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The following is a conversation with Ray Dalio.
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He s the founder, co-chairman, and co-chief investment officer of Bridgewater Associates, one of the world s largest and most successful investment firms that is famous for the principles of radical truth and transparency that underlies culture.
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Ray is one of the wealthiest people in the world with ideas that extend far beyond the specifics of how you made that wealth.
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His ideas that are applicable to everyone are brilliantly summarized in his book Principles.
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They are also even further condensed on several other platforms including YouTube, where, for example, the 30-minute video titled How the Economic Machine Works
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is one of the best educational videos I personally have ever seen on YouTube.
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Once again, you may have noticed that the people I ve been speaking with are not just computer scientists, but philosophers, mathematicians, writers, psychologists, physicists, economists, investors, and soon, much more.
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To me, AI is much bigger than deep learning, bigger than computing.
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It is our civilization s journey into understanding the human mind and creating echoes of it in the machine.
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That journey includes the mechanisms of our economy, of our politics, and the leaders that shape the future of both.
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This is the Artificial Intelligence Podcast.
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If you enjoy it, subscribe on YouTube, give it five stars on Apple Podcasts, support on Patreon, or simply connect with me on Twitter, Alex Friedman, spelled F-R-I-D-M-A-N.
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This show is presented by Cash App, the number one finance app in the App Store.
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I personally use Cash App to send money to friends, but you can also use it to buy, sell, and deposit Bitcoin.
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And now, here s my conversation with Ray Dalio.
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Truth or more precisely an accurate understanding of reality is the essential foundation of any good outcome.
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I believe you ve said that.
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Let me ask an absurd sounding question at the high philosophical level.
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So what is truth?
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When you re trying to do something different than everybody else is doing and perhaps something that has not been done before, how do you accurately analyze the situation?
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How do you accurately discover the truth, the nature of things?
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Almost the way you re asking the question implies that Truth and newness have nothing are almost at odds and I just want to say that I don t think that that s true, right?
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So what I mean by truth and truth is, you know, what is the reality?
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How does the reality work?
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And so if you re doing something new that has never been done before which is exciting and I like to do I
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The way that you would start with that is experimenting on what are the realities and the premises that you re using on that and how to stress test those types of things.
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I think what you re talking about is instead the fact of how do you deal with something that s never been done before and deal with the associated probabilities.
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And so I think in that, don t let something that s never been done before stand in the way of you doing that particular thing.
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Because almost the only way that you understand what truth is is through experimentation.
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And so when you go out and experiment, you re going to learn a lot more about what truth is.
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But the essence of what I m saying is that when you take
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a look at that, use truth to find out what the realities are as a foundation, do the independent thinking, do the experimentation to find out what s true, and change and keep going after that.
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So I think that when you re thinking about it the way you re thinking about it,
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That almost implies that you re letting people almost say that they re reliant on what s been discovered before to find out what s true.
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And what s been discovered before is often not true, right?
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Conventional view of what is true
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is very often wrong.
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It ll go in ups and downs and, you know, I mean, there are fads and okay, this thing, it goes this way and that way.
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And so definitions of truths that are conventional are not the thing to go by.
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How do you know the thing that has been done before that it might succeed?
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It s to do whatever homework that you have in order to try to get a foundation.
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And then to go into worlds of not knowing,
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And you go into the world of not knowing, but not stupidly, not naively.
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You go into that world of not knowing, and then you do experimenting.
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and you learn what truth is and what s possible through that process.
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I describe it as a five-step process.
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The first step is you go after your goals.
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The second step is you identify the problems that stand in the way of you getting to your goals.
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The third step is you diagnose those to get at the root cause of those.
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Then the fourth step is then, now that you know the exact root cause, you design a way to get around those.
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and then you follow through and do the designs you set out to do, and it s the experimentation.
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I think that what happens to people mostly
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is that they try to decide whether they re gonna be successful or not ahead of doing it.
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And they don t know how to do the process well because the nature of your questions are along those lines like how do you know?
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Well, you don t know.
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But a practical person who is also used to making dreams happen knows how to do that process.
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I ve given personality tests to shapers.
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So the person, what I mean by a shaper, is a person who can take something from visualization, they have an audacious goal, and then they go from visualization to actualization, building it out.
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That includes Elon Musk, I gave him the personality test, I ve given it to Bill Gates, and I give it to many, many such shapers.
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And they know that process that I m talking about.
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They experience it, which is a process essentially of knowing how to go from an audacious goal, but not in a ridiculous way, not a dream.
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And then to do that learning along the way,
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that allows them in a very practical way to learn very rapidly as they re moving toward that goal.
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So the call to adventure, the adventure starts, not trying to analyze the probabilities of the situation, but using what, instinct?
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How do you dive in?
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So let s talk about.
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It is being a, it s simultaneously being a dreamer and a realist.
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It s to know how to do that well.
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The pull comes from a pull to adventure.
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For whatever reason, I can t tell you how much of it s genetics and how much it s environment, but early on, it s exciting.
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That notion is exciting.
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Being creative is exciting.
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And so one feels that.
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Then one gets in the habit of doing that.
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Okay, how do I know?
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How do I learn very well?
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And then how do I imagine?
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And then how do I experiment?
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to go from that imagination.
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So it s that process that, and then the more one does it, the better one becomes at it.
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You mentioned shapers, Elon Musk, Bill Gates.
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Who are the shapers that you find yourself thinking about when you re constructing these ideas, the ones that define the archetype of a shaper for you?
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Well, as I say, a shaper for me is somebody who comes up with a great visualization.
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usually a really unique visualization and then actually builds it out and makes the world different, changes the world in that kind of a way.
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So when I look at it, Mark Benioff with Salesforce, Chris Anderson with TED, Mohammed Yunus with Social Enterprise and Philanthropy, Jeffrey Canada and Harlem Children s Zone.
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There are, all domains have shapers who have the ability to visualize and make extraordinary things happen.
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What are the commonalities between some of them?
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The commonalities are, first of all, the excitement of something new, that call to adventure, and then again, that practicality, the capacity to learn.
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The capacity then,
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They re able to be in many ways full rage.
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That means they re able to go from the big, big picture down to the detail.
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So let s say, for example, Elon Musk.
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He describes he gets a lot of money from selling PayPal, his interest in PayPal.
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He said, why isn t anybody going to
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Mars or outer space, what are we going to do if the planet goes to hell?
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And how do I, how are we going to get that?
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And nobody s paying attention to that.
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He doesn t know much about it.
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He then reads and learns and so on, says, I m going to take, um, okay, half of my money and I m going to put it in there and I m going to do this thing.
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And he learns and blah, blah, blah, blah, blah.
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And he s got creative.
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Okay.
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That s one dimension.
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And so he gave me the keys to his car, which was just early days in Tesla, and he then points out the details.
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Okay, if you push this button here, it s this, the detail.
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So he s simultaneously talking about the big, big, big picture.
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Okay, when does humanity,
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um going to about abandon the planet but he will then be able to take it down into the detail so he can go let s call it helicoptering he can go up he can go down and see things at those types of perspective and then you ve seen that with the other shapers and that s a common thing that they can do that another important difference that they have in mind is how they deal with people i mean meaning there s nothing more important than achieving the mission and so
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What they have in common is that there s a test that I give these personality tests because they re very helpful for understanding people.
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And so I gave it to all these shapers.
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And one of the things in workplace inventory test is this test and it has a category called concern for others.
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They re all having concern.
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for others, this includes Mohammed Yunus, who invented microfinance, social enterprise, impact investing, as Mohammed Yunus received the Nobel Peace Prize for this, the Congressional Medal of Honor, a fortune determined one of the 10 greatest entrepreneurs of our time.
