[00:00:00] Speaker A: Hello, everyone, and welcome to the 216th episode of the Atlas Society asks. My name is Jennifer Anju Grossman. Most people call me Jag. I am the CEO of the Atlas Society, the leading nonprofit organization introducing young people to the ideas of Ayn Rand in fun, creative ways, including animated videos and graphic novels. Today, we are joined by my old friend and mentor, Jim Pinkerton. But before I even begin to introduce my guest, I want to remind all of you who are watching us on Instagram, Twitter, LinkedIn, YouTube, Facebook. You can use the comment section to type in your questions, and we will get to as many of them as we can. So our guest, Jim Pinkerton and I go back about 25 years. We met when he was a policy advisor to the George HW Bush administration, and I was a researcher and then speechwriter. Previously, he worked in Ronald Reagan Domestic Policy office, and later we worked together in advising Ted Forestman on the launch of the Children Scholarship Fund. Jim was also a key advisor to Roger Ailes during the launch of Fox News. Jim is the author of several books, including, most recently, the Secret of Directional Investing, making money amidst the red blue Rumble, which offers a new way to think about investing in politically polarized times, which we will talk about. Jim, so great to see you again.
[00:01:40] Speaker B: Nice to see you. Thanks for having me.
[00:01:42] Speaker A: So we are definitely going to get into the secret of directional investing. But you've had such a unique and, dare I say, directional perch in american political history for the last 30 plus years that I'd be doing our audience a service if I simply glossed over it. What elements in your early life contributed to your interest in politics and public policy?
[00:02:12] Speaker B: I was always a newshound. I mean, I just age about ten or eleven. I just read the Chicago Daily newsletter every day.
And I found, you know, I just sort of piecing together, you know, the fate of the Johnson administration.
I just found it interesting and kind of compelling and consequential. It made a difference whether or not we were fighting in the Vietnam War or whether or not we had an energy crisis. And so I just, and I always say, you know, to people starting out who want to get into politics, do the one heart read the news every day. So, you know, a key moment in my upward mobility in the campaign back in 1979 came when I was just a volunteer driving paper. This is sort of the pre facts era, and I drive papers around, just write documents. And then somebody came into the room where we're just sort of sitting around eating pizza and said, you know, which one of you knows who Robert Byrd is majority leader West Virginia. The Democrats, they said, okay, come this way. And I was promoted at that moment from the deliverer to answering letters. That was how I got going. So just actually have some facts and knowledge and details in your head and you're on your way.
[00:03:49] Speaker A: Would it be fair to say that Lee Atwater, the former republican party chair, was a mentor to you and such a fascinating character. What was that relationship like?
[00:04:02] Speaker B: Well, he was a fascinating character and died tragically at the age of 40 of brain tumor. I worked for him for seven years, 1982 to 1989 or 88, you know, in the person of Reagan White House and then George Hw Bush political action and the Bush campaign.
And then he went to be off to be chairman of the Republican National Committee in 1989. Bush White House.
And, you know, he was a brilliant, driven, intense guy. And people always suggested, you know, look, anybody who had that much sort of mental energy to kind of turn on him somehow and give him a brain tumor, but he just was, you know, results sweep themselves for two republican land lives. Reagan got 525 electoral votes. Bush got torn in 26. You know, those are the last times that any president got over 400 in either parties.
And he had a flair for popular culture.
Had he lived, he would have been a regular on David Letterman and so on.
It was a tragedy and just definitely gives you, as you think about life and fate, that somebody so brilliant, so dynamic, so energetic can be dead at 40.
[00:05:42] Speaker A: Yeah. Well, even within that very first Bush White House, you had a vision of a new paradigm for government, which you ultimately presented in your first book, what comes next? The end of big government and the new paradigm ahead.
That was back in 1995. Are there lessons therein that could continue to inform a more user friendly approach to public policy today?
[00:06:15] Speaker B: Well, I was. When I wrote that book and gave a speech on the new paradigm in 1990, which white people interested in history, Google all this stuff and find it.
I was very influenced by the restructuring and changing I saw going on corporate America. And I was struggling to kind of understand, you know, what was happening as in those days, I about the White House is call somebody like Alvin Toffler up and invite him to lunch. It took a couple of months, but he turned up and we had a nice lunch and talked about these things. And one of the books that I was sort of hoping for some way of kind of understanding what I was seeing, I had read the Thomas structure of scientific revolution high School, and I understood about every third word. I mean, it was dense.
He was a brilliant guy. I was the one who was dense and slow. And, you know, in the pre Wikipedia era, you know, he makes some reference to, you know, some chemistry or Boyle or Harvey or somebody, and you have to kind of struggle to figure out what they're talking about without was slow going. But I kind of knew it was saying something important.
And so then during the Bush 41 days, I got the book again and read it. I got to page 167. And he was talking about the old paradise, the old paradigm of ptolemaic astronomy, which held that the sun revolves around the earth and how that was just completely corrupted by the 15th century intellectually because it just wasn't explaining where the celestial bodies were. And Hugh said that the state of astronomy in pre Copernican Europe was a scandal. That word just jumped out at the page on a scandal. And I said, well, you know, that's kind of what we're seeing now. We have this horrible scandal of a giant government.
