Speaker 1: All Zoe Media. Hello and welcome to Better Offline. We
Speaker 1: are live in beautiful New York City. I am your
Speaker 1: host ed Zitron, of course, and I'm joined today by
Speaker 1: Zevity Challenge. She's a professor of law at Fordham Law
Speaker 1: School and the author of Break Them Up, Recovering Our
Speaker 1: Freedom from Big Ang, Big Tech, and Big Money. Zephyr,
Speaker 1: thank you so much.
Speaker 2: For being here, Thanks for having me on ed.
Speaker 1: So let's stalk corruption. So you've talked a great deal
Speaker 1: about corruption. But what does it mean in the business
Speaker 1: and economic sense?
Speaker 2: Yeah, I mean corruption is it's this idea that comes
Speaker 2: from the Latin, you know, the rupt rupture break apart,
Speaker 2: and a corruption is breaking apart from within. So it's
Speaker 2: internal disintegration.
Speaker 1: That's this.
Speaker 2: I mentioned that because and the deep roots of the language,
Speaker 2: because questions of corruption have been central to economic and
Speaker 2: political thinking for thousands of years. So one way to
Speaker 2: start thinking about corruption, if you don't mind, is to
Speaker 2: think about Aristotle.
Speaker 1: Okay, okay, right.
Speaker 2: Because I actually am quite drawn to Aristotle's understanding of corruption,
Speaker 2: and I think it's a kind of man on the
Speaker 2: street understanding of corruption as well.
Speaker 1: What is it?
Speaker 2: Yeah, it's the idea that those with governing power use
Speaker 2: that governing power to serve themselves instead of the public.
Speaker 2: So in Aristotle's classic formulation, he talked about the difference
Speaker 2: between a monarch and a tyrant, you know, is both
Speaker 2: are rule by a single entity. The difference is the
Speaker 2: monarch serves the public and the tyrant serves himself. Aristotle's
Speaker 2: other two formulations were then the rule by an elite few, right,
Speaker 2: So a rule by an elite few is either an aristocracy, right,
Speaker 2: an elite few governing for the public, or an oligarchy
Speaker 2: elite few governing for themselves. And then finally, the mass
Speaker 2: version of this, a little more controversial, especially in modern translation,
Speaker 2: was you know, the idea of a polity or mass rule,
Speaker 2: and often it was described as democracy, in other words,
Speaker 2: people using the public power for themselves. But the key
Speaker 2: there is that he saw the corrupted version as being
Speaker 2: about how you use your power, right right, a sort
Speaker 2: of core internal motivation frankly.
Speaker 1: And so I'm going to guess that that's how you're
Speaker 1: looking at tech at the moment, because and to be clear,
Speaker 1: I fully agree it feels like and it's talking Matt
Speaker 1: Stola a few episodes back and he kind of said
Speaker 1: the thing around authoritarianism and new authoritarianism, And you've made
Speaker 1: this point too, so do you.
Speaker 2: Think and I think it just before we get into this,
Speaker 2: it's important to just then, in very you know shakespeare
Speaker 2: thirty seconds way to say, this fight about what is
Speaker 2: corruption and what isn't then has become a two thousand
Speaker 2: year fight.
Speaker 1: Right.
Speaker 2: So Hobbes, for instance, thought that Aristotle was crazy on this.
Speaker 2: He's like, yeah, people are always going to be selfish, right,
Speaker 2: And that a flat version of Hobbes. But there's it's
Speaker 2: actually a fight about human nature and what's possible with
Speaker 2: human nature on the one hand, but it is also
Speaker 2: a fight about where public power is versus your private life.
Speaker 2: Because Aristotle is not saying, in that formulation or understanding
Speaker 2: of corruption that in your private life you can't seek
Speaker 2: out yourself. He's saying there's something uniquely dangerous and destructive
Speaker 2: to a public when the governing power is self serving.
Speaker 2: So when this as applied to the modern the modern
Speaker 2: big tech, big ag questions that the underlying philosophical question
Speaker 2: then is is this a governing power? And if it's governing,
Speaker 2: that's really problematic because it's set up to be selfish, right,
Speaker 2: That's that's you know, that's the nature of modern business.
Speaker 2: So the selfishness isn't the problem. The governingness is.
Speaker 1: So makes sense, yes, because and that's kind of and
Speaker 1: that's kind of the bothersome thing about this because you've
Speaker 1: got so many monopolies orligopolies whatever. So one I like
Speaker 1: to choose the most people are not. People are kind
Speaker 1: of dancing around this one is the cloud empires. You've
Speaker 1: got Google, Amazon, Microsoft, Oracle to an extent, though for
Speaker 1: different reasons, and they are the ones that set the
Speaker 1: terms of how the Internet is built out. Ack am
Speaker 1: I in CDNs to an extent, but you can't what
Speaker 1: can you even do about something like that? Is that
Speaker 1: cloud empire bad or good? It's kind of hard to tell.
