Kind: captions
Language: en
On December 7th of 1941, Japan launched
a surprise attack on Pearl Harbor,
sending much of the US's naval fleet to
the seafloor and killing thousands of
Americans. The next day, [music] the
United States declared war. History
would mark this infamous day as one of
the starkkest examples of around and
find out. Admiral Yamamoto is often
quoted as saying, "I fear all we have
done is to awaken a sleeping giant and
fill him with a terrible resolve."
Whether the quote is apocryphal or not,
the statement is true. What the US did
next is unparalleled in human history.
On a dime, we pointed our incredible
industrial base singlemindedly to
winning the war. What followed was
industrial shock and awe. American
industry produced nearly 100,000 tanks,
200,000 artillery pieces, and a
staggering 300,000
aircraft. All of that was in addition to
manufacturing nearly 2third of all
Allied military equipment. a feat of
production so incredible that it buried
the Axis powers and ensured none of us
had to learn German or Japanese. America
proved we had the will to fight and the
ability to outproduce anyone on the
planet. We mobilized like a command
economy briefly and then we unwound it
once we were again living free. And what
did we do with that incredibly
well-earned freedom? We went back to
sleep. We globalized. We decayed. And we
have fallen behind. Way behind. If you
look at the numbers, China now looks far
more like the World War II era US than
the US does. China is now the world's
industrial superpower. They outproduce
everyone. And because they're a top-own
command economy, they can move far
faster than the US with all of its
political gridlock. But they're a
dictatorship.
Let that hang in the air while you think
about this. Right now, the stakes are
skyhigh. The US and China are on a
collision course economically,
politically, and militarily. They're
stuck in a historical pattern known as
Thusidity's trap. This is where you have
a declining superpower going up against
a rising superpower. And the last 16
times this has happened in history, the
two nations have ended up going to war
12 times. Each side will do virtually
anything to win. The question is, does
that include the US becoming
authoritarian? We've done it before. And
right now, the US is starting to make
the same kind of policy decisions that
China is famous for. Right now, today,
the US government is no longer just
giving companies tax incentives. They're
buying them. That means politics, not
performance, could soon decide which
businesses win and which ones get wiped
out. That's the same as deciding which
investors win and which ones get wiped
out. So the question we have to ask is,
should America be taking a page out of
China's playbook? And if we do, will the
free market die? And will your
investments be the next casualty? The
answer to that question is anything but
obvious. We're going to walk through the
issue in four critical parts. Part four
is my answer and what I think the right
path forward is, but it will only make
sense if you understand what's really
going on right now between the US and
China. So [music] don't skip around.
This one goes down straight no chaser.
Welcome to part one, the choice we have
to make. As of 2023, China is
responsible for roughly 29% of all
global manufacturing value ad. That's
more than the next four countries
combined, which includes the US. China
makes over half of the world's steel,
producing 76 million metric tonses in
December of last year alone, while the
US clocked in at a measly 6.7 million
metric tonses for that same time period.
As for ship building, China controls
over half of global commercial ship
building as well. The US is just 0.1%.
[music]
A number so grotesque most mainstream
think tanks consider it a national
security threat, which it is. During CO,
it became clear just how many things
like masks and pharmaceuticals were
controlled by China. And they control
70% of the rare earth minerals that
power every phone, drone, and EV on
Earth. If global competition were a foot
race, China [music] is sprinting while
America argues over the rule book. China
plans. Our politicians do and say
whatever they need to to get reelected.
And right now, China is winning. Such is
the power of a command economy. When you
can marshall capital, labor, and
infrastructure by fiat, you can move
mountains. You can pick a goal in the
horizon and just march everyone towards
it. No shareholder votes, no focus group
polling, no need to even build
consensus. It's efficient, [music]
disciplined, and ruthless. And that's
why China can build a bridge in a month
while we spend a decade arguing over the
environmental impact statement. When a
top- down system works, it is
breathtaking.