One of the incidents of 1989 was several incidents. One was, of course, the clash of the Berlin Wall, which kind of put the last nail in the coffin, hopefully european communism.
Another was the violent case of Central park, where this poor girl was jogging and was drugged and raped by these criminals. And I thought, well, here we are in New York City, part of the welfare state and all generosity and John Lindsay and everything, and this horrible thing happened, and nobody can in charge can sort of explain, well, how could we be this generous and kind get in return this utter criminal viciousness? And again, the word scandal just came to me again and again as, okay, this is what we're seeing is a scandal. And so I said, well, what can we do about that? That was, what about the new paradigm, which again, is an homage to Kuhn? And of course, the word itself goes way back.
And that got me thinking, well, that's sort of what we need. And I do think that it helped spark a discussion by both parties, frankly, more inside the democratic party than the Republican Party, as to how you reinvent government.
The Bill Clinton and Al Gore administration was very influenced by it. They created a whole reinventing government thing, a task force, which did quite a lot. It actually succeeded in shrinking the government in the size of GDP to the lowest level it had been in the post world war two era. So it was successful in terms as far as it went. And the Democrats had kind of lost interest in that. But at the time they were very interested and it continues to live. And Newt Gingrich was talking about this and emphasizing this. Plenty of governors have been struggling with this. So it was, I think as long as there's a bureaucracy that needs to be reformed, people will be thinking about some paradigm shift and how to make it better.
[00:10:39] Speaker A: Roger Ailes was also a person that you worked very closely with, and looking back to your role with him in the launch of Fox News now, however many years later, in what ways do you think the original vision that you two had for Fox News has been achieved? Or in what ways has Fox failed to live up to that vision?
[00:11:11] Speaker B: I mean, I worked for Roger in the Bush campaign days in the eighties, and then started working for him at Fox in 1996, actually, before the Fox Channel launched. And I was pretty close to him. And I think Roger definitely had a vision of 90% of the media are liberal, and if something is not liberal, people will notice. And he was 100% right. He was very disciplined, very organized, and a showman. I mean, he worked on the Mike Douglas show for years.
He knew how to make an entertaining show. He knew how to have nice colors and nice music, attractive anchors, good talkers and things like Dixon. He was conscious of it. He was the blue collar guy. But his mother had sent him to elocution school eight or nine just to make him talk like a, you know, sort of mid atlantic accent that people used to cry for.
He had a sense of all the elements that make a good show. And then he said, we're going to zig when they're zagging, or zag when they're zigging, whichever. And he made Fox incredibly successful, the most powerful name.
And I'll say, also, he was a great guy. He was a wonderful boss. And I realize there's all no secrets, Google. So anybody who doesn't remember this can look it up, he was a wonderful guy, great boss, and did a great job. And I will just say, as an aside, speaking of where, Fox is now one of Roger's projects, and he was born in 1940, so by the time Fox was in his full flower, he was, you know, pushing, pushing 70 or almost 80. And so, in essence, he was not as able to finish things as he wanted to. One of the ideas that we worked on back in 2001, Fox Nation, with our, our idea of trying to inject the new social media into the presentation, but understood that in a world of a million billion podcasts, just the idea of one linear cable channel is not going to cut it. And so they created the Fox Business Network in 2007, and then Fox Nation, which was an attempt to, again, to get social media, to have people make it participate.
We didn't know about Twitter back then or X. But we certainly understood people. It's not just people want to watch. They want to be part of it. They want to help. They want to make it better. And as Twitter and social media in general prove, if you give people a chance to express themselves, they will do it, and they'll amaze you with how creative they are and how interesting they are and even how journalistic they get. And I saw a great video just today of Steve Cortez at the democratic convention in Chicago saying, I'm Steve Cortez, who's the republican influencer type. I'm here at the democratic convention because I have a friend of mine from Venezuela who would like to join the come to the democratic convention and cross the border without anybody bothering him. Why can't he come to the democratic convention without anybody bothering? So it was sort of a setup where he just went to these various checkpoints and said, you know, hi, Edwin would like to come to the convention, and would you like to let him in? Security guards, you know, on camera, they were saying, well, no, you can't do that. You need id cards, you get badge, all this stuff. And it was a funny skit. And it's the kind of thing that only comes from we people. Wisdom of crowds, trying new things, doing things, you got to be on. That's the idea we had for Fox Nation. And unfortunately, Roger was pushed out in 2016. And now, frankly, without that kind of vision that he had, Fox Nation, anybody who watches it is just a bunch of reruns and filler, you know, low rent specials and stuff. It's nothing. It's just another tv network and not what Roger had in mind.
[00:15:35] Speaker A: Yeah, well, and like you write in directional investing, if you're going to have something new, and it's going to be expensive because that Fox News Nation's not cheap. It's got to be ten times better, not about half worse. So, on a personal note, Jim, a few years back, you faced a pretty severe neurological health scare, one which knocked you off your regular Fox News appearances and was really life threatening. I think it's impossible to go through anything like that without it changing your outlook in some fundamental ways.
