
And but how did that wealth get transferred to like, health care system or like a child care system? There must be a policy change for that, right? And part of it is like, I think about what industry, the AI industry itself needs to take a leadership role and make in facilitating this change because like, okay, you know, we're developing this technology that's going to cause disruption.
00:21:26:14 - 00:21:40:02
We can wait for the government figured this out, or we can come up with a model of how we're using the profits of the technology to, you know, to, you know, improve society. Right. And I think that's one thing I think about as well.
00:21:40:06 - 00:22:00:14
Yeah, absolutely. And I think the technology industry should be part of the conversation, should be trying to put forward like standards and practices and ideas that could help manage this transition. But I also think, you know, given the social compact and the role government and democracy in elections, all of this will be adjudicated that way as well.
00:22:00:14 - 00:22:15:23
And I think to your point about like make a couple distinctions. One thing like child care right now, like most of a lot of the child care system, United States is pretty privatized. And so that could almost happen a bit more naturally where it's people will become richer and they purchase more child care services. And so we have an expansion of the child care sector.
00:22:16:02 - 00:22:42:23
Obviously, there are ways to do that also involve higher taxation. And government providing the funds. But that's one option. And the I would separate out education and health care because those are so, regulated by the government. And okay, so the education directly provision by the government. Yeah, I think on the margin you will need to see higher taxes, whether that's corporate taxes, individual taxes, property taxes, some way to increase funding for those kind of, sectors of the economy.
00:22:43:01 - 00:22:53:14
And we want to see innovation there as well. But I just think those are the kind of sectors that benefit the most from human human interaction and will be hard to disrupt. But I.
00:22:54:04 - 00:23:16:12
Yeah. Yeah. I mean, we almost need our government institutions to be stronger than ever. You know, to be dealing with this coming disruption, which I think might be bigger than any previous type of disruption that we've seen, I think also will happen faster potentially as well, you know, but, I, you know, I worry about students, and, you know, our ability to work as a country, we're pretty divided.
00:23:16:12 - 00:23:35:02
We're not able to get stuff to Congress. In many ways. I was encouraged during Covid, like how we did come together in crisis to like, you know, pass a bunch of bills. Right. And I hope that can happen again. And maybe that's the optimistic view is I like when it when it comes down to it, we will band together to figure it out.
00:23:35:05 - 00:23:52:18
Yeah, that's basically my position as well as well. One this is why I live in DC and do the work that I do, and I'm trying to build our own institution to assist the government and advise the government, to pursue better policies. And, yeah, I think the problem, my mental model is that this is an endogenous system.
00:23:52:18 - 00:24:12:11
And when there are external crises that put a lot of pressure on policymakers, they do eventually take action. It's not an ideal way to run a country. There are obviously like large institutional reforms we can and should pursue. But like you said, during Covid, we passed $5 trillion worth of stimulus. We mobilized large sectors of the economy.
00:24:12:11 - 00:24:30:18
We did Operation Warp Speed, obviously, again, was not perfect. Lots of mistakes were made and people have strong opinions about different things that should have been done. But we did take a lot of action. And so that's also why it's important to lay the groundwork ahead of time. Because there's the old saying in DC that like during a crisis, people just pick up ideas that are on the shelf.
00:24:30:18 - 00:24:45:02
They don't come up with new ideas. And so you want to be populating the shelf with good robust well, that it ideas so that when the crisis comes, or when the dramatic change interruption comes, the good ideas are the ones get implemented, not the the bad ideas.
00:24:45:11 - 00:24:59:03
Yeah. I mean, I love that makes sense. It is depressing a little bit that we have to wait for the crisis. As you said, like, I saw some. I think Bill gates was saying that, like, you know, we're not ready for the next pandemic. We haven't done a lot of groundwork for the next pandemic.
00:24:59:05 - 00:25:19:01
Yeah. So it's that's concerning. I feel like there needs to be a more, you know, we need to learn from some of our mistakes as well. But, yeah, it is very much like, you know, as a unit where, like, you know, the, you know, high school kid who doesn't do their homework until the night before, you know, is the assignment is due, right?
