Is The Internet The Successor to America | Balaji Srinivasan | Keris & Silicon EP02

The end of the American Empire is going to result in a lot of chaos, and we're going to need frameworks for peacefully creating new communities. After Rome ended, Christianity endured. And after America ends, I think the internet will endure. Lenin has a saying, 'You may not be interested in politics, but politics is interested in you.' What happened was we got successful enough in tech that Google and Facebook revenues all went vertical, and newspaper revenue crashed. So, we took over the classified business, the advertising business, and so strongholds of the Democrats, the internet disrupted. That is what made them mad. Tech is the newest of new money. My father came from a dirt floor in India. Very few of the tech zillionaires have inherited wealth. So, on the one side, you have the land, and let's call that civilization state, the past. Then, on the other hand, we have AI, we have crypto, we have drones, we have robotics. It's both the land and the cloud. I've always admired the innovation of the new world. But, I always wondered, is there a way of doing that without colonialism? People say, 'Oh, you're a tech bro.' But, I am for the tech dad and the tech mom, and the tech kids, and the tech couples. We're going to be announcing the Network School Replit Global Merit Scholarship. They come to Network School to take an in-person test, and if they do well, then we get them a tech job. Do I intend to offend anybody? Absolutely not. In Malaysia, I intend to abide by all Malaysian rules, all Malaysian regulations. I'm one of the very earliest people to invest in the Arab world. I was attacked for doing that by people who were saying, 'Oh my god, they're all primitive and whatnot.'

Thanks for having me.

Sure. I can give you the one-sentence version if you go to thenetworkstate.com. But briefly, there's kind of four ways of thinking about network state. The first is every immigrant wants a new country. That's almost the definition of what an immigrant is. An immigrant is in a country, they're seeking another one of the 193 states in the world. If you go and study abroad, you're looking for a new country. If you're emigrating for work, you're seeking a new country. If you wanted a 194th, 195th, the billions of people around the world that want better states, that's one way of thinking about network state. Can we get new countries? But also new cities, new communities. We see how much benefit there was in starting new companies. That's where all the economic growth comes from. Can we do things with new cities and new communities? Second point is that Network State is in large part a response to the decline of the West and the failed states of the West as opposed to the functional states of the East. Malaysia, Singapore, China, India, these states are actually all on the rise. Governance here basically works. Voice within the system basically works. Part of why I'm here is to learn from the fact that Malaysia, Singapore, China, they can build new cities and take some of that learning back to the West. The civilization states, governance basically is working on balance, upward. In the West, it's not. And so, we need alternatives. The third thing is that at a global level, American empire is ending and the successors are China and the internet. China takes over the military and manufacturing might from the Republicans and China takes over the media and money from the Democrats. Just like when the British empire ended, the French empire ended, the Soviet empire ended, all kinds of new states arose, many peacefully. The Soviet empire mostly broke down peacefully at least in the immediate aftermath. In the same way, the end of the American empire is going to result in a lot of chaos and we're going to need frameworks for peacefully creating new communities. And fourth and finally, at a technological level, we're in the middle of a complete internet media disruption of everything. From dating to manufacturing with robots, military drones, communications, currencies. The paper-based bureaucracies of the 20th century were simply not built for the internet. We need to rethink the relationship between network and state. And that may mean a state that adopts the network. Tiny Estonia, gigantic China, internet India, or increasingly digital Malaysia. These are states that have actually adopted the internet, infused with it, and done things for the public good. That's another definition of network state. It's a term that has multiple meanings, and one of them is cooperation between the network and the state. Let me pause there. That's the thesis of the book.

Yeah. So, my solution is, and this comes out of a Western context where I think the West can learn from the East. In the Western context, there's a reason they call it the New World because those states were all created relatively recently. After the end of the Western nation-state, because of the inflation crisis and the debt crisis in Western states, I think many Western nation-states are basically bankrupt. So, what comes after that? Well, one answer is the Eastern civilization state, China, Iran, India, maybe Russia. These are places that have had people living in these locations for thousands of years. It's kind of a return to the past, the civilization state. That is one answer and it'll be one big part of the answer. But the other big part of the answer in my view is going to be the internet-based network states.