Speaker 1: But the thing they definitely have is power unchecked.
Speaker 2: Yeah, yeah, I love your language of term setting. And
Speaker 2: it's not always obvious, right, but that if you think
Speaker 2: of a government, you know what a governing entity does.
Speaker 2: If you think of governing not in a flat formal
Speaker 2: sense like are you elected or not? But who actually
Speaker 2: has the question for whether something is governing? I think
Speaker 2: one way to ask that question is does it have
Speaker 2: the power to set terms right, right, yeah.
Speaker 1: And which is effectively a tech industry now right, every
Speaker 1: big player Airbnb sets the terms for vacations, the cloud
Speaker 1: empire set the terms for how cloud storage is monetized
Speaker 1: and indeed sold, and how indeed our electric grid is
Speaker 1: built out or not as the case maybe, I mean
Speaker 1: even Musk with Tesla, and I have many thoughts about
Speaker 1: that man kind of sets the terms of how charging
Speaker 1: works now, like they have the standard now, even though
Speaker 1: he's a mess, And even then when he fired most
Speaker 1: of the supercharger team, it's like, oh, this isn't just
Speaker 1: about Tesla, this is now the entirety of America is
Speaker 1: being let down, right, But what do you do about that?
Speaker 2: Like?
Speaker 1: How you what can I mean, what you and I
Speaker 1: can do might be someone limited, But what can society
Speaker 1: do with this kind of thing?
Speaker 2: Well, you know, let's start with where we did start
Speaker 2: on corruption. Language of corruption. If we think about term
Speaker 2: setting by selfish actors as a problem in the political
Speaker 2: realm before we then apply it to the realm. We
Speaker 2: may not think of as political, but it's clearly political too.
Speaker 2: There's a series of strategies for either removing that term
Speaker 2: setting power, right or having public regulations, so even if
Speaker 2: they're term setting, the terms are fundamentally set by the public.
Speaker 1: Right.
Speaker 2: And so the classic American strategy was to have diverse
Speaker 2: sources of competing power in a presidency, right, Senate.
Speaker 1: And ecogress. Right.
Speaker 2: Yeah, so that's a break come up model. And you know,
Speaker 2: if you would, it's not just elections, but it's actually
Speaker 2: about providing different sources of competitive power at the local
Speaker 2: and federal level, local, state.
Speaker 1: And when you say maybe I miss when you say
Speaker 1: competitive power, is that so local and federal government stuff?
Speaker 1: Is that just? Is that is elections? Part of this?
Speaker 1: Are these like what are the different mechanisms there that
Speaker 1: help break them up in a governmental sense?
Speaker 2: Yeah, it's all of the above. So right, so if
Speaker 2: you have you know, we can be a little glib
Speaker 2: about just comparing you know, presidential systems to parliamentary that's
Speaker 2: that's one source of difference, but it's not the only
Speaker 2: source of difference. It's cantons versus not cantons.
Speaker 1: Right.
Speaker 2: So, so what it is to say is not that
Speaker 2: there's an ideal vision I don't think there is, but
Speaker 2: that genuinely separating sources of power. So there's some public contestation.
Speaker 2: I think of it both as a federal state and
Speaker 2: across federal and across state branches as being important. That's
Speaker 2: one mechan it's not the only mechanism.
Speaker 1: There are at least options and means in which people
Speaker 1: will be cycled out and ideas will be cycled in.
Speaker 2: Right. And then in the election sphere, we're very worried,
Speaker 2: as we should be about arenas where there's no competitive elections.
Speaker 1: Right, somewhat scary, Yeah, this is very scary.
Speaker 2: And the lockout of the opportunity for new ideas or
Speaker 2: for leverage on a grassroots level, you know. I think
Speaker 2: of it often if if there's nobody you could turn to,
Speaker 2: if the water smells bad in the morning and your
Speaker 2: elected officials aren't doing anything, there's a problem, Like you
Speaker 2: want to you know, it doesn't mean you're gonna win,
Speaker 2: but at least.
Speaker 1: You have some access to dig right, yeah.
Speaker 2: Right, So then when you apply that that breakup or
Speaker 2: divestiture model to companies, you can see similar visions. Right.
Speaker 2: So what I mean to say is that there's plural
Speaker 2: ways to do breakups, right, And that's one of the
Speaker 2: things that the electoral or political world can inform how
Speaker 2: that can inform thinking about breakups, but it's not the
Speaker 2: only way to break up power.
Speaker 1: So what are some ones we're not doing yet then,
Speaker 1: because it feels at times like the only thing there
Speaker 1: is is just anti trust. And thanks to Ronald B. Reagan,
Speaker 1: that's not being awake for a while. Yeah, it's kind
Speaker 1: of waking up. Yeah, it's making noises. What are the
Speaker 1: other mechanisms I mean that we could even create?
