Transcript of Death of the Middle Class: Billionaire vs Entrepreneur DEBATE - Daniel Priestley v Nick Hanauer

There is literally no example on planet Earth of a high-functioning society without big government.

That's not true. Big government is sucking the life out of small businesses, and I've spent countless hours with businesses, and they're like, you can't succeed in the UK. As soon as you earn anything, they'll just tax it off you.

So pop off to Dubai, run the business virtually, and pay no tax. It's idiotic. I don't know how you can look at that and think this is a good system.

No, no, I'm saying what needs to happen is reduce the taxes and the pressure on the small businesses because everyone in this The economy needs to own stuff. We need to own a house, own a business, and own shares.

But not everybody can be an entrepreneur.

Correct. Look, it would be wonderful if everybody owned something, but ownership starts with earning enough money so that you can save money so that you can begin to own something. So the problem is wages, because most people want to be able to go to work and be treated decently. I want to earn enough money so that I can feel secure. I just want to be married, have kids, own a house, all that.

That's what I hear you. Most people want that, and I want that for everyone. That's gone away. Houses are unaffordable. Local jobs don't exist. Technology has cut out all the middlemen. No one's paying healthy wages. We have the most unhappy population.

And if you want to fix that, you have to enact this.

Well, I've seen Nick's policies implemented and I don't feel it's enough.

You haven't seen all of the policies, so—

But we need people to know that the rules that we grew up with have changed and people have to learn the rules of this new economy.

Yes, yes, yes, I totally agree. And if you want to get the economy back on track, the starting point is Guys, I've got a favor to ask before this episode begins.

The algorithm, if you follow a show, will deliver you the best episodes from that show very prominently in your feed. So when we have our best episodes on this show, the most shared episodes, the most rated episodes, I would love you to know. And the simple way for you to know that is to hit that follow button. But also, it's the simple, easy, free thing that you can do to help us make this show better. And I would be hugely grateful if you could take a minute on the app you're listening to this on right now and hit that follow button. Thank you so, so Thank you so much. Nick, I want to start with your background and your context so I can understand your perspective and who you are. You sold a company for almost $7 billion.

Correct.

And what's so fascinating about you is you typically billionaires have a certain narrative and perspective on the world. You seem to have a very different one. I do. Who are you? Where have you come from? And what is your perspective on the world as it relates to the subjects that, you know, we're going to discuss today?

I was raised in a civic family, I should say.

What does that mean?

It means a family that takes civic responsibility seriously. But we were middle-class people, and my father started to work for this tiny family business that his father had started manufacturing bed pillows and down comforters, which is how I got my start in business. And to make an incredibly long story short, I had a very early intuition, uh, about the internet, uh, and, uh, the role that it would play in commerce. And as luck would have it, I had a friend who agreed with that proposition and his name was Jeff Bezos. And so he wanted to start an e-retailer. He was working in New York, uh, uh, for a hedge fund, uh, dating one of my closest friends. And for a variety of reasons, he ended up sending his stuff from New York to Seattle to my house, and we started amazon.com together. But from that started starting other tech companies. You know, I've helped run, you know, manufacturing businesses, e-commerce businesses. My friends and I own a bank, you know, like the, you know, and I think that that very broad perspective on markets began to inform an intuition that everything that people are taught about economics today, that's sort of the conventional view.

Is a pack of lies, and that if you take it seriously and enact policy on the basis of it, the only thing that can happen is that the rich will get richer and everyone else will get poorer. And, you know, a signal piece of that evidence for me is sort of a thing that really sort of galvanized my interest was that I got to look at the IRS tax tables in 2007, 2008, which showed American income shares and the history of that. And in 1980, the top 1% of Americans shared about 8.5% of national income. By 2007, that 8% had grown to 22%, as I recall. So tripled largely as a share of national income, while the bottom 50% of Americans, their share fell from about 18% in 1980 to 12% in about 2007.. And what I did is I took those numbers and I stuck 'em in a spreadsheet and said, what happens if this trend continues for another 30 years? And the answer is revolution. You know, it's just arithmetic because you cannot sustain a capitalist democracy if the top 1% controls 45 or 50% of income and the bottom 50% shares 5%.

This is not a deep political insight. This is just math. And I, and I freaked out and decided that I needed to devote myself to trying to figure out why this happened and how you could, how you could fix it. And so I have been writing about this and working on it since then.

Why did this feel so important to you? I've heard you talk about pitchforks.

Even a cursory reading of history will tell you that when societies get as unequal as the societies we now live in, terrible things start to happen. This leads to either a police state or a revolution. And I believe that the pitchforks are here. I think the Trump administration is the, is the, you know, one of the canonical examples of a society beginning, beginning to tear itself apart. And I just think it's the responsibility of people with power and resources to do the right thing.

Dan, same question for you.

Yeah, I grew up in Australia and as a teenager I discovered entrepreneurship. I got an entrepreneurial mentor very early on, and I did 2 years in a startup, and it was really exciting, and I loved it. And I felt like I'd discovered a cheat code in life, which was entrepreneurship and starting businesses and small businesses. And then at 21, I went off and started my own company, which was my first agency, and it grew really rapidly. It went from zero to a million in its first year, and then $10 million in year 3. And it was like this exciting young company with all these cool young people working there and living there. We actually kind of did. Yeah, we actually were in a big house, and we kind of spent a lot of time together. Yeah, I just fell in love with entrepreneurship and small business and family business and all of those kind of things. And I also 15 years ago started an entrepreneur accelerator where people who want to get together and talk about entrepreneurship and figure out how to run their businesses can get together and figure out how to do that.

So for the last 15 years, I've spent countless hours with 5,500 businesses all over the world who are getting together, talking about how entrepreneurship works. And over the years, I've also come to a similar conclusion. That the technological revolution that we've seen in the last 25 years has hollowed out the middle class. And I basically said, I can't play by the rules that I grew up in. I have to learn the rules of this new economy, this digital economy pretty quickly, or else I'm going to be displaced and disrupted. And I don't have a fallback position. I didn't come from any form of wealth or money. I also didn't take on any venture capital. I self-funded, bootstrapped my own businesses by cobbling together credit cards and things like that. And yeah, I think one of the things that I really truly believe is that We are in a very big danger at the moment that if more people can't participate in the benefits of capitalism, they're going to do crazy things and vote in socialism. Correct. And the pitchforks will come and inequality is going to be a toxic corrosive force in the economy. So like I'm a capitalist who wants lots of people to benefit from capitalism.

That's been my whole shtick forever. And I just want to include more people in the benefits of capitalism before we do dumb things.

And I guess the question therefore is how? How do we do that? The prevailing narrative, and I think one of the most dominant narratives is we need to tax people like us a lot more. What's your view of that, Daniel?

So it's very easy to have a bad guy of a rich person. So you could imagine this billionaire rich person, right? Nick maybe could be a bad guy. Yes. And you could sort of do that. When I look at the economy and what's draining it out, it's harder to conceptualize, but we have these mega corporations and we have these mega funds. So here in the UK, all the houses are being bought up by BlackRock, a massive private equity fund that wants the entire population to be a rental class forever. And you know, our Prime Minister has walked down Downing Street hand in hand with the CEO of this big fund saying, yeah, come in and buy up stuff and financialize houses. And that is causing a lot of trouble. And then you've got big companies like Microsoft, like Amazon, and they say, hey, we want to do business in your country, but we don't want to pay tax there. We want to pretend that we're in Luxembourg, or we want to pretend that we're in in Ireland, and we're going to send something from our British warehouse to our British consumer, but we're not really in Britain at that time, so we don't pay tax.

And then you've got Starbucks that says, you know, we, we want to do business and sell coffee next to a mum-and-dad family business coffee shop, but we have to pay this license fee for the Starbucks logo, and that has to go to Bermuda. And, you know, so, so when I look at who's hollowing out the middle class, you've got massive megacorp businesses that are the absolutely bigger than we could have ever conceived them to be. They're as big as nations now. And you've got megacorp funds, which are also trillion-dollar funds. And one thing I'm worried about is that a lot of people think that a guy like me, who's basically a dynamic entrepreneurial person, or even a billionaire like Nick, is the enemy. And, you know, when you get a James Dyson who invents a cool vacuum cleaner and sells a lot of them, that's not the enemy. When you get Paul McCartney who writes a bunch of songs and becomes a famous Beatle and makes a billion dollars, that's not the enemy. The enemy is the financialization of our homes. The enemy is big mega corps that don't want to pay tax. And that's where we need to, we need to be a little bit more nuanced and clear who's hollowing out the middle class and how do we make policy choices to make sure that doesn't happen.

So you're saying taxing the rich isn't the answer?

Taxing the rich is like a headline that creates enemies who aren't actually the enemies.

But so let's just say in the UK then, If you were Prime Minister, would you increase the tax rate on the top 1%?

You could do that for political reasons because it would make people feel good, but it won't change the economy. What needs to happen is we need a thriving entrepreneurial class. Small businesses are the answer. The biggest mistake the, the UK government is making is they don't see that the 5.7 million small businesses are their biggest asset, that we could get those going, that we could create an entrepreneurial uplift that would create jobs and it would create better opportunities. I would definitely curb the issue that we're having with these mega funds and I would definitely stop pretending that Amazon is in Luxembourg and Google's in Ireland, right? So those sorts of things I would definitely do.

What about yourself, Nick? Would you, do you want the top 1% to pay more taxes? Is that important?

So it is not true that the richest people in the United States pay a lot of tax because the American tax system is riddled with loopholes that allow the richest citizens to pay taxes rate of one half of what ordinary people pay. I absolutely believe that in a high-functioning democracy, the wealthiest citizens will pay taxes equal to or greater than the typical citizen. And that is just objectively not the case in the United States.

As a percentage.

As a percentage. And I think that that is, you know, sort of table stakes in making an economy function and a democracy go. But it is not the biggest problem. The problem is wages. So here's the most important socioeconomic fact in the United States, that the median full-time worker today earns in the range of $60,000 a year. If that person had maintained their same share of the economy since 1975, instead of earning $60,000 a year, they'd earn close to $120,000 a year. That effect, by the way, goes up to the 90th percentile. If you earned $180,000 in 2018, 2020, if you would maintain your same share of GDP, instead of earning $180,000, you'd earn like $250,000 a year. So in the United States over 50 years, the only people who benefited directly from economic growth and productivity gains were the people in the top 10%, and the majority of benefit went to the top 1%. And that is the problem. And that is trillions of dollars a year that used to be wages for ordinary Americans and now ends up in the pockets of the richest people, by the way, utilizing precisely the mechanisms that Dan just outlined.

And what we have done is we have massively tilted the economic playing field, which once favored small and medium-sized businesses and local companies towards these giant corporations. We used to have an economy that actively encouraged small businesses and entrepreneurship. I mean, basically what we call neoliberalism, this set of ideas around economic cause and effect that came into force in the '70s and '80s— Reaganomics, Thatcherism, all this stuff— cut taxes for rich people, deregulate powerful people, and suppress the wages for working people, basically trickle-down economics. Those policies went in, went into effect in the '70s, '80s, and '90s. And what happened is a huge shift in concentration from smaller businesses to bigger businesses and a huge shift in income from ordinary Americans to the very rich. And that's the core of the problem. And of course, I think rich people should pay their fair share. We should— it is ridiculous for somebody who makes half a billion dollars a year and to pay 15% tax rate. Somebody makes $200,000 a year, pays 40.. I just think that's stupid and wrong, which is, which is the case in the United States. May not be the case here in the UK, but the bigger problem is wages.

And if you want to get the economy back on track, you have to address that problem.

Dan, you say that optionality and entrepreneurship will do more to raise wages than any government policy.

Yeah. So I believe that optionality is the, is the most important thing. When someone has lots of options, then they don't accept terrible conditions.

So give me, give me some color on that.

Well, if I have 10 companies that are wanting to hire me, I'm going to choose the best option. Right. But if I live in a town where there's only one employer, like let's say there's one massive company that employs people and you either work for that company or you're unemployed, then I have to accept whatever they're dishing out. So the most important thing in creating better quality of life is optionality. We need lots of optionality. One of the options that I want people to have is I want us to teach entrepreneurship in schools so that people have the option to start a family business as one of their options. They may not take that option, but at least it's not a mysterious black box that they just don't understand. Hand that that would actually be one of their, uh, one of their options. Also, let's say you had no minimum wage, but if you had 10 employers and a limited pool of people who are available to work at those companies, they're going to have to bid against each other to create better and better working conditions and better and better pay. So you kind of only need to have minimum wages when there's not enough optionality.

If there's enough optionality, it pushes everything up.

Is that your view as well?

I agree with the spirit of that. It just turns out that is never the case. So there's a lot of economic theory that sounds a lot like that, but, but exists in a, in a, in an imaginary world where people have power and optionality and, and in the real world that actually doesn't ever exist. So by way of example, there's a, there's a principle of economics, the theory of Marginal productivity.

Have you heard of that?

No. So that's a theory that is embedded in the center of economics, which says that because markets are efficient, the amount of money you earn reflects precisely the contribution that you make to it.

Then, okay, so if you make $15,000 a year, that's because I'm giving $15,000 of value, of value in the world. Okay.

Correct. And if I earn $500 million a year, rubbing money together to make more money, that is a, that is an accurate reflection of the value I'm creating in the world.

Which is really central to capitalism, isn't it?

It is absolutely central to capitalism and is central to economic policymaking. But here's the thing, if you understand where that came from, it gives you pause. So in 1879, a guy named Henry George writes a book called Progress and Poverty in the United States, and basically it's the first book about the rich stealing from the poor. And this book isn't just a bestseller, it is the bestseller in the history of the United States. And the powers that be freak out. And JPMorgan brings this guy, John Bates Clark, to Columbia University, which is sort of the home of like Wall Street and stuff like that in New York, and says, fix this. And so Henry George writes a book called The Distribution of Wealth in which he invents this idea called Theory of Marginal Productivity, which asserts this idea. But he says the quiet part out loud in the book. He says, look, we have to prove to working people that no matter how much they make, whether it's a little or a lot, it reflects their value. Because if they conclude that their work is worth more than they are paid, they will revolt and kill us all.

And that would be bad. And that idea will not surprise you to learn was very attractive to a bunch of rich people and got swept up into economics and today is a core idea in economic theory. And it would be true potentially if markets were perfectly efficient and all this optionality existed. But there has never been a case where that has been true. It has materially harmed the welfare of most people because, as Dan says, your ability to earn is related to your power to negotiate, not some magical number that the market decides.

And it's how easy you are to replace. Because if I run an ad for a job and 400 people apply for the job, right, which, which really does happen. Yeah, I know this happens for you, Stephen, right? That essentially you run an ad and 400 people. So you don't think about raising the wage because 400 people applied and they're all good. Like they're all really like super qualified people. And this happens all the time in the UK right now. Right.