What were some of your takeaways from surviving that near death experience?
[00:16:24] Speaker B: Diagnosed with an acoustic trauma, which is a sort of autoimmune thing on my left acoustic nerve. And I was just born with a bad right ear. And so my left ear was the only really good one I had. And they said, this neuroma is in your head, and if you don't take it out it'll cause a stroke or something. And so I sort of said, okay. And it was, you know, as I went to Johns Hopkins, you know, good doctors and 12 hours on the operating table, and it was very difficult.
I had a final leak on top of that. It just became a genuine difficult situation for a couple of years. I finally went to Cedar Sinai in Los Angeles, and they picked final court leak. And so I would just philosophically say that sort of obvious, but it's things that are obvious and still hard to keep in your head when it's happening to, you know, know what you're getting into. Not every problem can be made better with surgery. I think back to what we both very much enjoyed and starch reckon it's various iterations. One of the sort of jokes which is, I now see the profundity of it is Doctor McCoy saying, active the 24th century. You know, he said at Captain Kirk, you know, Jim, in the old days, in the primitive days, they used to cut people open to solve the problem. Surgery is such a crude instrument now we have, you know, tricorders and everything. And, you know, it was. It was fixed science, but it sort of pointed toward where we're headed, which is the realization that cutting somebody open to do something is not nearly as good an idea as whatever other solution with lasers, radiation, or nanobots, or just chemicals or whatever.
And so actually, that led me to give gears a little bit to think about how you get more innovation and imagination into a field, which, again, takes you back to Kuhnena. The whole point of Kuhn is a new paradigm comes along and it disrupts the old paradigm. And that's why the old paradigm hates it.
The Nobel Prize winning physicist Max Planck said, science evolves one funeral at a time. The old scientists have to die, and they take their old idea with them. And the new scientists come along. It's kind of a romantic and randy and kind of point about the new figure comes along and does this because I am kind of public policy minded. I think to myself, well, how do you create a framework? How do you create a system that makes it easier for entrepreneurs and visionaries, innovators to do their thing? And that requires, first of all, you can't kill them, and you don't want secret police and stuff. And then you think, what else can you do to make a more welcoming environment? And so I, you know, in the book the fractional investing, I take the case of Nevada.
And back in 1931, Nevado Las Vegas had a population of 5000 by an acre of land. What was then called us highway 15, $70. And that's gambling in 1931. And today, metro area of Las Vegas is 2.2 million.
What's now called the script is $30 million. And again, gambling is not everybody's cup of tea, but you have to admire the vision of the people who said, here's deserts and tumblewees, and how do we now turn that into, you know, glittering casinos and entertainment and this, you know, the sphere, if you see that, this 300 foot high thing, which is sort of an astonishing engineering marvel, and you don't have to pay anything, you just stand outside and look at it and watch it. It's pretty fun, let alone go inside it. And this is, you know, everything that Ayn Rand thought about in terms of what people can accomplish if they're allowed to or if they make it, they insist on doing. And I would now then say, let's apply that to other fields, too. If Nevada could prove sort of the liberty enterprise own concept with gambling, what could some other place do on behalf of medical innovation or cryptocurrency or AI or whatever, if the entrepreneurs and visionaries are free to do so? And that's really what kind of got me thinking about this, because I would love to see more medical innovation that doesn't involve surgery.
[00:21:26] Speaker A: Right. I can imagine. Okay, we're going to dive into the book, but I want to get to a couple of these clever questions from the audience. Candice Morena, as always, great to see you. She asks, what news stations do you, Jim, listen to today?
Is it still mainstream outlets, or do you get your news elsewhere?
[00:21:51] Speaker B: I really find, you know, I used to say that the drugs report was my homepage. And, you know, and now I find myself, you know, I go to Twitter and start looking around. I check my email.
You know, I.
It's really hard to say. There's, you know, because I live in DC and I still follow politics pretty closely, I guess. I, you know, I read Punchfall and Axios and, you know, politico playbook just to see what's going on in the presidential campaign. But I fully understand, you know, unless you're a hardcore political junkie, that's, you know, pretty obscure.
But look, all the people who say, read widely just, you know, just. Just read, you know, promiscuously, I think. You know, Thomas Jefferson said that, you know, my. And, you know, Machiavelli said, you know, I get home from work, he was a diplomat in his life, and I then, you know, have a drink and then commune with, you know, Plato and Plutarch. And, you know, and, you know, I know the feeling we, we all, anybody on this podcast knows that kind of feeling, you know, as a participant or audience. Yeah, it is, it is fun to read things, just read, read widely. I just am reading John Grinspan's book on the age of acrimony. It was sort of history of the United States from 1865 to 1915. And, you know, again, once you sort of get into what you see, well, there's an obviously, you know, patterns that, you know, human nature for obviously the political parties and so on that recreate themselves. And, you know, look, whether you're interested in politics or, you know, botany, you'll see the same thing. And it's, you know, one of the few pleasures of getting older.