Speaker 2: Right, Well, so there when I sort of think about
Speaker 2: anti monopoly, and I know you've talked to Matt before,
Speaker 2: but you think of anti monopoly as anti concentrated private
Speaker 2: governing power, you know, the tyranny of private governing power,
Speaker 2: and anti trust is one part of that. In the
Speaker 2: United States, the first real nineteenth century anti monopoly movement
Speaker 2: was actually around on discrimination principles. Okay, so the Interstate
Speaker 2: Commerce Act, which came out of farmers coming together saying
Speaker 2: down with monopolies. The first thing they asked for was
Speaker 2: open access. Basically what we might think of his open access.
Speaker 2: You know, on the same terms non discrimination right. You
Speaker 2: have the access to whether it's a grain elevator or
Speaker 2: a train, to not have differential treatment. And so it
Speaker 2: is a key way to break up power. We may
Speaker 2: not think non discrimination equals breaking up power, but.
Speaker 1: That would makes sense. Yeah, because I was just talking
Speaker 1: with Corey doctor Rowe about this, yes, and he had
Speaker 1: suggested that one of the main things is the government
Speaker 1: forcing interoperability between platforms. Everyone has to have the same standard.
Speaker 1: So you can look at posts from Twitter x threats
Speaker 1: and I'm not even talking about the feediverse necessarily just
Speaker 1: open stand Why do you well? I mean, is there
Speaker 1: a reason why these things just don't happen? Is it
Speaker 1: that they're not being pushed through? Is that the lobbying
Speaker 1: is powerful? Like? Is it all of the above? I
Speaker 1: guess right, right?
Speaker 2: Is it? The ability to discriminate between counterparties is extremely.
Speaker 1: Valuable, right as you know, right, yes.
Speaker 2: Right, and especially true if you have anopoly power, right right, right.
Speaker 2: So I'm I'm laughing because I'm just trying to think
Speaker 2: of the right point of intervention. So maybe going to
Speaker 2: history again is useful. So we see the eighteen nineties
Speaker 2: and this first the first effort is and always claiming
Speaker 2: first is difficult. It's all jumbled.
Speaker 1: Together, right, History is a mess.
Speaker 2: History is a mess. There's because there's I'm going to
Speaker 2: do my own little segue. Even within corporate charters, there
Speaker 2: were anti monopoly provisions in the nineteenth century, really, but
Speaker 2: basic rules that said, you can only engage in this
Speaker 2: certain line of business. Right, the government will only grant
Speaker 2: you a corporate charter and all the privileges that accompany
Speaker 2: that in the event in so long as you stay
Speaker 2: within the line of business for which you applied to
Speaker 2: the charter.
Speaker 1: Does that make sense? Why don't they do that anymore?
Speaker 2: Well, in I'm going to get my dates wrong, but
Speaker 2: the gesture right late nineteenth early twentieth century. Actually it
Speaker 2: was a little earlier. There was a real effort to
Speaker 2: engage in.
Speaker 1: Appreciate the question.
Speaker 2: And I'm being the academic worried about sloppiness, so worry people.
Speaker 1: Get things right, so don't worry about Yeah.
Speaker 2: No, I I want to put the asterisks there for
Speaker 2: the corporate law historians who are listening. But there were
Speaker 2: you know, there's really interesting. There was a move towards
Speaker 2: free corporation anybody should be able to incorporate as an
Speaker 2: anti corruption.
Speaker 1: Move, which kind of makes sense a lot. I can
Speaker 1: understand the logic, right.
Speaker 2: And then there's a because the idea is, oh, if
Speaker 2: you can only get a corporate charter if you're friends
Speaker 2: with somebody. That's a pretty corrupt system.
Speaker 1: Right, that makes sense. Well, but now they've moved on
Speaker 1: to other ways of doing exactly.
Speaker 2: And then the other part was an effort to expand
Speaker 2: what all corporate charters have since become, which is you
Speaker 2: get a charter to do whatever is legal in the state. Right,
Speaker 2: that's now what a corporate charter is. This a long
Speaker 2: digression to say that anti monopoly impulses have showed up
Speaker 2: in a lot of different areas of law, right, not
Speaker 2: just in federal anti trust and railroad law.
Speaker 1: So interesting because it it almost feels like, because I
Speaker 1: mean fairly blaming Ronald Reagan, I feel like we can
Speaker 1: all do it every day, but it feels as if
Speaker 1: it's just been a slow bleed for like hundreds of years,
Speaker 1: where we just the ramifications of decisions at the time
Speaker 1: that probably made perfect sense because at the time of
Speaker 1: corporate charters were very limited. There wasn't much commerce. There was,
Speaker 1: or at least more limited commerce. It almost feels like
Speaker 1: we need to bring that back because an episode I
Speaker 1: think I just wrote recently, even I was thinking about Salesforce.