Happens everywhere.

Yeah.

I mean, and they're almost zero circumstances where, where workers have more power than owners. And, you know, even Adam Smith in The Wealth of Nations outlined this asymmetry of power. And the thing is, is that if you persuade people that what they earn is all they're worth, then you've created this narrative that makes rich people richer and everybody else poorer.

So what's the solution here? Is it to put a a higher minimum wage on society?

Well, that's a policy solution. But if you, if you really want to solve the problem, the starting point is getting people to understand economics in a way that actually reflects how, how the economy actually works, not this stylized invention dating back to 1787 that if you take seriously and enact policy on the basis of it, the only thing that can happen is that the rich will get richer and the poor will get poorer, which is the story of the last 50 years.

So what is the policy solution?

A policy solution is most definitely to apply a standard which requires companies to pay people, you know, a living wage. So the minimum wage is a perfect example of a great policy. Another policy in the United States, which is really, really important, is the overtime threshold. Which I don't know whether you have here in the UK.

We do.

But it's the salary threshold below which you automatically get paid overtime, which is time and a half here too.

Yeah, 48 hours here.

48?

48 hours is the upper limit of a week, a working week.

Okay, so in the United States it's 40 hours. So if you work more than that, you get paid overtime. And so one of the things— so that standard used to apply to virtually every worker in America in 1970, 1965. Today, that standard applies to less than 10% of workers. Now, why does that matter? Because people like me at on a scale of tens of millions have turned 3 40-hour-a-week jobs into 2 60-hour-a-week jobs and pocketed the difference. You may be doing that here, right? You put gummy bears in the lunchroom and a ping pong table and you force people to work 60 hours a week, and then you can have 2 employees instead of 3. If you do that 30 million times, you've taken 10 million jobs out of the workforce.

So do you agree with this, Daniel, this approach?

Not as much. Well, Here's the issue. I agree with it at one level, but almost every solution that Nick has recommended, the UK's had for the last 20 years. So we have a minimum wage that is pegged two-thirds of the median and it ratchets up. We've got 28 days' worth of paid holiday every year. We've got sick leave. We've got maternity and paternity leave. We've got the ability— very, very difficult to fire someone if they've been with you for more than 6 months. So we have this unbelievable set of workers' rights and all of these recommendations from minimum wage right through to how to handle employment. We have the most unhappy population. Our economy's not growing. We have a million young people out of work. We have no one's hiring at the moment. So it hasn't created— those conditions have not created runaway prosperity. And that gives me pause to think something deeper is going on. And the reason that I think this is that I think we need to make more participation in capitalism. Capitalism is about ownership. You have to own an asset, and if you don't own own anything, if you're just selling labor in the current economy with digital and AI and robots and all this sort of stuff, the real reason that the wages— because what Nick's saying is that the amount of money people would, should be earning right now is like in the hundreds of thousands.

And what I think is happening as another major part of this is that the rules of the economy have shifted. Technology has cut out all the middlemen. Technology has hollowed out the middle class. We used to go to the video store and the video rental store used to have 12 people working there and now we just go to Netflix and we used to go to our little local retailer and buy a CD and now we just go to Spotify and we just go to Amazon. So it's hollowed out all of those supply chains that used to create amazing jobs. The value of the labor has been eroded because it's very easy to outsource labor to another country. It's very easy to simplify a job down to automated parts using technology. So the fundamental value of actual labor has diminished because of technology. Technology has reduced the actual utility of this this thing that we call labor for 90% of people.

And it's only going to get worse with AI.

And with AI and with robots, it's going to go down. So if you just simply say, oh, this is about lifting work standards, you're going to miss the point that we can't compete with technology. Technology is better at this stuff than we are. And the answer, the solution is ownership. We have to, everyone in this economy needs to own stuff. We need to own a house. We need to own a family business. We need to own shares in the companies that are growing. So it's— you cannot outrun this. This is like trying to run against someone who's in a car and they say, oh, you just need nicer shoes. No, the shoes won't change things. We've already tried nicer shoes in the UK economy and it's made no difference. Everyone's miserable. So that's one of the things that I— that's where you and I would disagree.

I mean, both things can be true. The minimum wage in the United States is $7.25 an hour or $2.13 plus tips. It's half— it's a third of what it is here in the UK.

Okay. But you have twice the disposable income that we have. Your median wage is 1.5 to 2 times what our median wage is. We're now a poor country relative to the US. And even though your minimum wage is terrible and horrific and inhuman. Yeah. However, it's magically done it. Your, your country and your citizens are so much richer than ours.

Yeah. Except if you consider that out of that median wage, you have to take $20,000 a year to pay for healthcare. Right?

Like, I think it's still your 30% better, even adjusted.

I think if you look at the AIC OECD, it would be interesting. We might be able to look it up. I can't remember, but I bet you it's about 10% different.

Even when you subtract out-of-pocket healthcare costs and insurance premiums, the average American worker still takes home significantly more money than the average UK worker. The average US salary is around $74,000. The average UK salary is around roughly $50,000. Americans pay heavily for healthcare. The average employee in America pays about $6,000 to $8,000 a year in premiums and out-of-pocket costs. Brits do not pay for healthcare because of the NHS. If a US worker makes $74,000 and spends $8,000 on healthcare, they are at $66,000 before relatively low taxes. The UK worker starts at $52,000 before relatively high taxes. The bottom line is the gap in base salaries and tax rates is simply too large for UK free healthcare to close. The US wins on pure disposable income per person.

Yeah, there's no doubt the US has had a much more successful economy than the UK. Brexit being, you know, a catastrophe.

Can I push back on one thing though with the minimum wage or this?

Yeah.

The companies that hollowed out the middle class, are big tech companies, big finance companies, those mega corporations. And I agree with you, they can afford to pay their workers more money. Yeah, yeah. One of the issues that I feel, and this is what I'm concerned about, is that in the UK, the majority of businesses that do pay minimum wage— like, a friend of mine owns a pub, and that pub has razor-thin margins. It's losing money. He's not taking any money out of it. He's massively impacted by taxes and minimum wage. Yeah. So the companies that I see that are the ones who have to pay minimum wage workers and give people the on-ramp into the economy— pubs, little retailers, mom and dad businesses— these are the ones that really do get squeezed out of the economy. They have razor-thin margins and you put more pressure on them. You say you've got more government regulations, you've got more taxes, and now you've got more minimum wages. And they just go, I've had enough, I can't do it. And the companies that hollowed out the middle class, the Microsofts, the Googles, the Amazons, They go Starbucks. Yeah, Starbucks.

They go, yeah, we can, we can absorb it. Yes. And also we're not paying tax anyway, so we'll just kind of like do that.

So one of the things that you could do, one of the things that we recommend is that you impose these standards progressively, that the biggest companies have to pay the highest minimum wage. Yeah. Medium-sized companies pay slightly less and small businesses pay less. Yeah. But even within that context, ensuring that everyone pays enough for people to have enough money to continue to buy stuff. I mean, it's fine and good to say, look, I don't want to pay high wages in my pub, but surely the people working in the pub should make enough money so that they can go to the pub themselves and buy a beer, right? You have to— I mean, you know, the National Restaurant Association in America is, you know, famous for this. Like, they want everybody in America to be able to go to a restaurant and eat, except for the people who work in the restaurants.

Right.

Can I just say something with your friend that owns the pub as well? Yeah. So So say you own Starbucks. Yeah. You own a pub.

Yeah.

I'm a worker.

Yeah.

If you're going to pay me more because you have this progressive minimum wage and you're going to pay less, I'm sorry, Daniel, I'm not going to apply for the job. I'm going to want to go work at Starbucks. So is there not an issue where you're not going to be able to attract talent because you're not going to be able to pay them as much?

There are many reasons why you would work for a small business as opposed to a megacorp.

But I'm saying you're paying me £4 minimum wage, he's paying me £8. So why not? Does he not end up getting all the best talent?

He might get the best talent. And also for my pub, I might be able to have to, I might match £8, right? So maybe it works that I just pay £8, but I'm not necessarily legislated to pay £8. So here's the thing.

Look, as a small business owner, you can treat, there's all sorts of techniques that you can use to retain people because you're going to have more optionality. As a big company?

Yeah, because you can, you are gonna definitely pay me more.

Well, being bigger is always better. It is absolutely true that that high standard will put pressure on throughout the economy. Mm-hmm. But the small pub owner is also going to benefit from the fact that all, I mean, are we using Starbucks? Whatever, whatever, whatever example we're using, all these people now own, now earn so much more that they can afford to go to the pub and buy stuff. So one of the interventions that I was part of in the United States was the $15 minimum wage. We cooked that up in Seattle, Washington. And so I spoke to many, many, many, many, many small business owners who are absolutely terrified by this because, you know, look, we are all business owners, right? And so you can do a calculation in seconds about the risks and the expenses of higher wages. Correct. But what you cannot calculate is the benefit of living in, of operating your company in a regime where everyone earns more. Right. And the benefits that accrue to you from that. Look, a ham sandwich in, I don't know, Somalia costs $0.25. It costs $25 in Switzerland. What kind of economy do you want to live in?

Right. You know, yeah.

So what were you going to say about your friend?

Well, the friend who owns the pub, his pub is actually full most nights of the week. They have lots of people going there. The issue is taxes in costs. He's got a big government. In the UK, we have all of these things. Like everything that you've mentioned, we have it and we've had it for 25 years. We don't have an affluent middle class that's been created. We have an eroded middle class. So the actual numbers here is that my friend's— he took no money himself and the pub lost £180,000 last year. And it's because of VAT. And he feels like he's carrying the weight of training people in their first job. He's creating jobs as one of the only employers in his little town. And also he didn't create this mess. Amazon and Microsoft and Google and Facebook and big funds, they are sucking money out of the economy.

Yes. We're in violent agreement about this. Yeah.

So I just feel like the issue is like, I really want to make sure that we're super, super clear that small businesses are currently squeezed here in the UK. I don't know what it's like in the US.

It's the same in the US.

Like they are so squeezed and they are squeezed by big tech and now AI has come along. They feel like they have to learn this new thing and they have to start posting on LinkedIn 45 times a day using AI posts or else they'll get drowned out and they have to edit videos and become a TikToker as well. So it's all of this constant pressure caused by this tech sector and these big funds. Like one of the biggest threats to my friend's pub is that a big American private equity fund wants to buy the pub and turn it into a block of flats. So they want to financialize this community asset and he's trying to fight to keep his pub. So what I don't want to have is I don't want to have big government create a new framework that basically squeezes small family businesses even harder. They all start going, we're losing 2 pubs a day here. They're closing down. They go out of business and then we end up with big corps, big funds who can afford to absorb it and they own everything. And I also want to be clear that the reason people are struggling is they don't own anything.

It's not because of working conditions. They don't own anything. And if they don't own anything—

Is that a reason in your view?

No. It would be wonderful if everybody owned something. But ownership starts with earning enough money so that you can save money so that you can begin to own something. Right? Like one of the lessons that we learned was that trying to give stock options to everyone in a company often doesn't work. Yeah. I agree. It's a catastrophe. Yeah. Because for 90% of the workers in a company, that their concerns are immediate and they don't value stock options.

And if you give them the choice between cash or stock options, they choose cash.

It's not even close.

Yeah.

Right. And So again, I agree with the sentiment. It's just that I have never seen, and I do not believe there is an existence proof for it working on planet Earth. What certainly worked great in the United States for 40 or 50 years was a set of standards that required companies to fairly split the value they create with their employees through a variety of mechanisms. Unions, which can be problematic for sure, but labor standards like the minimum wage and the overtime threshold and so on and so forth, coupled with a set of policies to discourage consolidation and discourage the kind of exploitation that you have, I think, very smartly articulated so that we can have a dynamic economy.

The only difference that happened back in this, in the time that you're describing where workers had to be included is that it was nearly impossible for a company to outsource their customer success team to the Philippines. And it was nearly impossible for a company to come up with a piece of software that would do 80% of the heavy lifting of a job. And one of the issues that we have right now is that when you put a lot of pressure on, on all sorts of companies, we are living in the age of AI and robotics where you essentially You know, one of the options that companies have is just the option, well, we'll just outsource the labor to another country. We'll automate it. We'll simplify it.

Okay. But those— the rules that enabled people to do that were written by the same people who are consolidating industries and, and taking advantage. I mean, you don't have to live in a world like that. There are other ways to organize the world. The neoliberals promised that free trade was going to make all of us richer. And what it did is it flooded our markets with cheap stuff from China. But it is absolutely not clear that it made people's lives better.

Made Chinese people's lives—

Chinese people's lives better. But it certainly didn't make people in the UK's life better, and it certainly didn't make people in the United States' life better. And so you could have imagined approaching that in a fundamentally different way. I guarantee you that if the United States could go back and do it again, we would've rethought it. We would've rethought it.

There's a few ownership models that I think are important that could be looked at. Number one is a sovereign wealth fund. So the countries like Norway, Singapore, these countries, they own natural assets in a sovereign wealth fund. And essentially every citizen therefore owns a piece of some asset. There is an asset that is owned through a sovereign wealth fund. It's a very successful model. It seems to work. Work so incredibly well that it's dangerously well. Half of London is now owned by the Qatari Sovereign Wealth Fund, the Norwegian Sovereign Wealth Fund. We're literally losing all of our property to the sovereign wealth funds of the world. So the sovereign wealth fund model is incredibly powerful.

Yes. So just for someone that doesn't know what that is, you have natural assets within the company owned in part by the state.

So the UK did a stupid thing. We discovered the North Sea. Norway back in the '80s, I think it was. And Norway had half and we had half of this Norwegian, this North Sea oil. And the Norwegians said, "Hey, we'll just own this in a fund that all of our citizens will benefit from and that will be a state-owned fund. And then we'll take the profits of that, we'll reinvest it into assets and every citizen will benefit from those assets." And the UK said, "We'll just sell a license to British Petroleum." Yes. Right?

We'll make the rich people richer.

Yeah. Australia is so stupid. We have all this incredible natural resource, no sovereign wealth fund. Britain, when we took over the whole world or 25% of the world, we operated sovereign wealth funds called the East India Trading Company and all this sort of stuff. And basically our business model was sovereign wealth funds for many, many years.

So sovereign wealth funds, number one.

So that would be one. The other one is to put shares into babies' names. So when a baby's born, you have a piece of the stock market, like $1,000 worth of shares It's a baby bond idea.

Yeah.

And Trump's doing both of these things, isn't he? Sovereign wealth fund and the baby bond. He's calling it the Trump Fund or something.

Yeah. Well, they're experimenting with some version of this right now.

Yeah.

Yeah.