[00:23:46] Speaker A: All right. Well, another question here from my modern gault. Good to see you here, too. Looking back at the 1970s and 1980s compared to now, what is the biggest change in regards to government policy making.
[00:24:02] Speaker B: Since the seventies and the eighties?
I would, you know, a fellow named Benedict Anderson, who was a political scientist, wrote a book in about 1987 called imagine communities. And it's about the rise of nationalism as a phenomenon. And he's sort of on the left, and he talked a lot about what he called print capitalism. Just saying once you start thinking yourself as a German or a Frenchman or English and so on, then things fall into place in terms of nationalism. But if one were to take the book broadly, what has changed? And Roger Ailes gets a lot of credit for this is there's now just sort of half the country that just says, look, whatever the liberal establishment says is most likely, you know, at best propaganda and worst a lie. And they just, it's just sort of a permanent oppositional dialectic culture that says, look, if you know, Walter Cronkite or Katie Couric or, you know, Anderson Cooper say it, I just don't buy it. And that then gives you the space for imaginative, you know, counter political figures, whether it's, you know, Ronald Reagan or Donald Trump or Ron DeSantis or Greg Abbott or whoever, to say, look, let's try something different. The school choice movement is a good example. It just is so erupted now.
You could read the New York Times or the Washington Post and really never know much is going on in school choice. And yet if you go to Twitter and you follow, for example, Corey DeAngelis, who's got a pretty substantial following on education, you'll see they're winning primaries and knocking off sort of anti school choice republicans all over. There's three and three yesterday just I think in Idaho or someplace, I've forgotten where. But nonetheless, it's a constant process now of change and it is occurring with media intellectual oxygen completely outside of New York City or DC.
[00:26:12] Speaker A: So the subtitle to your book is making money amidst the red blue rumble. And you acknowledge the reality that the american population has become more politically polarized. Given your unique historical perspective, what are some of the key forces that have fueled that polarization?
[00:26:37] Speaker B: People will say the forces are, you know, media and social media. And again, I think Fox had a lot to do with it. I think Fox just clearly established in every other sort of right leaning media outlet since can say they owe us some kind of debt to fox. And identifying a sort of a counterculture has been part of it. But I would also say that a lot of what's going on is just the biological term of speciation is just as Charles Darwin said, all systems evolve towards complexity. And this country is 340 plus million, whatever it is now. And of course, you know, in the same way that there's always more forms of ice cream or potato chips or, you know, tv, you know, cable channels or podcasts or, you know, websites, of course, there's more of it all the time. There's just a proliferation and it gets to be sort of too big to manage and too big to, you know, diversity is real and diversity includes, you know, even better ideology and thinking and, you know, conscience and so on. I wrote a piece for real clear politics last year, and I said, look, America is so successful, it's time to split the stock.
I'm not looking for secession or civil war or anything close to that, but I'm just sort of observing that there is clearly a red state culture and clearly a blue state culture. And you take an issue like transgenderism, it's obviously unpopular in some places, frankly, kind of popular in other places. I saw polls as recently in New York state, they said by a 58 to 27 margin, New Yorkers want to put transgenderism into the state constitution. That's not going to happen in Alabama or Texas, but it might happen in New York. People are, you know, it's part of being, you know, this diversity. And so I think that a lot of this red blue stuff, which is, I think it's very real and is, you know, continuing and will extend is just simply the realization that, look, you know, some people are optimists, some people are pessimists, you know, some people half full, half empty.
So the red blue is an expression of that divergence. And thanks to the Constitution and thanks to, you know, the basic loose jointedness of the american system. It'll be possible for Texas to have one view on school choice or abortion or gun control or whatever it might be, and Massachusetts to have another, and they can stay in the same union and hopefully not kill each other.
[00:29:14] Speaker A: So you write that you particularly admire the investment acuity of Daniel Bell's book, the Cultural Contradictions of Capitalism. You say that he anticipated contemporary wokeness with its anti merit, anti capitalist obsessions. How so?
[00:29:36] Speaker B: Well, Bell wrote that book in 1976 and was noting, in the tradition of other observers, probably Joseph Schumpeter is probably better known, but he wasn't an american, so I didn't focus on him. Bell could just observe that capitalism and the free market and all that was creating wealth. And it had a paradoxical outcome, which is to say people who are oftentimes the greatest beneficiaries of all this money and wealth ended up for sort of strange but perhaps predictable psychological reasons to actually end up hating it. They just said, no, this is terrible. I hate all this stuff. And Bell didn't have the word wokeness, but he certainly had enough phrases to get the same point across. It is a contradiction or a paradox that the people who've been most benefited from wealth oftentimes end up look at college campuses today. You know, they just. You know, there's a. I joke, you know, that economists have a concept called superior good. Superior good is something that you consume more of as you get richer. So yachts are a superior good. There's also inferior goods. You know, a dog food is inferior good because you get poor, eat dog food. So superior eats. And I, limousines and jets and so on are superiors, but also just sort of, you know, forgive my language bullshit. Is a superior good in terms of, yes, you have so much money, you're so privileged, you have so little work to do, that you spend your time just creating nutty thoughts and thinking yourself, you want to be transgender or something. And it's. It's an unfortunate, you know, element of human nature.
