Facebook co-founder Chris Hughes on U.S. industrial & tariff policies, AI data center investment

Thanks for having me.

Yeah, exactly. I think we got to take a step back. This is rule by deal and it's not going very well and I'll tell you why. So, a lot of people are trying to figure out what all these private deals are. Two weeks ago it's nuclear power. Before that it was MP materials. Before that it was Intel and video. We know the sequence of them. And people are trying to figure out is it economic nationalism? Is it industrial policy? Greg in the Wall Street Journal calls it state capitalism. And I see something a lot more basic. I see a group of dealmakers, the president himself, but also the commerce secretary and the treasury secretary going one by one picking winners and losers. And that is exactly the criticism that so many leveled at the Biden administration. And what's actually happening here is that there are particular companies that can find their way to the White House. They find their way through the negotiations and then they can get really meaningful public investment and the private capital crowds in without any thorough consideration of competitors, the industrial landscape, no transparency, and so far very little accountability to follow up on it. So this is exactly how one doesn't want to do.

Yeah. And I think that's why we have to get this right. So the point I'm making in the piece isn't that industrial policy is bad in and of itself. It's rather that we need to have a comprehensive institutional approach. So we'll take critical minerals because I'm 100% with you. We have got to use the public sector to get those industries moving. So we need a clear mission. Are we producing the critical minerals in the United States? Are we okay doing that with our partners and friends like Canada and elsewhere? Then we need an institutional capacity who's charged with putting that mission into place. I think the development finance corporation, which is actually a Trump one invention, would be a great place to put it. And then we need a process to say, hey, if you are either mining, extracting or doing any kind of innovative work around these minerals, you need to come to the government and say you're doing it and we will invest in you. We have the template for this with the chips program. $40 billion was put forward. We had five of the largest semiconductor manufacturers in the world open up fabs and we did it in a thorough and fair way, and really slow way, and that's part of the problem with this. In fact, we had Intel's former CEO who was just with us a couple of weeks ago who said it was years that they were waiting for the commerce department under the Biden administration to hand out those funds and in the meantime things collapse. With something like rare earths, it's probably going to take us five to seven years even if we start today to be in a position where we are not reliant on China.

Yeah, I saw the news that you're talking about. I thought that was pretty rich, particularly coming a few days after this accidental disclosure of a desire for a government backstop for OpenAI. I mean, there is so much private capital moving into not just OpenAI, but the AI ecosystem. The capex numbers are, you guys talk about them all the time, pushing close to half a trillion dollars this year. When you see an industry with that much private capital rushing in, that's the exact moment where public capital should lean back. We don't need any additional funds. If anything, I worry about a bubble in that space with so much money. So, the government should be monitoring that, thinking about that, analyzing its implications on national security concerns. But if I had the magic wand around what industrial policy to pursue, I'd be thinking a lot more about things like critical minerals than I would AI. And then separately on tariffs. I was talking to a CEO of a US automobile maker recently. They were basically making the argument that 10 years from now, we will just have a domestic car market given the way things are going, and that parts of the rest of the market will be this way as well, where we will have cars that cost more money that are less competitive, that don't have the same features that you can get in China or elsewhere. And whether you think that that's a good thing, a feature, a bug, it's a bug. And if it's a bug, therefore what should happen? Because the truth is, and you've heard Elon Musk make this comment, if we didn't have tariffs on automobiles, it is not clear we would have an automobile industry at all in this country. And whether we should just say we want to be a services industry, and that's cool, too. I don't know the answer.