#288 Shyam Sankar - Are We Sleepwalking Into World War 3?

Thanks for having me, Sean. It's great to be back.

I love it. Thank you.

A lot's gone on. I've been advocating for the future of AI for the American worker. The American people are being lied to. I've been working on bringing back the bonds between industrial base and government, fixing the Department of Defense, empowering heretics. It's been a full 12 months.

I already have a spot in South Florida, so I'm set.

Yeah. It's important to be in a state where your reps rep you. Miami felt like the right home for us.

I haven't seen the latest. Catch me up.

My lived experience is that nothing crazy is happening. It's more like an iron man suit for the American worker. The American people are being lied to about AI: either doomerism or fantasism. Both are wrong because they assume no human agency. AI doesn't do anything; humans use it to do something.

The future of AI is being determined by our decisions. We can choose to use it for re-industrialization. We should listen to the people using the technology, not just the inventors. The example of the telescope: Galileo didn't invent it, but used it to discover planetary motion. The people we should listen to are the American workers.

It can be massively empowering. Kids need to know how to use the tool. Specific knowledge is valuable. They need to learn how to ride the bicycle. The American cowboy spirit is an advantage. Education should not restrict AI; let them use it and learn through experience.

The most interesting use cases start with deep domain knowledge. The real stuff is in the enterprise. For example, Panasonic Energy: apprenticeship from 3 years to 3 months with AI, leading to more employment. It's about human agency. On the consumer side, it's trivial.

Historically, government and military were last adopters, but not with AI. Non-computer scientists are inventing the future. It breaks hierarchy. It's great for the American worker, pulling power from middle managers. It addresses the legitimacy of institutions.

Jevons paradox: efficiency leads to more consumption. In healthcare, sepsis deaths reduced to zero. It's about eliminating drag, not replacing labor. For example, adding a third shift by reducing planning time. The key is reestablishing the connection between GDP growth and wage growth. The productivity dividend must be shared.

It's a continuous journey. Models have jagged intelligence. Some say we're already there for coding. It's about valuing taste. The challenge is that we could enter a new dark age if we lose knowledge. Someone has to know how things are made. The inductive path is reasonable.

Universal basic income. The idea that everyone gets an income because there will be no jobs. Lots of inventor types talk about it. But we should listen to the users. The Manhattan Project example: geniuses can be wrong about applications. Theodore Hall's actions led to atomic espionage. It's a lack of epistemic humility.

The most optimistic case is what's happening with the American worker. We run American Tech Fellowships, training factory workers, ICU nurses, potato farmers to build AI apps. One veteran reduced downtime by 50%, improved yield by 20%. It's about unleashing human agency. The American people have been gaslit about globalization. If you let them cook, it's eye watering.

Trust is earned. Example: I saw a clip of myself misattributed by Grok. It's about developing evals and understanding the model's capabilities. It's like a new teammate; you don't blindly trust them.

We're going to build a relationship together solving problems together and we're gonna see where you're really a rock star and where you can help me be more effective. Working backwards from the problems we have, that's a much narrower scope. It's like, hey, I make wires, you know, I'm a potato farmer, these are my problems. How do I develop trust in this domain with you where I'm the expert? I'm going to be a really good judge of whether the danger is using it where you have no knowledge. So you're a blank slate and by default might trust it way more than you should.

Thank you.

Yeah, great question, Derek. The first thing you have to understand is we don't collect any data, right? We're a software company. We provide our software to the government. So the only data that is going to be in the software is the data that the organization has access to. If you're a manufacturer, that's your supply chain, your production data, your customer orders. If you're the government, it's what you have lawful authority to have access to. Then there's the question of safeguards, which is where we think Palantir is the worst platform to try to abuse civil liberties because we have immutable audit logs, purpose-based access control, role-based access control, classification-based access control. If you misuse the data in the platform, first of all, all the controls prevent misuse. But if you try to circumvent these things and misuse it, there's an immutable audit trail of what happened. You are going to be caught. Now I can tell you anecdotal stories like there are institutions that don't want to work with us because sometimes those protections are too strong. Sometimes that's uncomfortable. Sometimes you don't want to know what the data or you already know what the data is going to tell you and you don't want protections that strong. But that's the core thesis. So you have to go back to the founding precept of the company, which is like you know politics is structurally zero sum. People just like to argue about who's right or not.