What does that mean? Well, after Rome ended, Christendom endured. And after America ends, I think the internet will endure. The internet was actually built initially to resist a nuclear attack. Even in war-torn places, the internet remains up. The internet is the thing you can rely on when everything else goes down. It gives you your communications, your transactions, your cryptocurrency, information, it might give you a job, it might get you a ticket out of there. That saying, restore from cloud backup, when these Western states melt down, when the American empire withdraws, many things that people took for granted are going to evaporate. And we want to have a code-based order that does what that rules-based order used to do. Otherwise, we enter a period of every state for themselves, and it's all nationalism and all socialism, and I think that's an unfortunate future. I believe in peace, I believe in trade, I believe in internationalism, capitalism, diplomacy, and I think that the internet can restore some of those things because there are a lot of good things that America did. There's tons of bad things America did. I would agree with many of the criticisms, but a lot of good things America did as well. And we're going to miss Uncle Sam when he's gone. And so, maybe afterwards comes Uncle Satoshi.

Sure.

First I don't think it should make anyone uncomfortable because one of the keywords there is negotiate. Consensual negotiation. There's kind of two dimensions to this. The first thing is there's 193 countries in the world and many smaller provinces. These countries want these kinds of deals. They've passed DAO laws, they've passed digital nomad visas. The land is already negotiating with the cloud to attract business, to attract talent, to attract capital. They're setting up special economic zones, charter cities. They're saying, 'We will change the laws to attract capital.' This is a known thing. This is how China reformed. China built Shenzhen and went away from ultra-communism towards capitalism. Many countries have seen this model work with varying levels of success, but it's definitely a known strategy that has produced results. And the key thing is it's done voluntarily. Tuvalu did a deal with GoDaddy for the .tv domain extension. Whenever you register twitch.tv, you're giving a payment to Tuvalu. No natural resources given up. They just get a straight cash flow. Palau set up rns.id for digital identifiers. Nevada did a deal with Tesla for a gigafactory. Nayib Bukele and the King of Bhutan have gone heavy on Bitcoin mining. El Salvador has adopted Bitcoin as national currency. These are all examples of where the land has done negotiations with the cloud for mutual benefit. When it's consensual and negotiated, both parties are strengthened. That's why it should make people comfortable. The second answer is very importantly, I didn't invent the internet, you didn't invent it. That's already there. Billions of people are spending billions of minutes a day on the internet. One way of thinking about it is here's Earth and here's the cloud up over here. If people spend half their time on the internet, they're like telecommuting up to the cloud and then back down to the Earth. They've got totally different neighbors up there, in New York and San Francisco and London as opposed to their physical neighbors on Earth. The diplomatic relationship between cloud and land is something that actually will reduce friction. With the discovery of the Americas, the new world changed the old world. People had to rethink everything. This is the new new world with the cloud and billions of people who identify as internet-first. What is their relationship to the land? I think that can and should be put into writing, thought about explicitly. There's many people who identify more as Bitcoin holders or Ethereum people than they do with their national governments, especially in the West. In the East, there's families, language, culture, stronger societal bonds. But in the West, governments have failed to such an extent that many people identify much more with internet communities than with their offline governments. Formalizing that relationship could be friction reducing and something to look forward to.

I'm absolutely speaking to a minority of the world population. But only 4% of the world came to America. Maybe only 10, 20% of the world lives in the new world. But that changed the world. 96% of the world is not American. But the exit of a small group of people from Europe created all these innovations. In this risk-tolerant jurisdiction, a lot of very impressive things came out of it. A lot of technology, many of the tools that you and I use on a daily basis. So why am I speaking to a minority? Because I believe in minority rights. I believe in reconciling both the majority and the minority. Democracy has both those issues. You want 51% majority rule, but you also want to protect minority rights. And sometimes the smallest minority is one person, an individual with a good idea who can start a company. I think we should have protected ways for people to experiment with different modes of operation, especially given all the technological disruption. Maybe AI can help with bureaucratic paperwork. These kinds of reforms are easier to do in a small city or town where everybody agrees. Then the rest of the world can copy them if it turns out well. This is actually the Chinese strategy. How did China reform? They saw things working in Taiwan and Hong Kong and Singapore and the Chinese diaspora. That helped reform China. In India, a small minority of Indians went abroad and that helped bring India from socialism to capitalism. Even if the majority is uncomfortable with it now, we're not asking them to change. We're just saying, let this minority have a solution. Let them go and experiment. Maybe it doesn't work. But if it does, everybody can benefit.