Speaker 1: Salesforce one of my least favorite companies. And if you
Speaker 1: ask what Salesforce does, that is a very long answer
Speaker 1: because they do CRM, they do data lakes, they do AI,
Speaker 1: they do chatbots, they do different kinds of chat. But
Speaker 1: they have all of these things and they do it
Speaker 1: by vacuuming up these companies. They eat them alive and
Speaker 1: then and now they do it much like Microsoft, as
Speaker 1: a means of making sure you don't buy another product,
Speaker 1: because we've got everything here like a buffet. Can we
Speaker 1: stop that? How do we stop these acquisites? It almost
Speaker 1: it feels as if acquisitions are the first place to start. Yeah, yeah,
Speaker 1: to make it much harder.
Speaker 2: Well, so stopping We were talking about different elements of
Speaker 2: anti trust or vanta monopoly. So one element is non
Speaker 2: discrimination rules. And that doesn't mean that every industry should
Speaker 2: be subject to radical non discrimination rules in all cases,
Speaker 2: but that if there are industries that the ability to
Speaker 2: discriminate between counterparties is going to allow for exploitation and
Speaker 2: extraction and shutting down of new entrants, then non discrimination
Speaker 2: is really important.
Speaker 1: Yes, right.
Speaker 2: Anti trust then also very important, And the first step
Speaker 2: in antitrust is not allowing bad as the American system
Speaker 2: has it set up, is not allowing is not allowing mergers. Now,
Speaker 2: I'm not as familiar with the Salesforce corporate structure, but
Speaker 2: I gather that one of the things you're talking about
Speaker 2: is the way in which one we've been quite lax
Speaker 2: until recently on merger policy. Yes, but we also haven't
Speaker 2: until very recently, until Canter and CON's recent merger proposals,
Speaker 2: we've had this highly formal understanding of where threats lie.
Speaker 2: Before we see threats primarily with horizontal acquisitions. I'm a
Speaker 2: shoe company buying another shoe company, right. Secondarily between vertical integration,
Speaker 2: I'm a shoe company buying a shoelace.
Speaker 1: Choice, right.
Speaker 2: But the conglomerate merger, the merger in adjacent agency, adjacent institutions,
Speaker 2: has sort of been assumed to be, well, that's not
Speaker 2: a threat because it's not about dominating that dominating either
Speaker 2: that vertical or that horizontal. And one of the interesting
Speaker 2: buried parts of the merger guidelines, which I think is
Speaker 2: really important, is a recognition that I forget the exact language,
Speaker 2: maybe Canter just said this in a speech, but these
Speaker 2: these don't fit anymore. Yeah, right, Like when when Amazon's
Speaker 2: buying Whole Foods. Well maybe they're using the data of
Speaker 2: the Whole Food's customers to create a moat somewhere else.
Speaker 1: Well, it's just it almost feels like we need to
Speaker 1: start asking them why do you need this so bad?
Speaker 1: And make them justify it and not be totally open
Speaker 1: to it because I don't even know why they bought
Speaker 1: it other than the data, for sure, because whatever. But
Speaker 1: also it's another way of conquering another commerce vertical.
Speaker 2: Now, I think there's so much. I mean, I think
Speaker 2: there is so much that we miss psychologically as well
Speaker 2: as economically when we think about mergers as if everybody's
Speaker 2: just rational, like yeah, yeah, there's also a lot of
Speaker 2: boys playing risk.
Speaker 1: I'm not I fully agree, because there's a lot of
Speaker 1: One of my prevailing theories with tech right now is
Speaker 1: that everyone says, well, open AI, for example, well they're
Speaker 1: going to work it out because he's really smart. It's like,
Speaker 1: what if he isn't what if they don't have any idea?
Speaker 1: What if they're just doing this salesforce great example, they
Speaker 1: just bought a digital storage company and it's not really
Speaker 1: obvious why, but you know they're going to work it out.
Speaker 1: I guess I saw a piece of the information saying, oh,
Speaker 1: Benningoff's got it back. It's like, what is he? God?
Speaker 1: What is going on?
Speaker 2: And it almost with the more capitalists lashing around, actually,
Speaker 2: the less likely that we should think that all these
Speaker 2: decisions are rationals.
Speaker 1: And on top of that we've got there's a very
Speaker 1: irrational feeling to the economy. I've said a lot about this. Yeah,
Speaker 1: that's really interesting. Well, because a lot of these companies
Speaker 1: will spend like thirty billion dollars Okay, I'm being a
Speaker 1: little like ten billion dollars to make three hundred million,
Speaker 1: and I guess that you can't really stop Like, maybe
Speaker 1: you don't stop that, but at some point you have
Speaker 1: to wonder if that's a symptom of these big, ungainly
Speaker 1: monstrous companies that they just had the companies that do
Speaker 1: everything and thus do nothing.
Speaker 2: Well, there's this interesting reminds me of this research. I
Speaker 2: wish I could find it around the urge to merge?
