Marc Andreessen: The Old Jobs Are Never Coming Back

So, first of all, just a moment on AI. So, you asked a question earlier, which is like, is there a traditionalist view of like we need to go get the jobs that used to exist? We need to somehow bring them back. And here you get into this argument of like, well, you've got Chinese laborers working for a dollar an hour or whatever. Like, you're not going to get those jobs back. It's just not cost effective to bring those jobs back. What we have though is we're at this very specific and important and fundamental and I think profound turning point in technology, which is the rise of AI. And I would say that the good news, let's make the panel optimistic. The good news is the US is like by far the leader on AI. Now, by the way, we need to decide whether we want to be the leader in AI because there's like a lot of forces in the US and in the US government that are trying to prevent that from happening.

But there's over a thousand laws at state level we've been trying to fight and stop that would screw this up, right? So, there's a lot of people who are against this.

California state government almost passed a law to outlaw AI in California six months ago, which is an indication of how crazy California is. But yes, it's like everything else. We can have it if we want it. These are all choices. Like AI is happening and AI is only happening in two places. Like it's only US versus China and there's a whole competition thing there. But like the US is like very powerful on this. And then by the way, the US is benefiting a lot because Europe has basically made AI illegal. Like they're regulating themselves to death. And so the smart AI people in Europe are moving to the US. And so the US really is ground zero for AI.

Today AI is software, right? And so when you use AI, you use ChatGPT. It's an app on your phone, right? There's no manufacturing kind of component, you know, really. People are building giant data centers, but you know, it's not a huge generator of like middle-class jobs. But there's another turn on AI that's coming, which is the turn to embodied physical AI, which is robotics, right? And this is a transition that has already happened. It's already actually happened in drones, where drones went from being human piloted to actually being autonomously piloted. They now fly themselves. It's a transition that's happening in cars right now, right? Where cars went from basically purely physical products to now basically being rolling computers that drive themselves.

And if you haven't tried this yet, if you ever have the misfortune of finding yourself in San Francisco, take a Waymo. It's amazing to live in a cyberpunk future reality where you're in literally a state-of-the-art self-driving car that's lit out of the Jetsons driving past people who are dying of fentanyl overdoses on the sidewalk. I recommend having the experience at least once. But the self-driving car really does work. Like, it's really happening. And then what's going to happen, you've all probably seen, Elon has this Optimus robot that he's building. These humanoid robots, the general purpose robotics thing is going to happen and it's going to happen in the next decade and it's going to happen at giant scale. And I think there's a plausible argument, which Elon also believes, that robotics is going to be the biggest industry in the history of the planet. It's going to be gigantic. There's going to be billions, tens of billions, hundreds of billions of robots of all shapes, sizes, descriptions running around doing all kinds of things. Those robots need to get designed and built, right? And so my view is, you know, we don't try to get the old manufacturing jobs back. What we should do is lean hard into the manufacturing jobs of the future, which is designing and building all of these new things, right? By the way, which includes drones and cars, right, and robots. And you know, we shouldn't be building manufacturing lines that have people sitting on a rubber mat for 10 hours screwing screws in by hand. But we should be building, you know, what Elon calls alien dreadnought factories, right? Which is like these super sophisticated factories with like tons of robotics. But you can imagine thousands and thousands of different categories of industrial production that have to happen all across the US in order to make this happen, and would cause just like enormous economic growth throughout the country. We'd get a huge payoff from all the tech investment that the coasts are making, but we generate many tens or hundreds of millions of jobs in the countryside. And then the US would lead, it would be the third or fourth industrial revolution. We would lead in the development of all these new things. And then you get to the national security side of this, which is if you don't do this, you're living in a world of Chinese robots everywhere. And that has very profound consequences, let's just say, yeah, profound consequences.