So if a baby, by the time they hit 18, has had 18 years of compounding of owning that asset, then by the time they hit 18, they're literally getting an asset that they can then turn into another asset if they want to. That's pretty powerful. And then the biggest issue is the financialization of houses. So if you take a value of a house, about half the value of the house is what you might call the utility value of the house, which is it's a house to live in and I want to live in it. And then the other half of the value is the financial speculation value of the house, which is how much value does a fund have if we can rent this out to people for the rest of their lives?

I looked at the BlackRock thing and it said the idea that BlackRock is buying up UK homes is a myth. They are a financier, not a landlord. They provide loans and debt facilities to property developers, but they do not directly own or manage residential housing stock.

Oh, Lloyds Bank is buying 70,000 UK homes to rent forever.

The number of single-family homes BlackRock directly owns and manages in the UK is zero.

Okay. But he's right. Yeah. I don't know what the details are, but this is a private equity thing that's going on in this country and in the United States right now.

Yeah. In the United States, I've heard a lot about BlackRock. Buying a—

I'm not sure what the entities are. It may be true. I, I, again, I don't know what they mean.

They come up with structures to do it at arm's length.

Yeah. But like, I guess you kind of own it if you're financing it as well.

Well, or you loaned it to a subsidiary or somebody else, whatever it is. But the, but the meta point here is that homes used to be owned by people.

Yeah. And they bought them to live in.

And they bought them to live in. Yeah. And one of the nefarious things that's going on in the West driven by this neoliberal consensus that the only purpose of the economy is to make rich people richer, is this idea that private equity should buy all these homes and turn ordinary people into this rental class.

Just to confirm, yeah, Lloyds Bank are doing that through something called Citra Living. They're buying up thousands of new-built homes and apartments to act as a direct private corporate landlord. They view the structural shift away from home ownership towards long-term renting as a major profit opportunity for Yes.

That's it. Right. They want to have a permanent rental class that people never— you'll own nothing and be happy is the idea. And people are not like that. People love to own stuff.

I want to go back to the central point we were talking about, which is like, how do you solve this? Because you've got two different views on how you solve this inequality. What I find interesting is the UK has better worker rights, but it is—

But you also have much less inequality here. I mean, just to be clear.

That is true. So the US is significantly more unequal.

Yeah.

The US top 1% holds over 30% of the nation's wealth compared to roughly 20% in the UK. Yes. And the US consistently ranks as the most unequal of the G7 nations. Correct. However, the US is growing much, much faster. If you look at 2019 to 2026, the US is growing over 100% faster than the UK. Yes. And the UK is vastly more protective of workers. We have the things Daniel said, like paid vacation, paid maternity leave. The UK mandates up to 39 9 weeks of statutory pay. The US mandates zero. Correct. Which is unbelievably correct, horrific.

But I mean, one of the things that happened in the UK, Steve, is, is Brexit. When did that happen?

2016. Yeah, but that's taken—

that's taken— what has that taken? 8 or 10% out of UK growth rates. It has affected unemployment by 4%, productivity gains by 4%. I mean, the list goes on. So that owned— I mean, part of, part of of why people in the UK are feeling down is this unbelievable mistake that the country made.

But it's the same in Germany. It's the same in Australia. Germany has unbelievable workers' rights. Australia, unbelievable workers' rights. In fact, the USA is the outlier of all the modern capitalist economies.

Absolutely. But we're confusing things. People are pissed off everywhere in the world. Everywhere.

Yeah, that's what I mean. Everywhere in the world. I don't want— I want the pitchforks to go away as well. But these workers' rights are not putting the pitchforks away. Like all of this stuff, we've given this stuff to Australia, New Zealand, Canada, all of Western Europe, all the English-speaking democracies other than the USA. USA is the only one that has virtually no safety nets and no safeguards. Everywhere else has healthcare systems that are much more generous and welfare systems that are more generous and like maternity leave. I mean, it's just It's just inhumane that USA doesn't have maternity leave. So all of that stuff, but we've got all of that, but we've got the pitchforks here too.

Yes.

And this is why I'm saying I'm really zoning in on the idea that people need to own a house, they need to own a business, and they need to own shares. And it's like if they own stuff—

I could not agree more. And I don't know how to get them there unless they are paid well enough to do that. Let me tell you an anecdote. During the George Floyd riots, people were burning stuff down in the United States and there was this fantastic interview. With this woman. And the reporter said, you know, I just— I cannot believe that you don't have respect for property rights. And the woman said, they've got to— we have no property. Yeah. You know, why should I respect property rights? No one I know owns anything. Yeah. You know, like, so I am 100% with you. But I think at the core of it, the core of it is that inequality is way more than an economic inconvenience for the people that it affects. Yeah. What it does is it shreds the reciprocity norms that make social cohesion, kindness, and democracy possible.

Yeah.

It's this dog eat dog. You're all on your own. Grab what you can. I mean, obviously, the Trump people—

and burn the place down.

That's right. And burn the place down. Obviously, Donald Trump has created a permission structure for the worst kind of behavior, right? The worst kind of corruption, uh, basically stealing has come back into style, right? And, you know, there's all sorts of reasons that are generating this malaise, this, this sense of unfairness and lack of control, right? And, and, and the thing is, I, I just, I agree 100% with your sentiments. I really do, about entrepreneurship and ownership and You know, at the end of the day, the cool thing about entrepreneurship is you're in charge. Yeah, like you're in charge here.

But not everybody can be an entrepreneur.

Correct. Correct. And so I do think that that's a little bit unrealistic.

The issue is, is that like 70% of all jobs that get created are created by small businesses and not governments, not big companies. They're, you know, they don't create jobs. Small businesses create jobs. And if we just— not everyone can be an entrepreneur, but if we had 100,000 entrepreneurs who were all hiring 10 people, We'd have a million jobs and we'd have 100,000 options for people with jobs. So I don't think that we discount the whole idea that entrepreneurship is a big part of the solution. Can I take us briefly back in time? This is not the first time this has happened. The K-shaped economy has happened in the Engels pause. Yeah.

So the— What do you mean by K-shaped economy?

So the K-shaped economy is where— So a normal economy is one where everyone agrees it's going up or down sideways. Everyone can sort of say, oh yeah, roughly speaking, it's a good economy, it's a bad economy, it's, it's rising and falling like a tide. A K-shaped economy is where it's really good for some and really bad for others. It's a disrupted economy. Yeah, right. So the top percentage are going up and the bottom percentage are going down. Now the headlines that we run today are the exact same headlines that were run in the early 1800s in Britain, and it was essentially record profits for industrialists and workers haven't had any improvements They all— like, you could almost take every grievance that we have today and you could just overlay it in the early 1800s and you get the exact same words. The solutions— one of the big solutions in the early 1800s was we need to export people, we need to get rid of people. And what they did is they sent everyone to Australia. So they said they sent— they sent— they picked up people and they put them in Australia, right? So they— same sort of thing, mass, mass emigration, or whatever you call it, remigration.

So they got rid of people out of the country. So it was very similar. And we call this the Engels pause, but We understand what caused it.

1790 to 1840.

Yeah. So what caused it was technology and it was this new—

It was the Industrial Revolution.

Yeah. Yeah. So it was the new technology where we introduced a steam engine, we introduced a spinning loom, we introduced tractors, we introduced all of this sort of new technology and the owners of that new technology and the people associated with that new technology went like that. They leveled up because of tech and the people who were not part of that technology went down. Very simple picture you might want to have in your mind. Is a farm that had 100 workers farming versus one farm that had a tractor. The tractor farm went like that and they, all the workers went like that because of technology.

The interesting thing about the Engels pause is that for approximately two generations, 50, 75 years, with the exception of the owners of capital, basically everybody else on planet Earth went backwards.

It was hell.

It was hell. Um, and what, and what happened is that over time, the political consensus changed and working people clawed back some of that value through unions, through labor standards, so on and so forth.

So one of, I, I guess the essence of what I wanna get to is, I mean, something you've always talked about, Dan, as well, is that if you start applying pressures on these companies or entrepreneurs, they can just now get up and leave. Mm-hmm. And that was quite different from that era where where we weren't dealing with technological businesses, we weren't dealing with IP and those things. So if you start imposing some of these measures, will these companies get up and leave and go somewhere else where market conditions are preferable? A lot of UK entrepreneurs are, as we've seen from some of the numbers recently, choosing to go work elsewhere.

Okay. Yeah. I think one of the things that just needs to be acknowledged and put on the table is one of the challenges you have here is you have the Europe or the world has built this incredibly stupid system. Where you can operate a business here, take advantage of the UK's market, take advantage of the UK's rule of law, take advantage of the UK's infrastructure, put your stuff in a box, move to Dubai and pay no tax. Right. It's idiotic. It's just, it's just idiotic and suboptimizing. As an American, I pay tax wherever I go. Right. So I cannot come to a place and take advantage of it and then skirt the laws. So this is such a profound disincentive to do the right thing.

Well, yeah. Yes. But the real culprit is what companies can do because US companies can do it. You can't do it as an individual, but you can set up an office in Ireland, in Luxembourg, which is even worse. And it's the corporations that are the bad guys.

Which is, but you have both problems because you have, you have UK-based entrepreneurs who are like, well, I can stay here and pay 40% tax or whatever it is, right? Just pop off to Dubai, run the business virtually and pay nothing.

So what are you saying should be done with those people that do that?

I think that UK citizens should pay UK tax wherever they go, and German citizens should pay German tax wherever they go.

Do you agree?

I don't think that will solve it because it's It's not citizens, it's corporations that are the bad guys.

Well, it will solve one problem. This other problem needs to be handled too.

The giant vampire squids of the world are companies that are pumping money out of the economies and they're faceless corporations that have figured out how to play this game. So for example, let's take YouTube for example. YouTube is serving up a ton of videos to people all over this country and they're running ads, but that is pretending to be in some distant place. It's not pretending, it's not being in the UK. And what we used to do in the UK is we used to have a broadcast license. If you want to broadcast in the country, you pay a flat fee and you can broadcast. Why is YouTube not paying a broadcast license if they are a broadcaster effectively and running ads? They sit there and say, oh, but there's this, and we shift our profit through here, and oh, we have to— I'm so sorry, but we have to buy our licensing, you know, from this company over in this other— Vanuatu or whatever. It's like, no, no, no, we don't care about that. It's like, look at how many—

you do business in the UK, you should pay taxes.

It's just as simple because you've got this many views and the broadcast license for you is this much.

Okay, so do you agree on both points then, that you should tax corporations based on where their customers are consuming and you should tax individuals irrespective of where they decide to fly off to?

Look, I think in a globalized world that we live in, an individual should be allowed to make a new life for themselves if they want to, right? Like, so for example, if I genuinely— I make a new life for myself I set myself in the UK 20 years ago. I came here from Australia and I don't want to pay tax in Australia because I was born in Australia. I paid $1 million worth of tax in Australia, but I now live here. I've got 3 kids here and I've got a house here and my whole life is here. I don't like the idea that just because I was born in Australia, it's not possible for me to make a new life.

But we have a tax treaty. Yeah. There are ways of handling this. Yeah. But this ridiculous, look, every rich person I know in Europe is playing this ridiculous game of trying to avoid taxes, right? I don't know how you can look at that and think this is a good system.

But the issue is you and I both know it's so easy to just turn this into a company game. So like, for example, if—

We have to appropriately close the loopholes.

Like, yeah, but like, I just, I'm seeing so many people demonize people like Nick, right? They go, oh, this guy, he's a rich guy and he's like, you know, he shouldn't be so rich. Honestly, he's not the problem. I'm sure you pay a bunch of taxes and also you create economic activity around you. These mega corporations do trillions of dollars out of economies.

If we take a mega corporation, you know, think of one in your head and we decide to tax them where their customers are. Yeah. I was looking at some of the research and it says corporations rarely just absorb the tax. When countries like the UK or France introduce taxes based on local users, tech giants, like the, like the biggest in the world, immediately raised fees and prices for the consumer and small businesses inside those specific countries to offset the cost.

If we had a global tax system that prevented this, then they wouldn't do it. They couldn't do it.

If the compliance cost of tracking user locations and paying local taxes outweighs the profit from the region, companies also tend to simply block users in those countries or pull their products entirely.

Great, great. And that opens up a possibility of a local company to do it. Worse.

Huh?

Worse.

Maybe better. I was thinking here about the large language models, and I was thinking about that as an example. If the UK tried to take on Gemini or ChatGPT, etc., we would be using a significantly worse technology.

The truth is that those mega—

That's accurate, no?

Those mega corps, they don't do this. They want to own the world and they want to dominate the world. They're not interested in cutting countries out, right? None of them them actually cut countries out.

When you think, you think Facebook is just going to leave the UK?

Yeah, like they're not going to do that. So, and the other way is how you do it. So if you simply charge— do that in Australia though with the news publishing business, they might do it very briefly as a way to punish political, uh, dissent. But ultimately they operate globally, they have a global business model, and they, uh, essentially too, we just need to say I'm sorry Hey, you've had your 20, 30 years of not paying taxes anywhere, but we're not doing that anymore. And you know, we, we are very good at coordinating when we want to coordinate. And we need to say the bad guy here, I mean, it is really just pulling money out of our economies and taking it to other, other places. And one of the reasons that the USA has become so wealthy with its stock market is because it is the end valuation where all of these vampire squids end with their balance sheet.

If I look at what happened, it was Australia I was thinking about, but it also happened in Canada where they passed a law called the Online News Act requiring tech giants to pay local publishers whenever Canadian users shared or viewed news links. And immediately, instead of paying the user location tax, Meta simply blocked all news content from every user in Canada because the cost of compliance just wasn't worth the hassle for one particular market. And you have the same thing happen with Amazon where several US states like California tried to force Amazon to collect local sales tax simply because Amazon had independent affiliates like bloggers, et cetera, living in those states. And rather than dealing with the complex local tax collection, Amazon instantly terminated thousands of affiliate accounts.

If every state required Amazon to collect local sales tax, then obviously they couldn't do any of that. They would have to deal with it, right? It's just these big corporations have a massive advantage over for the jurisdictions that they're operating in because they have so much more power and so much more flexibility.

So what is the, what is your solution then, Daniel, to solve for this inequality problem that we're experiencing? Because, you know, you seem to be less interested in the sort of workers' rights piece because that seems to—

We've tried it.

We try— you're saying we tried it?

Yeah. What I would like personally is I want to see way more small businesses and I want the government to favor small businesses and essentially say, we're going to reduce the taxes and the pressure on the small businesses. We're going to advantage local small businesses that are here and paying tax. We're going to create special economic trading zones if your business is based here and is a smaller size. We're going to basically make ourselves highly competitive for small businesses to show up and do their A-game.

And what about big businesses?

Punish big businesses that are—

I wouldn't punish them. Tilt the play— I'm 100% with him. Tilt the playing field towards smaller businesses and startups. Uh, you know, I, I'm not sure if you've heard about this thing that, uh, I just joined the board of called Enterprise Britain. Oh, cool. That, uh, that, um, Brent Hoberman, who does Founders Forum.