But when it fails, it fails
spectacularly.
The same centralization that lets you
move fast also guarantees that when you
make a mistake, everyone goes down with
you. Mao taught us all that lesson in
the most terrifying fashion imaginable.
45 million people dead from policies
that a could have told you were a
terrible idea. But to tell him no was to
be beaten to death, shot, starved, or
exiled. And today under Xihinping, China
is relearning the same lesson, albeit
more sophisticated.
Ghost cities, a housing collapse,
re-education camps, forced labor, and
entrepreneurs vanishing simply for
questioning the party. The founding
fathers of America understood this
danger all too well. That's why the US
was founded on the ideal of freedom
expressly because they had lived under
tyranny and they knew just how bad and
arbitrary it could get. But freedom, the
free market and democracy also have
their tradeoffs. And that's why we now
have to make a choice. Do we embrace
free market capitalism with all of its
mess and chaos so that we can reap its
neverending innovation? Or in order to
catch up with China and make up for the
mistakes of globalism? Do we now begin
copying China? We could go on for days
with all of the ways that China has
outmaneuvered the US in recent decades.
And we are clearly no longer the World
War II era America that could kick
anyone's ass on the battlefield. We're
now the soft financialized America that
tries to solve all of its problems with
sanctions and tariffs. But that hasn't
even stopped postsviet Russia, let alone
the juggernaut that is China. And
honestly, [music] you could make an
argument that we chose long ago to
abandon the free market. That we're
already a command economy. We're just
doing it poorly. We've got enough
regulations right now to stifle
innovation, enough money in politics to
guarantee regulatory capture. And
[music] in the past year, the US
government has started taking direct
ownership stakes in key American
companies like Intel, MP Materials, and
US Steel. And unlike in times past,
there's no obvious plan to exit those
positions once this crisis has passed.
Backed by the Department of the Treasury
and the Department of Defense, these
ownership stakes mark a bold move from
being a supporter of an industry to
becoming an active player tilting the
scales. For decades, economists and
advisers alike warned against using
government controlled capital to guide
sectors, pick winners, and crush
competition. Now [music] though, the US
has had its head turned by a new bell at
the ball. Over the past [music] 40
years, China's economy has exploded and
America has gotten bogged down in
culture, war, We got so
convinced that we were the best, we
forgot we climbed to the top by being
the best, by out competing everyone
else. We tried to take all of the risk
out of competition. We tried to shame
people for being aggressive. We
prioritized safety over freedom. and we
watched our lead erode faster than any
economic lead that massive [music] has
ever eroded before. And now that we're
behind, we're open to changing the rules
this country was founded on, the very
predicate of our success in order to
catch back up. And make no mistake, this
is all about your portfolio as much as
it is about policies and politics.
[music] Because when government capital
distorts markets, valuations detach from
reality. Companies look valuable because
they're protected, not because they're
productive. Everything becomes insider
trading. Because when the political
winds shift, so does a company's
fortunes and potentially yours with
them. Once the state becomes a top
shareholder, CEOs stop chasing consumers
and start chasing congressional
appropriations. R&D budgets turn into
lobbying budgets and the market shifts
from who builds the best product to who
plays the policy game the best. That's
how you get fewer moonshots and more
safe [music]
state approved mediocrity. It's how you
strangle the entrepreneurial impulse
that made America the engine of global
innovation in the first place. There's
also a bigger threat lurking, the
erosion of free market capitalism. When
the government owns a slice of the
economy, it holds power to influence
outcomes, [music]
which means insiders get access and
outsiders get shut out. This leads to
favoritism, rigged competition, and a
system that rewards connections over
creativity, but it can't be denied that
it lets you move [music] fast. Now, I
wish the dilemma that we face right now
was simply a moral one, but it's not.
We'll get back to the show in a moment,
but first, let's talk about why you keep
starting and stopping. Most people
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That's exactly why Short Form exists.