And again, you have to. If you think about politics, you have to think about, how do we.
I may not be able to stop somebody from becoming a nut, but how do I at least keep them from hurting me or hurting the country?
[00:31:35] Speaker A: Right? So one of our scholars, you talk about the sort of hamiltonian and jeffersonian framework in direct secret of directional investing. And one of our scholars at the Atlas Society, professor Richard Salzman of Duke, wrote an important piece called America at her best is hamiltonian. He concludes with this observation. Quote, some say America at its best is neither fully hamiltonian nor fully jeffersonian, but instead a judicious, balanced mix of each. The first, it is believed, would bring too much elitism, capitalism or inequality, and the latter too much populism, agrarianism, or democracy. Yet America suffers from the latter and not the former.
Can you, as mentioned, you devote a substantial attention in your book to your interpretation of the jeffersonian hamiltonian distinction. Would you break that down for us?
[00:32:47] Speaker B: Well, a lot of it comes from the writer Herbert Crowley, who wrote the promise of American Life in 1909, which is a, you know, nobody's heard of it now, but it was an incredibly influential book in a time, you know, Theodore Roosevelt read it, Franklin Roosevelt read it. It was just, you know, extremely influential in its day. And, you know, Crowley observed, and he wasn't the first, but he kind of made it more kind of schematic. The jeffersonian tradition is small government, freedom expression with paradoxical elements like slavery and stuff. But mostly that was not. Jefferson was anti slavery. He just was sort of stuck with it. And the hamiltonian tradition is business and tariffs and I sort of a little bit of industrial policy and so on, but mostly just, you know, finance. I mean, you know, you know, Hamilton was the creator of the bank of New York, and, you know, he's still in his twenties.
And so you can say that Jeffersonianism is more libertarian, and that's attractive. And you can also say that Hamilton is more consciously pro business and pro economic growth and pro development. That's also attractive. And so Crowley just discussed at some length how these two traditions have interacted with each other. And again, there's plenty of people who say Jefferson is terrible, and there are plenty of people say Hamilton is terrible, and yet there's more issues going on than just the economy. It's also a country.
And this is the point about Nevada. Nevada was free to be an enterprise zone and get rich on, at least some people get rich on gambling, in part because it didn't have any laws against gambling, but also because it wasn't conquered by Mexico or China or Utah or Japan or whoever. So, you know, we used to talk about what a great miracle of freedom Hong Kong was, and then the chinese communists swallowed it. So you have to, you know, as I see it, if you want to have a place where investors can feel good about the next decade or 50 years or 100 years or longer, you have to say. Have to. Implicit in there somewhere is, look, you and your investment and your descendants are not going to get conquered by the Huns or the Nazis or the whoever's, we will figure out a plan for protecting you. And that does require a certain rigor in the system that says it's not just doing what you want to, it's also organizing yourself. So you say defend it. You need some kind of, it can be technology, it can be armies, it can be something. But whatever it is, Nevada has had it and Hong Kong has not in the past history, Venice, other rich city states just couldn't figure out a plan for defending themselves. Singapore has Singapore. It's hardly a libertarian paradise, but nonetheless, it's very prosperous. Singapore has made a balance of being prosperous and not getting conquered. The same thing with Bahrain and Qatar in the Persian Gulf. These places, nobody would say they're perfect, but they're better than Iran, better than Iraq or Syria or someplace. So Crowley just sort of meditated on this political system. And so your colleague at the Atlas Society is right. I mean, Hamiltonianism is a sort of a vision of, as Calvin Cooler said, the business of America is business. Let's get right down to it and start, you know, making money and doing things at the same time. Hamilton, you know, wrote the report on manufacturers in 1791 for President Washington with a very much an eye toward media industry to produce weapons. You know, we nearly lost the american revolution because we couldn't make muskets and barrels and, you know, you know, the canvas or sailing ships and stuff. So you need some kind of provision in there somehow. And this is up to clever people who also have just a canny sense of what soldiers and sailors and defenders of your republic will allow. And that requires certain compromises. And it makes a fascinating, endless discussion on this intertwining of both business like hamiltonian, sort of laissez faire Jeffersonianism.
[00:37:26] Speaker A: So what is blue Hamiltonianism?
[00:37:29] Speaker B: Well, I mean, again, Hamilton was, you know, focused on technology and, well, that was part of it.
[00:37:38] Speaker A: And.
[00:37:38] Speaker B: And so now, as I write in the book, I have a whole chapter called blue Hamiltonianism. You know, and I compare blue Hamiltonism to red Jeffersonianism. Again, these are the, you think about the difference between the state. We're both from Massachusetts and Texas.