Yep.

And Steve Fitzpatrick, who founded OVO, just started. It's called Enterprise Britain. It's a group of us who have gotten together, uh, with the express purpose of doing exactly pretty much what you, what you describe, which is to try to make Britain an even better environment for business, mostly small and medium-sized businesses. And one of the great challenges here is to try to find capital structures that allow small companies to turn into larger companies while remaining here and not fleeing to a better place. But I'm, I am 100% in agreement with this. And you can have an incredibly dynamic, fast-growing economy where all of the benefits flow to the people at the very top and everybody else gets screwed. And you have to do both. You have to do both.

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And every time he said the word AI, one of the things that Anthropic, who are one of the leading AI companies, said recently is that entry-level jobs are at risk. And I've got this graph here showing the decline of entry-level job postings. I believe it was on LinkedIn, pulled from somewhere, and it shows that they're consistently dropping and dropping and dropping. AI is— I think about it so often. I was up late last night trying to think through some of this stuff because Anthropic released a report yesterday showing that AI models will be able to improve themselves theoretically in the future and what this might mean. How disruptive do you think AI is going to be as it relates to job losses?

You know, I don't think Bernie Sanders' latest idea is terrible.

US will own 50% of all the air companies.

Yeah, it is absolutely true that AI is monetizing for free humanity's intellectual property, and a few people are going to directly benefit from that. And I think that, um, in the same way that Norway created a sovereign wealth fund with this enormous asset that they had, uh, creating a sovereign wealth fund with 50% of the value created by AI and recycling that into, uh, I think it's unclear exactly how those benefits should be, should be recycled, but trying to find a way to make some of that value a cushion for the disruption that it will inevitably cause. I don't think that's a crazy idea.

It's a good idea for China and the US.

Yes.

Yes. But not for anywhere else necessarily. It's not gonna help Senegal Southampton much.

No, in fact, it'll damage a lot of those places. You know, like the Philippines has benefited enormously by being the outsourced back office for a lot of small businesses that AI can now do a lot of those jobs. One of the things that I always come back to is the idea that, say, the UK has 5.7 million businesses, we have a million unemployed people, we need one-fifth of the businesses to employ one person. AI does actually make your business better. Like, AI is really good at helping you with your marketing. AI is great at helping you do legal contracts. There are 100 ways that AI could actually make 5.7 million businesses a little bit better to the point where they want to hire someone. And if we can incentivize those things to happen, businesses are trained on how to use AI to their advantage, and tax breaks for small businesses that are hiring, and we will, you know, there's actually 5.7 million businesses and 1 million unemployed people. That's a good— there's a good match there.

You know, a lot of people have been talking about AI agents and what an AI agent can do for anyone that doesn't know is it can go on your computer and it can get any task you want done on the computer, whether that's editing tasks or whether it's manual data entry tasks or whatever it is, it can click around on a computer and do things. A lot of the entry-level roles we're often given are that kind of work. I think my entry-level job after I dropped out of university was kind of doing that kind of thing. There was also a little bit of a sales component where I'd cold call people. AI can now do the cold calls too. And increasingly, if we just play the rate of development forward, we'll be able to do those things. So if these businesses get more and more efficient, again, it comes back to this entry-level point is what role will entry-level team members have in these kind of companies?

So what's interesting for me, I have a group of companies, small businesses, Dynamic Small Businesses. We've implemented AI in all of them. And as a result, we've hired people.

Who have you hired? So entry-level people?

We've hired some entry-level people who are augmented by AI, so they become more valuable because of AI. But like things like appointment setting, we've ended up hiring more salespeople because we get more appointments. We use it with our marketing and we end up hiring people who can actually have those final conversations with people. At the very core of my organizations, we have an AI layer and the AI layer has context and skills and models and security layer, right? All in there., and it spits out amazing information and data and reports and tells us who to talk to and why to talk to them and what to talk to them about. All these things are happening because of AI.

But it doesn't get around the point that if you think about Uber, Dara has been pretty clear that the 9 million drivers they have, I think it is, are going to lose their jobs in the future. If you think about the other sort of white-collar professions we've described, those roles won't exist in the future. Well, I should say those roles will be changed.

Correct. If I put on my more optimistic hat, the thing is, is that all businesses operate in a competitive environment and there are two ways to compete. One is to be cheaper, the other is to be better, right? And the thing about AI is that yeah, there are tasks that you can automate away, but one person with good AI tools may be able to do the job of 5, right? And yeah, you could eliminate that job or you could keep that person, give them the right tools and outcompete your competitors.

The right tools.

The right tools. I think there's an assumption that, well, I mean, this is of course what happened with computers, right? I mean, I'm, I am older than you guys, so I remember, I remember when calculators hit. You had to be there to realize how freaked out people were about calculators, right? Like, people were talking about, like, what are the accountants going to do? And, and, and will kids learn math anymore? I mean, it was, it was like extremely controversial to bring a calculator to, to, to school. And then along came computers. And the truth is that computers didn't reduce the amount of work that people did. They increased the amount of work that people did. And I do believe that there are ways in which AI is probably going to do that. And so the job loss may not be as apocalyptic as it now feels like it may be, because again, at the end of the day, you have two ways to choose to compete. If you, you know, you can get rid of somebody and do X, but you could keep that person and have them do 5X and outcompete, you know, your competitors in another dimension.

I think that that that will be something that people are likely to do. Doctors are just going to be better doctors.

I think I definitely agree that there's going to be this sort of augmentation of certain individuals. I think maybe the difference between, like, calculators or computers versus this is AI is coming into a technological economy and it is coming in with instant scale in a way that when Anthropic shipped their new model last week, week, it went to all of us at once. Yeah. Everywhere in the world. We were all boom, step change. With computers, I remember the day that like my dad ordered the first computer for our house and we waited for weeks and weeks and weeks and then we got it. It was super expensive to get one. We unboxed it. I remember us all stood around it looking at it and it was like this Windows 95 machine that had like no memory on it. So the distribution, the sort of disruption was much slower.

The pace.

The pace was much slower.

Much slower. Lower.

Right. And I understand that, like, with my— with our team, there's no intent. We have no intention at all to let anybody go because of AI. We're reskilling people, training people. However, would we end up hiring less people, especially in the near term, than we would have otherwise? I think that's maybe conceivable. Yeah. And a lot of companies, I think, are in that position where— I actually was speaking to someone yesterday and they said, we're just letting the natural attrition in our call center take care of the shift, which means they lose 25% of people from their call center naturally. They're just not hiring other people back in. And actually Klarna's CEO said the same thing. He said, we're just letting the attrition take care of it.

I'll give you another example though, just to counter that. I work with a husband and wife couple in the north of England who, they had a little video production agency and like one or two people who did a little bit of contracting with them. They used AI to create a piece of software, and that piece of software helps automate script writing and a few of the things that they do. They launched a waiting list for this. They got 5,500 people to join the waiting list. They then signed up their first 1,500 clients to a piece of software that cost almost nothing for them to build in 4 months. And now they're hiring a team of 10 people. And this is a husband and wife who had a small, constrained business who are now building out a bigger business. And this is something that could never have happened. They haven't had to raise billions, millions of dollars. They haven't had to hire 30, 40 people. So this tiny little SaaS opportunity is suddenly possible because of AI. And take that AI away and that fast growth dynamic little businesses is—

Yeah, I think anecdotally I could come up with lots of examples as well where particular people are highly entrepreneurial. They come across an opportunity, but there's this broad, if you just zoom out on the way that people generate value in the economy at the moment, so much of that is going to change and it's going to be quite quick, it feels like.

Oh, totally.

And I don't know what you do about, like what do you do about that sudden shift?

Well, this happened in the Jevons paradox. The person who had a tractor displaced 100 people who were in the field and those 100 people went into the city looking for work all at once. And it was Charles Dickens wrote The Tale of Two Cities. He wrote Oliver Twist. Guess who else came out of the Jevons paradox?

Paradox.

Our good friend Karl Marx, who came up with the most toxic ideas ever created and written down, he came off the back of the Jevons paradox.

So what do you do about it?

UBI? I'm not a big fan of UBI at the moment.

Isn't that kind of what this 50% Bernie Sanders thing would do?

Well, it's sovereign wealth fund basically, but you have to find a way to help manage through this transition and you have to, I think, depend on the value create. Look, the whole valuation that AI is predicated on is job disruption, right? You can't, you can't get to those numbers unless you're displacing lots of jobs. Exactly. And, and if that's true, then we should grab some of that value that is created and recycle it into the economy to try to cushion the disruption that it creates.

This is a bit of a socialist idea, right?

I don't call that socialism.

What do you call that?

I don't know. Just common sense.

But wouldn't that broadly apply to all companies and rich people? If there's, if they are disrupting the economy and taking an unfair share of that disruption, should we not just grab and recycle back in?

But that's the bit, that is the basis upon which every high-functioning democracy in the world operates. I mean, every high-functioning democracy in the world has progressive taxation, labor standards, rules of law.

There's a difference between seizing private property property, which would be a socialist way of doing things and a communist way of doing things, and owning strategic assets, which—

Which are private property.

So for example, the Dubai government owns the physical hotel buildings that run Dubai and it leases those out to hotel operators, but it keeps money in its sovereign wealth fund because it says basically a big part of Dubai is that we own these kind of land So do you think we should go and take a portion of these companies? Well, the difference was the Dubai government actually developed those assets.

Right, but we're already too far down the line within a capitalist society like the United States.

So we might say that data is the new oil and data is a common good and it is a common asset that has been sequestered illegitimately by these companies. So therefore you're not seizing what they created, you're basically saying, I'm sorry, but you need to pay a license back to this sovereign wealth fund because you are using a common asset that you were able to essentially seize.

You stole it from Africans and British people. You stole it from people in Australia. You stole it from people in Canada.

The biggest issue that we're having is that we're actually, the nature of the entire economy is changing. So this happened 250 years ago where the nature of the economy was land and we had an economic system called feudalism and colonialism. And then the nature of the economy was industrialization and we had an economic system called socialism and capitalism. And now the nature of the economy is actually fundamentally changing. So in economics, there's 4 factors of production: land, labor, capital, enterprise. We're now swinging like a pendulum from land through capital, labor, and now we're actually in an enterprise economy. And we need some sort of economic system that reflects the reality of how money and wealth is made at the moment. And what is that?

Is that go to OpenAI, take 50% of their company, and then pay out the profits of that 50% to the people.

I'm always skeptical of any socialist ideas. If it comes from Bernie Sanders, I'm skeptical.

Okay, but Bernie Sanders is not a socialist. Like, let's be clear. He says he's a socialist. Well, socialism means what? No, socialism is, you know, the government owning all the means of production, right? Look, there are a million forms of capitalism. Amazon, right? We, we, every country operates slightly differently. And there, I don't think that Bernie Sanders is saying that we should abandon markets. What he is saying is we should manage markets for the public benefit, not exclusively for the benefit of the owners of capital. And I think that's really different.

You know, with like an Amazon, they're using the roads.

Yeah.

And the infrastructure.

Correct.

So would you go take 50% of those companies as well for public benefit and then pay it out to—

No, but—

The citizens?

We effectively do take part of them in the form of taxes.

Right?

Now, now, now the taxes that we impose on those companies, I would argue, and Dan may agree, are insufficient. They do not accurately reflect The value that we give them, they don't return equal value that we—

So you're saying increase the taxes on companies like Amazon. You both agree?

Well, Amazon is very successfully avoiding taxes. Yes.

So would you agree to increase the taxes?

So I think we need to have, we need to close tax loopholes. We need to make sure that they're paying taxes like all other companies that operate within the economy.

Like the guy at the pub that you're talking about pays.

Yeah.

Right? Yeah. He takes a lot of tax. Exactly. And the retailers and all that sort of stuff who are in competition with Amazon. Right. Look, one of the biggest issues that we have is we have widespread incompetence in governments. And I'll give you a quick stat on this. In the UK government, you are 10 times more likely to die than to be fired for poor performance. And the UK government fires people at 1/600th the rate as normal businesses for incompetence. So we have an accumulation of massive incompetence in government. So the idea— you can come up, we can come up with all the best ideas under the sun at this table. We have a fundamentally incompetent set of people who have misaligned incentives. We have basically a revolving door between financial industrial complex, technology industrial complex. Well, the Singaporean government, they basically said that we're going to have a very high degree of meritocracy in government that essentially we promote and fire based on outcomes and merit.

Singapore is a miracle of governance.

Amazing governance.

It's a miracle of governance, but it is a very small place.

Yeah, no, totally.

And perhaps the only place in the history of planet Earth that has benefited from a well-meaning dictator. Yeah.

Right? Well, yeah, Dubai.

It's an astonishing story of capability, competence, foresight.

So what is the solution with this AI revolution? I think we all agree that there's going to be job disruption and there's going to be a new type of job. There's going to be probably a delta of people transitioning to those new types of jobs. I've said this before, but I even noticed that within our recruitment processes now, we are really looking for people that have a certain set of skills.

We always are.

And it's harder and harder and harder to find those people.

Well, that's training. That's education and training. It is.

So that takes time.

The school system needs to produce people that you would want to hire.

Yeah. And that takes a lot of time.

In my hiring, I ask the question, how deep are you in the AI rabbit hole? And anyone who says, oh, a lot, I'm like, okay, join the team.

And also, if you think about humanoid robots, Elon Musk's pay packet mandates him to deliver millions of humanoid robots or else he doesn't get his big pay packet. If we think about robotics, and humanoid robots coming through. We watched the other day, Figure AI released this video showing a humanoid robot sorting packages on a production line for 8 days straight, beating a human sorting those packages on the production line. My car in Los Angeles now drives itself, as do the taxis, and there's a huge race to make autonomous vehicles. I'm sure there's new jobs created, and I understand in foresight it's hard to understand what those will be. I assume there'll be more human more sales jobs.

My only thing that I can say is that the future is small businesses. It's small teams of 10 people making YouTube channels. It's small teams of 10 people making software. It's like when you have millions and millions of little small businesses, everyone's happier.

But if you read what Anthropic released yesterday, they're making the claim that actually we're getting to a point where it will be an individual with a team of agents who can now make a trillion-dollar company without hiring a single person.. And actually, when you said about making software, making that, they would, they might argue that that'll be agents making that software. Anthropic said the amount of code each individual's producing on their own is 8 times. And this one particular quote, which I actually screenshotted on my phone last night, it comes from an engineer at Anthropic who was saying they feel useless because now they say they haven't written a line of code in months and months and months. This Anthropic engineer was basically saying like, I come to work, this agent writes the code for me, and I kind of sit and watch and I feel useless. So all those examples you gave is—

Okay, but what would happen in that situation is you would have a massive deflationary effect at the cost of, if there was one person doing all sorts of things in the economy, then the cost of that would go to the cost of the electricity to run it, right? So massive deflationary. And then the question becomes, well, what does everyone do, right? What do we all do? We do human things, right? Humans always come up with things to do with each other. Like if I was to tell my grandfather that there is a job called a personal trainer who takes you to the gym and counts your reps, right? My grandfather would go, "That's insane." And I say, "Oh, there's 50,000 personal trainers in gyms all over the country." So there are always these crazy new jobs that get created. I look at what trust fund kids do, right? Because a lot of trust fund kids, they go, they don't have to worry about money and they don't have to worry about resources and they go find something to do. And it's always weird.