Take Atomic Habits by James Clear. It's
packed with proven systems for building
habits that stick, but the book is 300
pages of theory mixed with stories,
[music] and most people read it, then
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Short Form cuts through that problem.
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and give you step-by-step implementation
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three months off the annual plan to
access the decision-making systems
behind every major breakthrough. And
now, let's get back to the show. So,
welcome to part two. You got to give the
devil is due. China's playbook and their
incredible rise. China's GDP per capita
rose from $180 in 1978
to over 12,500
in 2024. That's a 70fold increase. In
that same time period, China has pulled
approximately 800 million people out of
extreme poverty, the greatest poverty
reduction in human history. As American
wages stagnated, the typical Chinese
workers wages went up nearly 30x. As US
life expectancy declined in part due to
deaths of despair, China's skyrocketed
from 66 years in 1978 to 78 years today.
A jump of 12 years in a single
generation. It's not hard to see why
America would look at what China is
doing with extreme envy. But if we're
not careful, we risk learning the wrong
lesson. There's no doubt one must give
the devil his due. What China has done
since Mao's death has been nothing short
of extraordinary. But as I go to great
lengths to remind people, Deng Xiaoing,
who replaced Mao, realized, the
catastrophe of Mao was in centralizing
decision-making, allowing one man to
make all of the decisions for a country
had led to mass murder and biblical
levels of starvation. Ironically, Deng
Xiaoing, the man responsible for China's
true great leap forward, looked at the
devastation brought on by Mao Central
Planning and then looked at America, her
free market and the prosperity that it
brought and decided to copy that. That
was the innovation that actually
propelled China forward. Capitalism, the
very thing America is in the process of
abandoning in favor of a post deng
that thanks to Xihinping is headed back
in the horrifying Mao direction. People
forget the timeline. Beginning in 1978,
Deng Xiaoping opened the economy to
private markets, private enterprise, and
foreign capital. And the results of that
were seismic. And he did it by inviting
Americans to come in and teach them
about the American system. From creating
thousands of banks and decentralizing
loan applications to the structure of
venture capital itself, they took it all
in and replicated our model and our
success and in many ways honestly
surpassed it. But make no mistake,
Deng's reforms came with strings. The
Communist Party never relinquished
ultimate political control. The state
kept the levers of credit, land policy,
and licensing. It would let private
enterprises grow until it looked like
private enterprise might grow into a
rival. Fast forward to Xiinping. He
inherited a nation far wealthier than
Deng could have ever imagined. And he
had learned the lesson of Russia's
collapse. And so Xi set out to prevent
that from happening in China. He
understood that once people begin
questioning the party, stability
weakens. And he was not going to let
that happen in China. His tool set was
blunt and comprehensive. An expansive
anti-corruption drive that purged anyone
who wasn't loyal and ensured
corporations cooperated with the party.
Hundreds of thousands of officials gone.
and a regulatory offensive that
installed party officials into even the
most successful and powerful private
firms. He rewired party oversight into
corporate boardrooms everywhere and made
clear who ultimately decides the rules.
That's the danger of a system built on
authoritarianism and not freedom. When
entrepreneurs publicly challenged a
system or even just sounded too
independent, the state responded
aggressively.