I completely understand your point. I want to say one thing though, which is everybody's complicated and you've got multiple axes. On one axis one might be a successful capitalist. On another axis, you could be an Indian American in America where maybe your existence is actually quite tenuous. You're a second class citizen if you're on a visa, no matter how successful you are economically. People are complicated and they could be an elite on some axis and very marginal on another. Why have entrepreneurs been driven out of California? Why did Larry Page and Sergey Brin and Travis Kalanick and Elon and Peter Thiel and Mark Zuckerberg leave? Why did Jeff Bezos leave Washington? Clearly they weren't more powerful than the Democratic establishment. As powerful as they were in some axes, they're very weak on other axes. They're very politically weak even if they're economically strong. Think of it in math terms as a vector rather than a scalar, with multiple variables rather than one. We're all strong in some areas and weak in other areas. And protecting minority rights doesn't just mean protecting somebody when they appear sympathetic, but it means rule of law which protects minority rights regardless.

Sure. So first, the context is this is from years and years ago. I'm talking about countries or communities that were started by a book. The Holy Quran has helped start many communities which have the crescent on the flag. The Bible has started many communities with the cross on the flag. The Mormons were started by a book. Arguably the Puritans were started by a book. Arguably America was started by letters. I was talking to a friend on a podcast who made an offhand comment where you could think of this as Zionism. But I also mentioned Mormons, the Amish, the Puritans. This was not meant to be the core of the argument. It was meant to be about a book and not about taking something that's not yours. As an Indian, I believe in non-violence, as an Indian Hindu. That's a core part of what I believe. I believe in consent, peace, trade, capitalism. I've always admired the innovation of the new world. But I always wondered, is there a way of doing that without colonialism? There were obviously people in the Americas. So I've always been attracted to things like seasteading or Mars. There's no people there, but you have the innovation without the colonization. Reclaim land is actually close to seasteading in a sense, because the earth didn't exist before. There's various inspirations for Network State. The Amish, they live nearby in America and live in the past, stopping technology at 1800. What if we have an inverse Amish that lives in the future peacefully nearby? What if all the Chinatowns of the world were networked together, all the little Silicon Valleys? When you're describing something unfamiliar, Bitcoin talks about mining which isn't literally mining out of the ground. It's an analogy. So that's the context. At that time, it looked like Israel was making peace with Saudi Arabia and the UAE. The Biden administration said peace is breaking out in the Middle East. I didn't have a crystal ball on what would happen later. When in Rome, do as the Romans do. Do I intend to offend anybody? Absolutely not. In Malaysia, I intend to abide by all Malaysian rules and regulations. Malaysia has decided as a sovereign country that people with Israeli passports shouldn't come to the country, fine. But there's billions of Americans, Indians, Europeans who may have at some point made a positive remark about Israel. I think they should be able to invest in Malaysia because Intel is here, Microsoft is here, Meta is here, Google is here. I want to focus on the 95 or 99% of things people agree on versus that 1%. I'm against war and conflict. I'm one of the very earliest people to invest in the Arab world and Muslim world. I was attacked for doing that by people saying they're all primitive. Wamda Capital, Lana Alamat at Wamda Capital. Amjad Masad, the founder of Replit, perhaps the most successful Palestinian in tech, has been a friend of mine for 10 years. I was one of his very first investors. He headlined Network State Conference last year in Singapore. So clearly Network State is pro-Muslim, pro-Arab, pro-Palestinian. The way I see the world is minimal conflict, maximal trade, peace, technology. I've been a consistent opponent of war for many years. The Ron Paul peace and love faction. It goes back to the Quakers and overlaps with Hinduism. That's where I come from.