Speaker 2: Have you heard about that?
Speaker 1: No? No, no, I think this is older research.
Speaker 2: But somebody put together a bunch of grad students and
Speaker 2: compared them to CEOs, like would you do this merger?
Speaker 2: And those who already had power to get really.
Speaker 1: They just get grabby.
Speaker 2: They get grabby, right, and and denying that there's a
Speaker 2: power hungriness, yes, is just denying, like do we not
Speaker 2: learn anything from thousands of years of literature and history?
Speaker 1: They want to own more, and I think that like
Speaker 1: Elon Musk, is want to choose as well. Because as
Speaker 1: we speak, we just on the day after the Robotaxi event.
Speaker 1: What I thought it was illegal to make stuff up
Speaker 1: when you're a public company, but I guess Elon Musk
Speaker 1: has special rules. But that actually kind of brings me
Speaker 1: to a point. What do you do with people like
Speaker 1: Musk who they're evil and they're very clearly corrupt in
Speaker 1: some way, but they're not really breaking a law. How
Speaker 1: do you moderate the power of someone like Elon Musk?
Speaker 1: Outside of anti trust? Anti trust has done nothing like
Speaker 1: SEC could barely touch him. What how do we start
Speaker 1: bringing these people back down to earth?
Speaker 2: Wow? Well, anti trust is part of it, campaign finance
Speaker 2: is part of it. U and there are maybe I'm
Speaker 2: answering to glibly, but there there isn't a single answer
Speaker 2: I do There isn't.
Speaker 1: Yeah, I know that there isn't one. If there was,
Speaker 1: I assume someone would have done it. I mean there is,
Speaker 1: but that's not legal.
Speaker 2: And and then there are industry specific abuses and challenges
Speaker 2: that it's not. You know, just just because you and
Speaker 2: I are interested in anti monopoly law or you know
Speaker 2: what the FTC could do tomorrow doesn't mean that there
Speaker 2: aren't real challenges with specific industries that are unique, unique
Speaker 2: foreign policy challenges with starlink right right, unique policy levers
Speaker 2: too that could be used with some areas of maybe you.
Speaker 1: Shouldn't have national security clearance. That's a good start, right,
Speaker 1: But it's I think it comes back to that thing
Speaker 1: he was saying, though. It's the It almost as feels
Speaker 1: as if the media kind of definitely the government doesn't
Speaker 1: look these things and say, oh, they're accumulating power. They're like, oh,
Speaker 1: they're just accumulating markets, and you know that's okay, it's
Speaker 1: still bad, but like they're fine with it. And it
Speaker 1: feels like we actually really have to stop getting like
Speaker 1: there must be new legislation to stop that, or maybe
Speaker 1: just it's as simple as what if we stopped companies
Speaker 1: getting so big? Yeah, what if we just started pinning
Speaker 1: them down a bit and disincentivizing that specifically.
Speaker 2: Well, there there is clearly a problem of gross power, yes, right,
Speaker 2: And there have been various efforts in the past to say, well,
Speaker 2: we should just limit gross power, not simply I think
Speaker 2: this is what you're getting at, abuse of such gross power, right.
Speaker 1: Yeah.
Speaker 2: And the senator who has a famous Senate office building
Speaker 2: is a heart named after him, was actually an advocate
Speaker 2: of this in the seventies, you know, really concerned about
Speaker 2: mere accumulation of power. I don't want to poo poo that,
Speaker 2: but I also don't want to suggest that we've reached
Speaker 2: the limit of what we can do with existing tools.
Speaker 2: I mean, we still have an underfunded FTC, that's an
Speaker 2: underfunded DOJ, and we have a whole series of other
Speaker 2: agencies that just start using their power right now.
Speaker 1: Actually that's a good Like the EPA and the FDA.
Speaker 1: I'm not an expert in either, but it feels like
Speaker 1: they are a They are potentially avenues in which we
Speaker 1: could start going off to data. We could start making
Speaker 1: standards of consumer data or I don't know, standards of
Speaker 1: care for the cloud companies. But also I think that
Speaker 1: we have when you talk about the governing systems, we
Speaker 1: have a real problem with Silicon Valley, for example, there
Speaker 1: isn't discussed much, and it's the old boys network. It's
Speaker 1: the fact that if you are to grow beyond a
Speaker 1: certain scale, it must come from Sequoia, Coetu, Andreas and
Speaker 1: Tiger and past a certain point right.
Speaker 2: Right, that's the club and we all and everybody knows.
Speaker 1: That is that. And they fund based on accumulation of power.
Speaker 1: Character dot Ai was funded by Andres and Horowitz. That
Speaker 1: company doesn't make much money at all. And on top
Speaker 1: of that, they got reacquired by Google. They were made
Speaker 1: to be acquired. They weren't made to be real companies.