The most famous example was Jack Maw,
one of the world's richest and most
successful men. On the eve of Ant
Group's 37 billion IPO, Jackmaw made the
fatal error of criticizing bank
regulators. The IPO was instantly halted
and Jack Maw was essentially kidnapped
and re-educated. Ma's public
disappearance and ants and forest
restructuring served as a vicious
warning to the entire entrepreneurial
class. Companies were told to align with
state priorities or face severe
consequences. Fines, restructuring, and
re-education were all on the menu. These
moves were not subtle. They conveyed an
unmistakable message. The party will
allow markets only to the extent markets
remain politically useful. The
government also allowed and in many
cases engineered huge economic bubbles,
most famously in real estate. For years,
local governments relied on land sales
for economic progress, and developers
were incentivized to borrow cheaply,
ultimately building entire ghost cities
on speculative demand to please Xi. The
model blew up spectacularly when credit
tightened and buyers began to bulk. That
led to the 2021 collapse of Everrand, a
company with roughly $300 billion in
liabilities at its peak. That failure
exposed just how leveraged and brittle
China's property economy had become. The
fallout was immediate. Frozen projects,
distressed homeowners, and a contagion
of developer failures that punctured
confidence in that growth model. The
state has since tried to manage the
damage, but the era of easy finance
growth is clearly over because markets
operate on physics. Now, there are moral
costs as well. Alongside economic
control, the party has deployed coercive
measures against minorities, most
notoriously in Jing Jang, where
re-education camps and mass detentions
have drawn international condemnation
and documented human rights abuses. The
same political machinery that builds
super fast rail and industrial capacity
is also capable of mass lockdowns, mass
coercion, and what some have called
concentration camps for the weaguers.
That duality, breathtaking development
on one hand, and brutal repression on
the other is the devil's bargain of a
command economy. The thing people always
seem to lose sight of is the fact that
when you're telling people what to do
and how to do it, eventually someone is
going to disagree. In a free country,
you have to convince them. You have to
use persuasion. In an authoritarian
system, you just use guns. And in the
end, boys and girls, the guns always
come out. So when choosing that system,
you are choosing violence. So when
America looks at that system and swoons,
every alarm bell I have goes off. China
imitating elements of the free market.
That made sense. But here's the playbook
we'd be copying if we decide to ape
China. Now, step one, centralize
political power. Step two, embed the
government inside of companies by buying
up state-owned shares. Step three, drive
enormous gains in output, incomes, and
capacity for a chosen set of winners.
Step four, when private power threatens
political control, or when speculative
bubbles form, or when people just
disagree, step in with force. The result
is a system where market incentives run
on an authoritarian chassis. It produces
the kind of scale and speed that
democracies can only envy. And I get why
it's seductive, but boy oh boy does it
have a downside. But despite that, I
think this decision is a lot harder than
I'm making it sound. Because history has
proven in times of crisis, even America,
the land of the free, has set freedom
aside and folded under something
approaching a temporary dictatorship. So
before part four, and my path forward
will make any sense, we've got to go
through part three. America has some
China in its past. In 1942, the US
government created the War Production
Board, giving Washington the power to
tell companies like Ford, GM, and
Chrysler exactly what to build. The
Reconstruction Finance Corporation,
Revive for World War II, issued more
than $35 billion in government loans
direct to the private sector to build
refineries, synthetic rubber plants, and
shipyards. Cold War era R&D was
basically corporate socialism. In 1964,
the Pentagon's Advanced Research
Projects Agency, ARPA, spent federal
money [music] to wire universities and
defense firms together, which is
basically the prototype for today's
internet. In the 1980s, when Japan
threatened US semiconductor dominance,
Washington formed Seitech, a
government-f funded consortium of
chipmakers backed by the Pentagon, the
first public private partnership of the
digital age. Post 911, the federal
government became a direct investor
again. DARPA, INQEL, and the Department
of Energy's loan programs financed the
early research behind Google Earth,
Palunteer, and even Tesla's first
factory. And today, the Chips and
Science Act and Inflation Reduction Act
have Washington allocating hundreds of
billions in subsidies, equity stakes,
and tax credits to micromanage
everything from chip fabs to EV
batteries. The very definition of hybrid
state sponsored capitalism. These are
the same kind of statebacked capital
plays China is making. The hard reality
is America abandoned true capitalism a
long time ago. We like to think we only
do it in times of war and crisis, but in
all honesty, government interference in
the free market has been at a fever
pitch ever since 1913,
a year that should truly live in infamy.
As they say, remember why you started.
[music] And the founders didn't fight to
found a new country just so once again
the government can control the economy.