This is a super complicated matter that you could spend many hours on. But fundamentally there's a lot of shifting opinions on this issue now. My involvement in the politics of any country: my goal is to be not involved in the politics of any country. Malaysian politicians pass whatever laws, rules, regulations they have and I abide by them as a guest. They pass laws to bring in foreign investment. They have MM2H and digital nomad visas, Malaysia Digital, laws for data centers. That's where I see my role. I've put tens of millions of dollars into the country already, close to 100 million MYR. And that's just getting started. We're backing white collar and blue collar people. We're backing tech startups in Malaysia which help build digital sovereignty. We're also the number one customer of the laundromat, the hair cutter, the food service, all kinds of small businesses near Network School. We're backing Malaysians at every level and we haven't asked for a cent of government money and we don't intend to. We're here under the rule of law you guys have set up. If Malaysia decided at some point they don't want Intel, Meta, Google to invest, that's your decision as a sovereign, and I would abide by that. On balance, Malaysia has been a crossroads for trade with the world, the Straits of Malacca. Chinese investment, Indian investment. That's a win-win for Malaysians, for everybody. I just take the laws and the culture as they are as a given. I'm not trying to change that at all. I'm here for mutual win-win. All we want is a sunny place with coffee to code. Malaysia doesn't have the drug addiction problem San Francisco does, it doesn't have the violence problem. It has stable families, family values. That's the kind of stuff I respect. I really have no interest in getting involved in local politics anyway.

Absolutely. I take your point. That's right.

I agree and I get it. Another way to think about it is Malaysia's relationship with India. Malaysia and India get along pretty well. I speak Tamil, that's my ancestral tongue. There's 2 million odd Hindu Indians, Tamil speakers in this area. Tamil is an official language in Singapore, but it's constitutionally protected in Malaysia. So this is a place where I thought no one could say, 'Balaji, you don't belong.' If Tamil Hindu Indians don't belong in Malaysia and Singapore, where do they belong? Whereas in America, people say, 'You don't belong here.' And they say it with a straight face, unfortunately, increasingly. One of the reasons I'm here is that this is a very tolerant and welcoming country. In passportindex.org, Malaysia is ranked number four globally for most welcoming countries. That's what attracted me to the place, that it's tolerant, cosmopolitan, internationalist, hewing against the ultra-nationalism, ultra-socialism I'm seeing in America. Positive patriotism is good, negative nationalism is bad. Pride in your own people and culture is laudable. Being mad at others can go wrong. This is a great place with lots of data centers, warm, peaceful, good family values, lots of Hindus, Indians, Tamils. It's open to the world, has great airports, it's a country on the rise with all these regulations for foreign investment and tons of local talent. CoinGecko, Etherscan, there's tons of Malaysian people we plan to employ and invest in. We've already begun. Of all the places in the world I could have gone, I picked Malaysia as literally the number one place. That's a testimony to what you guys have built here and my respect for the system that's here. I don't intend to change it. It's a better system in my view than San Francisco.

I would say both are happening at the same time. We're seeing the land and the cloud both accelerate. The end of the American empire is accelerating both. On one side, you have the land, the civilization state, the past. It's China, blood and soil. China also has a tech aspect, but it's thousands of years of culture, it's Iran, it's basically the old world. Going back to the basics, the proven, like physical gold. Military, all this kind of stuff. But on the other hand, we have AI, crypto, drones, robotics, more people using social media. Did you use WhatsApp today? Probably. If you use screen time, every single person watching this, how are they watching it? On YouTube, on the internet. They're spending hours on the internet. So we have both happening at the same time, the land and the cloud. You could think of it as the left and the right of the future, but it's actually both. The land is often socialist, and the cloud is capitalist. But the land is nationalist, and the cloud is internationalist. You could say the land is to the left because it's socialist, or to the right because it's nationalist. You could say the cloud is to the right because it's capitalist, or to the left because it's internationalist. The land is rooted here at the base, and the cloud is up in the sky. But you could also say the cloud is the people and the land is the state. The cloud is individuals connecting voluntarily, and the state is top-down. My view is that is the dyad that's going to define this century. Very roughly, you can map it to Eurasian communism and Anglosphere capitalism. And Malaysia's right at the border of the two, at the border of China and the internet. It's English speaking, a former British colony, very pro-tech and internet, with a lot of the free internet. But it also has a lot of trade with China. An important thing for Malaysian sovereignty is to balance between China and the internet. Think of me as an ambassador from the internet side. I have a decent size online following. I'm here in humility. I'm very aware of my limitations.