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He s built all sorts of businesses to give back money in social enterprise, a remarkable man.
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He has nobody that I know practically could have more concern for others.
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He lives a life of a saint.
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I mean, a very modest lifestyle, and he puts all his money into trying to help others.
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And he tests low on what s called concern for others, because what it really, the questions under that are questions about conflict to get at the mission.
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So they all, Jeffrey Canada, who changed Harlem Children s Zone and developed that to take children in Harlem and get them well taken care of, not only just in their education, but their whole lives.
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Him also, Concerned for Others.
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What they mean is that they can see whether those individuals
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are performing at a level, an extremely high level, that s necessary to make those dreams happen.
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So when you think of, let s say, Steve Jobs was famous for being difficult with people and so on, and I didn t know Steve Jobs, so I can t speak personally to that, but his comments on, do you have A players, and if you have A players, if you put in B players, pretty soon you ll have C players and so on, that is a common element of them.
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holding people to high standards and not letting anybody stand in the way of the mission.
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What do you think about that kind of idea, sorry to pause on that for a second, that the A, B and C players and the importance of, so when you have a mission, to really only have A players and be sort of aggressively filtering for that?
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Yes, but I think that they re all different ways of being a players and I think and what a great a great team You have to appreciate all the differences in ways of being a players Okay.
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Yes, that s the first thing and then you always have to be a
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super excellent, in my opinion, you always have to be really excellent with people to help them understand each other themselves and get in sync with them about what s true about them and their circumstances and how they re doing so that they re having a fabulous personal development experience.
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at the same time as you re dealing with them.
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So when I say that they re all different ways, this is one of the then qualities.
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You asked me, what are the qualities?
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So one of the third qualities that I would say is to
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know how to deal well with your not knowing and to be able to get the best expertise so that you re a great orchestrator of different ways so that the people who are really, really successful, unlike most people believe that they re successful because of what they know,
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they re even more successful by being able to effectively learn from others and tap into the skills of people who see things different from them.
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Brilliant, so how do you, when that personality being, first of all, open to the fact that there s other people see things differently than you, and at the same time have supreme confidence in your vision?
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Is there, just the psychology of that, do you see a tension there between the confidence and the open-mindedness?
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No, it s funny because I think we grow up thinking that there s a tension there, right?
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That there s a confidence,
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And the more confidence that you have, there s a tension with the open-mindedness and not being sure, okay?
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Confident and accurate are almost negatively correlated in many people.
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They re extremely confident and they re often inaccurate.
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And so I think one of the greatest tragedies of people is not realizing how those things go together, because instead, it s really that by saying, I know a lot, and how do I know I m still not wrong?
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And how do I take that best thinking available to me, and then raise my probability of learning?
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All these people think for themselves, okay?
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I mean, meaning they re smart.
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But they take in like vacuum cleaners.
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They take in ideas of others.
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They stress test their ideas with others.
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They assess what comes back to them in the form of other thinking.
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And they also know what they re not good at.
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And what other people who are good at the things that they re not good at, they know how to get those people and be successful all around because nobody has enough knowledge in their heads.
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And that I think is one of the great differences.
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So the reason my company has been successful in terms of this is because of an idea meritocratic decision making, a process by which you can get the best ideas
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You know, what s an idea meritocracy?
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An idea meritocracy is to get the best ideas that are available out there and to work together with other people in the team to achieve that.
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That s an incredible process that you describe in several places to arrive at the truth.
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But I apologize if I m romanticizing the notion, but let me linger on it.
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Just having enough self-belief
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You don t think there s a self-delusion there that s necessary, especially in the beginning you talk about in the journey, maybe the trials or the abyss.
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Do you think there is value to deluding yourself?
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I think what you re calling delusion
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is a bad word for uncertainty, okay?
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So, I mean, in other words, because we keep going back to the question, how would you know, and all of those things.
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No, I think that delusion is not going to help you, that you have to find out truth, okay?
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To deal with uncertainty, not saying, listen, I have this dream, and I don t know how I m going to get that dream.
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I mentioned in my book principles and described the process in a more complete way than we re going to be able to go here.
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But what happens is I say you form your dreams first and you can t judge whether you re going to achieve those dreams because you haven t learned the things that you re going to learn on the way toward those dreams.
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Okay.
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So that isn t delusion.
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I wouldn t use delusion.
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I think you re overemphasizing
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Emphasizing the importance of knowing whether you re going to succeed or not get rid of that Okay, if you can get rid of that and say okay.
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No, I can have that dream, but I m so Realistic in the notion of finding out I m curious.
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I m a great learner.
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I m a great experimenter.
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I m
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Along the way you ll do those experiments which will teach you more truths and more learning about the reality So that you can get your dreams because if you still live in that world of delusion, okay, and you think delusions helpful No, the delusion isn t don t confuse delusion with not knowing.
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Yes, and
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But, nevertheless, so if we look at the abyss, we can look at your own that you describe, it s difficult psychologically for people.
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So many people quit, many people choose a path that is more comfortable.
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the heartbreak of that breaks people.
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So if you have the dream and there s this cycle of learning, setting a goal and so on, what s your value for the psychology of just being broken by these difficult moments?
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Well, that s that that s classically the defining moment.
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It s almost like evolution taking care of, OK, now you re you crash, you re in the abyss.
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Oh, my God, that s bad.
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And then the question is, what do you do?
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And it sorts people, OK?
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And that s what that s like.
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Some people get off the field and they say, oh, I don t like this and so on.
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And some people learn.
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And they have a metamorphosis.
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And it changes their approach to learning.
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The number one thing it should give them is uncertainty.
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You should take an audacious, dreamer guy who wants to change the world.
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crash, OK, and then come out of that crashing and saying, OK, I can be audacious and scared that I m going to be wrong at the same time.
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And then how do I do that?
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Because that s the key.
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When you don t lose your audaciousness and you keep going after your big goal and at the same time you say, hey, I m worried that I m going to be wrong, you gain your radical open mindedness.
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that allows you to take in the things that allows you to go to the next level of being successful.
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So your own process, I mean, you ve talked about it before, but it would be great if you can describe it, because our darkest moments are perhaps the most interesting.
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So your own with the prediction of another depression.
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Economic depression.
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Yes, I apologize.
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Economic depression.
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Can you talk to what you were feeling, thinking,
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planning and strategizing at those moments.
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Yeah, that was that was my biggest moment.
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OK, building my little company.
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This is in 1981, 82.
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I had calculated that American banks had given a lot more money to lend a lot more money to Latin American countries than those countries are going to pay back.
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and that they would have a debt crisis and that this would send the economy tumbling.
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And that was an extremely controversial point of view.
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Then it started to happen and it happened in Mexico defaulted in August 1982.
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I thought that there was going to be an economic collapse that was going to follow because there was a series of the other countries.
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It was just playing out as I had imagined.
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And that, well, I couldn t have been more wrong.
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That was the exact bottom in the stock market because central banks, he s monetary policy, blah, blah, blah.
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And I couldn t have been more wrong.
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And I was very publicly wrong and all of that.
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And I lost money for me, and I lost money for my clients.
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And I only had a small company then, but these were close people.
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I had to let them go.
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I was down to me as the last person.
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I was so broke I had to borrow.
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$4,000 from my dad to help to pay for my family bills.
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Very painful.
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And at the same time, I would say it definitely was, uh, one of the best things that ever happened to me.
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Maybe the best thing from happened to me because it changed my approach to decision making.
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It s what I m saying.
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In other words, I kept saying, okay, how do I know whether I m right?
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How do I know I m not wrong?
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It gave me that.
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And it didn t give up my audaciousness because I was in a position, what am I going to do?