We're going to traverse through, you know, potentially the jobs we have now, involuntarily go through this transition moment where I think history is quite clear on what happens in these transition moments.

It gets ugly.

It gets ugly. Yeah. And then we'll come to, you know, what I'm hearing is that you're saying we will come to some kind of utopia on the other end of this.

No.

No.

No, I don't think there's going to be utopia.

What do you think?

Look, I don't think utopias exist. Exist. I do think that markets are the greatest social technology ever invented for creating prosperity and for ennobling the human spirit. That is not because markets are efficient allocators of scarce resources, which is the conventional view. Markets are an evolutionary system that enables groups of people to come together and solve complex problems. And solutions to human problems is what prosperity actually is. It isn't GDP or money. And the best world that you can build, I think, on Earth is a market economy governed by a robust democracy that robustly includes all citizens in that economy. And your, your answer is small business, and I'm, I'm 100% behind you, and I, I wish you all the success. My answer is that a lot of people are going to end up working for large companies and, or medium companies, and that we have to ensure my part of the answer is that we have to have standards in place to ensure that those companies treat people well enough so that they can be dignified participants in both the society and the economy. And that will require innovation in laws and rules and all sorts of mechanisms to enable that, but that there is no alternative if you want to live in a decent society.

And, and the— but the high-order bit for me, and the reason I work on economics, is that the existing economic paradigm basically says markets are perfectly efficient, we should just let them run, and, you know, what comes will come.

So you're really focused on increasing the workers' lives and pay.

So if you understand the economy from the conventional point of view, view, including people in the economy is a liberal luxury that you can afford if and when you have growth. And I think everything the New Economics says is that including more people in the economy more robustly is actually the tech— technical mechanism that makes both economies grow and democracies function.

So to simplify that, what does that mean if you— from a policy perspective?

It is very hard to answer. In an uncertain future? In an AI future, if you don't know what's going to happen with the economy, I mean, we have no idea how much job loss there will be. We have— we are— we are, I think Dan says quite rightly, going through a transition where the shape of the economy will change.

So do we do nothing through the transition? No.

No. We aggressively experiment with ways to include more people in the economy. Bernie Sanders' idea is an experiment. What's the worst that can happen? What is the worst that can happen? Like, just think about it. What is the worst that can happen?

The worst would be is that you give government more money and they leverage more debt.

And as soon as the government has the new asset, the, the, the, the economy of the United States does not need assets to leverage more debt. We just created, we just created a— we, we, we, we didn't need, that is not true. That is just not true. We have $37 trillion of debt, all of which was basically given away in wars or tax cuts for rich people. Yeah.

But they can print more money.

Absolutely. But these two things, they are not connected. But the truth is that the worst that can happen by running that experiment is that there will be a few dozen guys who are worth $100 billion and not $200 billion. Like, that is the worst that that can do. Is that going to be the end-all be-all? Will it work perfectly? I have no idea. But what I do know is that democracies need to move aggressively to try to make sure that these technological innovations benefit the society broadly, not just a few people narrowly.

If I think about the UK, if you implemented something like that here, would people leave? So if you implemented, say we had an AI company here and you said, well, the UK is going to own half of it, would that company just go and restructure somewhere else?

Because it's digital, they probably would.

But you're now, you're back to this old problem.

We've been seeing this with the data centers. People are going— I read a report that said the reason OpenAI didn't open their data center in the UK, which they said they were going to, is because energy costs 4 times more here.

Yeah.

So they said, well, so I'm going to go somewhere where it's cheap. Yeah. And would that not be the case here where you'd get this sort of brain drain where—

And the risk that you run with this Bernie Sanders model is that we leverage the government's balance sheet or non-balance sheet to take out huge debt in the name of our kids and our grandkids that they have to repay. They buy up all these intangible assets and then they're left holding those assets that may or may not perform and may and will have debt regardless. And then the super clever little Anthropic guys say, oh, actually we're just going to restructure to Vanuatu now, leave you guys holding all of that toxic debt and we're going to go run this from somewhere else. That could happen.

The other thing that could happen is if, let's say OpenAI as one example, are making $100 £100 profit at the moment, $100 profit at the moment, and Bernie Sanders says we want $50 of that profit, China are going to have an additional 50, theoretically an additional $50 to invest in their frontier models in getting ahead.

Bernie isn't saying, oh, I'll take $50, 50% of your profit.

What is he saying?

I'll take 50% of your stock.

Which means that then the US would have an equal voting power. Yeah. Well, then you're going to get gridlock. In terms of voting, right? So if the US owned 50% of the company and Sam Altman, let's say, owns 50%, they're going to have to vote on decisions.

Well, you could put some directors from the public on that board.

And what happens to a company when you have the government on the voting board?

I mean, you effectively have this in lots of countries where labor has a seat at the table, right?

With one of your companies, if half of your board were the government, do you think you'd be able to be as innovative, move as fast? I mean, we talked about the bureaucracy of the government.

Yeah, I'm not suggesting that half the directors should be on the government.

Yeah, mind you, that's what China has as well. China has got essentially the CCP on the board of all of those companies as well.

And they move pretty fast.

They're slightly different government, isn't it?

Yeah, it is. And there's different levels of competence and meritocracy hierarchy. I worry about all of these solutions that empower government because I don't trust government. My entire life has been one thing after the next made worse by government, right? That's my reality. Born in '81, 1981. I've never had a good experience with government.

Okay, but dude, you grew up in Australia and you live in the UK. If you hate government so much, move to the Congo.

Seriously. Yeah.

You are— look, I mean, it is just no one likes to be constrained. Everyone wants other people held to a high standard. And it just— seriously, there is no libertarian paradise in my world where nobody follows any rules, nobody pays any taxes, and everybody lives like a king. If you hate government, there are plenty. There are 220 countries in the world. 150 of them effectively have no government. Why do you not move your base of operations to those places? Because you would instantly be be somebody's, you know, lunch.

I'm not an anarchist. When a government doesn't fire incompetent people. Okay.

Right. But everybody agrees with this.

The previous governments.

Everybody agrees democracy is the worst— Except for all the others. Except all the others. Right. Like, of course it is easy to point to these things and say, they're incompetent, but it is, it is just not honest to say that government doesn't improve our lives. There is literally no example on planet Earth of a high-functioning society without big government.

I'm not saying, well, without big government, that's not true.

Give me an example. Singapore. Singapore is insanely big government.

22% of GDP.

Okay. But they are involved in every every element of people's lives.

High competence. They fire incompetent people.

And again, we're in violent agreement that we should have governments that do that.

Yeah.

You should work hard on the politics in the UK to bring in reforms that would increase the velocity of competence.

Because I love—

That's the answer. Yeah. That is the answer, is to work hard to increase competence. To build a government that is as high functioning as they can be. But here's the thing, and I think you will agree, Look, look, Microsoft— big companies are equally incompetent. Microsoft bought my company Aquana for $6.4 billion. This is a company that was growing at 40% year over year. It's been so long, 30, 40% year over year, $750 million in sales, $200 million in EBITDA or something like that. 3,000, 4,000 of the best internet advertising people on planet Earth. And in one year it was gone.

Wow.

Gone.

And they wrote the entire $6 billion off 5 years later. Incompetence lives everywhere. Yeah. And, and I, I just don't think it is realistic to say, oh, pox on them. You know, they suck. I, I just, Dan, there is no place on earth without government co-creating prosperity.

For, for sure. Here's where I put my hope in this post-AI world. I want to stack the favor. I want to stack the economy in the favor of the small family business and the small business. You and me.

I'm 100% with you. Yeah. I agree. I agree. The question is how do we get there? Yeah. And you and I are completely aligned in some ways. We need to aggressively tilt the balance of power in the economy towards the little guy. From the biggest, most exploitive companies to small and medium-sized businesses.

So I see big government. Government and big corporate are sucking the life out of little people and little businesses.

And I think you are no doubt correct in some cases, but the only thing in human societies that has the power to confront big business is big government, right? There's no— in the history of the world, there has never been another force that would— that had the power to address this problem. And the reason I care so much about this economic paradigm is that all of the problems you were describing— Yeah. —are a consequence of an economic paradigm that was designed to create those problems. That's why we are in the box we're in, is because neoliberalism literally said the bigger is better and that we should afford no protection to small businesses, that we should actively advantage the largest players, that, that free trade is good for everyone. All of these things that weren't true and ended up advantaging in this room me effectively. And, you know, a few thousand people from around the world and disadvantaged everyone else. And I think the starting point for, for change is, is addressing the fact that we just understood economic cause and effect inadequately. That the things that we thought would lead to growth led to concentration.

Right. And the things that we thought were bad for the economy, in many cases, those were good for the economy. Because, look, again, you know the UK so much better than me, and I, I hate to argue with you about it, but the truth is that you cannot sustain a capitalist system unless most people are paid enough to buy the stuff that the system produces. And there has to be a balance. And there— and again, in the history of the world, there is no example of a thriving economy that did not impose those standards or create through some mechanism the countervailing power that enabled the owners of capital and everybody else to work together to benefit everyone in the long term. And that's—

you are— you and I are in so much agreement on most of it.

Like an inch apart. Yeah, right. And what is that?

Inch. So I've seen Nick's policies implemented and I don't feel it's enough. And the reason I don't feel it's enough is I think people are more than consumers. They're more than wallets. Okay.

You've only heard me talk about the minimum wage and something else. You haven't seen all of the policies.

But the missing piece for me is ownership. When people had houses, they felt really good about communities. When people had small businesses that they owned, they felt really good about their communities and when people own some shares in the overall economy of the fastest growing companies in the economy, then they feel like they're participating. So for me, the non-negotiables of fixing this problem is that people can easily own a house, own a business, and own shares in the fastest growing economy.

Yes, yes, yes. And how do we get there? Yeah. Yes, yes, yes. I totally agree. And I think, I just think that Dan and I have a slightly different view on the path to get—

I think capitalism is ownership. It's ownership. That's what capitalism is. Otherwise, if you don't own anything, you're not a capitalist. If we— You agree on the path, but the—

Sorry, you agree on the outcome, but the path—

Yes. But how did Nick get rich? Like Nick started companies. He owned a family business. He leveraged the family business into an investment into Amazon. Born on third base. But it's ownership, ownership, ownership, and did a lot with it. Okay. Right? Fair.

But I'm saying— Let's be fair.

But how was he rich? Applicable. You're saying other people should do what Nick did.

Yeah, but it's hard to get born into a family that owns a small business.

Well, if there's more people who own small businesses than there are— Then it's easier. Then it is easier, right? I just want to— I do want more people to do it.

What do you mean by this?

Well, it's all about how you get there, right?

But you overlook the fact being born on third base, we should aim for more people to be born on third base. If more people have—

But third base is coming from a family— that owns a small business. Or whose parents earn enough income to enable all of that. Right. And look, not everybody who is affluent— in fact, a tiny minority of people who are affluent are small business owners, right? They are mostly doctors and lawyers and professionals of a variety of kinds who work—

I'm not against that—

in big companies, in middle management roles.

I'm not saying everyone should be a small business.

Yeah. So anyway, I just think that— I think the high order bit here, I mean, for me, and this may sound like too squishy for you, is that societies have both the right and the responsibility to organize their economies in ways that benefit everyone. Is socialism the answer? No, socialism is most definitely not the answer. Because socialism— again, we need to operationally define that term. Yeah. If socialism means— look it up in the dictionary— the state ownership of the means of production, that is a catastrophe. Right. And it's a catastrophe because all socialism can do is split up existing prosperity in a fairer way. It can do that. The problem is, is that socialism does not know how to create create more prosperity. Okay. So for one minute you can make everybody better off, but 10 years later everyone is poor. Because once— because this is the power of markets, is what markets do as evolutionary systems is they generate increasing prosperity. They— that, that's what solutions to human problems is, right? Going from aspirin to antibiotics is economic progress, right? And the beauty of markets is they, they're evolutionary systems where every Every business effectively is an organism competing to fill a niche.

Yeah. Which is the perfect product for whatever market segment they're creating. You are, you are canonical example of this, right? What you have done here, and thank goodness for it, right? Because in a world where there wasn't capitalism, there's no way you, you, you have effectively independently created what was a television network. It's miraculous. Like, you have more reach than MSNBC, dude. That is the power of markets. But, you know, they have to be harnessed to benefit people broadly. This does not mean that the profit motive shouldn't exist, but— and how though?

This is what I'm trying to get to. And this sounds a little bit like there's this middle ground we're like playing with where socialism on one end is, okay, you know, short-term, whatever you said. Then on the other end, you've got this like extreme capitalist approach.

And I was looking at those are the So that laissez-faire capitalism, right, and this socialist status control, both of those things are terrible ideas. Am I right? We want something in the middle.

On the left side, then on the socialism side, you get lower growth in your economy over the long term. Correct. Okay. And then in a capitalist economy, you might have higher growth, but then you have more inequality. Yes, correct.

And the sweet spot, and this is, this is the one of the most important, this is an important matter, one of the most important points I would like to make is that all of the evidence suggests that when you come to the middle and you have a market economy that is actually actively managed to include people, that is the growth sweet spot. I— you have more growth. So you have more growth. Absolutely. GDP growth rates in the United States were 4, 4.5% for decades, '40s, '50s, '60s. And then as soon as the neoliberal took over in 1975. GDP growth rates fell first to 3% and now to 2%. When they did what? Cut taxes for rich people, deregulated powerful people, and suppressed wages for everybody else. So the most important socioeconomic fact, as I've said many times before, in the United States is that the median full-time worker earns about $60,000 a year today. If they had maintained their same share of GDP since 1975, instead of earning $60,000, they would earn $120,000 a year.