You know, I know exactly how many people are better than me at math in my year and in school and so forth. So, the greatest strength is to understand one's own weakness. And so, please know that at least I'm very self-critical of myself, okay? And if there's a joke on my part, okay, okay. I know you well enough now. Fine, fine, fine. Okay, so think of me as like an ambassador of the network. And the network wants to work with the state. Literally just wants a place to build hardware, you know, for example, maybe the next Ozempic could be invented here, right? And you know, Ozempic produces so much revenue for the Netherlands, right? It's like some significant fraction of their GDP. Why couldn't we have an Ozempic for longevity here in Malaysia? Like a few researchers that can't get visas to America could come here, right? And especially Palestinians, Iranians, people from the Muslim world, like all that opportunity has been cut off in America where they no longer want that talent, I want to find other places to assemble that talent. That's something I've been talking about for 10 plus years. I call it the dark talent world. We can talk about this scholarship program we're doing. And Malaysia could be a welcoming place to assemble that talent and it would benefit them and benefit Malaysia and benefit the world. That's the kind of thing I'm interested in. Let me go back to your question. Go ahead.

Absolutely.

Well, so now it's funny. You and I have almost switched sides in some ways because now you're saying the internet is important, right? Okay, but so I think the most important question here is: is the internet American? And so if you say yes, of course, the internet is American, you get an answer that many of my colleagues in the US, because I'm the minority report, right? You know, we talked about minorities earlier on. Many of my friends in the US think of me as, you know, eccentric perhaps. That might be one way of putting it. Advanced scout, another way of putting it. That's a nicer way of putting it. But basically, I am zagging when other people are zigging. A lot of them have doubled down on trying to save the USA and so forth. They agree, you know, okay, it's not inevitable in terms of decline and so on. And I'm the 1% who thinks actually maybe we need parachutes. Maybe we need lifeboats. Okay. But on this question of is the internet American? The first answer is of course it's American. It arose out of DARPA grants and it arose from, you know, like the American military and the American educational system, and the internet until 1991 was actually all a US military educational network, and until the NSF acceptable use policy was repealed, which banned commercial traffic in the internet, it was all American. And also the American big tech companies are American and Silicon Valley is American and all this kind of stuff, right? Those are the obvious points. Then the counter argument is, well, clearly though there's a non-American internet because there's a Chinese internet, there's a Spanish internet, there's a Russian internet and some of those are walled off. Moreover, if we look more closely at those American tech companies, they're more than 50% immigrants. Right? They're Indian and Chinese and Persian and, you know, Korean and so forth and you represent

In the past, but it's now cut off that flow. You can't get in anymore, right? So everything is, you know, it's called a lagging indicator in finance, right? So, it's very difficult. Like all that talent is not going to the US anymore. And where's it going to go? Maybe it comes to places like Malaysia. Silicon Valley is decentralizing now. Also, when you look a little bit further at those American internet companies, it's not just the workforce that's more than 50% immigrant, it's their user base. Like WhatsApp, let's say it has 3 billion users. There's only 300 something million Americans. That means definitionally almost 90% of their user base is non-American, right? So, and how about their revenue? If you look, depending on the country, the company, more than 50% of the revenue is non-American, right? So, these are internet companies where in my view the internet is to America as America was to Britain. It's a version 3.0. It's a successor. But most people don't see it that way yet, or they only half see it that way. They say these tech guys are not real patriots, right? Or, you know, they're not loyal to America or what have you, right? And when you asked earlier, which America? Everything you said that was a bull case for America was tech tech tech tech tech. It was semiconductors, it was cloud, it's this and that. Everything that's managed by Democrats or Republicans.