Speaker 1: And it almost feels as if we need to reevaluate
Speaker 1: how finance happens at the private stage as well, because.
Speaker 2: I would love to know more about that, because I
Speaker 2: only have an impressionistic sense of that being true.
Speaker 1: But when you say that, well, what it is is
Speaker 1: so character dot ail chip. So it's founded by guyed
Speaker 1: known Shazi. I'm going to mess up his name someone
Speaker 1: on email me. He was one of the original people
Speaker 1: who wrote the Transformer paper that underpins most generative AI.
Speaker 1: He made this company, which was a chatbot company. You
Speaker 1: could talk to anime characters or I think Hitler. It's
Speaker 1: not a great company at all. It's a pretty bad one. Actually,
Speaker 1: they got absorbed into Google. The company still exists, but
Speaker 1: all of the people work at Google now for two
Speaker 1: and a half billion dollars. And the problem is that
Speaker 1: I think there are litanyar problems with it. It's that
Speaker 1: the limited partners who fund vcs don't really give a
Speaker 1: shit if they're good or not. They give a shit
Speaker 1: if there's a return, if they can get that. And
Speaker 1: as a result, the way that venture capital is allocated
Speaker 1: is predominantly not it's the biggest lion Silicon Valley by far.
Speaker 1: Is that startups get the majority of money. No, the
Speaker 1: majority of money in startups goes late stage. The minority
Speaker 1: goes to early stage, which is insane based on what
Speaker 1: most people assume. And it feels that I don't know
Speaker 1: how you start fixing this. But if you think about
Speaker 1: from how you're describing corruption, it really is these governing
Speaker 1: systems that are allowed to exist. And I think it's real.
Speaker 2: It's really interesting. And so when you're talking about the
Speaker 2: motivation of this club, you think it's about power, right,
Speaker 2: and what kind of power? So just give an example
Speaker 2: of a kind of power that you might seek that
Speaker 2: doesn't actually lead to great returns.
Speaker 1: I mean pretty much every investment in open ai. Open
Speaker 1: ai is a company that bleeds more than five billion
Speaker 1: dollars a year, will in twenty twenty four, They'll bleed
Speaker 1: more next year. Investing in them for a theoretical return
Speaker 1: is what I think most of them are doing. But
Speaker 1: I think a lot of them are doing this so
Speaker 1: that they have a piece, They have something stuck into
Speaker 1: what they believe a power center is. It's to show
Speaker 1: off to everyone that they've still got it, that they're
Speaker 1: able to get into big deals as a means of
Speaker 1: getting into other big deals. Oh, we were good enough
Speaker 1: to get a quarter billion dollars into open Ai. Now
Speaker 1: we can get into other deals. We're still seen as
Speaker 1: the hot thing. Perhaps that is actually a return of
Speaker 1: sorts in that it's a marketing effort. But I I
Speaker 1: refuse to believe all of that money is just there
Speaker 1: just for returns. I think a lot of it might
Speaker 1: be there, And.
Speaker 2: To be fair, I mean power eventually leads to returns. Yes, right,
Speaker 2: it's not necessarily the short term return.
Speaker 1: But it's also gets back to what we're talking about
Speaker 1: about logical thinking. Right, Because these people like the other thing,
Speaker 1: and I get in lots of arguments about this open
Speaker 1: AI episode went out this week and people have really
Speaker 1: pissed at meks they say, well, they'll work it out.
Speaker 1: I want to find all.
Speaker 2: Those great examples of you know, the armies that marched
Speaker 2: in the wrong direction for two weeks sleep.
Speaker 1: I just think of the Schleifen plan. It was the
Speaker 1: smartest thing at the time in World War One, but
Speaker 1: it went the wrong way and it curlled to inward
Speaker 1: and then they lost, probably for the better. I think
Speaker 1: I think we can all agree the causes shouldn't have one,
Speaker 1: but nevertheless, but that those.
Speaker 2: In power actually I mean, there's a very deep point here,
Speaker 2: which is not only that a lot of people are
Speaker 2: just people are will make some good decisions because they're human,
Speaker 2: but that there are particular pathologies that actually come along
Speaker 2: with the accumulation of power. And speaking of psych research,
Speaker 2: there's some I think they're Berkeley, California researchers who argue
Speaker 2: that accumulation of power is as bad as getting a
Speaker 2: poll stuck through your head in terms of the impact
Speaker 2: it has on your on your ability to process certain
Speaker 2: kinds of information.
Speaker 1: I like that because it is funny watching people get
Speaker 1: super rich and look at Elon Musk. I'm not saying
Speaker 1: he was a great.