They wanted government to secure
property rights, enforce contracts, mint
sound money, and then get out of the
way. Alexander Hamilton argued for a
national bank, but only to stabilize
credit after the revolution. His goal
was not to try and direct industry.
Jefferson and Madison hated even the
idea of that much involvement and fought
him on principle. Jefferson said banks
were more dangerous than standing
armies. Madison warned that concentrated
credit power would enslave the people
under monopolies of paper. And they were
right. The ultimate compromise they
struck was to put strict limits in place
and a term on the bank's charter of only
20 years. When Congress tried to renew
the charter in 1811, Jeffersonians
killed it on the floor. Their fear was
very simple. When the state controls the
money, it controls the men. They wanted
a marketplace of competing enterprises,
not a command economy hiding under a
powdered wig. For roughly a century,
that's how America ran. The federal
government stayed small. The dollar was
goldbacked, and markets, though often
brutal, self-corrected fast.
Entrepreneurs built railroads,
telegraphs, and oil empires with almost
no federal direction. Boom, bust,
rebuild, repeat. That was the chaotic
cycle that forged the richest [music]
industrial society in human history. But
then slowly Washington began tightening
its grip. Now please note this is how
you protect the rich from losing their
money and begin to stagnate the class
structure. When wealthy people can't
lose because the entities they're
invested in are too big to fail or too
systemically important, you now have a
cast system and an economy that never
selforrects. If rich people can't become
poor through a series of bad decisions,
you have a sick economy. And that is
what we've done to ourselves. In 1913,
the diabolical Federal Reserve Act was
passed, creating a permanent central
bank. I did a whole video on it which
you can watch right here. For now, just
know that it created an unelected
committee with the power to print and
price money. And this is why most young
people today can't afford a house and
why socialism, the historically
murderous economic system, is gaining in
popularity. Not to be outdone, in 1933,
FDR's New Deal installed wage controls,
a wave of agencies that turned crisis
management into permanent bureaucracy,
and the disastrous industry codes of
fair competition, which turned the US
economy into a topdown command economy
inside of a democracy. We'll get back to
the show in just a second, but first,
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now, let's get back to the show. Created
under the National Industrial Recovery
Act, NIRRA, of 1933, these mandates were
one of the centerpieces of FDR's New
Deal. Here's what the act entailed. The
Naira empowered industries to form
government approved cartels that set
prices, wages, production quotas, and
even hours. These weren't guidelines.
They were legally enforcable codes
signed by the president [music] and
carrying the force of law. The idea was
to end cutthroat competition during the
depression by coordinating business
behavior from the top down. Over 500
such codes were written, covering
everything from steel and oil to dry
cleaning and dog grooming. The Supreme
Court, however, struck them down in
1935, ruling that they amounted to
unconstitutional delegation of
legislative power. Attempts to control
our economy didn't stop there, however.
In 1971, Nixon closed the gold window,
severing the dollar from any gold
backing whatsoever and ending fiscal
restraint once and for all. From then
on, money became little more than a
political instrument. Its supply being
dictated by policy, not the production
of additional valuable goods. By the
1970s and 80s, a maze of regulation from
the EPA to OSHA to price and interest
rate caps had crept into every major
sector, throttling risktaking while
entrenching incumbents who could afford
compliance lawyers. This is known as
regulatory capture, and it's another
brick in the wall that keeps the rich
rich. Economists like Milton Friedman
and Friedrich Hayek sounded the alarm.
When regulation and monetary
manipulation replace competition,
capitalism mutates into corporatism,
where profits are protected by politics
[music] rather than outperforming the
competition. Today, we might call that
industrial policy, but the founding
fathers would have called it tyranny.