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Am I going to go back, put on a tie, go to Wall Street and just do those things?
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No, I can t bring myself to do that.
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So I m at a juncture.
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How do I deal with my risk and how do I deal with that?
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And it told me how to deal with my uncertainties.
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And that taught me, for example, a number of techniques.
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First, to find the smartest people I could find who disagreed with me, and to have quality disagreement.
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I learned the art of thoughtful disagreement.
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I learned how to produce diversification.
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I learned how to do a number of things.
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That is what led me to create an idea meritocracy other words person by person I hired them and I wanted the smartest people who would be independent thinkers who would disagree with each other and me well so that we could be independent thinkers to go off to produce those audacious dreams because you have to be an independent thinker to do that and
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And to do that independently of the consensus, independently of each other, and then work ourselves through that, because who know whether you re gonna have the right answer.
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And by doing that, then that was the key to our success.
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And the things that I wanna pass along to people, the reason I m doing this podcast with you, is I m 70 years old, and that is a magical way of achieving success, if you can create an idea meritocracy.
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It s so much better in terms of achieving success and also quality relationships with people.
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But that s what that experience gave me.
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So if we can linger on it a little bit longer, the idea of an idea meritocracy, it s fascinating, but especially because it seems to be rare, not just in companies, but in society.
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So there s a lot of people on Twitter and public discourse and politics and so on that are really stuck in certain sets of ideas, whatever they are.
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So when you re confronted with an idea that s different than your own about a particular topic,
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what kind of process do you go through mentally?
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Are you arguing through the idea with the person?
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Sort of present is almost like a debate, or do you sit on it and consider the world sort of empathetically?
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If this is true, then what does that world look like?
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Does that world make sense and so on?
1
SPEAKER_00
So what s the process of considering those conflicting ideas for you?
1
SPEAKER_01
I m gonna answer that question after saying first, almost implicit in your question,
1
SPEAKER_01
It s not common.
1
SPEAKER_01
Okay, what s common produces only common results Okay, so don t judge.
1
SPEAKER_01
Yes anything that is good based on whether it s common because you know It s only going to give you common results if you want unique you have a unique approach.
1
SPEAKER_00
Yes.
1
SPEAKER_01
Okay, and so that art of thoughtful disagreement is
1
SPEAKER_01
is the capacity to hold two things in your mind at the same time.
1
SPEAKER_01
The, gee, I think this makes sense, and then saying, I m not sure it makes sense, and then try to say, why does it make sense, and then to triangulate with others.
1
SPEAKER_01
So if I m having a discussion like that and I work myself through, and I m not sure,
1
SPEAKER_01
then I have to do that in a good way.
1
SPEAKER_01
So I always give attention, for example, let s start off, what does the other person know relative to what I know?
1
SPEAKER_01
So if a person has a higher expertise or things, I m much more inclined to ask questions.
1
SPEAKER_01
I m always asking questions.
1
SPEAKER_01
If you want to learn,
1
SPEAKER_01
you re asking questions, you re not arguing, okay?
1
SPEAKER_01
You re taking in, you re assessing when it comes into you.
1
SPEAKER_01
Does that make sense?
1
SPEAKER_01
Are you learning something?
1
SPEAKER_01
Are you getting epiphanies and so on?
1
SPEAKER_01
And I try to then do that if the conversation, as we re trying to decide what is true, and we re trying to do that together, and we see truth different,
1
SPEAKER_01
Then I might even call in another really smart, capable person and try to say, what is true and how do we explore that together?
1
SPEAKER_01
And you go through that same thing.
1
SPEAKER_01
So I would I said I describe it as having open mindedness and assertiveness at the same time.
1
SPEAKER_01
that you can simultaneously be open-minded and take in with that curiosity and then also be assertive and say, but that doesn t make sense.
1
SPEAKER_01
Why would this be the case?
1
SPEAKER_01
And you do that back and forth.
1
SPEAKER_00
And when you re doing that kind of back and forth on a topic like the economy, which you have, to me, perhaps I m naive, but it seems both incredible and incredibly complex, the economy, the trading, the transactions, that these transactions between two individuals somehow add up to this giant mechanism.
1
SPEAKER_00
You ve put out a 30 minute video.
1
SPEAKER_00
You have a lot of incredible videos online that people should definitely watch on YouTube.
1
SPEAKER_00
But you ve put out this 30 minute video titled, How the Economic Machine Works.
1
SPEAKER_00
That is probably one of the best, if not the best video I ve seen on the internet in terms of educational videos.
1
SPEAKER_00
So people should definitely watch it, especially because it s not that the individual components of the video are somehow revolutionary, but the simplicity and the clarity of the different components just makes you, there s a few light bulb moments there about how the economy works as a machine.
1
SPEAKER_00
So as you described, there s three main forces that drive the economy.
1
SPEAKER_00
Productivity growth, short-term debt cycle, long-term debt cycle.
1
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The former productivity growth is how much value people create, valuable things people create.
1
SPEAKER_00
The latter is people borrowing from their future selves to hopefully create those valuable things faster.
1
SPEAKER_00
So this is an incredible system to me.
1
SPEAKER_00
Maybe we can linger on it a little bit.
1
SPEAKER_00
But you ve also said what most people think about as money is actually credit.
1
SPEAKER_00
Total amount of credit in the US is $50 trillion.
1
SPEAKER_00
Total amount of money is $3 trillion.
1
SPEAKER_00
That s just crazy to me.
1
SPEAKER_00
Maybe I m silly, maybe you can educate me, but that seems crazy.
1
SPEAKER_00
it gives me just pause, that the human civilization has been able to create a system that has so much credit.
1
SPEAKER_00
So that s a long way to ask, do you think credit is good or bad for society?
1
SPEAKER_00
That system that s so fundamentally based on credit.
1
SPEAKER_01
I think credit is great, even though people often overdo it.
1
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Credit is,
1
SPEAKER_01
that somebody has earned money.
1
SPEAKER_01
Yeah.
1
SPEAKER_01
And you know, and what happens is they lend it to somebody else who s got better ideas and they cut a deal.
1
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And then that person with the better ideas is going to pay it back.
1
SPEAKER_01
And if it works well, it helps resource allocations go well, providing people like the entrepreneurs and all of those.
1
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They need capital.
1
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They don t have capital themselves.
1
SPEAKER_01
And so somebody is going to give them capital and they ll give them credit along those lines.
1
SPEAKER_01
Then what happens is it s not managed well in a variety of ways.
1
SPEAKER_01
So I did another book on principles, principles of big debt crises that go into that.
1
SPEAKER_01
And it s free, by the way, I put it free online on as a PDF.
1
SPEAKER_01
So if you go online and you look principles for big debt crisis under my name, you can download it in a PDF or you can buy a print book of it.
1
SPEAKER_01
and it goes through that particular process.
1
SPEAKER_01
And so you always have it overdone in always the same way.
1
SPEAKER_01
Everything, by the way, almost everything happens over and over again for the same reasons, okay?
1
SPEAKER_01
So these debt crises all happen over and over again for the same reasons.
1
SPEAKER_01
They get it overdone.
1
SPEAKER_01
In the book it explains how you identify whether it s overdone or not.
1
SPEAKER_01
they get it overdone and then you go through the process of making the adjustments according that and then and it explains how they can use the levers and so on if you didn t have credit then you would be sort of everybody sort of be stuck so um credit is a good thing but it can easily be overdone so now we get into the question what is money
1
SPEAKER_01
What is credit?
1
SPEAKER_01
OK, you get into money and credit.
1
SPEAKER_01
So if you re holding credit and you think that s worthwhile, keep in mind that the central bank, let s say it can print the money.