You know it's like you get nowhere by just arguing to the nth degree. The question is how do we move the efficient frontier? If we go back to the post-9/11 world, everyone was like, what's more important, privacy or security? I don't know. As an American citizen, that sounds really stupid. I kind of want both. Why can't we have more of both? Who's working on the technologies that mean for a given level of privacy, I can have more security, or a given level of security, I can have more privacy? How do you bring more nuance to the question? If you can protect data in a more fine-grained way, if you can attest to the purpose with immutable audit trails, maybe you can have reasons to have access to data on a temporary basis. Maybe you can have condition-based access control where given what's happening in the world and a precept of human intelligence that's telling us about something, we're in a new regime for a limited period of time. Having a system that allows all that to happen, if you really go back to a pre-9/11 world, it was essentially binary. You either share all the data or none of it, which biased towards either gross violations of oversharing or not being able to connect the dots because people didn't share at all. That's insane. That's the position you don't want to be in. Now, the reason we tend to get attacked is we're living in the messy reality of the arena. If you're looking at this politically and you just want to argue about who's right,

It would be insane not to worry about it. I mean, I think it'd be insane not to worry about it. It's a little bit not deep enough thought to think that we're somehow the antidote to that. We're not the cause of it. And that's my really point. When you're in the arena, you're going to be criticized for doing it. Like, hey, you should, it's almost like a purity test. Like, you shouldn't be touching this at all. But I'm just saying, what's the counterfactual? Letting a bunch of historical legacy contractors who aren't as sophisticated with technology try to solve these problems. Who is leaning in and saying we want to make these institutions function better? That's the antidote to nihilism, you know. Make things work. That's also the American builder way. We're not going to get out of these problems through policy alone, through politics alone. We got to build our way out of these things. We got to build a better future.

Um and that's my really point. When you're in the arena, you're going to be criticized for doing it. [continued]

Uh, we got to build our way out of these things. We got to build a better future.

Amazing. Thank you. Little something. I gobbled these up last time, so I'm looking forward to doing that again.

Oh, man. There it is.

Oh, perfect. Thank you. Appreciate it. That's awesome.

All right, let's move into how do we prevent World War III? I mean, there is a lot of stuff going on in the world right now. There's not a whole lot of talk about China. That kind of took the back seat a little bit, but I don't understand why. But we got stuff going on in China, Russia and Ukraine still kicking off, Venezuela, Mexico, Mexico-US border, Gaza. What are you most concerned about? Well, if you think about it, Operation Spider, 12-day war, Midnight Hammer, the skirmish between India and Pakistan, Maduro. There's a lot going on in the world. Are these skirmishes like the Spanish Civil War? Are they the prelude to potentially something much bigger?

Sure feels like it. All these things are happening against the backdrop of China still. Even though in some sense China's taking a back seat, it is the driving force here. Who's buying the Iranian oil that keeps the regime going? What is the industrial base that's supporting Russia's war machine? These pieces are interconnected. The radical pace at which these things are happening underlines the precept of the book and a lot of what I've been talking about, which is to really prevent World War III, we need to have a strong enough deterrence posture to make sure our adversaries don't want to mess with us. Things like Midnight Hammer and Maduro are really the first things we've done that have restored deterrence. This sense of, 'Oh man, I have been underestimating the US.' And we have to continue that trend. The missing part is if you thought about it as a spear, the pointy end is really good, but the shaft of the spear needs work. That's the industrial base, our ability to link the factory floor to the foxhole. And just like we learned in World War II, large-scale protracted conflicts are about your industrial capacity. We outproduced our adversaries in World War II. Even Stalin was shocked at our productive capability. We have to recognize in the present moment through a series of bad policies since the end of the Cold War and an unfettered belief in globalization, we have put a lot of our capability in the hands of our adversary. It's not just weapons. We have roughly eight days of weapons on hand for a major conflict. We obviously need something closer to 800 days. Look at pharmaceuticals. Look at rare earths. Those go into weapons, but also into cars. Our entire global western auto industry will be brought to its knees if we don't have sovereignty over these things. With pharmaceuticals, 80% of our generics come from China. In a conflict, we're not going to be getting those things, and the American people are not going to have an appetite to have their 5-year-old suffer or potentially die from an ear infection that we think of as trivial today. We need to have our own sovereignty over these capabilities. That itself is deterrence. Having our own pharmaceutical manufacturing capability is deterrence. It's easy to get cynical about the defense industrial base, to see it as warmongering or fear-mongering. But we need to think about it as the core thesis of the book: national security is American prosperity. These are just two sides of the same coin. If you get too fixated on just national security, it's not an end unto itself. It's a means to underwrite the prosperity of the American people. We're a little bit out of balance there. Fortunately, a lot has happened in the last 12 months to address these things. There's been a huge amount of change in Pentagon acquisition reform, which sounds boring, but we got to throw away the process, not be a victim to the process, and do things that work. How about we just do things that work and get out of our own way?