So you're saying there's no trade-off in the middle because there's trade-offs on both ends, right? We just described the trade-offs. You're saying that in the middle there's this sweet spot. That's the sweet spot. Where there's—

Where there's maximum amounts of growth, maximum amounts of participation, maximum amounts of political stability. This is what Daron Acemoglu and James Robinson call the narrow corridor. This perfect balance between laissez-faire capitalism and socialism. I mean, socialism is stupid because because it kills markets. But this impulse to more fairly share, let's call that where socialism comes from, this impulse to have a society which is more egalitarian. But what all the data suggests is that when you build a market economy that basically tries to make sure that everyone participates, where workers get a fair share of the wages, where as the company, as the economy grows, as it did for years, and you've got another other, you have a great graph in here. So for decades, as productivity grew, everybody benefited. And then in the '70s, it decoupled. And as soon as it decoupled, GDP growth rates fell, right? And all of this was a consequence of policy. Of policy. So here's another thing the new economics teaches is that there's this idea that a middle class, a thriving middle class is the consequence of economic growth. That if we just let the economy grow, we'll get this great middle class.

And that is because economists assume the economy is something called ergodic. Now ergodic means, let me show you the difference between two games. One is ergodic, one is non-ergodic. Rock, paper, scissors, is an ergodic game. And what that means is the outcome of the next game has nothing to do with the game before. Yeah, right. Monopoly is a non-ergodic game. And in Monopoly, no matter how much— how many times you go to Monopoly school, if you play a game of Monopoly long enough, one person will own everything and everybody else will have nothing. And that is what a market economy is. It is characterized by luck path dependence and compounding. The past. The past. Well, it's the past, right? Compounding. Where you start. Yeah. Right? Some of us started on third base. Some of us, like you, as I recall, started on actually first base or home plate or something like that.

Well, I think, yeah, probably, probably second base.

Okay. Maybe second base, but whatever. But we can—

I had parents that loved me, electricity at your house.

Yeah. Okay. Fair point. Right? And you're very capable and good looking and all the rest of it. Right? It could, it could, it, no, I mean, just if we're just being honest. Yeah. Right? Yeah. We're just being honest. You had some natural advantages. But you know, in Monopoly, you land on Park Place the first roll, you're rolling, you get 4 good rolls in Monopoly, you're gonna win the game, right? And compounding, the better you do, the better you do. And the thing about in a, in an honor— Gothic system is that both advantages and disadvantages compound. Surely you know people in your life who've had a couple of things of bad luck, right? Yeah. And then they spiral into oblivion. Right? And so what that means is that a, a middle class and thus a high-functioning society with social cohesion is always, always a deliberate construction. It is always created by policy, always. And all of these things that we are pushing back against— him in his way, me in my way— are a consequence of basically an economic theory that said to policymakers, Do it that way. And it was a mistake. And we should recognize that mistake and try to heal these mistakes, which we can.

We can have a great society. We can have an ownership society. We can have anything we want. We just have to decide to do it and not let a small group of incredibly rich people dictate the terms of the economy. This is within our grasp. What are your thoughts?

I agree in principle with all of that, especially the last bit, a small group of very, very powerful people dictating the economy. Meeting up in Davos, coming up with how our lives should live. There's more to the story here. In the early '70s, they decoupled the dollar from gold and they created the fiat system, which meant they could print money. That inflated assets, it financialized assets, including the family home, which meant that as soon as we could print money, we could inflate the value of family homes and make it out of reach of most people.

And then finance took over and became 20% of the economy and all the rest of us.

Yeah, we ended up with these two massive institutions, which is the technology industrial complex and the finance industrial complex. And those two institutions have driven a wedge in society. My only difference with Nick, and it's a small difference, is that I don't believe raising the floor is going to be enough. I really do—

I didn't say it's enough. No. It's table stakes.

Yeah. And my experience with that is—

It's a minimum.

Is because I've seen the minimum and the pitchforks are out here in the UK where we have that minimum. My worry here is that where we are, the technology economy and the finance economy is racing as if it's in a car. And then all of the workers who are selling time for money, labor for money, it's as if they're running and we're saying, ah, you guys just need better shoes, you need comfier shoes. If we give you a pair of Nikes, will you guys be happy? And it's like, this is not going to close that gap. We have to acknowledge that technology and finance are the two, like big funds and big tech are basically hollowing out the middle class. And if we don't acknowledge who the real bad guys are, when I say bad guys, I'm not sure they're real bad guys, but essentially systemically, they're systemically, they're the bad guys. We need to essentially say, "Hey, big finance, big tech, you can't financialize our houses. That's for us to live in and for us to own. And you also can't just eradicate all of our little small businesses." We need to tip the scales back in the favor of those small businesses because little towns, you go into any town in England, like little towns in England, the thriving towns that everyone wants to live in, they have lots of small businesses.

They have a butcher, baker, candlestick maker, type, like stuff is going on.

By the way, the best high street in London is the one I live on. Marlborough High Street.

Marlborough High Street. Yeah. So you agree? 100%. Yeah. I've got 60 seconds and I'm gonna show you how much I can get done because of our sponsor called Whisperflow. It's a business I invested in that turns your speech into text in any app or device. I'm gonna post into our Slack channel, which rewards whichever team member conducted the most experiments this week. Hi everyone. Here is this week's Experimenter of the Week. Congratulations to the Diary of a CEO trailer team, which is Ant, Liv, Dom, and Cam. You guys have won. Okay, now I'm going to open Gmail. So here is one of our founders on an email chain that I want to connect my team with. All I have to say is, add my team's emails, and Whisper will do exactly that. Now a quick message to Juan, who does my schedule every single week. Hey Juan, it's Stephen here. Can I record on Wednesday at 2 PM? Actually, no, do you know what, let's record at 3 PM on Wednesday. Whisperflow is 4 times faster than typing and it is incredibly easy to use. So if you wanna give it a go, all you have to do is head to whisperflow.ai/stephen to download it today.

I've done almost 700 interviews with some of the most interesting people in the world. And one of the things you learn, which is unexpected, is that vulnerability is the doorway to connection. And after sitting here for 2, 3 hours with a guest, I feel a deep sense of connection to them. And as they leave, what I get them to do is to write a question in the diary of a CEO. We've taken all of the questions from the Diary of a CEO. We have put the question here on this card with the name of the person that wrote it. So you can sit at home as I do with my fiancée and my colleagues at work and other people in my life. Whenever we get a minute, we play the Diary of a CEO conversation cards, and it is incredible what happens. These are great if you're in a romantic relationship. And you want to connect your partner more. These are also great if you're in a team and you want to bond your team together. And I have to say, they're also great for families that want to learn more about each other and that need a good excuse to spend some time in a digital world, in the analog environment, connecting human to human.

It is remarkable what the right question at the right time can do. Go to thediary.com and you can get these conversation cards right now. One thing I find interesting is you're saying that there's this sweet spot in the middle. Yes. Where you still get the upside.

You get dynamism.

You think there's a sweet spot in the middle?

And decency. It's a very narrow sweet spot and it's very hard to achieve because Germany has really tried so hard and their economy is collapsing. Their economy is going so badly at the moment and they've tried everything. They've got workers have to be on the board, for example. Of every company, you've got to have a worker on the board. So they're doing as much as they can to do inclusion and the German economy—

Okay, but so where is it working?

Okay, but here's the thing, it is simply not fair to say the German economy is collapsing. Have you been to Germany? Yes. Come on. Have you been to Stockholm? These places are incredibly high functioning. Yeah, there's definitely a forward momentum.

But the German car industry is getting hollowed out right now. China. Right.

China's doing that. Okay. But just because workers are on the board of German companies and German people are unhappy, you can't necessarily connect these things.

I just want to acknowledge though that like there are places like Dubai, which are very close to laissez-faire capitalism with a sovereign wealth fund and just hold on. If you talk to someone who lives in Dubai, they freaking love Dubai. Like they are, they're the happiest people. And they talk to entrepreneurs. The millionaires or the people working? Entrepreneurial people.

Yeah, the rich people. Not the poor brown people who are—

Well, I mean— Because they bus Indians in, don't they?

Well, they, yes. And also when I talk to a lot of the Uber drivers there and I talk to people who work in cafes there and all that, they're all quite pro-Dubai as well. Isn't it like—

Okay, but that's because their other options are horrific. Yeah.

It's probably more extreme inequality, isn't it?

It's more extreme inequality. It's extreme inequality, but because the place is growing, until recently, obviously, with— Yeah. Right, because the place is growing, it feels like there's a rising tide for everybody. There's something about economic growth that makes people very, very happy, and there's something about a lack of economic growth that makes people miserable here in the UK, for example.

Okay, but just again, Dubai is a place The UAE has been powered by the most extraordinary gusher of free cash probably the planet has ever seen. I mean, you can look up on your iPad there, the, like, the tailwind that economy gets from the unlimited resources.

I wouldn't say that's why people love Dubai. They love it because of the entrepreneurial vibe. Like, who loves it? Like ambitious people. Yeah. So this is the rich— The excitement. Well, no, I see— Rich white people go there? No, I see young people who want to have a crack.

And that because they're rich relative to the people doing the work, the labor.

Well, what they're looking for is a place where their work will be rewarded. Let's imagine the UK where your ability to get onto capitalism, your first million or your first 2 million is very easily low taxed in order to get things going for you economically. I, I just want to see a situation where ambitious— not a bad idea. Yeah, like, you're ambitious people. Like, what I hate is that I see these young people who are really super smart. I wish they were here building, and they're like, you can't succeed in the UK, they'll just tax it off you. As soon as you earn anything, they take it.

What if you're not? And they leave.

I think you're benefited by a lot of the ambitious people. So when, when you get one in a hundred— if you get one in ten people who are entrepreneurial, or one in a hundred people entrepreneurial. They're creating optionality. They're creating companies.

The US is this? The US is sort of set up for the American dream. This is more of a US approach, isn't it? Well, what we have there is higher inequality.

I'll give you two. To one extreme, the US, you hit the top rate of income tax when you hit $700,000. In the UK, it's $100,000. And it immediately goes to 60% tax, 62% tax, and then it drops to 45% after that. But there's this kind of like— Does it really? Yeah, it's this weird pain. I didn't know that, but I don't. No, it's this insane thing where you basically pay 20%, 40%, 60%, 45%, and it's this kind of—

Fine, but to the point of—

You should probably fix that. People prefer the US approach.

Sounds much more reasonable.

People are leaving to the US. A lot of Brits are actually going to the US.

And the US has an inequality, has higher inequality, which means it's probably more likely that the pitchforks will come out.

Well, for an ambitious person, they don't care about inequality, right? Inequality is the opportunity to get ahead.

Yeah, they might not, but from a social perspective, the pitchforks are probably going to come out sooner in the US because of that inequality than in somewhere else.

They seem to be coming out here in a big way.

They're coming out here, but they're also coming out in the United States.

Look at Zach Polanski is gaining a huge political movement.

Zohran Mandani in the UK, sorry, in New York. Is, you know, we're seeing a rise of socialism in the United States.

Okay, but Zoran Mandami calls himself a socialist because he does not have another word for what he is doing.

He has said seize the means of production. He said it, and he said take houses off landlords. Like, he is a card-carrying socialist.

Yeah, but he hasn't done any really socialist things. I, I just think that there's a bit of a confusion. But asking wealthy people to pay a little bit more tax taxes is not socialism. Uh, standing up grocery stores in food deserts because no grocery store will, will, will, will do it because it's not profitable enough is not socialism. This is the government provisioning benefits to citizens, fixing potholes, making bike ramps, whatever the stuff he's doing. These are not socialist things. What they are is not strictly neoliberal things, which is just like letting rich people run roughshod over everybody else.

The thing that I see with, say, a food desert and a store is that the tax system is so punitive that a small opportunity like setting up a grocery store with all the taxes and all the regulations and all the stuff the government puts on you, it's just not worth doing it. There are better opportunities out there. Like, I'm not talking about remove it for rich I'm saying for startups, for small businesses, for businesses that employ less than 200 people. If you basically create very positive conditions for small businesses to get started, they will set up a grocery store in a bad neighborhood because they go, yeah, you know what? I can figure out how it works in this.

Do you think there's a chance that we have a bit of a bias as entrepreneurs? Everyone at this table is an entrepreneur. Yes. And for whatever reason, I think a lot of mine might be some like, I don't know, trauma or whatever. Tougher. I had a bias towards setting up a business and taking that risk, whereas like my other 3 siblings, they didn't do that. And I don't know what I did to have that bias within me. Like, if you really think about it, it was probably something my parents didn't intend to do, which meant that at 18, when my 3 siblings went to university and sort of followed that more, one could say, safer part— well, yeah, safer path— I dropped out. How angry were your parents when you dropped out? Oh, they didn't speak to them. My mom Yeah. My mom's Nigerian as well. So she didn't, she left school when she was a child, didn't get an education, can't read, can't write. That must have been a tough, tough conversation. Understatement of what happened. But for whatever reason, that's the path that I took. And I can acknowledge that I'm in a bit of a minority.

Yeah. And I think I sometimes consider like, maybe I don't realize that through privilege or through some genetic privilege or whatever, I had this particular orientation towards like entrepreneurialism. That maybe other people don't always have. And that means that the start of the grocery store—

I get crucified in the comments. Not everyone can be an entrepreneur, right? I'm not saying everyone could be an entrepreneur. I've never said that.

But the grocery store analogy there is someone would start that grocery store if it was easier. Well, but not everybody would.

There's always a risk to reward ratio and government brings in all sorts of regulations and government only really thinks about big businesses. If you talk to anyone in government, small businesses don't exist and they just simply think, why hasn't Tesco done it? Or why hasn't like Walmart done it?

Yeah, right. I've never started a business in the UK, but I can tell you that in the United States, the, the barrier to setting up a grocery store in a food desert is not the regulation. It's Safeway. It's the supply chain. It's the, it's all the stuff that you've described, which makes it incredibly difficult for, for for, for somebody to operate a single-location grocery store like your friend's part.

Yeah. Right. Yeah.

So what'd you do about that? So what I would do is I would, I would— and again, in the United States, we used to have lots of laws that pointed the economy towards small businesses. So if I was in charge, I would impose a much higher minimum wage, but I would do it progressively. All the labor standards, all the, all of the regulations would be imposed progressively. And in terms of regulation, I would make it far— like, for a big company, there's a lot of regs, right? You have to follow every rule to the T. For a small business, you have a lot more flexibility. Yeah, it's important because, because we need the standards, but it turns out to be really hard as a single proprietor even to, even to read the manual, right? To know what you're supposed to do. Yeah. So to me, it would all be progressive. So it would be easy to get capital, easy to start a business, relatively unencumbered by regulation, although constrained to a certain extent. Some extent. Yep. There are terrible things that small business people do too.

Wait, how do you make it easier to get capital?

Oh, you could have government programs that were designed to help small businesses get off the ground.

We have the British Bank that underwrites for the first 25,000 of loans.

Yeah, we used to have the Small Business Loan Guarantee. Business Administration in the United States, they do a lot of that work. Yeah.

So we have a lending institution here that is 75% underwritten by government for £25,000 startup loan. So there is some schemes that can work. I started all my companies on a credit card. The key thing is there's a difference between entrepreneurials and startups that are intending to scale and just small businesses that want to exist as a small business. I'm really big on the idea that we want communities that have lots of small businesses, even if they have no intention to scale and exit and any of those sorts of things. Right. That old-fashioned thing, right?