1
SPEAKER_01
What is that problem?
1
SPEAKER_01
You have an IOU and the IOU says you re going to get a certain number of dollars, let s say, or yen or euros.
1
SPEAKER_01
And that is what the IOU is.
1
SPEAKER_01
And so the question is, will you get that money and what will it be worth?
1
SPEAKER_01
And then also you have a government, which is a participant in that process, because they are on the hook.
1
SPEAKER_01
They owe money.
1
SPEAKER_01
And then will they print the money to make it easy for everybody to pay?
1
SPEAKER_01
So you have to pay attention to those two.
1
SPEAKER_01
I would suggest, like you recommend to other people, just take that 30 minutes
1
SPEAKER_01
And it comes across pretty clearly, but my conclusion is that of course you want it, and even if you understand it and the cycles well, you can benefit from those cycles rather than to be hurt by those cycles.
1
SPEAKER_01
because I don t know the way the cycle works.
1
SPEAKER_01
If somebody gets over indebted, they have to sell an asset.
1
SPEAKER_01
Okay, then I don t know, that s when assets become cheaper.
1
SPEAKER_01
How do you acquire the asset?
1
SPEAKER_01
It s a whole process.
1
SPEAKER_00
So again, maybe another dumb question, but.
1
SPEAKER_00
There are no such things as dumb questions.
1
SPEAKER_00
There you go.
1
SPEAKER_00
But what is money?
1
SPEAKER_00
So you ve mentioned credit and money.
1
SPEAKER_00
It s another thing that if I just zoom out from an alien perspective and look at human civilization, it s incredible that we ve created a thing that only works because currency, because we all agree it has value.
1
SPEAKER_00
So, I guess my question is, how do you think about money as this emergent phenomenon, and what do you think is the future of money?
1
SPEAKER_00
You ve commented on Bitcoin, other forms.
1
SPEAKER_00
What do you think is its history and future?
1
SPEAKER_00
How do you think about money?
1
SPEAKER_01
There are two things that money is for It s a medium of exchange And it s a storehold of wealth Yes, that s that that s some money You know the so you could say something s a medium of exchange and then you could say is it a storehold of wealth?
1
SPEAKER_01
Okay so those and money
1
SPEAKER_01
is that vehicle that is those things and can be used to pay off your debt.
1
SPEAKER_01
So when you have a debt and you provide it, it pays off your debt.
1
SPEAKER_01
So that s that process.
1
SPEAKER_00
And it s, I apologize to interrupt, but it only can be a medium of exchange or store wealth when everybody recognizes it to be of value.
1
SPEAKER_00
That s right.
1
SPEAKER_01
And so you see in the history around the world and you go to places,
1
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I was in an island in the Pacific in which they had as money these big stones.
1
SPEAKER_01
And literally, they were taking a boat, this big carved stone, and they were taking it from one of the islands to the other, and it sank.
1
SPEAKER_01
The piece of this big stone piece of money that they had,
1
SPEAKER_01
and it went to the bottom and they still perceived it as having value so that it was even though it was in the bottom and it s this big hunk of rock the fact that somebody owned it they would say oh i ll i ll own it for this and that i ve seen uh beads in different places shells
1
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converted to this and mediums of exchange.
1
SPEAKER_01
And when we look at what we ve got, you re exactly right.
1
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It is the notion that if I give it to you, I can then take it and I can buy something with it.
1
SPEAKER_01
And that s so it s a matter of perception.
1
SPEAKER_01
OK.
1
SPEAKER_01
And then we go through then the history of money and the vulnerabilities of money.
1
SPEAKER_01
And what we have is there s through history, there s been two types of money.
1
SPEAKER_01
those that are claims on something of value, like the connection to gold or something.
1
SPEAKER_01
That would be.
1
SPEAKER_01
Or they just are money without any connection, and then we have a system now, which is a fiat monetary system.
1
SPEAKER_01
So that s what money is.
1
SPEAKER_01
Then it will last as long as it s kept of value, and it works that way.
1
SPEAKER_01
So let s say central banks, when they get in the position of like they owe a lot of money, like we have in the case, it s increasingly the case, and they also are a bind and they have the printing press to print the money.
1
SPEAKER_01
and get out of that and you have a lot of people might be in that position, then you can print it and then it could be devalued in there.
1
SPEAKER_01
And so history has shown, forget about today, history has shown that no currency has, every currency has either ended as being a currency or devalued as a currency over periods of time, long periods of time.
1
SPEAKER_01
So it evolves and it changes, but everybody needs that medium of exchange, and everybody needs that storehold of wealth, so it keeps changing what is money over a period of time.
1
SPEAKER_00
But so much is being digitized today, and there s these ideas that are based on the blockchain of Bitcoin and so on.
1
SPEAKER_00
So if all currencies, like all empires, come to an end, what do you think will... Do you think something like Bitcoin might emerge?
2
SPEAKER_00
as a common store of value, store of wealth, and a medium of exchange?
2
SPEAKER_01
The problem with Bitcoin is that it s not an effective medium of exchange.
2
SPEAKER_01
It s not easy for me to go in there and buy things with it.
2
SPEAKER_01
And then it s not an effective storehold of value because it has a volatility that s
2
SPEAKER_01
based on speculation and the like, so it s not a very effective saving.
2
SPEAKER_01
That s very different from Facebook s of a stable value currency, which would be effective as both a medium of exchange and a storehold of wealth.
2
SPEAKER_01
Because if you were to hold it, and the way it s linked to, the number of things that it s linked to, would mean that it could be a very effective storehold of wealth.
2
SPEAKER_01
Then you have a digital currency that could be a very effective medium exchange and storehold of wealth.
2
SPEAKER_01
So in my opinion, some digital currencies are likely to succeed more or less based on that ability to do it.
2
SPEAKER_01
Then the question is, what happens?
2
SPEAKER_01
OK, what happens is, do central banks allow that to happen?
2
SPEAKER_01
I really do believe it s possible to get a better form of money that central banks don t control, OK?
2
SPEAKER_01
A better force of money that the central banks don t control.
2
SPEAKER_01
But then that s not yet happened.
2
SPEAKER_01
And we also have to, and so they ve got to go through that evolutionary process.
2
SPEAKER_01
In order to go through that evolutionary process, first of all, governments have got to allow that to happen, which is to some extent a threat to them in terms of their power.
2
SPEAKER_01
And that s an issue.
2
SPEAKER_01
And then you have to also build the confidence in all of the
2
SPEAKER_01
components of it to say, okay, that s going to be effective because I won t have problems owning it.
2
SPEAKER_01
So I think that digital currencies have some element of potential, but there s a lot of hurdles that are going to have to be gotten over.
2
SPEAKER_01
I think that it ll be a very long time, possibly never, but anyway, a very long time.
2
SPEAKER_01
Before we have that, let s say, get into a position that would be in an effective means relative to gold, let s say, if you were to think of that.
2
SPEAKER_01
Because gold has a track record of thousands of years all across countries.
2
SPEAKER_01
It has its mobility.
2
SPEAKER_01
It has the ability to put it down.
2
SPEAKER_01
It has certain abilities.
2
SPEAKER_01
It s got disadvantages.
2
SPEAKER_01
relative to digital currencies.
2
SPEAKER_01
But central banks will hold it.
2
SPEAKER_01
There s central banks that worry about others.
2
SPEAKER_01
Other countries, central banks might worry about whether the US dollar is going to print that.
2
SPEAKER_01
And so the thing they re going to go to is not going to be the digital currency.
2
SPEAKER_01
The thing they re going to go to is gold or something else, some other currency.
2
SPEAKER_01
They ve got to pick it.