00:25:19:03 - 00:25:47:18
And that's not the right way. As you as you learn as a student, you're like, if you if you always wait, you know, sometimes it's not optimal, but it seems like we haven't, you know, figure that piece out, which is not ideal. You know, on the childcare topic, you know, there's also this other issue where we're having less kids and there is like, I don't know if that factors into some of the work that you're doing, but is that of concern like it seems to be like, you know, we're not going to be able to get the productivity growth or we're not going be able to get the growth that we need
00:25:47:18 - 00:25:56:14
without next generation flourishing. And, this is probably also the probably with the affordability crisis or other things, but. Well, you know, what are your thoughts on that on that.
00:25:56:21 - 00:26:11:20
Yeah. Definitely seems like a crisis. And it's a global crisis in nature. And this is one of the things. We don't work on it directly as a as a policy issue, but it has implications for, for every area of policy in every area of life. And I think this is what makes you want to double down on skilled immigration.
00:26:11:20 - 00:26:34:23
And it's obviously not a global solution to falling fertility rates. And in the long run, it's a problem. If the global fertility rate is below replacement rate, it's a huge problem for us as humans. But in the longer span of time, you know, we have a few decades where, all things considered, the US is still the most desirable location in the world for a lot, you know, tens of hundreds of millions of immigrants.
00:26:34:23 - 00:27:01:10
And so we can increase skilled immigration, higher to, to offset some of these fertility problems. And that will make us stronger and allow us to continue with bringing more bright minds and ideas into the US. And that's an advantage we have that most countries don't have. China has almost no immigration into the country. But the US, by contrast, is one of the world leaders in terms of absolute numbers of immigrants.
00:27:01:12 - 00:27:10:02
And we kind of have our pick of the litter if we design the system correctly. And so I think I'm less worried about it for the United States, but it is a problem globally.
00:27:10:02 - 00:27:29:13
Yeah. Absolutely, absolutely. And, you know, you and I talked about it, I have an organization in Lima which focuses on skilled immigration and bringing the best talent to the United States that, you know, United States is still a very, desirable place for everyone to be. But we get it. You know, we really make it hard for some people to come.
00:27:29:15 - 00:27:50:11
And it's not gotten easier in this administration, unfortunately. But, you know, there's just a lot of negative vibes as well, you know, are people, you know, are people just do they feel welcome when they come to the country? You and I was in Beijing a few weeks ago, meeting with entrepreneurs there, trying to sell them come to the US and they're like, well, I want to come, but, well, people want me there.
00:27:50:11 - 00:28:06:10
You know, like, they're that's their concern. And you know, where if they're seeing only like negative news stories, it's not going to make them more excited to come. The interesting thing, though, in China, was that, you know, I live in rural part of China where my wife's from, you know, for a lot of period of time.
00:28:06:12 - 00:28:25:12
I asked her, well, what do you think of the United States? And I was expecting to hear some negative things, but what I heard was university positive, you know, like, even in, like, rural China, like the base of the CCP. Everybody was positive on the United States. And, like, you know, the word for us in China is mega is like a beautiful country.
00:28:25:13 - 00:28:46:07
And, you know, people generally have a very positive impression of the U.S, regardless of what they know to be like, you know, government, you know, propaganda on the, on the, you know, media. So it was just interesting to see like people you know and my wife is estimation was that like if we actually made immigration easier, like 99% of people in China who would want to be here?
00:28:46:07 - 00:28:51:06
Of course, we don't want to take the more talented ones. But but people, you know, the demand is kind of unlimited.
00:28:51:11 - 00:29:08:06
Yeah, that's definitely my read of it as well. And I actually just started reading Dan Wang's new book, breakneck, about US-China relations and that kind of a comparative analysis of the two countries. I'm only just started it, but that is part of the intro of the book. Is you just saying culturally, that was you are vastly different countries.
00:29:08:06 - 00:29:16:14
But as a as peoples, we, share a lot of similarities, especially in terms of like ambition, work ethic, the desire to get rich.