Where you just had a grocery store.

Yeah. And it's a good thing.

And you weren't trying to create Walmart. Yeah. You just wanted to run a grocery store.

Yeah. It's hard though, isn't it?

Because if you— You wanna be CVS or, you mean you wanna be a network.

But with a grocery store idea, if you've got mom-and-pop grocery store here, then next to it you have, let's say, I dunno, in the UK it's called Spar, which is a grocery store, 7-Eleven. The problem is if those are next to each other, and one has economies of scale, i.e., 7-Eleven can buy the cucumber for 20% of the cost of the mom-and-pop shop, then if you're on that street, the 7-Eleven is going to survive.

That's why we tilt towards—

The United States used to have laws that expressly prohibited that.

And why did they get rid of them? Neoliberalism. So they got rid of the restrictions on—

Yeah, there used to be express laws to make sure that big companies could not buy raw materials cheaper cheaper than, than small companies. Like when I was young, when I was your age, if you wanted to buy a competitor, you were sweating bullets because you had— that had to be reviewed by a body. And if they thought that you were consolidating too much, they would just say no.

But if you think of— I think about all my friends that have opened retail stores through their companies, and they only do that when they get really big because their e-com business is supporting it. So if you think about, I know the Gymsharks, the represent, other active. So you can't, okay.

With respect to retail, you are largely correct. It depends on what kind of retail. Like you could have a gym, you can't e-commerce a gym or, you know, there are all kinds of retail, some of which is somewhat immune from e-commerce and some of which is getting destroyed by e-commerce. Doesn't, it doesn't matter if we're talking about retail. They were all regional manufacturing companies, regional everything. Sure. And it all went away. And you have never experienced a world in which that used to exist. Like your entire business experience is this sort of neoliberal world of giant companies. True.

And the world I grew up in, we were like young, medium, old, right? But I remember what it was like to go to the video store and select videos from the video store. I remember what it was like. Yeah. Like I remember going to to the CD store and listening to music and talking to the retail employees. When I was growing up, the cool kids worked at the CD store, the geeky kids worked at the bookstore, and everybody worked at the— everyone else worked at the grocery store. And all of those business models are gone. And this is what I mean, we need to kind of tip back towards small business experimentation being protected and all of that. The other thing too, and I should raise this about minimum wage and giving people more money, The bottom half of taxpayers in the UK pay 9.5% of all the income taxes. The government could remove taxes off of 50% of workers in one move and it would cost £33 billion and you just get rid of that. And then every single person in the bottom half of income earners gets a 10% pay rise to 15% pay rise.

Right. I love it.

So where do we get the £32 billion from?

Just keep in mind their budget is £1.4 trillion. 1.4 trillion.

I know, I know, I know. But we're going to have to— 1.4 trillion.

You're talking about this much to take 15 million people off.

Yeah, I agree. I'm just saying, where does the money come from? Because I know what's going to happen. Keir Starmer is saying they found this $20 billion black hole in the finances. And that's the reason why they're saying they've had to cut back on pensions and these kinds of things. So if we add another $30 billion to that, where do we get the money from?

You're talking about reduce the amount of administrative burden reason to tax 15 million people and keep on top of the tax on 15 million people. Just the sheer volume of people who have to work at HMRC. I completely agree. All of this insanity.

No, but I'm saying where does the money come from?

Yeah. So out of $1.4 trillion, I'm pretty sure we could find half of 1%, 1% of it or whatever to get these number of people out of tax. I think we could tax big corporations who are taking the piss. And I also think the economic spending rounds of getting those people, those poor, the poorer half of people should not be paying tax. If you give them more money, they'll spend more money, right?

They're not going to— Okay, I agree with you. So you're saying tax big corporations more in the UK at point of consumption.

Personally, I would make it like very similar to a broadcast license that it's a fixed fee that's very hard to wiggle out of.

So if I'm a, let's say I'm an OpenAI.

Yeah, you might have a broadcast license to pay. To access this market.

So you're going to charge up, say you say, I'm going to charge OpenAI $4 billion, $5 billion to access our market.

For example, Facebook is very much broadcasting videos and content all the time. So is YouTube, so is Google, all that sort of stuff. So you just simply say, guys, the cost of doing business in this country, if you want access to this market, is a fixed broadcast license fee of $500 million a year or whatever it is. And you just say, based on the number of views that you guys get and how how much attention you suck out of our economy, we just essentially tax the attention. You're literally, if people are spending an hour a day on their phone doom scrolling, that is a broadcast. You're broadcasting to our people, so therefore we've got a broadcast license. So those are the types of things that I would look at because they're very hard to wiggle out of.

Do you think then these companies like an OpenAI would then, as we said earlier, just increase the subscription fee in this market? And you see there's some times where in certain countries something is cheaper. I remember going to the United— I used to go to the United States to buy my Apple products because it was cheaper there. Yeah. And then in the UK, it cost me like, not even, not even a little bit, but it was like hundreds of dollars more to buy a laptop here. The same laptop in this market versus this one costs different amounts of money.

They may choose to try and pass on that consumption tax to consumers. Maybe they do do that. Maybe we could try and avoid— maybe we could try and legislate against that, that they have to essentially be on parity with where they are in other markets, that they have to charge parity. If we don't do anything, we essentially have nurses and, you know, like teachers and all the people who are in the normal 50% of the economy whose job is now to hold up the economy while Starbucks doesn't pay taxes, while Amazon doesn't pay taxes, while Google doesn't pay taxes.

And Steve, I think all your questions are really, really good. But they all point to the same thing, which is that, you know, the economy is a collective action problem. Right.

And now it's a global action problem. It's a global—

it's a global collective action problem. And if we want— if we want robust solutions to these problems, we're going to have to robustly coordinate activity across the world. And, you know, like during the Biden administration, they tried really hard to do this global profit tax where, where, but that collapsed under the weight of pressure. But all, you know, again, all of your questions I think are really good, but they all point to the same fundamental weakness of, of governance.

And Nick, you, you need to talk to your billionaire mates and also say, if we don't start investing in the economies that we do business with, which you are saying, right? Of course. Right. It's a lonely business.

I'll just tell you.

But it's like It's like those CEOs of those companies, you drain the whole economy out and then what next?

I think on this pass-through problem, I was looking at different ways that this ends up being applied. So if you think about the Big Mac, the Big Mac costs different things in different states depending on how much tax that state charges. So in Oregon, the Big Mac is $8, whereas in Chicago, it's almost $9. If you think about bookstores, you can buy one book on the high street for $20. The same book online is $10 because they're passing through the costs. So it's conceivable that if we say to big corporations, right, you guys are going to pay a bigger tax to sell into the UK than the UK consumer, that they might pass that on to the UK consumer. And they might look at different markets because they might say, as a company, we want to make 30% margins. Also, the UK consumer— And the way to make 30% margins in the UK— is to bump the cost.

Because a consumer could say, I'm going to use a VPN and pretend that I'm going to be in a different market and pay a lower price. And it doesn't matter. You still have to pay the broadcast license if you want to be available in our, in our country. These are hard problems. And we need to know who is the person that we're targeting. It's, it's the BlackRocks of the world. It's the, it's the big banks of the world. It's the big mortgage—

like I had to say, I had a private conversation with the CTO of a very large company. Company, technology business. And he was saying to me, he goes, I don't think the UK understands the situation it's putting itself in and the EU with all this regulation. He said to me that we sell this particular product. It's a physical product. And because the UK and I think EU have put this new law in where you have to have removable batteries. Interestingly, the unintended consequence of is we have to stock more lithium batteries. More of them go into landfill. Yeah. And also your devices break because they're no longer waterproof. So you're going to actually, it's harming the environment. And also he said, the thing you guys don't realize is that you're actually not a big market anymore for us. And because South America is coming online, we actually don't have to sell the product here. And you think about this in terms of some of the regulations around AI as well. When a new product launches on a ChatGPT. Yeah. It goes in the US first because of regulations. And then maybe—

No, it goes in the US first because it's the biggest market.

Biggest market. But also we have our regulations around some software and GDPR and all these kinds of things means that sometimes we just don't get the features. And sometimes in my history, in our history of building the previous business I was in, as creators, we would sometimes have to wait 12 or 18 months to get the same tools that my competitors— —no, in the United States could use monetization tools. They'd have the monetization tools first and then we'd have to wait 18 months.

The economy is a set of trade-offs. Like, that is the problem. Like, economics is called a set of trade-offs. The actual definition of economics is making trade-offs and picking your trade-offs. I totally get it. Like, regulation does actually suck for consumers and for businesses. And like, the EU is now overregulated to the extent that you can't even take You can't take a lid off of a bottle without, you know, the government being involved with how the lid comes off the bottle. And it's killing, it's killing our dynamism. We are really just like—

And the US is underregulated. And if you buy chicken in a store and don't cook it, could be anything. One in three chances you'll get either E. coli or salmonella. And your life expectancy is lower.

Exactly. So it's all trade-offs.

Everyone who eats in the US comes back from the US and goes, oh my goodness, I hate eating food in the US.

It's all trade-offs. It's all trade-offs.

Does this not then mean our ultimate conclusion of this conversation is around morals and ethics? Yes. Around the trade-offs that we think are the right ones to make. Yes. And so it's a question really of morals and ethics.

Yes. Human flourishing. Yes. 100%.

The purpose of the economy is to improve human life. The way to do this is to massively maximize small business power because when people—

I think it's more complicated than that, sir.

When I have to work shoulder to shoulder with my workers, I treat people well, right? When I'm a mega corporation who have faceless workers down on the factory floor that I will never meet, I will never sit next to on a plane, I will never come in contact with my workers, I can treat them however I like.

Why do you think that's reductive, Nick?

Well, I think that what Dan is saying is true and massively insufficient. Of course. I mean, we're in violent agreement about the small business point. Like, I don't want to be naive and think we should go back to the '60s or something like that. Like, I don't think that's true. But again, here's what the new economics shows: that corporate consolidation increases prices, lowers wages, decreases consumer choice, and decreases the rate of innovation. Right? And I 100% agree. Because innovation, again, the conventional view of innovation, the conventional economic view of innovation is this sort of great man theory is you have this smart, rich guy who's sitting somewhere and he or she has this amazing idea and that's innovation. That is not what innovation is. Innovation is always combinatorial. Technology makes itself out of itself. You, you start with a rock. The rock, the rock was our first technology and you did a lot of stuff with rocks. And we also had sticks. Actually, sticks were our first technology. But you tie a rock to a stick, you have a hammer, a spear, an arrow, an ax, a shovel. It goes on and on and on.

And what that means in terms of policy is that because innovation is combinatorial, The more diverse people in a network who come together with different ideas and different sets of experiences, that is what drives the rate of innovation. And this is mathematically demonstrated that a diverse group of people working on a problem will absolutely consistently outperform a homogeneous group of high performers.

And then when they, when they become really successful,, which will happen eventually. Yeah. If you let that system play out, you have this inequality unless you intervene at some point. And recycle it. And then when you go to recycle it, you go get back to this issue of us having, needing global cohesion. Yes. Because some people won't want the recycling. Correct. And they'll say, well, I'm just going to go to Ireland or I'm going to go to Dubai. Correct. I'm going to go somewhere else. Correct. And this is maybe a function of the new economy where people can just get up and leave. Yes. And take their value with them. Yes. And this is the conundrum. This is the conundrum.

But the meta issue above the conundrum is recognizing that citizens have both the right and the responsibility to want to address that problem. And we— and you grew up in a world where it was illegitimate to address that problem, that, that, that economics told you, don't worry about those problems. The market will sort it out.

Is there like a radical idea of how to solve this? Do we need like all the very, very rich people in the world to come together collectively and say, we're going to create a new model? Like, how do you, I don't know, is there any radical ways to solve this stuff? Or is it just all trade-offs once again? Democracy.

One of the big radical ways is breaking up companies and it's unthinkable. In fact, it's what Pierre did. You know Jeff Bezos, right? Yes, I do.

So. It was in my wedding.

I wonder if he would lose more sleep about higher taxes or having his company broken company broken up. Oh, for sure broken up. Because if you broke up Google from YouTube, if you broke up AWS, Amazon Prime, and Amazon, if you like, the biggest thing that scares the billionaires is backing competition with the market. And it's like, oh my goodness, I don't want to have to compete. I've got this amazing monopoly that just works. 100%, right?

So, but is that a perfect solution? Because I was thinking, it's not a perfect solution, pretty good.

It's the least worst solution available.

It's a good, it's It's pretty good.

It's pretty effective. I mean, this is what Teddy Roosevelt did.

These companies aren't making any money though. They're like being subsidized by the mothership. So like in an, let's say Amazon Prime, that's competing against Netflix.

Dude, these companies make money where they want to make money for tax optimization and strategic reasons. Look, I mean, you know, like when we started Amazon.com, I'm not sure if you guys remember, the whole hit on it was it's not profitable, right? Right? The secret to Amazon.com's success is the negative cash conversion cycle, right? For virtually every business on planet Earth, to grow requires capital, right? For all of your businesses, growth requires capital. But for Amazon.com, we took an order, we put up the website, you take an order, you instantaneously transmit that order to a book warehouse. Warehouse, which has all of the titles in stock. It's shipped the next day, it's received the next day. You ship it out, hit the, hit the person, hit the person's credit card, but then you don't have to pay the bookseller for 90 days. Hmm. Right. And what that means is the bigger the company gets, the better cash flow gets, whether you're making money or not. So we didn't have to make money because we had, most companies have to make money. Hmm. Because if they don't, they don't have the cash flow to continue.

Like Amazon Prime businesses.

And yeah, and so there are things available that we could have made money in one minute just by increasing our prices by 3 or 4%.

Yeah, these companies are also not worth trillions of dollars because they're not profitable. They're worth trillions of dollars because they are making money. But the issue is, is they have strategic monopolies, and if you really want to make them lose sleep, you need to break up strategic monopolies. You need to say there's an actual limit to how big a fund can be. There's an actual limit as to how big a strategic monopoly can be. You can't have things that hedge naturally against each other and prevent real competition. So like, these things are ways of— and also it ties up their attention. So while they're thinking about not getting broken up, they're also not competing with all the other guys out there. So like, it's, it's basically capitalism runs on competition, and this is the one thing that we've that the real— We have less competition. Yeah. Like when Adam Smith said capitalism works, he said it only works when there's competition. If there's one bakery in town, any bread at any quality at any price is what you have to pay. As soon as there's two bakeries in town, it has to be the best quality at the best price.

Although with two you can collude, but if you have five, it's very hard.

So Amazon has a monopoly over— Strategic monopoly. A strategic monopoly. So what does one do with Amazon? Amazon. You break it up.