The way America was designed around
freedom was radical precisely because it
trusted that innovation would flow from
the creative chaos of man [music]
pursuing his own self-interests,
curiosities, delusions of grandeur and
passions. By giving people the right to
be wrong, man is freed up from the
overbearing will of those who are
convinced they know better but who
rarely do. Freedom is driven by the
belief that the individual is divine and
therefore worthy of sovereignty, that
markets are self-correcting by nature,
and that trusting man's innate desire to
compete for glory and riches will lead
to far more innovation than temperous
centralized control or safety. There is
no doubt that freedom brings with it the
unsettling creative destruction of
mistakes over exuberance, greed, and
plain stupidity. But it also allows for
merit and productivity to steer the
ship. When you try to remove all of the
danger and risk from freedom, you make
docile, anxious people and innovation
stagnates. The moment we decide safety
matters more than freedom, we begin
engineering our own decline. And that's
what's happened over the last 40 years.
[music]
As China allowed for more freedoms, they
rose. As America strengthened its
centralized control, we declined. We've
lost sight of the fact that there are no
solutions, only tradeoffs. And now we
need to consciously decide what
trade-offs we're willing to accept.
Since the Federal Reserve Act was passed
in 1913, we have lulled people into the
belief that they can have a command
economy to protect the little guy. But
in reality, it has come at a huge cost
that has already led America into a cold
civil war, which you are in right now.
And it risks pushing us into a hot
revolution. We already have political
assassinations and states waring against
the federal government based on party
lines. And it's only going to get worse
from here if we don't have a unified
vision for how we march forward. So,
welcome to part four, the dangerous path
forward. Throughout the entire 19th
century, federal spending averaged less
than 5% of GDP. Almost all of it went to
defense, the postal service, and
infrastructure. From 1820 to 1900, US
real GDP per capita roughly tripled,
vaultting America from a frontier
economy to an industrial powerhouse in
just two generations. From 1870 to 1913,
America's share of global manufacturing
output jumped from [music] roughly 23%
to 32%, surpassing even the entire
British Empire. [music] Real wages rose
about 60% between 1860 and 1913, while
prices stayed flat or fell thanks to
relentless innovation. [music]
Prices should go down over time. Despite
guilded age tycoons, upward mobility in
the US was extraordinary. By 1900, they
had the highest worker wages in the
world. [music] By 1900, the US rail
network stretched 190,000 miles, a
continent spanning logistics grid built
largely by private capital. Roughly 25
million immigrants arrived between 1880
and 1913. That's the largest voluntary
migration in history. And they came
chasing opportunity, not government
handouts. The United States most
explosive worldbeating growth happened
under extremely limited federal [music]
government. By 1950, with just 6% of the
world's population, America produced
roughly 27% of all global GDP. Liberty,
not dictate. built the richest society
in human history. But as government
spending, regulation, and central
planning rose through the 20th century,
the growth rate, dynamism, and social
mobility that defined the American
miracle steadily flattened. The freer
the economy, the faster America grew.
When Washington's share of GDP was tiny,
innovation, immigration, and mobility
exploded. As the state grew larger,
however, with the addition of central
banking and income tax both were added
in the same year, the explosion of the
alphabet agency's massive entitlements
and immoral deficit spending, [music]
growth slowed, volatility increased, and
inequality stabilized into a permanent
cast structure. Said as plainly as
possible, America didn't rise because
government managed the economy. It rose
until the [music] government started
managing the economy. So, if we're going
to stop our managed decline and get back
to being an unparalleled economic
[music]
powerhouse, what do we need to do,
especially now in this unique moment
where we're going up against a rising
power like China? Do we take a page out
of their playbook? Or do we get back to
a true free market, the thing that
powered our initial rise? Whatever we
choose, it's not going to be a utopia.
It will be risky. There is danger no
matter what we choose. Everything is a
trade-off. But here is what I think is
our best path forward. [music] One,
build a strategy based on first
principles. Economies operate on
physics. This is why patterns occur over
and over again in history. [music] Every
time you run the experiment, you're
going to get similar results. Here are
the rules to remember. Nothing [music]
comes for free. Everything is paid for
by someone. Economics is a PVPVE game.