2
SPEAKER_01
And so I think it s a long way to go.
2
SPEAKER_00
Well, you think it s possible that one day we don t even have a central bank because of a currency that cannot be controlled by the central bank is the primary currency?
2
SPEAKER_00
Or does that seem very unlikely?
2
SPEAKER_01
it would be very remote possibility, or very long in the future.
2
SPEAKER_00
Again, maybe a dumb question, but a romanticized one.
2
SPEAKER_00
When you sit back and you look, you describe these transactions between individuals, somehow creating short-term debt cycles, long-term debt cycles, this productivity growth.
2
SPEAKER_00
does it amaze you that this whole thing works?
2
SPEAKER_00
That there s however many millions, hundreds of millions of people in the United States, globally over seven billion people, that this thing between individual transactions, it just, it works.
2
SPEAKER_01
Yeah, it amazes me.
2
SPEAKER_01
I go back and forth between being in it and then I think,
2
SPEAKER_01
How did a credit card, how is that really possible?
2
SPEAKER_01
I m still used, I look up credit card, I put it on, the guy doesn t know me.
2
SPEAKER_01
It signs, okay, we re making the digital entries.
2
SPEAKER_01
Is that really secure enough and that kind of thing?
2
SPEAKER_01
And then it goes back and it goes this and it clears and it all happens.
2
SPEAKER_01
And what I marvel at that and those types of things is because of the capacity of the human mind to create abstractions that are true.
2
SPEAKER_01
You know, it s imagination.
2
SPEAKER_01
And then the ability to go from one level and then if these things are true Then you go to the next level and if those things are true Then you go to the next level and all those miracles that we almost become common It s like when i m flying in a plane or when i m looking at all of the things that happen when I get communications in the middle of
2
SPEAKER_01
I don t know, Africa or Antarctica.
2
SPEAKER_01
And we re communicating in the ways where I see the face on my iPad of somebody, my grandkid in someplace else.
2
SPEAKER_01
And I look at this and I say, wow, yes, it all amazes me.
2
SPEAKER_00
So while being amazing, do you have a sense, the principles you described, that the whole thing is stable somehow also?
2
SPEAKER_00
Or is this, are we just lucky?
2
SPEAKER_00
So the principles that you described, are those describing a system that is stable, robust, and will remain so?
2
SPEAKER_00
Or is it a lucky accident of our early history?
2
SPEAKER_01
My area of expertise is economics and markets.
2
SPEAKER_01
So I get down to like a real nitty gritty.
2
SPEAKER_01
Yes.
2
SPEAKER_01
I can t tell you whether the plane is going to fall out of the sky because of its particular fundamentals.
2
SPEAKER_01
I don t know enough about that, but it happens over and over again.
2
SPEAKER_01
And so on.
2
SPEAKER_01
It gives me faith.
2
SPEAKER_01
Okay.
2
SPEAKER_01
So without me knowing that in the markets and the economy, I know those things well enough.
2
SPEAKER_01
in a sense, to say that, by and large, that structure is right, what we re seeing is right.
2
SPEAKER_01
Now, whether there are disruptions and it has effects that can come, not because that structure is right, and I believe it s right, but whether it can be hurt by, let s say, connectivity or journal entries.
2
SPEAKER_01
They could take all the money away from you through your digital entries.
2
SPEAKER_01
There s all sorts of things that can happen in various ways that means that that money is worthless or the system falls.
2
SPEAKER_01
But from what I see in terms of its basic structure and those complexities that still take my breath away, I would say knowing enough about the mechanics of them, that doesn t worry me.
2
SPEAKER_00
Have you seen disruptions in your lifetime that really surprised you?
2
SPEAKER_01
Oh, all the time.
2
SPEAKER_01
This is one of the great lessons of my life is that
2
SPEAKER_01
Many times I ve seen things that I was very surprised about and that I realized
2
SPEAKER_01
Almost all of those I was surprised about because they were just the first time it happened to me.
2
SPEAKER_01
They didn t happen in my lifetime before.
2
SPEAKER_01
But when I researched them, they happened in other places or other people lifetimes.
2
SPEAKER_01
So for example, I remember 1971, the dollar, there was no such thing as a devaluation of a currency.
2
SPEAKER_01
I didn t experience it.
2
SPEAKER_01
And the dollar was connected to gold, and I was watching events happen, and then you get on, and that definition of money all of a sudden went out the window, because it was not tied to gold, and then you have this devaluation.
2
SPEAKER_01
Or the first oil shock, or the second oil shock, or so many of these things.
2
SPEAKER_01
But almost always,
2
SPEAKER_01
I realized that they, when I looked in history, they happened before.
2
SPEAKER_01
They just happened in other people s lifetimes, which led me to realize that I needed to study history and what happened in other people s lifetimes and what happened in other countries and places so that I would have timeless and universal principles for dealing with that thing.
2
SPEAKER_01
So I, oh yeah, I ve been,
2
SPEAKER_01
you know, the implausible happening.
2
SPEAKER_01
But it s like a one in a hundred year storm.
2
SPEAKER_00
Right.
2
SPEAKER_01
OK.
2
SPEAKER_00
Or it s or they ve happened before.
2
SPEAKER_00
Yeah, they ve happened.
2
SPEAKER_00
Just not to you.
2
SPEAKER_00
Let me talk about if we could about a little bit.
2
SPEAKER_00
So we ve Bridgewater Associates manage about one hundred and sixty billion dollars in assets.
2
SPEAKER_00
and artificial intelligence systems algorithms are pretty good with data.
2
SPEAKER_00
What role in the future do you see AI play in analysis and decision making in this kind of data-rich and impactful area of investment?
2
SPEAKER_01
I m gonna answer that not only in investment, but I give a more all-encompassing rule for AI.
2
SPEAKER_01
As I think you know for the last 25 years we have taken our thinking and put them in algorithms and so we make decisions.
2
SPEAKER_01
The computer takes those
2
SPEAKER_01
Criteria algorithms and they put them and they re in there and that takes data and they operate As an independent decision maker power in parallel with our decision making so for me, it s like there s a chess game playing And i m a person With my chess game and i m saying it made that move and i m making the move and how do I compare those two moves?
2
SPEAKER_01
So we ve done a lot but let me give you an a rule if the future can be different from the past
2
SPEAKER_01
and you don t have deep understanding, you should not rely on AI.
2
SPEAKER_01
Okay?
2
SPEAKER_01
Those two things.
2
SPEAKER_01
Deep understanding of the cause effect relationships that are leading you to place that bet in anything.
2
SPEAKER_01
Okay?
2
SPEAKER_01
Anything important.
2
SPEAKER_01
Let s say if it was do surgeries, and you would say, how do I do surgeries?
2
SPEAKER_01
I think it s totally fine to watch all the doctors do the surgeries.
2
SPEAKER_01
You can put it on, take a digital camera and do that, convert that into AI algorithms that go to robots and have them do surgeries, and I d be comfortable with that.
2
SPEAKER_01
Because if it ll do that if the keeps doing the same thing over and over again and you have enough of that That would be fine even though you may not understand the algorithms because you re if the things happening over and over again And you re not asking the future would be the same that appendicitis or whatever it is will be handled the same way the surgery that s fine however
2
SPEAKER_01
What happens with AI is, for the most part, is it takes a lot of data and it, with a high enough sample size, and then it puts together its own algorithms.
2
SPEAKER_01
Okay, there are two ways you can come up with algorithms.
2
SPEAKER_01
You can either take your thinking and express them in algorithms, or you can, say, put the data in and say, what is the algorithm?
2
SPEAKER_01
That s machine learning.
2
SPEAKER_01
And when you have machine learning, it ll give you equations which quite often are not understandable.