Speaker 2: Guy before, but it's but there's a theory that pathological
Speaker 2: people gain power, and there may be some truth to that,
Speaker 2: but I think it's really important to recognize what accumulation
Speaker 2: of power actually does to somebody. It makes them less
Speaker 2: likely to be able to accurately guess the emotions of
Speaker 2: those who are speaking with them, okay, right right, which
Speaker 2: you can imagine and I'm probably seeing. It makes them
Speaker 2: less likely to observe personal boundaries, more likely to eat
Speaker 2: like cooking monster with the crumbs falling all over their chest. Right,
Speaker 2: So you actually are starting to miss out on a
Speaker 2: lot of subtle cues that are the gather part of
Speaker 2: the gathering of information. And I don't know what impact
Speaker 2: it has on other other cognitive functions.
Speaker 1: I mean, I'm somewhat extract here, but if you look
Speaker 1: at Silicon Valley, which is now dominated by a few
Speaker 1: vcs and Sekoya used to be pretty good. They invested
Speaker 1: in FTX, they invested in open ai. They actually didn't
Speaker 1: go in the latest open ai thing. But Mark Andresen's
Speaker 1: a great example. So from what I've heard Mark andresen
Speaker 1: In like the eighties was a decent enough guy. He
Speaker 1: was like a regular fella. Now as of two years ago,
Speaker 1: he reads comprehensive biographies of Hitler and Funds and claims
Speaker 1: that people like Nick Land are the patron saints of
Speaker 1: techno optimism. It's almost as if the more power he gets,
Speaker 1: the more brain damage he receives.
Speaker 2: Ye.
Speaker 1: And it's but when you think of this in the
Speaker 1: realms of Silicon Valley and how harmful this is. If
Speaker 1: most of the big checks come from a certain few
Speaker 1: who have accumulated so much power, and most of those
Speaker 1: big checks are going to late stage companies, it's going
Speaker 1: to reinforce the same thing. We are not going to
Speaker 1: innovate much further because the money is going to the
Speaker 1: same guys, from the same guys in the same way
Speaker 1: and the same Sam Altman is a great example. This
Speaker 1: man has been fired for three companies, including Open Ai.
Speaker 1: He has done like some of the stuff about his
Speaker 1: sister is truly grizzly as well. But on top of that,
Speaker 1: he's a liar. He lies regularly, and he's also not technical.
Speaker 1: He doesn't know what he's talking about. But I think
Speaker 1: as he And this is actually kind of funny to
Speaker 1: think about. As you watch Samon went over the years,
Speaker 1: he gets even dumber. The thing I hate using that
Speaker 1: phrase in general, but it's Samon. I don't care. He's
Speaker 1: worth billions, but with him, he sounds sillier. The more
Speaker 1: stuff he says, the more out of whack it gets reality,
Speaker 1: and the more just ridicaent.
Speaker 2: Yeah, right, and so the you know, there's people are
Speaker 2: going to be ridiculous in the world, and our job
Speaker 2: as a society is to make sure that they don't
Speaker 2: accumulate governing power. Right, that's our job, yes, right, because
Speaker 2: the people who are going to be genuinely and who
Speaker 2: are being genuinely hurt are those who I just use
Speaker 2: the example from this week in New York, a great
Speaker 2: Bloomberg story investigating how Uber and left drivers are now
Speaker 2: locked out. Yes, of Uber and Lyft just locked out.
Speaker 2: You're going to work, You're an hour into your shift,
Speaker 2: you go to the bathroom.
Speaker 1: Locked Yeah, you looked out. So you don't become a
Speaker 1: full time is it the classification full time employment?
Speaker 2: No, they just can't access the app.
Speaker 1: Why is Uber looking amount then.
Speaker 2: Because they're trying to do a run around around a
Speaker 2: New York City law that says if cabs are empty
Speaker 2: over a certain number of hours, then they have to
Speaker 2: increase their.
Speaker 1: Per mile rate. Huh does that make sense?
Speaker 2: Yes? And so they're saying, well, when they're locked out,
Speaker 2: they're not an empty cab.
Speaker 1: They're not a cab at all, right, they're no longer.
Speaker 1: They're no longer?
Speaker 2: Is it?
Speaker 1: This is a dumb question, and we can wrap off
Speaker 1: after this one. But why does no one ever think
Speaker 1: of these It feels like they make these very interesting
Speaker 1: and useful laws and then they're like, ah, they won't
Speaker 1: work it out, but they always do. What is it
Speaker 1: just a limit of what Look, maybe you can speak
Speaker 1: to this. Is it just the limit of what you
Speaker 1: can get past? Or is it just you can't think
Speaker 1: of everything? Or is it just hard to get that
Speaker 1: down in paper when you're facing off against multimillion dollar lord.
Speaker 2: Look, I think they're breaking the law, but that doesn't
Speaker 2: mean it's a perfectly air tight law. And this is
Speaker 2: a no. I actually think it's a big deal, So
Speaker 2: I'll say it. I think that there is a societal
Speaker 2: failure to date to recognize the risk to workers of
Speaker 2: how big data can be used to individually exploit them.
Speaker 1: Yes, absolutely, and that this is.