Yeah. So, I've been doing my best to kind of spin up in the history of this. And so there was something in the 19th century, actually originally created by Alexander Hamilton when he was Treasury Secretary, called the American System. And really what they, and this is even, you know, this is like 80 years before McKinley, 90 years before McKinley. What they were dealing with was the British Empire, right? The UK was the preeminent industrial power. They were the first like giant industrial power on planet Earth and had built this very commanding economic, technological, military position. And of course America, at the time of the revolution, was mostly farmland. And then there was this raging debate between Hamilton and Jefferson as to whether you'd want America to be an industrial, you know, kind of urban financialized power, which is what Hamilton wanted, or a kind of rural, you know, kind of rural farming aristocratic power, which is what Jefferson wanted. And Hamilton won that debate, and so that led to what was called the American System.

The American System led to the creation of the United States as an industrial power that developed over the course of the 19th century, but it really took off at the tail end of the 19th century in what was called the Second Industrial Revolution. And so between, call it, 1870, 1880 and like 1930, basically everything we view today as the modern world was basically invented then. And like you could almost look around the room here today and you could say basically every piece of physical infrastructure, everything around us, literally everything, the airplane, manufacturing techniques to be able to make modern glassware at scale, air conditioning, television, radio, the automobiles we drove to get here, it all was the result of the Second Industrial Revolution. And then the McKinley presidency was right in the middle of that period. It's really when the whole thing catalyzed. And so it was really the point at which America became the world's industrial superpower. And then of course that led to America being able to become a huge player in both World War I and World War II, ultimately winning World War II and becoming the arsenal of democracy. It all kind of flowed out of that period.

And the American System is something that people really don't like to talk about these days because it was heavily protectionist. And the whole theory of it was you don't industrialize just with like a single technology or a single company. You industrialize by having an entire ecosystem, right? You industrialize by having, you know, not just three car companies, but by having all the thousands of part suppliers that make all the parts for the cars. And so the Brits had done this. They had run a very heavily protectionist program to be able to boot up the first industrial revolution in the UK. They then advocated for free trade when exports became more important. McKinley was the inheritor of the American System, and so he was heavily protectionist to build up the Second Industrial Revolution, and then he actually switched to become more of an advocate for free trade because as American exporters were becoming more successful, they needed foreign markets. And then by the way, in the 20th century, basically every industrial revolution in every other country that has worked in the last hundred years basically follows that model as well. So it's the same thing Germany did, it's the same thing Japan did, it's the same thing Korea did, it's the same thing China is doing right now. China's basically been running the American System playbook in China.

And so this goes to tariff policy, and I'm not here to make an argument in favor of tariffs, but more of a historical observation that there has been this phenomenon over time that if you want to have the kind of clustering effect that leads to industrial preeminence, it is not unusual to have a combination of tools and methods used to do that. It has been historically characteristic that tariffs would be a part of that, but it's also historically characteristic that there becomes this point when you also therefore want to go for exports and you want to go for free trade. And McKinley specifically, he ran for office very much on the idea of having a high permanent tariff. Once he was in office, he switched more to a model of what he called reciprocity. And basically it was, we start out by tariffing, but the goal actually is to get everybody to lower their tariffs, that the goal is to get a world of much more free trade, and then therefore these American exporters were able to succeed globally. And of course he was able to use American tariffs as a lever to get other countries to drop their tariffs.

And so in that sense, what we're going through right now in the US is sort of very characteristic of that. And what makes maybe the whole thing kind of more poignant is there is this fundamental underlying question, which is, do we want the US to be an industrial superpower or not? And in the 19th century, they were like completely clear that they wanted that. And in our time, I think we're still ambiguous about it.

Yeah. So, it's a real puzzle. I think there's a very straightforward explanation for why it happened, which is basically it has to do with one of the fundamental personality traits of human beings called openness, which is one of the big five personality traits. Openness, which is by definition, people who are super into technology and entrepreneurship are highly open people. We love new ideas and we love doing new things. And then on the political spectrum, openness is a trait of the left. And then on the other side, on the right, is conscientiousness, it's structure and order, which is a trait on the right. So we just, and by the way, this is not just tech. This is true in the arts. Anytime you have a clustering of people who are high in openness, inevitably they're on the political left and usually very far to the political left. And so I think we're just a classic example of what happens when open people cluster together. You read these hysterical things in the newspaper that Silicon Valley is a hotbed of libertarianism or incipient cryptofascism or whatever, and it's just not true. The Valley is like 99% Democrat and you can see that in the political domains and the voting patterns and everything else. So it's a classic left-wing Democratic environment. Look, I think people should have the politics that they want to have if they're voting for the people they like and they're getting the results that they want.