2
SPEAKER_01
If you would try to say, okay, now describe what it s telling you, it s very difficult to describe, and so they can escape understanding.
2
SPEAKER_01
And so it s very good for doing those things that could be done over and over again if you re watching and you re not taking that.
2
SPEAKER_01
But if the future is different from the past and you have that then you re, if the future is different from the past and you don t have deep understanding,
2
SPEAKER_01
you re going to get in trouble.
2
SPEAKER_01
And so that s the main thing.
2
SPEAKER_01
As far as AI is concerned, AI, and let s say computer replications of thinking in various ways, I think it s particularly good for processing.
2
SPEAKER_01
But the notion of what you want to do
2
SPEAKER_01
is better most of the time determined by the human mind.
2
SPEAKER_01
What are the principles?
2
SPEAKER_01
Like, okay, how should I raise my children?
2
SPEAKER_01
It s going to be a long time before AI, you re going to say it has a good enough judgment to do that.
2
SPEAKER_01
Who should I marry?
2
SPEAKER_01
All of those things maybe you can get the computer to help you but if you just took data and do machine learning it s not going to find it if you were to then take one of my criteria for Any of those questions and then say put them into an algorithm and you d be a lot better off than if you took AI to do it but by and large the mind should be do
2
SPEAKER_01
used for inventing and those creative things.
2
SPEAKER_01
And then the computer should be used for processing because it could process a lot more information a lot faster, a lot more accurately and a lot less emotionally.
2
SPEAKER_01
So any notion of thinking in the form of processing type thinking should be done by a computer.
2
SPEAKER_01
And anything that is in the notion of doing that other type of thinking should be operating with the brain, operating in a way where you can say, ah, that makes sense.
2
SPEAKER_00
You know, the process of reducing your understanding down to principles is kind of like the process, the first one you mentioned, type of AI algorithm, where you re encoding your expertise.
2
SPEAKER_00
You re trying to program, write a program.
2
SPEAKER_00
The human is trying to write a program.
2
SPEAKER_00
How do you think that s attainable?
2
SPEAKER_00
The process of,
2
SPEAKER_00
reducing principles to a computer program?
2
SPEAKER_00
Or when you say, when you write about, when you think about principles, is there still a human element that s not reducible to an algorithm?
2
SPEAKER_01
My experience has been that almost all things, including those things that I thought were pretty much impossible to express,
2
SPEAKER_01
I ve been able to express in algorithms, but that doesn t constitute all things.
2
SPEAKER_01
So you can, whew, you can express.
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SPEAKER_01
far more than you can imagine you ll be able to express.
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SPEAKER_01
So I use the example of, okay, how do you raise your children?
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SPEAKER_01
Okay, you will be able to take it one piece by piece.
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SPEAKER_01
Okay, at what age, what school?
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SPEAKER_01
And the way to do that, in my experience, is to take that, and when you re in the moment of making a decision, or just past making a decision,
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SPEAKER_01
to take the time and to write down your criteria for making that decision in words, okay?
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SPEAKER_01
That way you ll get your principles down on paper.
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SPEAKER_01
I created an app online called, it s right now just on the iPhone, it ll be on Android.
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SPEAKER_00
Yeah, I tried getting it on Android.
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SPEAKER_01
Come on now, let s get it on Android.
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SPEAKER_01
In a few months it ll be on Android.
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SPEAKER_01
Awesome.
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SPEAKER_01
But it has an app in there
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SPEAKER_01
That helps people write down their own principles because this is very powerful so when you re in that moment where you ve just you re thinking about it and you re thinking your criteria for you know choosing the school for your child or whatever that might be and you write down your criteria or whatever they are those principles
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SPEAKER_01
You write down, and that will, at that moment, make you articulate your principles in a very valuable way.
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SPEAKER_01
And if you have the way that we operate, that you have easy access, so then the next time that comes along, you can go to that, or you can show those principles to others to see if they re the right principles.
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SPEAKER_01
You will get a clarity of that principle that s really invaluable in words, and that ll help you a lot.
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SPEAKER_01
then but then you start to think how do i express that in data and it ll shock you about how you can do that you ll you ll form an equation that will show the relationship between these particular parts and then the
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SPEAKER_01
essentially the variables that are going to go into that particular equation and you will be able to do that and you take that little piece and you put it into the computer and then take the next little piece and you put that into the computer and before you know it
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SPEAKER_01
you will have a decision-making system that s of the sort that I m describing.
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SPEAKER_00
So you re almost making an argument against an earlier statement you ve made.
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SPEAKER_00
You re convincing me.
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SPEAKER_00
At first you said there s no way a computer could raise a child, essentially.
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SPEAKER_00
But now you ve described, making me think of it, if you have that kind of idea, meritocracy, you have this rigorous approach to bridge while it takes an investment, and apply it to raising a child, it feels like, through the process you just described, we could, as a society, arrive at a set of principles for raising a child, and encode it into a computer.
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SPEAKER_00
That originality,
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SPEAKER_01
will not come from machine learning.
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SPEAKER_00
The first time you do, so that the original, yes.
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SPEAKER_01
That s what I m referring to.
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SPEAKER_00
But eventually, as we together develop it, and then we can automate it.
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SPEAKER_01
That s why I m saying the processing can be done by the computer.
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SPEAKER_01
So we re saying the same thing.
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SPEAKER_01
We re not inconsistent.
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SPEAKER_01
We re saying the same thing, that the processing of that information and those algorithms can be done by the computer in a very, very effective way.
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SPEAKER_01
You don t need to sit there and process and try to weigh all those things in your equation and all those things.
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SPEAKER_01
But that notion of, okay, how do I get at that principle?
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SPEAKER_00
And you re saying you d be surprised how much you can express.
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SPEAKER_00
That s right.
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SPEAKER_01
You can do that.
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SPEAKER_01
So this is where I think you re going to see
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SPEAKER_00
the future.
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SPEAKER_00
Right now, we go to our devices and we get information to a large extent.
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SPEAKER_00
And then we get some guidance, we have our GPS and the like.
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SPEAKER_00
In my opinion, principles
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SPEAKER_00
Principles, principles, principles.
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SPEAKER_00
I want to emphasize that.
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SPEAKER_00
You write them down.
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SPEAKER_00
You ve got those principles.
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SPEAKER_00
They will be converted into algorithms for decision-making, and they re gonna also have the benefit of collective decision-making, because right now, individuals, based on what s stuck in their heads, are making their decisions in very ignorant ways.
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SPEAKER_00
They re not the best decision-makers, they re not the best criteria, and they re operating.
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SPEAKER_00
When those principles are written down and converted into algorithms, it s almost like you ll look at that and follow the instructions and it ll give you better results.
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SPEAKER_00
Medicine will be much more like this.
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SPEAKER_00
You can go to your local doctor and you could ask his point of view and whatever and he s rushed and he may not be the best doctor around and you re gonna go to this thing and get that same information or just automatically have an input in that
3
SPEAKER_00
and it s gonna tell you, okay, here s what you should go do, and it s gonna be much better than your local doctor.
3
SPEAKER_00
And that, the converting of information into intelligence, okay, intelligence is the thing.
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SPEAKER_00
We re coming out with, again, I m 70, and I wanna pass all these things along.
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SPEAKER_00
So all these tools that I ve found need to develop all over these periods of time, all those things, I wanna make them available,
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SPEAKER_00
And what s gonna happen as they re going to see this, they re going to see these tools operating much more that way.
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SPEAKER_00
The idea of converting data into intelligence.
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SPEAKER_00
Intelligence, for example, on what they are like.
