Is the Union About to Break? Blue vs. Red, China & the $1 Trillion Pivot | Impact Theory w Tom Bilyeu & Balaji

Tom Bilyeu (0:01)

Welcome back to part two of this incredible conversation. Without further ado, here we go. Do you think California has a rude awakening coming where they've just hollowed out like a trillion dollars of their tax base, or are they doing it to be punitive and believe that they can make up the shortfall through federal funds? Like, I'm not sure what their logic is.

Balaji (0:23)

Ah, there's a meta logic to the meta organism. So meta organism, another important concept to have. It's certainly not original to me, but an ant colony, any individual ant doesn't necessarily know what it's doing, but the colony has an intelligence. Doesn't mean it's super intelligent. It just means there's an emergent intelligence where you can talk about the colony's interests even if any individual ant is only responding to local incentives. Similarly, a flock of seagulls or a school of fish. There's meta organisms. Even in a sense, you as a human being, you have a collection of cells and your epithelial cells don't necessarily know what's going on, but they obey your orders in a sense, right?

If we model Democrats, California Democrats as a meta organism, Republicans as a meta organism, right? There's a bunch of individual sensors and they're not super intelligent, but this way you can say blue wants this, red wants this, okay? Like at an abstract level over millions of people.

California Democrats, basically the wealth tax is for them a win-win. Why? They either deport or rob their main competitors for political power within California, or the tech guys.

Tom Bilyeu (1:34)

That's fucking dark.

Balaji (1:36)

Right? This is the same as the communists, right? The communists, like they would take control of Cuba, and all the capitalists, they either rob them or they force them out at gunpoint, be exiles in Miami.

And there's a meta-rationality to this, which is the kind of person who's a communist or a California Democrat is somebody who's not good at winning in the market. They're not good with numbers. They're not good with building businesses, but they are good at is coalitional politics. They actually have a real, for lack of a better term, talent for that, right? So from somebody who has that talent, and they can't build a business, they can't build wealth or what have you, what they can do is they can focus 100% of their energy on controlling the law and the state, and the tech guy can't do that.

And so they go upstream and they basically win the high ground and they drive out their enemies or rob them, okay? And every tech zillionaire who leaves California basically cements Democrat political power because at a deep sense, and this is a really important, another important concept, Democrats destroyed democracy in California. And the reason is California is a one-party state. Let me show you this. Okay, do you see that? Yep. Yeah. Democrats destroyed democracy.

Tom Bilyeu (2:53)

That's wild.

Balaji (2:55)

Okay. California is a one-party state where elections are held, but the party always wins.

Tom Bilyeu (3:06)

That is crazy. For anybody not looking at this, it shows that every year from 2011 to well, I guess technically that's what we see. It's 92 to 2024 Governor state.

Balaji (3:18)

Go ahead.

So let's say 2011 to 2025 It's just pure Democrats and the new gerrymandering bill is going to mean permanent Democrat rule forever.

Tom Bilyeu (3:28)

Jesus.

Balaji (3:30)

Okay. Schwarzenegger was like the last Republican.

Tom Bilyeu (3:33)

What year was he? So he ended in 2011

Balaji (3:36)

Yeah. That's right.

Tom Bilyeu (3:38)

So he was the last one. So 2010 was the last time that we had. Wow.

Balaji (3:42)

That's right. And so then going a little further, basically it was right around then that California started topping out. And basically one party democracy is why you can have graphs like this. Do you see this graph? It shows the Department of Homelessness budget.

Tom Bilyeu (3:58)

Jesus. Yeah.

Balaji (4:00)

So this is a thing like lots of people who are like, oh, you need to stay and fight. We need to fix California and so on. The thing they don't understand is that for Democrats, the state is their startup.

The like so here's a specific example. The purpose of the San Francisco government for Democrats is to award hundreds of millions, in this case, more than a billion dollars per year to quote homeless NGOs that hand out the syringes and set up the safe injection sites, so to speak, to get people addicted to drugs, to increase the homeless population and thereby increase the justification for their existence. Whether they conceptualize it that way or not, they'll say they mean to do good, but they really mean to do well for themselves because what they're optimizing is the NGO budget.