Massachusetts puts a huge premium on education and has great schools like Harvard and MIT and has relatively high taxes and relatively high spending. And Texas is in many ways sort of the opposite. It does not have the kind of educational, really ultra high end educational schools that Massachusetts does. It does have low taxes. It does have growth. It does have no zoning, and at least in a lot of places. And the population is growing. And of course, as I point out in the book, if you sell somebody in Martha's Vineyard that the population of Massachusetts is shrinking because they're going to Texas, that person in Massachusetts and Martha Vineyard situated or someplace doesn't say great, that's delightful. Delighted. We don't want these people here. We want them. We want fewer people on the beaches and on the roads and so on. So again, it's blue. Hamiltonianism in Massachusetts or California puts a great emphasis on technology and as a driver of growth. The economist Robert Solow at MIT want to earn the Nobel Prize back in the eighties for making what can be summed up as in terms of economic growth, capital is twice as valuable as labor and innovation is twice as valuable as capital.
So if you think about where the really, really super rich companies are, it's not really an accident that a lot of them are founded in California. It's a little disturbing. But if Silicon Valley is in California with a 14% top income tax rate, not Tennessee, and it may end up in Tennessee. I'm totally aware that Elon Musk has left California to go to Texas, and people like Joe Lonsdale have gone to Texas from California. So it's changing. But it's still the case that Nvidia and Microsoft, which is actually in Seattle, of course, or Apple and Google, these are multi trillion dollar companies. And with AI, who can say exactly where this, this is headed? But it certainly seems like there's, you know, many, many trillions of dollars ahead in the future on that. And that GPT is headquartered in the city that conservatives love to hate the most, which is San Francisco. It sort of tells you just how different people are, that somebody would say, you know, San Francisco was overrun by homeless people and whatever else was going on there, that's where I choose to live because I want to develop this AI system, Tat, GPT, which is going to change the world and has changed the world just in the last two years. So we all have our preferences as to what we want to live and how we want to live and so on. And as a science fiction writer, Larry Niven said the thing you have to understand. I asked him once, what lessons have you learned from decades of writing science fiction? He said, people who are just as smart as you think. The opposite.
[00:41:04] Speaker A: True. Well, I'm also very happy to recount that Larry Niven is a supporter of the Atlas Society.
So you mentioned Corey de Angelis earlier and the wins in school choice sweeping the country. And as I mentioned in the intro, you and I both worked together on an early school choice project funded by Ted Forestman and John Walton to offer educational private vouchers to inner city families. I'd love to get your retrospective on what that approach got wrong. What approach got right, and more importantly, how the school choice legislation currently sweeping the states might provide opportunities for directional investing in the future.
[00:41:59] Speaker B: Look, I mean, the school choice, and Jennifer, you were right in the middle of it with Ted and John, and it was, you really were a major protagonist yourself on that score. You know, they were right. I mean, school choice is a great idea. School vouchers, to be more precise about it. It was hard slogging, that's for sure.
It's an idea that's been, I think Milton Friedman either came up with the idea or close to it, came up with it back in probably in the book capitalism, freedom from about 1962. And other figures who deserve some mention, like Christina Culver, who we both know from Washington days in decades past, they've been in the trenches on this issue for a long time. You know, the enthusiasm for the issue has sort of ebbed and flowed, but some people stuck with it and now we really are. But I guess one little sort of wrinkle is that a lot of the children's scholarship fund, you know, going back to the mid whatever, the mid nineties, I guess, was oriented on the inner city. And, you know, it's still a good idea in the inner city. But what has sort of taken people by surprise, at least taken me by surprise, is the degree to which places like Idaho and Utah are talking school choice.
You can have a good idea and you stick with it based on principle, and you will be quite likely surprised by who sort of raises their hand in the audience, says, I want to do that.
Cory de Angelis wasn't like he was rooted.
He showed up and volunteered and kind of has come on now to sort of like lead the movement. I want to say lead, but be a big part of it in many ways. And so what's exciting is when a good idea happens, you sort of throw the bread on the water and you don't know which, you know, fish bites and swallows it all and run and makes a run with it. And now we have, and yes, it's, look, the K through twelve education budget is a trillion dollars, give or take. And so as we move forward, vouchers, and as we start to think about the ability to think about entrepreneurially and creatively, whether it's for profit or nonprofit or anything in between, it's just infinite. That much money should have every smart person, and frankly is in many ways smart person, saying, I have some angle on this. Whether it's in education, pedagogy or AI or technology or something, it's exactly what you would want. You're having now sort of a cambrian explosion of thinking about how this stuff could be made better. And the only thing I can say is it took a while.
[00:44:53] Speaker A: Things, things do take longer than one might expect. And actually, Cory DeAngelis was a previous guest on this podcast. So perhaps we can put the link to that interview in the chats and in the chats on YouTube. Mark Thomas asks a question for Jim. Where can we find more of your work, one book or article of yours that you would recommend? Of course, we'd recommend the book that we've been talking about, the secret of directional investing, how to make money in the midst of the red blue rumble. But otherwise, Jim, any, what's the best place to find your work or any of your key pieces? That would be a good next step for this audience.