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SPEAKER_00
Right, or what are your strengths and weaknesses intelligence on who do I work well with under what circumstance personalized intelligence?
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SPEAKER_00
We re going to go from what are called systems of record Which are a lot of okay information organized in the right way to intelligence
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SPEAKER_00
And we re gonna, that ll be the next big move in my opinion.
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SPEAKER_00
And so you will get intelligence back.
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SPEAKER_01
And that intelligence comes from reducing things down to principles and to.
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SPEAKER_01
That s how it happens.
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SPEAKER_01
So what s your intuition if we look at future societies?
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SPEAKER_01
Do you think we ll be able to reduce a lot of the
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SPEAKER_01
the details of our lives down to principles that would be further and further automated.
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SPEAKER_00
I think the real question hinges on people s emotions and irrational behaviors.
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SPEAKER_00
I think that there s subliminal things that we want, okay?
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SPEAKER_00
And then there s cerebral, conscious logic, and the two often are at odds.
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SPEAKER_00
So there s almost like two yous in you, right?
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SPEAKER_00
And so let s say, what do you want?
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SPEAKER_00
Your mind will answer one thing, your emotions will answer something else.
3
SPEAKER_00
So when I think about it, I think emotions are,
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SPEAKER_00
I want inspiration, I want love is a good thing, being able to have a good impact, but it is in the reconciliation of your subliminal wants and your intellectual wants so that you really say they re aligned.
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SPEAKER_00
And so to do that in a way to get what you want.
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SPEAKER_00
So irrationality is a bad thing if it means that it doesn t make sense in getting you what you want.
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SPEAKER_00
But you better decide which you you re satisfying.
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SPEAKER_00
Is it the lower level you, emotional, subliminal one?
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SPEAKER_00
Or is it the other?
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SPEAKER_00
But if you can align them.
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SPEAKER_00
So what I find
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SPEAKER_00
is that by going from my, you experience the decision, do this thing subliminally, and that s the thing I want.
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SPEAKER_00
It comes to the surface.
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SPEAKER_00
I find that if I can align that with what my logical me wants and do the double check between them and I get the same sort of thing, that that helps me a lot.
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SPEAKER_00
I find, for example, meditation is one of the things that helps to achieve that alignment.
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SPEAKER_00
It s fantastic.
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SPEAKER_00
achieving that alignment.
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SPEAKER_00
And often then, I also wanna not just do it in my head, I wanna say, does that make sense?
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SPEAKER_00
So I do it with other people, and I say, okay, well, let s say I want this thing, and whatever, does that make sense?
3
SPEAKER_00
And when you do that kind of triangulation, your two yous, and you do that with also the other way, then you certainly wanna be rational, right?
3
SPEAKER_00
But rationality has to be defined by those things.
3
SPEAKER_01
And then you discover sort of new ideas that drive your future.
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SPEAKER_01
So you re always at the edge of the set of principles you ve developed.
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SPEAKER_01
You re doing new things always.
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SPEAKER_01
That s where the intellect is needed.
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SPEAKER_00
Well, and the inspiration.
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SPEAKER_00
The inspiration is needed to do that, right?
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SPEAKER_00
Like, what are you doing it for?
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SPEAKER_00
It s the excitement, the adventure, the curiosity, the hunger.
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SPEAKER_01
What s, if you can be Freud for a second, what s in that subconscious?
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SPEAKER_01
What s the thing that drives us?
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SPEAKER_00
I think you can t generalize of us.
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SPEAKER_00
I think different people are driven by different things.
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SPEAKER_00
There s not a common one, right?
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SPEAKER_00
So, like if you would take the shapers, I think it is a combination of
3
SPEAKER_00
Subliminally, it s a combination of excitement, curiosity.
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SPEAKER_01
Is there a dark element there?
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SPEAKER_01
Is there demons?
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SPEAKER_01
Is there fears?
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SPEAKER_01
Is there, in your sense, something dark that drives them?
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SPEAKER_00
Most of the ones that I m dealing with, I have not seen that.
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SPEAKER_00
What I really see is,
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SPEAKER_00
Ooh, if I can do that, that would be the most dream.
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SPEAKER_00
And then the act of creativity.
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SPEAKER_00
And you say, ooh.
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SPEAKER_00
So excitement is one of the things.
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SPEAKER_00
Curiosity is a big pull, okay?
3
SPEAKER_00
And then tenacity, you know, okay, to do those things.
3
SPEAKER_00
But definitely emotions are entering into it.
3
SPEAKER_00
Then there s an intellectual component of it too, okay?
3
SPEAKER_00
It may be empathy.
3
SPEAKER_00
Can I have an impact?
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SPEAKER_00
Can I have an impact?
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SPEAKER_00
The desire to have an impact.
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SPEAKER_00
That s an emotional thrill, but it also has empathy.
3
SPEAKER_00
And then you start to see spirituality.
3
SPEAKER_00
By spirituality, I mean the connectedness to the whole.
3
SPEAKER_00
You start to see people operate those things.
3
SPEAKER_00
Those tend to be the things that you see the most of.
3
SPEAKER_01
And I think you re gonna shut down this idea completely, but there s a notion that some of these shapers really walk the line between sort of madness and genius.
3
SPEAKER_01
Do you think madness has a role in any of this?
3
SPEAKER_01
Or do you still see Steve Jobs and Elon Musk as fundamentally rational?
3
SPEAKER_00
Yeah, there s a continuum there.
3
SPEAKER_00
And what comes to my mind is that genius
3
SPEAKER_00
is that often at the edge, in some cases, imaginary genius is at the edge of insanity.
3
SPEAKER_00
And it s almost like a radio that I think, OK, if I can tune it just right, it s playing right.
3
SPEAKER_00
But if I go a little bit too far, it goes off.
3
SPEAKER_00
OK.
3
SPEAKER_00
And so you can you can see this.
3
SPEAKER_00
K. Jameson was studying bipolar.
3
SPEAKER_00
What it shows is that, you know, that s definitely.
3
SPEAKER_00
the case, because when you re going out there, that imagination, whatever, can be near the edge sometimes.
3
SPEAKER_00
It doesn t have to always be.
3
SPEAKER_01
So let me ask you about automation.
3
SPEAKER_01
That s been a part of public discourse recently.
3
SPEAKER_01
What s your view on the impact of automation?
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SPEAKER_01
of whether we re talking about AI or more basic forms of automation on the economy in the short term and the long term.
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SPEAKER_01
Do you have concerns about it, as some do, or do you think it s overblown?
3
SPEAKER_00
It s not overblown.
3
SPEAKER_00
I mean, it s a giant thing.
3
SPEAKER_00
It ll come at us in a very big way.
3
SPEAKER_00
in the future where we re right at the edge of even really accelerating it.
3
SPEAKER_00
It s had a big impact and it will have a big impact and it s a two-edged sword because it ll have tremendous benefits and at the same time it has profound benefits in employment and distributions of wealth
3
SPEAKER_00
Because the way I think think about it is there are certain things human beings can do and over time we ve Evolved to go to almost higher and higher levels and now we re almost like we re at this level, you know It used to be your labor and you would then do your labor and okay, we can get past the labor we got tractors and things and you go up up up up up and
3
SPEAKER_00
And we re up over here and up to the point in our minds where, OK, anything related to mental processing, the computer can probably do better and we can find that.
3
SPEAKER_00
And so other than almost inventing,
3
SPEAKER_00
You re at a point where the machines and the automation will probably do it better.
3
SPEAKER_00
And that s accelerating and that s a force.
3
SPEAKER_00
And that s a force for the good.
3
SPEAKER_00
And at the same time,
3
SPEAKER_00
it what it does is it displaces people in terms of employment and changes and it produces wealth gaps and all of that.