00:29:16:14 - 00:29:18:02
The poop.
00:29:18:02 - 00:29:25:06
China right now look like what the U.S. is doing in the middle of the 20th century in terms of industrialization and rapid rates of infrastructure buildout and growth.
00:29:25:08 - 00:29:38:02
And. Yeah, so I think there's no reason per se that we need to be antagonistic. But obviously the current governments of each country, it is not, kind of a tenable situation right now.
00:29:38:10 - 00:29:57:02
Totally. Totally. And, I totally agree with you. The Chinese and American people have a lot of similarities, and, I'm a big fan of Dan Wang. Daniel read a lot of his essays. So, Yeah. I, I wish more people in the U.S visited China. I think there is like a, phobia, of, like, you know, feels like what?
00:29:57:02 - 00:30:14:19
I've talked to people that are like, it feels like visiting the Soviet Union or something, but it's not at all like that. Like it's, it's actually pretty welcoming and it's very modern, and it's a it's a good experience, but, you know, a large Chinese people come to the U.S, but not a lot of Americans, I think, go to China especially except for work, you know, for manufacturing stuff.
00:30:14:19 - 00:30:17:05
But, it's actually a great place for vacation.
00:30:17:08 - 00:30:30:12
Yeah. I mean, I think for your thoughts on this, like I went when I was a kid, it's been it's been, like, 20 years since I've been in China. I haven't been back since. And I enjoy my trip there. And a few years ago, I would have said, like, oh, I need to go to China. I need to go visit.
00:30:30:14 - 00:30:48:02
But now, I mean, I've been critical of the CCP and you're getting situations where Canada arrest someone and then China arrest some Canadians there didn't China I don't know what it feels as someone actually who's been has a somewhat of a public platform and is being critical of the CCP, I feel like I can't travel to China. But maybe I'm being overly risk averse.
00:30:48:04 - 00:31:20:14
No, no, you are being over the U.S. covers people in China, criticize the CCP, on public platforms. It, you know, the the, there's a difference if you're a foreigner versus a, you know, someone in China. If a Chinese citizen criticizes XI Jinping, they're going to be in trouble, right? Like to some degree. Right. But if a foreigner, I have many foreigner friends in China were actively on Twitter criticizing the CCP while they're there and that, you know, they're basically not attached, right, so that they don't worry about you on Twitter, like talking about stuff.
00:31:20:18 - 00:31:37:23
They worry about you coming to China and like trying to like, you know, start a revolution right in China. Right? Like, so they won't let you do that on like, the Chinese social sites. Right. Obviously. But the one that you run a protest, but but, you know, on Twitter there's plenty, you know, they don't care.
00:31:38:02 - 00:31:39:14
And, and so,
00:31:39:14 - 00:32:00:12
you know, and, you know, the arrest stuff did happen, and it was scary for a while, I would say, especially during Covid. But the last couple years, it's open back up again. And, you know, they're, they're open for business and they're, they're actually they're, you know, visa policy has become a lot looser now, it's much easier to visit.
00:32:00:14 - 00:32:19:20
And they're actively making steps to welcome, you know, foreigners again. So this was like back to like a decade ago versus like maybe a few years back. So, I, I totally understand the concern. That's why I'm trying to say to people is like, yeah, yeah. And, it, it, you know, one thing they've done is they've cleaned up the air, as well.
00:32:19:20 - 00:32:35:13
So like, it's a much more pleasant place to visit. And the apps now have all, like, English language stuff. So everything is run through apps. There is like, you know, the delivery apps and the rideshare apps and stuff. So it's all they have English language support. So it's much more pleasant now as a foreigner to visit.
00:32:35:15 - 00:32:53:11
But yeah, there is still this concern, you know, from people. So yeah. I of course, I wish the leadership, of both countries would be able to work together. And I understand the concerns. You know, from our perspective, the that we have. So, and another thing I want to talk to you about energy.