Everyone is competing against everyone
else in a highly complex chaotic
environment. [music] Cooperation is a
strategy to win, not an outcome in
itself. The government should be a
referee, not a player. Economic systems
are too complex to predict and therefore
too complex to control from the top
down. It can work for brief periods, but
on a long enough timeline, rapid
decentralized decision-making will
always be more efficient [music] than a
command economy. Governments tend
towards tyranny, so their power should
be checked relentlessly. The rules of
the game need to be fair and
transparent. The government should
therefore secure property rights and
enforce contracts and the rule of law.
Economies must be compatible with human
nature. Humans pursue self-interests
far more reliably than altruistic ones.
So the system should be designed to take
advantage of that. Set another way, the
system should optimize [music] for
freedom and fairness. Two, focus on
infrastructure and innovation. The
government has never been nor will it
ever be the home of innovation because
the government doesn't have to compete.
Because of that, [music] it does not
have the necessary stimulus it needs to
innovate. Its focus should be entirely
on laying the foundation for the private
sector which does have to compete to
innovate on top of it. Whether that's
building roads, the internet, or giving
the kind of tax incentives that welcome
all comers, the government should see
its job as creating the soil in which
the private sector can work its
distributed, albeit chaotic magic.
Three, let creative destruction take
place. The markets are designed to
foster competition. If no one can fail,
then bubbles form and the losers never
get out of the way of the potential new
winners. You clog the system with ideas
that should have died and been killed
off long ago. Market signals get all
confused and therefore progress stalls.
You have to let people lose and lose
big. Stay out of the way of the markets
and they will correct themselves. Get
involved. You may smooth out the pain,
but you make growth far less likely.
Four, focus on national security and
national dominance. Every country should
believe in itself enough to play to win.
Remember, the game is PvPVE,
whether we want it to be or not. So, we
might as well be going for broke. When
deciding what soil needs the most
nutrients, the government should focus
obsessively on being the highest growth
economy with the largest middle class.
It does not make sense to grow fast if
you're just accelerating an excessive
level of inequality. But some inequality
is the point. People work hard to get
ahead of others. You don't spend your
entire life training for the Olympics
hoping to end up in the middle of the
pack. You do it to win gold. Economics
is the same [music] way. It is the sport
of money. It doesn't mean you don't have
alliances. You do and you should. But it
does mean that you're still playing to
win and you accept that you might fail,
especially at the individual level. The
only time the government should directly
involve itself in the markets [music] is
if there is a national security reason
to do so. Right now, for instance, where
we have made the catastrophic error of
globalizing to the point that our
largest rival basically controls our
entire way of life. It's absolutely
suicidal and needs to be rectified
urgently. We must bring advanced
manufacturing back to the US, but it
should be done in a way that adheres to
the principles laid out in steps 1
through [music] three above. Five, if
the government must intervene, restrict
it massively. If government money is
going to be invested directly in private
companies, for example, to secure chip
production, critical minerals, or
defense tech, we should do it through
one small specialized fund that's
tightly controlled, totally transparent,
and extremely temporary. Here's how it
would work step by step. a a single
backs stop, not a bureaucracy. Think of
it like a national emergency fund for
industry called something like the US
strategic capital facility run by
professionals, not politicians. It would
be independently audited and legally
shielded from political meddling. B, a
clear job description. The fund would
have just three ranked goals in the
following order of priority. First,
protect national security and keep
essential production on shore. Second,
step in only when private investors
can't or won't fill a critical gap.
Third, make sure taxpayers get their
money back and ideally with a profit. C,
small ownership on equal footing. The
government should never take over a
company. It should only be allowed to
buy a minority stake, let's say less
than 20%, maybe going up to 25% during a
formally declared crisis. [music]
Its investment terms must be the same as
private investors. D. Taxpayers should
share directly in the [music] upside. If
a company later succeeds because of
public support, the fund should
automatically get warrants or a small
share of profits so taxpayers benefit,
not just the company or its executives.
E, there should be built-in end dates.