Speaker 2: A major deal for labor, not just for gigwork, although
Speaker 2: it's the clearest in gigwork, and that we should more
Speaker 2: comprehensively think about this and get out ahead of it. Basically,
Speaker 2: you know, if you can banfracking before it comes to
Speaker 2: New York, it's a lot easier than after it's already there.
Speaker 1: Yes so, and it almost will. We need to just
Speaker 1: start by classifying this stuff. We don't know what these
Speaker 1: companies have, we don't know how the algorithms will, we
Speaker 1: don't know what they're doing too well.
Speaker 2: But this is a really important point because when we
Speaker 2: talk about power and we talk about governing power, we
Speaker 2: are in a new era of a kind of new
Speaker 2: governing power, right, Like the mere friction that I just
Speaker 2: couldn't collect data on what baseball team you like, and
Speaker 2: you know how long you sit on a that Now
Speaker 2: that looks like some limit in what I used to
Speaker 2: be able to know about you. But there was just
Speaker 2: lots of informational great freeing informational gaps, right, And that
Speaker 2: meant that even if I had certain amount of market power,
Speaker 2: maybe non monopolistic market power, there was only there were
Speaker 2: limits and how much I could as an employer or
Speaker 2: somebody interacting with you exploit you. There still are limits,
Speaker 2: but the need for anti trust, the need for non
Speaker 2: discrimination laws, the need for stopping mergers. Yes, you know,
Speaker 2: so much greater now than it was thirty years ago
Speaker 2: because of big data. It's a game changer in terms
Speaker 2: of how power can be used to exploit and then
Speaker 2: to build more power.
Speaker 1: So to wrap us up, I know that we have
Speaker 1: been quite negative and this show kind of times me
Speaker 1: like a little bit of a downer. Perhaps, can what
Speaker 1: should give people hope right now?
Speaker 2: Should?
Speaker 1: Yeah? I think there's a lot.
Speaker 2: Basically, I think that we, you know, split the hemispheres
Speaker 2: of our brain apart in nineteen in the nineteen seventies
Speaker 2: and decided that politics was in one arena and economics
Speaker 2: was in another, again defying all of human history, right,
Speaker 2: and we may not have all the solutions right now,
Speaker 2: but the spheres of the brain have rejoined.
Speaker 1: So you think that is like a I do think
Speaker 1: people are an awakening.
Speaker 2: I think there's a deep awakening and a deep I
Speaker 2: don't know that you need an awakening on the ground,
Speaker 2: but an elite there's been a transformation in talking about
Speaker 2: how antitrust relates.
Speaker 1: To politics and this consciousness of the of the problem
Speaker 1: with this kind of power.
Speaker 2: Yeah, so instead of just just sort of imagining it's
Speaker 2: possible to cabin economic power and not have it bleed
Speaker 2: into political power or vice versa, I don't think that's
Speaker 2: credible anymore, right, And I think that the the sort
Speaker 2: of the final blow to that way of thinking. It'll
Speaker 2: still exist, they're still trying to come back. But was
Speaker 2: the was COVID the supply chain disruptions and price hikes right,
Speaker 2: because basically the promise from the seventies on was let's
Speaker 2: just separate all economic and power thinking, right, and we promise.
Speaker 1: You low prices we have and we have not had those.
Speaker 2: So the the you know that the internet meme, you
Speaker 2: had one job, they had one job, and they had
Speaker 2: already failed in the crash of two thousand and eight,
Speaker 2: but after COVID, that failure is complete. So I just
Speaker 2: think there's a totally different way of thinking about power
Speaker 2: and economics. And that's exciting what chair Con and the
Speaker 2: FTC has been doing. I mean they don't stop every day.
Speaker 1: Yeah, its it's real.
Speaker 2: It's understanding that governing power held in a public entity
Speaker 2: can be innovative and exciting and engaged and enforce the
Speaker 2: law and curious. So that's also changing a really deep
Speaker 2: paradigm we've had for thirty years, which is all innovation
Speaker 2: comes from, you know, the people that Mark had recent funds, right, right?
Speaker 2: And Look, I really want a lot more innovation in
Speaker 2: the private sector.
Speaker 1: Well why, I would love there to be more cool
Speaker 1: stuff and bets the things. I would love for AI
Speaker 1: not to be destructive and actually help people. Yeah, and
Speaker 1: I guess like maybe some things could change to actually
Speaker 1: make that possible.
Speaker 2: Well we but for AI in particular, I mean a
Speaker 2: lot of these these worldviews are sort of this epical
Speaker 2: struggle inside the AI fight, right, It's uh, we need
Speaker 2: to understand AI as a power problem, sure.
Speaker 1: Right, and not just as not just as a business one. Zephyr,
Speaker 1: thank you so much for joining me. It's such a
Speaker 1: pleasure to have you on.
Speaker 2: Likewise, thanks for having me on.
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