00:32:53:11 - 00:33:13:02
So, and, a lot of the entrepreneurs I talked to are very concerned about this administration's approach to solar. You know, what is their view, do you think, on solar? Like what? What do we have to do to, like, get them, you know, to like, embrace it like, like China has and other countries have? It doesn't make any sense to me.
00:33:13:02 - 00:33:32:22
Yeah it's a great question and something that one of the questions I think about most frequently these days, I'd have a lot of opinions on. So one, I think they start from a place of skepticism of intermittent technologies. And there is some fair pushback here of just like historically intermittent technologies, when you first start deploying them, it's okay.
00:33:32:22 - 00:33:53:03
The grid can handle it. But then when you look at like California, for example, they were getting to the point where, like tricity is free during the middle of the day because there's so much solar, especially rooftop solar, and then it's expensive at night and they're importing natural gas power from other states, overnight. And so there was a point where it was like, yes, penetration of renewables, especially solar, can become too much.
00:33:53:05 - 00:34:15:22
As a historical paradigm, but that's dramatically changing with battery storage. And California and Texas are leading the country in terms of deploying battery storage at this point. In recent months, there have been certain days in California where in the evenings, 30% of power on the grid is from battery storage being discharged. And this is smoothing out the Duk curve that people talk about in energy markets.
00:34:15:22 - 00:34:37:21
And so what I would say is that battery storage is is changing what intermittent technologies mean. It's making them more reliable. And Republicans need to update on that. But then I would say I would just have a little nuance on their position on renewables. There is deep seated opposition to wind energy, especially offshore wind, for like more Nimby reasons.
00:34:37:23 - 00:34:55:23
Offshore wind has had cost problems, rising costs over the last few years. And so I assume most offshore wind projects in the U.S are pretty much dead at this point. Because administration is pretty opposed to them, but also not a critical part of the energy transition and energy abundance, in my opinion. And so, so the biggest loss, I'd rather we build them than not.
00:34:55:23 - 00:35:16:08
But, most of the onshore wind projects happen on private land in red states primarily. And so Texas is going to continue building wind energy on private land. And they don't need the the federal government to approve that. And it's also interesting that you see continued attempts by the Texas state legislature to pass anti renewables legislation, but it almost universally fails.
00:35:16:08 - 00:35:38:00
I think the industry is now big enough to protect itself and lobby for itself. And the default in Texas is to have streamline permitting, kind of a a level playing field. So that's working out nicely. Yeah. So I think having the storage component really changes the game. And I see, you know, they're anti solar reflexively, but I don't think it's a hard and fast position.
00:35:38:00 - 00:35:57:12
And it could evolve over time just because like I like to be on fights where invites where the facts are on your side and momentum's on your side. And it's like it's so inevitable that solar is going to be the dominant energy form, not the only energy form. We could try investing in nuclear, geothermal, wind, hydro, all of these things can be part of the solution.
00:35:57:14 - 00:36:04:14
But solar is clearly, at this point, a big part of the future, and we're going to build it. Just depends on how fast we build it.
00:36:04:23 - 00:36:20:22
Interesting. Yeah. I mean what I've heard is like the, the removal like the new bill has the removal of the solar credits right. Like that to and that could really decimate a lot of the existing solar projects that are going to come online. Is that right?
00:36:20:22 - 00:36:44:00
we're currently working on, and it's actively being debated in, Congress. So the House passed their version of the reconciliation bill, which didn't include pretty much a complete wipe out of the credits for solar, wind, and pretty much every other technology except nuclear. There was a small nuclear carve out, but even that wasn't very good because, I forget the exact year where something like the projects need to be.
00:36:44:02 - 00:37:16:21
Underway by 2030 or something like in use and like no nuclear projects, new nuclear batteries are going to be ready by then. So would effectively also not have applied to nuclear. Fortunately, the Senate version of the bill, which is currently being debated and will be voted on soon, is much more generous to energy. Across the board, there are carve outs for nuclear, geothermal, hydro and all forms of energy storage and the the phase out date for those that those are good for the length of the original IRA, and they push back the solar and wind carve out a little bit.