Yeah. Into what? AWS, Amazon Prime, Amazon Retail.

Fine, but they've still got a monopoly in online e-commerce, theoretically.

Yeah, well, it's just harder. It's easier for someone to come along and compete. Right now, it's very, very hard for me to compete with Amazon because they are pulling in cash from AWS. They're pulling in cash from all these other subscriptions. There's so— Amazon Basics.

You could break up the retail. You could say you can have a bookstore, you can have an electronics store, you can have this store, you can have that store.

You can only say— you can't be the everything store. Store, right? So you could, there's all sorts of ways that you, but you have to acknowledge when someone has achieved a strategic monopoly.

Do you think that's a good idea? Do you still own shares in Amazon?

No, sadly. Okay. I wouldn't be here talking to you guys if I still did. No, no, no, no.

That's true. That's true.

Jeff won't come. Yeah. No, sadly I sold my shares, but you know, I am open to all of these ideas because I know, I mean, I am completely with Dan. I know that the world would be a better place if these companies were smaller and we had more competition. And again, there is no— there are no silver bullets to these complex problems the world faces. We are not at this table going to come up with this algorithmic idea that is just going to make the world a better place. None of these solutions are perfect. They are always going to be the least worst thing that we can come up with. But I think at the level of principle, living in a world where we try actively to limit concentrated power in all its forms, where we try actively to include people in whatever way, whether as entrepreneurs or just workers, as robustly as possible, where we try to make sure that people are engaged enough in the economy so that they'll be supportive of the democracy, not want to burn it down, These are high-level principles that I think reasonable people can agree with. And they come into conflict with people like Elon Musk and Jeff Bezos and Mark Zuckerberg, who do not want to live in that world, who want to live in an oligarchical world.

And I just think that we should have that fight and win.

We have a closing tradition where the last guest leaves a question for the next, not knowing who they're leaving it for. And I think it's quite a relevant question. I'll ask you first, Dan. The question is, in a world with so many challenges, what can we do to restore hope and trigger engagement?

Getting back to what we were talking about, we need people to know that the rules of the game have changed and that the rules that we grew up with, where we grew up in a particular industrialized, late-stage industrialized world that had those rules, and we now live in an early-stage digital revolution world. Worlds. And the thing that gives me hope is I know how the rules of that world work, right? Someone explained it to me. They actually explained, this is how you start a business. This is how you grow a business. This is how you make a million. This is how you hire some people. This is how you get a great team working side by side. That gave me an enormous amount of hope. I have a pathway out of where I was born and the wealth I was born with and where I am now. Someone explained to me the pathway. Here's how the rules work and here's how you make success. One of the things that makes people feel hopeless is that they're stuck in a game where no one explains the rules. So explaining the rules. So I would say we need a schooling system.

The thing we don't talk about enough is that the schooling system has to explain to kids the relevant information as to how to function in the current economy.

So I played that forward in my head and I was thinking, okay, you get a million kids and you explain all of the rules to them. At some point, if you just give it a year or two, say they all knew the rules. There's still an edge. And some of them would figure out the edge. Totally. And then you've got this pocket that know, everyone knows the rules, but then others know this particular way to beat the system. And that could be with, I don't know, they learn about AI, they learn about whatever, and then you're kind of back into the same place. And you were one such person who got the edge. Someone came to you and went, psst, you know, they're saying the rules are this. That's actually, there's a way to get an edge. And you had it within you for whatever reason to capitalize on that edge. And now you're a multimillionaire. Almost said that edge. So there's always going to be the rule and then the rules get— There's no permanent state. Every single day after you explain the rules to someone, there's a new set of rules.

The only consistent is change. And at the moment, most people I encounter who have never had any explanation going on about how the world works now, they are hopeless. They feel completely hopeless. As in, like I see kids who are sending out CVs to Microsoft or to like some major company, they don't realize that those companies are getting 3,500— I get it.

—applications a day. The day after you explain the rules to them, the rules are one day less relevant. And so it's true, you'd have to go to school every single day.

Well, yeah, lifelong learning. You do have to do lifelong learning. Like there is this lifelong— part of the rules is lifelong learning. That is actually one of the rules, which is the only consistent is change.

It sounds like you're saying though that if we teach people the rules of business, then people will have more hope. But there's so many people that I know, like my fiancée, who she doesn't, she cares about something else much more than she cares about business.

She cares about like, she just started, she set up Bali Breathwork and she was able to, right? She was able to create Bali Breathwork. Hashtag ad. Because, well, I said it, not you, right? She was able to figure out how to turn her passion into something that is commercially sustainable.

But I'm just using her as an example.

Did she get that from the school system?

Fundamentally, maybe she got it in part because she has a dad who's an entrepreneur. Yeah. She has a family. Someone explain the rules to her. She has the support network. Like she supports me, I support her.

She knows how to enroll people into her success. All of that is called pitching, publishing content, creating a product offering. I only know one thing that I've seen work again and again and again and again, which is I teach people, the people who learn the Entrepreneurial Method suddenly feel agency and hope.

I agree. I'm not saying that's for everyone. Yeah, but this is a It's not for everyone. It's for people like that had whatever mean you had in terms of like the upbringing, the luck, the whatever, the fortune.

I'm not saying everyone's going to be an entrepreneur. My answer to that question is entrepreneurial. Is the entrepreneurial toolset gives people a lot of hope.

I get that. And one of the things that we have to acknowledge there is that's a certain type of person who has a certain type of goals. There are some people who actually just want to go outside and they don't— they want to work. Maybe they want to work work one day a week or two days a week.

Sure, I don't want to do push-ups and I don't want to do sit-ups. I don't want to go to the gym. But if you ask a fitness professional, how do you improve your body? How do you feel good? Right? The fitness professional says, hey, these are all the things that I've seen working for a lot of people about going out and getting fit. And you might not want to do them initially, but actually the people who do these things— the hope—

the people that do those things might have an inherent privilege, right? Like the monopoly.

The world's not fair. Like the world's not fair.

Some people are born on different sides. I need to know your answer to the same question.

I think we need to have vital democracies that manage economies in ways that are optimized around human flourishing and not capital efficiency, not capital accumulation. That we live in a world, you completely grew up in a world where the highest good was capital efficiency. The capital efficiency and godliness were the same, and we have organized society in this way. We, in the United States, it— we literally have a norm and a set of regulations around maximizing shareholder value for corporations, right? This was invented out of whole cloth in the 1970s, this whole idea that the purpose of the corporation should be merely to enrich shareholders. And the evil of that idea isn't it wasn't— what they weren't saying was screw the poor. What they said was, if you maximize value for shareholders, it will be good for everybody. And that was the lie, because it wasn't good for everybody. It was good for a tiny minority of people. And the lie was that when you do that, growth rates will go up, GDP will go up, we'll have a rising tide. And the tide didn't rise, it fell. And what modern economics says is that we can have a different construct.

We can have a different society that purposefully includes people in a robust way, whether they're a worker, whether they're a small business. And if we do that, everyone will benefit. The economy will grow faster. People will be paid better. Prices will be lower. We will have more innovation. This is within our grasp. We just have to decide to do it.

You should go into politics.

I am in politics. Well, I hear that. One thing I don't like is waiting for the world to change. And I like personal agency. And at Nick's level that he's playing at, I love the fact that he's in politics and he's using his wealth and his power and his influence to change the system. For most people, waiting for the world to change does not feel empowering. And I guess where I'm coming from is like, yes, tilt towards this because that's the political movement that's required to make sure the world includes more people in capitalism. And I love that. And while that's happening, take personal accountability, personal agency, figure out what is your next move, watch all the episodes of Diary of a CEO, learn from people and, you know, and jump on and, and figure out, yeah, subscribe, right? I just said, do me a favor, subscribe to the channel. But if that is done, like people who do that end up feeling hopeful because hope comes from having personal agency and personal agency is knowing your next move that's going to benefit you and move you forward. I agree.

And I realize, you know, the older I've gotten, the more I realize my own privilege. And my privilege isn't necessarily that I built a business and that I have money now and all those things. Things. My privilege is something happened when I was young from the point of maybe even where my parents—

but do you feel guilty about it?

I don't feel guilty about it, but it just has allowed me to see my own bias and to realize that I have this unknown unknown. Unfortunately, that's growing by the day because I'm getting more entrenched in my own privilege. And what I mean by this is like, I play out the scenario theoretically. My dad left my mom, and my mom still struggles to read and write. And she would've had like 4 kids, can't read or write, can't really get employment. She worked at St. Luke's Hospice as a volunteer. And I go, God, if that one thing had happened, how different would my life have been? And so that's like a privilege that I've never even acknowledged because it's kind of inherent. It was like built into my life. And then would I be sat here now? Would I be, be the person I am today if that one little thing had happened? No. Would I be ambitious and optimistic about the world? Or would I be theoretically, could I be resentful? Could I be like some of my other friends who came from the same city where I came from, who didn't have a father, who may, I've said to some of my friends, I said to one of my particular friends back home, if you would just get a job for a couple of months, I will pay your rent for years.

Didn't happen. Can't get a job at Subway for 3 months so that I would pay his rent for years. Is I ended up helping him anyway. But I remember saying that 10 years ago. It just highlighted to me that there's a real deep inherent privilege that I have that I'm not even aware that I have. Sometimes it's trauma, my DNA. My brothers are all very smart naturally. And what if I didn't? What if I didn't have those two parents? And what if I didn't have the whatever genetic composition I had? Then would the advice apply? Then would the advice I give to the world, would it apply? So I mull that and go, it's got to pass that lens for it to be broadly applicable and therefore, I think, effective advice.

I love your level of compassion and empathy for people, and the fact that you're having that self-exploration means you're an incredible type of person. With each individual, each person wants to do the most with what they've got. I'm saying that if I was to visit a small town that had a thriving 10, 15, 20 businesses in there, there were enough entrepreneurs to create optionality for people, that would be a good town to go I go to, right? And if I go to a town where there are no entrepreneurs and there are like everyone feels downtrodden and there's one big Costco and that's the only employer in town, that's going to be a shit town. So all I'm saying is you need a critical mass of people who have agency and that lifts up the, like having a few, do you know in Japan they call it the Shogun family, right? And the Shogun family lifts up that little community and that around that Shogun family you end up with lots of other businesses and lots of other, like it flows out. But when you have one monolith in the world that is the only company in town and it is the only place that ships stuff to your door and it's the, there's only one place to get your CDs and there's only one place to get your Netflix, then pretty much everyone else is just reduced to being a consumer.

What do you think, Nick?

Again, I've said it before. I agree with this sentiment 100%. I am an entrepreneur myself. But I expect that operating in empowerment applies to— it will no doubt apply to a high percentage of the people who watch your show, right? Lots and lots of people who watch this show are entrepreneurial, want to be entrepreneurial, so on and so forth. But I suspect you're talking about less than 5% of people on planet Earth that fit that paradigm. And I want to create a paradigm that works for everybody.

And you're saying if you hit those 5%, Well, even in the UK, it's 6 million self-employed people out of 30 million workers. It's not tiny. It's a pretty decent percent, right? It is a major opportunity that more people than ever could take part in. If you asked a health professional, how do you get hope? Go to the gym, go for a run, all that stuff. You're asking an entrepreneur, how do you get hope through personal agency? I'm going to tell you what's worked for me is the entrepreneurial method.

Yeah, that's— so maybe we need to ask a broad group of people.

Yeah, but I suspect that what they will come back to you with is the quiet miracle of a normal life. If you want that, that's great.

I want that and I want that for everyone. That's gone away. It's gone. Houses are unaffordable. Sorry. Local jobs don't exist. No one's paying healthy wages. Like all of that stuff that I want as well. It's great to sit there and want it, right? But that doesn't give me hope. That gives me disappointment that it used to exist. Exist, right? Might the family home that most people would love to raise a family in, it's £1.2 million now, right?

And if you want to fix that, you have to enact this.

Yeah, you have to do these things.

Most people, most people are going to wonder what's on that piece of paper.

So this is, you know, I mean, the, the main body of my work is coming up with a different economic paradigm, a way of understanding economic cause and effect that leads to the world that Dan prefers, that I prefer. I think— I don't know, but I sense it's the world that you prefer. And what you have to do is you have to rip down the existing economic framework and replace it with a 21st century thing that inclines policymakers to make good decisions, not bad ones. And the booklet itself that— can you show the booklet? Yeah. So this booklet is 21st century economics. Now, this is aimed at policymakers and professionals. Yeah, but, but if you go to marketsbuiltforhumans.org, you can download this for free. And that is merely an expression of the paradigm itself, going from believing that we should just increase capital efficiency to human flourishing, going from understanding human beings as Homo economicus to Homo sapiens, going from understanding the economy economy as a parade to optimal equilibrium, to a complex, to an ecology, all this stuff. But when you understand it in a new way, you come to very different conclusions about how you should organize the world.

And that is the starting point for global transformation.

I love it. He's already a billionaire. He's got time on his hands and he's got money to fly around the world doing it. Do it. And while he's doing it, all I need is for people like you to help me explain Yeah. And like, I love it. I'm not against it. I'm just saying what will give most people hope is taking agency over their life where they can do something this week to improve their life.

So while next time I see you, there will be a test and download it, give it to your lawmakers.

Well, so what I'll do then, I mean, we've got different reading materials people that are listening can pursue here. We've got Dan's books here, which I'll link below. Dan, is there a particular best book to start with in your opinion?

The most recent one is called The Lifestyle Business Playbook. The Playbook, and it's basically how to get started with a small business and a business that will give you more fun, freedom, and flexibility. And I like the idea of supporting anyone who's trying to create a better economy. Some of the most miserable people I know are waiting for the system to change, and I don't want you to be that person. I want you to be doing something in your own life.

And then over here, I mean, I'm going to link all of your books below as well, but—

Yeah, I mean, I just think that a starting point for global transformation is under— look, economics is the operating system of the world. If it's the wrong operating system, you end up with a very bad circumstance. And economics is invisible to most people. They don't even understand it's the, it's the water they're swimming in. They don't understand that policymakers are making decisions that affect their lives based on a particular understanding of how the economy works. And if that's wrong, wrong, then you're going to make some terrible decisions. If you believe that prosperity trickles down from the top, you're going to enact a certain set of policies. If you believe that growth is built from the middle out, you will make an entirely different set of, uh, policies. If you believe that the middle class is a consequence of economic growth, you will go one way. If you believe that the thriving middle class is the cause of You will do a completely different set of things in terms of policy, all of them aligned with what Dan wants. But, but that's where you have to start. That's, that's the meta. Those are the meta questions that you have to answer.

And then you, and then you deduce logically to all of the things that Dan prefers. But you have to start up here. You have to start with the set of ideas that govern how people see economic cost and effect. And that is what this is.

I shall link it below. Thank you so much. We're done.

Thank you. You are fantastic.