Well, but you know, it's the paradox of tolerance, right? To be maximally tolerant, we have to be intolerant of intolerance, right? And so it is absolutely morally required. If you're going to maximize tolerance above everything else, you have to be intolerant towards the intolerant. And that's how liberalism becomes illiberalism. I quibble with the illiberalism framing of it because I actually don't think, something you and I might disagree on, I don't think what's happening now is a betrayal of liberalism. I think it's just the full realization of liberalism. I think it's what happens when you take liberalism to the extreme, which is you declare war on the intolerant, right? And then the fact that you yourself have become intolerant, somehow you never quite wrap your head around that, but on away you go.

Yeah. So the guy in New York is interesting. And he's kind of running slightly behind Cuomo for New York mayor, but he's literally running a platform among other things of having city-owned grocery stores, right? And so the joke is he's reinventing bread lines for the 21st century, like impressive, really tremendous, tremendously tremendous platform. Seattle is another case study of this. Seattle, to give you a sense of how crazy things are, the district in Seattle, the city council district where the most Microsoft and Amazon executives live, elected a city councilwoman who ran a platform of nationalizing Microsoft and Amazon. Right. And then in the Bay Area, I live in ground zero of dysfunction and collapse. And I've got thousands of stories from the Bay Area.

So I think there's a very fundamental political economy thing happening which falls out of this economic transformation that's happened and this policy transformation that's happened. And so there's actually a French writer, geographer, who has I think the best analysis on this and who's written a great book on it called Twilight of the Elites. And what he basically observes is if you look at all the Western countries through this process of de-industrialization and financialization and technology, knowledge work becoming preeminent at the high end of the economy, you sort of have this pattern where basically like in an agricultural economy or in a manufacturing economy, you kind of have to spread everything out throughout the country because natural resources really matter and energy really matters and physical infrastructure matters and access to trains and all these things, rivers and water and so forth really matters. But if you're going to replant the commanding heights of your economy on knowledge work, then what you're going to do is you're going to slam basically all economic growth into the cities, right? Which is what Silicon Valley has done, right? So you want all the software developers in one place and they're going to, the good news is they're going to eat at high-end restaurants and they're going to employ a lot of nannies, but fundamentally they're going to be sitting in conference rooms designing software together and you want that to happen in a single concentrated place.

And so what happens is basically the cities become a magnet for basically two kinds of people. One is sort of the upper class, which is to say the highly educated elite in the knowledge professions, who make enough money where they can afford to buy three million dollar houses. And then you've got basically super expensive homes and then you've got public housing, so-called public housing, right? Council estates in the UK or Section 8 or whatever it is housing here, where you've got basically public housing and then the public housing is basically people who are very low paid on the low end of the service economy. And then that's the city. And then who's squeezed out of the city is basically the entire middle class is squeezed out. And just to give you an example of this in the Bay Area, if you're a cop or a firefighter in the Bay Area and you work in Palo Alto, you commute three hours both ways just to be able to have a house and afford a family, right? And then of course you look at what's happening in the cities and there's lots of dogs, there's very few kids, right? And it's like, what on earth is that about? Well, you can't buy a house. You can't have a family. You may not even own a car. Like how are you going to get kids anywhere? But what happens from a political standpoint is the cities then are run, in their local democracies it's these super high-end very progressive elites and then it's sort of the clientele underclass, in the US it's Hispanic immigrants or African-Americans, in Europe it's their other kind of clientele underclass that they've developed in places like Paris. And so you've got this old political structure of sort of top plus bottom configuration. What you've done is you've squeezed the middle and you've ejected the middle out of the cities into the countryside, but you've de-industrialized and so there's no new economic activity happening in the countryside for all the middle class people to do.

Sorry. Sorry.

Let me try to make it optimistic.