[00:45:40] Speaker B: AancPickerton, you know, I'll give you one point that I didn't put in the book. So I wrote another book on this. You know, I quote a wrote a co authored a book with a woman named Joyce Starr on Gaza. And I said, look, they called create Gaza to build peace, protect Israel. And the argument of the book, and this is something I was thinking about for the directional investing book and I just decided to left it out. It was sort of two out. There is it is perfectly within our capability to build land in the ocean. The Dutch have been doing it for 800 years. There's not a country in the world that hasn't changed its coastline in a big way by adding piling in land and landfill and building stronger coasts or even whole new islands. The venetian islands in the bay of Biscayne between Miami and Miami beach are all artificial. They were built back in the 1920s. So we read about NimBYs and Yimbys and growth control and housing costs and so on. There's an obvious answer is build more land in the ocean.
The population of the world has quadrupled in the last hundred years from 2 billion to 8 billion. And we're still living on the same 29% of the earth's surface pretty much completely, actually. And why not say we should just let's build more islands or extend peninsulas? And part of this would be what are the chances that Israel and Gaza are going to reach any kind of peace deal or settlement or anything other than just having this kind of carnage every five years, and which is bad for everybody. And so why not think completely differently about putting an island somewhere and moving the people of Gaza there?
And then once you start thinking about that, you could do that for the Rohingyas and maybe Taiwan and then start really thinking further. You can say, listen, wouldn't it be great to have a new hawaiian island somewhere? You know, that'd be kind of a good investment, right? So taking advantage of technology to do new things. And it's not only can you solve social problems, you can actually make money as well.
[00:47:55] Speaker A: So in addition to this outside of the box idea of building more developable land here on the earth's surface, Elon Musk and others have talked about the possibility of humanity leaving the cradle of Earth and becoming a multi planetary species. And of course, another intellectual partner of yours was thinking about this much earlier, and that's Newt Gingrich. And in the book, you share his longstanding advocacy of space based economic development going back to the early 1980s. What are some of the policy changes that could help make that vision a reality? And how might directional investing play a role?
[00:48:43] Speaker B: I mean, what Gingrich did, you know, back in 1984 when he was in the minority, the Republicans were in the minority in the House back then, but he worked with a democratic congressman named Daniel Acaca from Hawaii. And to speed up the space launch business in the early eighties, NASA stagnated. It hadn't really recovered from know and never really has, I suppose, from, you know, the moon.
Sort of. The catastrophic success of the moon launch was then made NASA kind of a sleepy agency. So in the early eighties, we were only launching about five commercial satellites a year. And a lot of it had to do with just the permitting problem. You know, this is a classic syndrome of government. In the early eighties, there was something like 35 different government agencies that had some piece of whether or not a commercial space launch could happen, a permit kind of thing. And Gingrich and Nakaka said, we should streamline this. And just being shrewd, mention Kenners about how the government works. They said, if we sent NASA, it's kind of hopeless. But if we centralize authority over space launches in the office of the Secretary of transportation, we can make it better again. Secretary of transportation in, you know, in many ways, the Department of Transportation is just another giant, incompetent government agency. However, it's also true that the actual person who is the secretary of transportation tends to be a pretty good political operator. It's just the way it works. It's attractive to people who sort of want to be on the news a lot and do things. And so whether you love them or hate them, Pete Buttigieg, Elizabeth Dole, or Drew Lewis going way back, they tend to be sort of good operators. And so they put the launch authority under the Commercial Space Launch act of 1984, signed by, passed by a democratic House and Republican Senate, and signed by President Reagan in October of 1984, put the authority for space launching in the office of secretary at DOT. And the number of space launches jumped. And so we went from five to launches a year, give or take, in the early eighties, like 130 last year. And it's been an enormous success. And look, Elon Musk deserves all the credit in the world for his own genius and vision. He's a character straight out of some Iron Rand novel, for sure. But you also need a team, and you also need a framework of some kind that lets you do this. It doesn't have the KGB landing on top of you. And Gingrich gets a lot of credit for this. And, you know, it was probably, you know, maybe even his greatest achievement if you think about how important space will be. I look, I'm completely with Musk on the value of being interplanetary and so on. And now there's other challenges coming. I mean, you know, and that's a great, you know, it's straight out of, you know, you know, Atlas shrugged or something, wherever. Just in the last few months, Jeff Bezos of Amazon, who has his own space company but has not been anywhere near as successful, I mean, like, nowhere near as successful, has gotten less interested in building rockets that will go to space or orbit and more interested in convincing the Federal Aviation Administration to deny Musk permits to launch. It's so randy, and you can't even stand it. And that's what musk. That's where. That's what Bezos is doing now. He's trying to convince the Biden administration to yank the permits from us to launch rockets from Cape Canaveral in Florida because of the piping clover or something. And they're trying to do this to musk, too, in Texas Fish and Wildlife Service. So this is a case where somebody who has 1 trillion% the right idea of what we need to do in terms of going to space, it's not that space is for everybody. It's just a great option and great for humanity and great for the human spirit. And meanwhile, others are trying to kneecap him, sabotage them with red tape and green regulation. As I have written several times this is a wonderful opportunity for governor of DeSantis in Florida or Governor Abbott in Texas to say, we reject the ability of the federal government to do these things. It would be a court case, that's for sure. But I think given the Chevron decision and a dozen other Supreme Court decisions in the last few years, I think there's the opportunity for a major, major heavy rethink on the ability of federal bureaucrats to regulate these things. I think it's fair to say the environment would love to put, you know, musk out of business and that the fact that it killed this, you know, space exploration, I don't think they care. I think they'd say that's probably just as well. And obviously, other people, including us, think differently. And so it becomes a political project to make sure that, you know, the environmental impact statements don't destroy this industry or, you know, or send it to China.