00:37:17:00 - 00:37:34:02
So like there's, ability I believe the current tax, something like if it goes into operation by next year, then it still is eligible for the credit. But it's obviously a massive phase out relative to the Inflation Reduction Act. So it says like those are all tentative deals, and timelines. This is being actively negotiated between the House and the Senate.
00:37:34:07 - 00:37:34:14
The
00:37:36:14 - 00:38:07:08
completely opposed to all subsidies from the Inflation Reduction Act. And then there are a lot of moderate Senate Republicans who are from states, a lot of wind power or solar power, or want to build new nuclear or geothermal projects that are advocating for a much more moderate approach. And I think this shakes out to a place where you probably do get those carve outs for firm technologies and energy storage, and that's not great for solar, but it's not the worst for solar, either, because most solar projects being built in the U.S today have an energy storage component, and so they could still get the tax credit for
00:38:07:08 - 00:38:09:14
the battery storage they're building alongside the solar.
00:38:09:20 - 00:38:29:09
Oh I see okay. Good to know. Good to know. I didn't realize it was kind of they dovetail together like that took advantage of it I, I but, I'm solar on my house and a battery storage and it's great, you know, like, when if there's a power cut on the grid, I know I have, you know, I know I have power, I it reduces my cost on the grid.
00:38:29:11 - 00:38:47:18
You know, you know, because I can self, fulfill my own energy needs. So, it's very it is very popular here in California. And, I think it's a great thing. I mean, it's it's fantastic that, you don't need to rely on the grid. And once you've been through one power cut, you're like, I don't want to go through that again.
00:38:47:18 - 00:39:06:23
Right? So yeah, especially when you have young kids and stuff. So, you know, it's like, it's it's really, much better for people. And so I hope they keep those incentives and keep, you know, as the solar panels also keep improving, it'll be, better. What about nuclear? We've had, a number of nuclear founders on this podcast.
00:39:07:01 - 00:39:21:03
How optimistic are you for that being a big, bigger percentage of our, you know, energy? You know, supply. What what are your thoughts on, you just you mentioned you think you'll take much longer to get, you know, more nuclear powers online.
00:39:21:03 - 00:39:43:06
the nuclear projects that are being planned are long timeline projects. It's just like we're kind of other than the, the Vogel plants in Georgia. We just haven't had almost any active nuclear industry in the United States for decades. And so it takes time to rebuild the supply chains, rebuild the skilled workforce. Traditional nuclear, like Gen two nuclear, like the Ap1000 design.
00:39:43:06 - 00:40:03:00
These are large scale infrastructure projects. They just take years, many years to build by kind of by default. Of course there's hope for like small modular reactors. Next gen nuclear could, could be sufficiently small that they're built in factories that you can build faster and deploy them faster. But I'm optimistic for that. It's also needs to be proven out.
00:40:03:00 - 00:40:33:07
We just don't know how that's gonna go. Exactly. I wouldn't put all my eggs in that basket. But overall, I'm pretty optimistic because I'm hearing rumblings that, the there's a lawsuit filed last year between two states, Utah and Texas and Last Energy, and I think one other nuclear energy company, against the Nuclear Regulatory Commission saying that the nuclear radiation has inappropriately been regulating micro reactors below a certain level for its entire history and actually never had the authority to regulate reactors of that size.
00:40:33:09 - 00:40:52:07
And I'm hearing that that's likely to be settled soon because the new administration agrees with the lawsuit, basically said DOJ is going to settle that lawsuit, and revert the authority to regulate, small reactors to the state level and Texas and Utah and other states, red states have been preparing for this moment already, and they have some capacity already built up.
00:40:52:12 - 00:41:10:06
And the startup companies are ready to go. And so I think you could see a quick pivot where once they're out, out from underneath, you know, the burden of the NRC and their, pretty bad regulatory paradigm. You could see a lot more investment in innovation. But again, it's not going to happen overnight. It's going to happen in the next 1 or 2 years.
00:41:10:06 - 00:41:16:14
But, I'm optimistic that nuclear can be a significant part of the energy abundance story.
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