Well, that's the thing. So, blue America, red America, tech America. Blue America is totally dysfunctional domestically. Red America is completely dysfunctional globally, right? Red America's idea of trade is insane tariffs and trade war, insane war with Iran. These are insane things, right? The Democrats are similarly insane domestically. And it used to be that it just used to be different within my lifetime, within your lifetime in the '80s and '90s it just wasn't like this, right? So, they've just lost their way. And that might be 90% of Americans have lost their way or some fraction. The tech group is competent. They can build from scratch, but they can't build in the physical world. They can only build in the cloud. Network state is a way of resolving that tension. There's still a slice, as you just agreed, of competent Americans that are world-leading, but they're prohibited from building in the physical world by a thicket of regulations that would be so crazy you wouldn't even believe if I told you them, right? These are things where like you have to get, for example, there's like a gas station in San Francisco where it was like a 5-year question as to whether to renew their 5-year lease and that had to be voted on by the supervisors and this is a level to which it's like impossible to build in many parts of America. Totally the opposite of how it used to be, right? It's become so encrusted by regulation that you need a new start. And when you dive into that, you say, 'Why do those regulations happen?' Regulations happen because there isn't local physical consensus. Some people want to keep their house prices high, so they're NIMBYs. Other people want to build and there's just no way of reconciling those two economic things. So, you have to go and find a new territory where you have some sovereignty that you've negotiated consensually in order to finally build in the physical world. That's where I come from on this, right? So, a lot of my stuff comes out of the observation of the decline of San Francisco and California and Blue America and Silicon Valley, the decline of America as a place for talent, for capital. And also recognition that it used to be a great place. And maybe there could be a sequel to it, but it's going to be somewhat different as different from America as America was from Britain. The internet is version 3.0.

So, again, I would agree with you, but I'd say it's both, and here's why. Within the US, we have seen, for example, the replacement of the US Postal Service by email, right? The replacement of NASA by SpaceX, the replacement of taxi medallions by Uber, the replacement of the Fed gradually by Bitcoin, the replacement of the SEC and Wall Street by Ethereum, right? These are things where I can give many more examples, but those are network alternatives to functions that were previously performed by the American state. Then outside, as you absolutely say, you have China in particular taking over many functions the American state previously performed. It's in manufacturing, and it may become the military, you know, for much of the world. Like, if there's going to be peace in the Strait of Hormuz, it's probably going to be China involved in some way, right? But we'll see what happens. It's also possible that China just absents itself from the conflict and just ships electric cars and solar panels around the world, right? My only maybe caveat in what you're saying is I think, and this is one of those comments where who knows where it'll be in like 4 years or something like that. But, if you were to nowcast it, you know, nowcast is a forecast based on, I think the winners of World War III insofar as this is World War III, a weird kind of World War III where it's mostly economic, are probably like Russia, Iran, China, North Korea, maybe India in a sense. So, India's not really fighting because those four countries, Russia, Iran, China, North Korea, have US independent supply chains. But, Western Europe, the Gulf States, Japan, South Korea, Australia, New Zealand, all these countries that depended on America to ship oil or to guard their seaways, they're in big trouble, right? So, those countries I think are actually going to become less sovereign. It's very possible that Iran becomes the power in West Asia. Russia becomes the power in North Asia and Europe, especially given that Western Europe now is cut off from both Russian and Middle Eastern oil. Very possible China becomes the power in East Asia. And India probably is going to do okay in South Asia, but India's kind of in the middle. It's somewhat dependent on America, but it's not as dependent as other countries. I think so I think it's situational. It's country by country, but the more America independent they are, like China, the better off they will be, the more sovereign they'll be. But, other countries may see their sovereignty recede. And so, they will actually turn to the internet to balance China. I don't think you can beat China. But, I think you can balance China. What do I mean by balance China? The only thing in the world with global economic scale comparable to China is the internet. That itself is an interesting observation, right? Because China, like, if we look around this room and we look around every desk and table and chair and window and so forth, then we track back who the manufacturer's manufacturer is, it's probably something in China, right? You know what's funny? The same thing is true for the US military. Did I show you that graph?

Yeah, the US military is made in China. The Tomahawk, the JDAM, if you go to their supplier, supplier, supplier, it's a Chinese factory. So, that's

Let's put this graph in the show. It's a study from Govini, a $400 million study the Pentagon itself commissioned. The Pentagon's own data, okay? That's hilarious, unfortunately, resoundingly. So, what that means is China can just turn off the US military. It's already over. That's what people don't get. Like all of this stuff the military industrial complex is all basically fake.