3
SPEAKER_00
So I think the real issue is that that has to be viewed as a national emergency.
3
SPEAKER_00
In other words, I think the wealth
3
SPEAKER_00
the wealth gap, the income gap, the opportunity gap, all of those things that force is creating the problems that we re having today.
3
SPEAKER_00
A lot of the problems, the great polarity, the disenfranchised, not equal, not anything approaching equality of education, all of these problems, a lot of problems are coming as a result of that.
3
SPEAKER_00
And so it needs to be viewed really as an emergency situation in which there s a good work, good plan worked out for how to deal with that effectively.
3
SPEAKER_00
So that it s dealt with effectively.
3
SPEAKER_00
Because it s good for the average, it s good for the impact, but it s not good for everyone and it creates that polarity.
3
SPEAKER_00
So it s gotta be dealt with.
3
SPEAKER_01
Yeah.
3
SPEAKER_01
And you ve talked about the American dream and that that s something that all people should have an opportunity for, and that we need to reform capitalism to give that opportunity for everyone.
3
SPEAKER_01
Let me ask on one of the ideas in terms of safety nets that support that kind of opportunity.
3
SPEAKER_01
There s been a lot of discussion of universal basic income amongst people.
3
SPEAKER_01
So there s Andrew Yang, who s running on that.
3
SPEAKER_01
He s a political candidate running for president.
3
SPEAKER_01
on the idea of universal basic income.
3
SPEAKER_01
What do you think about that, giving $1,000 or some amount of money to everybody as a way to give them the padding, the freedom to sort of take leaps, to take the call for adventure, to take the crazy pursuits?
3
SPEAKER_00
Before I get right into my thoughts on universal basic income, I want to start with the notion that
3
SPEAKER_00
opportunity, education, development, creating equality so that you, people say there s equal opportunity and is the most important thing.
3
SPEAKER_00
And then to find out what is the amount, how are you going to provide that?
3
SPEAKER_00
where, what, how does it, how do you get the money into a public school system?
3
SPEAKER_00
How do you get the teaching?
3
SPEAKER_00
How do you, what do you, the fleshing out that plan to create equal opportunity in all of its various forms is the most pressing thing to do.
3
SPEAKER_00
And so I m, you know, that is that.
3
SPEAKER_01
The opportunity, the most important one you re kind of implying is the earlier the better, sort of like,
3
SPEAKER_01
opportunity to education.
3
SPEAKER_01
So in the early development of a human being is when you should have the equal opportunities.
3
SPEAKER_01
That s the most important.
3
SPEAKER_00
Right.
3
SPEAKER_00
In the first phase of your life, which goes from birth until you re on your own and you re an adult and you re now out there,
3
SPEAKER_00
and you deal with early childhood development, okay, and you take the brain and you say, what s important?
3
SPEAKER_00
The child care, okay, it makes a world of difference, for example, if you have good parents who are trying to think about instilling the stability in a non-traumatic environment to provide them, so I would say the good guidance that normally comes from parents and the good education that they re receiving
3
SPEAKER_00
are the most important things in that person s development.
3
SPEAKER_00
The ability to be able to be prepared to go out there and then to go into a market that s an equal opportunity job market.
3
SPEAKER_00
to be able to then go into that kind of market is a system that creates not only fairness, anything else is not fair, and then in addition to that, it also is a more effective economic system because the consequences of not doing that to a society are devastating.
3
SPEAKER_00
If you look at what the difference in outcomes for somebody who completes high school or doesn t complete high school,
3
SPEAKER_00
or does each one of those state changes.
3
SPEAKER_00
And you look at what that means in terms of their costs to society, not only themselves, but their cost and incarceration costs and crimes and all of those things.
3
SPEAKER_00
it s economically better for the society and it s fairer if they can get those particular things.
3
SPEAKER_00
Once they have those things, then you move on to other things.
3
SPEAKER_00
But yes, from birth all the way through that process, anything less than that is bad, is a tragedy and so on.
3
SPEAKER_00
So that s what, yeah, those are the things that I m estimating.
3
SPEAKER_00
And so what I would want above all else is to provide that.
3
SPEAKER_00
So with that in mind, now we ll talk about universal basic income.
3
SPEAKER_00
Start with that, now we can talk about UBI.
3
SPEAKER_00
Right, because you have to have that.
3
SPEAKER_00
Now the question is what s the best way to provide that, okay?
3
SPEAKER_00
So when I look at UBI, I really think is what is going to happen with that thousand dollars?
3
SPEAKER_00
Okay, and will that thousand dollars come from another program?
3
SPEAKER_00
Does that come from an early childhood developmental program?
3
SPEAKER_00
Who are you giving the thousand dollars to and what will they do for that thousand dollars?
3
SPEAKER_00
I mean like my reaction would be I think it s a great thing that everybody should have almost a thousand dollars in their bank and so on but when do they get to make decisions or who s the parent a lot of pit times you can give a Thousand dollars to somebody and it could have a negative result
3
SPEAKER_00
It can have, you know, they can use that money detrimentally, not just productively.
3
SPEAKER_00
And if that money s coming away from some of those other things that are going to produce the things I want and you re shifted to, um, let s say to come in and give a check doesn t mean it s outcomes are going to be good in providing those things that I think are so fundamental important.
3
SPEAKER_00
If it was just everybody can have a thousand dollars and use it.
3
SPEAKER_00
So when the time comes,
3
SPEAKER_00
and use it well that would be really really good because it s almost like everybody you d wish everybody could have a thousand dollars worth of wiggle room in their lives okay and i i think that would be great i love that but i want to make sure that these other things that are taken care of so if it comes out of that budget
3
SPEAKER_00
And, you know, I don t want it to come out of that budget that s going to be doing those things.
3
SPEAKER_00
And, you know, so you have to figure it out.
3
SPEAKER_01
And you have a certain skepticism that human nature will use, may not always, in fact, frequently may not use that thousand dollars for the optimal to support
3
SPEAKER_01
the optimal trajectory.
3
SPEAKER_00
Some will and some won t.
3
SPEAKER_00
One of the big advantages of universal basic income is that if you put it in the hands, let s say, of parents who know how to do the right things and make the right choices for their children because they re responsible and you say, I m going to give them a thousand dollars wiggle room to use for the benefit of their children.
3
SPEAKER_00
Wow, that sounds great.
3
SPEAKER_00
If you put it in the hands of, let s say, an alcoholic or drug addicted parent,
3
SPEAKER_00
who is not making those choices well for their children, and what they do is they take that thousand dollars and they don t use it well, then that s going to produce more harm than good.
3
SPEAKER_01
Well put.
3
SPEAKER_01
You re, if I may say so, one of the richest people in the world, so you re a good person to ask, does money buy happiness?
3
SPEAKER_00
No, it s been shown that once you get over a basic level of income so that you can take care of the pain, health and whatever, there s no correlation between the level of happiness that one has and the level of money that one has.
3
SPEAKER_00
That thing that has the highest correlation is
3
SPEAKER_00
quality relationships with others, community.
3
SPEAKER_00
If you look at surveys of these things across all surveys in all societies, it s a sense of community and interpersonal relationships.
3
SPEAKER_00
That is not in any way correlated with money.
3
SPEAKER_00
You can go down to native tribes in very poor places, or you can go in all different communities.
3
SPEAKER_00
And so they have the opportunity to have that.
3
SPEAKER_00
I m very lucky in that I started with nothing, so I had the full range.
3
SPEAKER_00
I can tell you, by not having money, and then having quite a lot of money, I did that in the right order.
3
SPEAKER_01
So you started from nothing in Long Island.
3
SPEAKER_01
Yeah.