Every deal needs a timer. The fund must
sell its stake within 5 to seven years
and the entire program expires
automatically after 10 years unless
Congress votes to renew it based on an
independent audit and [music] extreme
circumstances. All of those things
should happen only in extreme
circumstances. [music] Otherwise, the
government should secure rights, enforce
laws, and otherwise stay the hell out of
the way. In short, government
intervention should be small, rare, and
temporary, not a permanent bureaucracy.
Help America move fast in a crisis,
protect taxpayers, [music] and then shut
itself off before it turns into the next
Fanny May. Six, unclog the real economy
so private capital can win. Execute
regular regulatory spring cleaning. Sun
set old rules unless re-justified every
5 years. Have a competition policy.
Target regulatory modes, not scale.
Mandate data portability so switching is
easy and companies have to continue to
please customers to maintain their lead.
Kill off monopolies wherever they rise
up and threaten legitimate competition.
Seven, implement strict fiscal and
monetary guard rails or nothing else
matters. Balance the budget. Set strict
statutory debt to GDP rails that are
mapped to annual growth. If you're
growing by 3%, then barring war, you
can't deficit spend beyond 3%. Put all
of those together, and that's the path.
Return America to the core of freedom
that made it the most successful engine
of broad prosperity the world has ever
known. [music] acknowledge that there
are trade-offs on both sides, but what
corrupts empires and brings them down is
always excessive governmental
involvement. The market is simply too
complex to plan from the top down
[music] despite its apparent utility in
moments of crisis. China's model may
seem to be working now, but its real
engine of prosperity came from copying
America's economic freedom. And all of
China's current woes are born of its
top- down mandates, not its bottomup
billionaires trying to out compete each
other. That's where the innovation comes
from. It is precisely the bottomup chaos
that gave us the microchip, the
internet, electric cars, and private
space flight. I'm not saying the
government doesn't have a role in trying
to make sure that the soil is prepared
for entrepreneurs and private companies
to come in and make use of, but the
private markets is why a nation with 4%
of the world's population still creates
roughly half of the world's
billion-dollar companies. Freedom to be
wrong and to fail is the very oxygen of
innovation because it lets people bet
against the consensus which is required
to avoid stagnation. China's system can
sprint, sure, but ours can self-correct.
Freedom is inefficient. I [music] get it
and it's messy, but it maximizes access
to human creativity and ingenuity
unbburdened by bureaucrats who will
never be able to outperform the free
masses. The path forward isn't romantic.
It's practical and it's competitive.
There will be major failures and people
will suffer in the short term from time
to time. But as the history of America
proves, in the long run, the entire
world prospers when the world's best and
brightest are given an even playing
field on which to swing for the fences,
even when people think they're stupid.
Many are going to fail. But over times,
the winds will stack up into something
undeniable. When the state is used like
a scalpel, incredible things happen.
When it's used like a sledgehammer,
people learn to be quiet, hold their
hand out for a gimme, and while you may
remove risk, you also remove reward. We
don't need a five-year plan. We need a
fivepoint compass. Freedom, [music]
competition, sound money, limited
regulation, and a government that knows
how to leave when the job is [music]
done. That's how instead of trying to
out China, China, we will out America
everyone else. That's how you turn the
next century into the century of
progress instead of the century of
tyranny and control. In the end, it
really is simple. We must choose between
a future run by bureaucrats and one run
by builders. The choice we make right
now will determine whether America
remains the world's innovation engine or
becomes yet another creator of the
oppressed who can only long to breathe
free. All right, if you want to join me
as I explore ideas like this live, join
me Wednesday and Friday at 6 am Pacific
on YouTube, Twitch, X, and Kick. You can
join the debate or just chill in the
community. I hope to see you there. Till
next time, my friends, be legendary.
Take care. Peace. If you like this
conversation, check out this episode to
learn more. In 1933, under the veil of
the Great Depression, the US government
did something unthinkable. They made it
illegal to own gold. Executive Order
6102. It didn't just