A big part of the book, I spend time talking about the historic figures who threw away the process, who rebelled against the system and actually delivered the capabilities we need. I think that's a really important narrative because honestly, everything that's ever worked was against the system. It was despite the system, not because of it. Having the courage to look at the American industrial base, whether it's Isaiah with Valor, people trying to build nuclear reactors now, the heterodox thinking is not coming from the big companies. It's coming from the founder figures, the crazy youthful energy of invention that has always characterized the American soul.

They're capable of it, though. I mean, huge credit to the department because if you went back even 10 years, none of these people existed. It's not because we didn't have them in America. It's because there was no business case. No one was going to buy. Now you have the department leaning in, recognizing that a maverick like Dino is not a problem. He's the solution. How do we make more bets?

One of the things I spend time in the book is understanding how did we get here? How do we go from having the most amazing industrial base in World War II and the early Cold War to one today that is capable of building a small number of truly exquisite things? And they are exquisite. Probably my colleagues who are innovators would get upset at me for giving the primes credit, but they're not boneheads. They actually do a number of things incredibly well. I think they are a victim of the system that has been pushing cost-plus contracting, pushing risk onto the taxpayer instead of these companies, reducing the reward for taking risk. It almost doesn't make sense to take risk. The way I like to encapsulate this is every country including Russia and China have turned their back on communism except for Cuba and the old DoD. What you're seeing with the new DoD is recognizing that doesn't work. Let's go back to winning again. Winning matters. What does winning look like? It looks like innovation, something that powers the rest of the American economy. This is not some muscle that's atrophied in America. It's a consequence of being the sole superpower since the end of the Cold War. We didn't have to tolerate the crazies anymore. You go back to figures like Hyman Rickover, John Boyd. These are famously difficult people. The most talented engineers I have are difficult humans. You tolerate them because that's what winning requires. Reattaching yourself—I talked about Theodore Hall, who was a traitor in the Manhattan Project, and his brother Edward Hall, the inventor of the Minute Man missile. Edward Hall was famously a pain in the ass. But Schriever protected him because he recognized that this guy's a pain but he's a genius. Edward Hall famously pulled out his service weapon on British soldiers who were doing a shitty job repairing aircraft. He held them at gunpoint until they did the job right. The British hierarchy got pissed, but he said, 'I was right. I'm not going to send my men back out in a plane that these guys are doing a shitty job on.' That's a fearless figure. I'll suffer consequences for doing what's right. It takes a bit of crazy, but that's what winning looks like.

The grave risk we have is—let's strike the very foundational precept. After World War II, America at our expense rebuilt Japan and Germany. I think we might have been the first victor in a conflict of that scale to realize that peace and prosperity in the world depended on rebuilding these countries, making them democratic, free, open, and successful. Most of the electronics industry in Southeast Asia was an intentional decision by us to take manufacturing from the US, send it there. Yes, we had the benefit of cheaper labor, cheaper goods, but it was also a way of developing their economies, creating stability and prosperity and influence. The challenge for us with the CCP is their goal is not simply to be prosperous. If that was their goal, there would be no tension. It is also for America to fall. I'll give you an anecdote. It is within their prerogative to decide if they want to buy our soybeans or not. That's a business decision. I don't begrudge them. But it is not a business decision when you smuggle in agricultural funguses so we can't grow soybeans. And that's happening. In the agriculture domain, we're in a full-on conflict. The reintroduction of New World screwworm, a livestock parasite that infects living livestock that started in Central America. Most credible sources believe it was reintroduced by the Chinese. It didn't just reemerge. If you talk to farmers and ranchers in America, they all know this came from the CCP.