[00:54:00] Speaker A: So, in reading the secret of directional investing and thinking about Ayn Rand and objectivism, one commonality is the crucial role of the innovative genius, the John Galt, if you will, in driving prosperity and progress. And I was reminded of that as I was rereading Rand's chapter seven in Atlas Shrugged, entitled the moratorium on brains. The chapter contains the horrific Taggart tunnel crash, in which Rand invites us to consider the consequences of bad ideas and demonstrates how when capable operators are demonized, they withdraw, and in the absence of capable operators, operations fall apart, hence the tunnel crash. What were some of your takeaways from Atlas Shrugged and Rand's philosophy of objectivism more generally?
[00:54:59] Speaker B: I mean, obviously, Galt and Musk are clearly in the same general realm of just. I really don't care what you think. Or Howard Rourke. I really don't care what you think. I'm going to do it. And Musk, it's just a living manifestation of that. I think also, look, we think of in terms of incompetence, if you let a system get incompetent, you let a system be overrun with Wesley Mooches and so on, you end up with. From Atlas drug, Starsville. Right? You end up with a place that just kills itself on high taxes and regulation aircraft or something, and you end up, look what's happening to the city of Chicago right now. And just in the last five or ten years, it's had these terrible mayors and the phrase from Sam Francis, a controversial figure from sort of the paleo con, right? It's anarcho tourism, anarcho tyranny. You know, the government look at it, what's going on in England, the UK, you know, they don't care about crime. They don't care about open borders. They do care. If you say tweet or you go pray in front of abortion clinic or something, then they lock you up.
It's crazy. And it just begs for a pretty substantial paradigm shift to use the phrase when I think we're seeing it. I think I wrote a piece for the american conservative a few weeks ago, just saying that Trump emphasizing deal making and the example I cite, there's a whole chapter in the book on this is thanks to new technology and thanks to better discovery, we now realize that the total value of oil and gas is 336 trillion, not billion trillion. And that's ten times the GDP and ten times the national debt and so on.
The fellow Julian Simon, who's definitely a fellow traveler with us on this, wrote a book in 2002, I think posthumously called the ultimate resource. And he said, look, we're not running out of any kind of resource you can think of. And in fact, look, I love going to space. I think it's cool. But I'll just point out that there are 131 major oil discoveries last year around the world, in addition to the 336. It's not that the United States is uniquely blessed on oil and carbon fuels. It's just everywhere. And that's the point. And we've never had an oil well go deeper than five or 6 miles. And the earth, it's 1800 miles to the earth's core.
Earth weighs 6 sextillion tons. And now that we know that you can turn silicon, which is 29% of the earth's crust, and I just read the other day about they've got some science in Denmark. I figured out how to make rocks into batteries. They just take the elevator. They just ride up the rock and turn into a battery. I mean, this is everything people have ever dreamed of. A Promethean figure inventing and figures, plural. It's not just one person. It's teams of scientists and so on doing this kind of stuff. So when we realize that every ounce of 6,000,000,000,006 sex trillion, that's 21 zeros, six sex trillion tons of the earth is some kind of valuable resource, then all of a sudden, frankly, the case for mining asteroids looks a lot smaller. I mean, if we could, you know, take. We've never dug a mine more than two and a half miles deepest. If we went 10 miles deep, I suspect we'd find four times as much of whatever, lithium or gold or. There's 122 million tons. This isn't a book of gold in the earth. We've only mined about 200,000 tons of that, and there's 122 million more tons to go. And it's just the greens and the Malthusians and sort of these budget balancing bean counters have tried to persuade us we're in some era of limits. You and I grew up with the energy crisis and shortages and all this kind of stuff. The shortages weren't real. They were imposed on us. And this is one trump in his speech in Milwaukee and since has said, look, we have liquid gold. We have it everywhere, and we should be using it. And we need to do carbon capture or something which we can, you know, I mean, carbon is no poison. It's the fourth most prevalent element in the universe. And it's easy to see a system where we have, you know, using carbon fuels and provide all the energy we need and then capturing the carbon and turning into plastics or wood or pharmaceuticals or nanotubes or landfill, all sorts of things. And that's just one source of energy. I mean, there's nuclear is so many more.
[00:59:53] Speaker A: And we could continue to talk about this. And I'm sorry we didn't get to talk about the election, because I would have loved to hear your thoughts on that, but we are out of time. We'll have to do this again some other time. So thank you, Jim. This has been fantastic.
And thanks to all of you who tuned in and asked such great questions. Again, sorry we couldn't get to all of them. Course, if you enjoyed this video and all of our other programming and content at the Atlas Society, please consider making a tax deductible
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