I have just accepted Her Majesty the Queen's kind invitation to form a new government.
Well, ladies and gentlemen, it's fantastic to be back. In this new era, we're taking a new approach. It will be uncensorable and uncancellable. We can't give in to those who say we can't do better. That is a disgrace. We can make the West great again.
The status quo is not optional. Welcome to the Liz Truss Show. How are we going to achieve a radical reset that Britain needs to get out of the path of managed decline that we're currently on? And how are we going to be able to do that in the face of the woke deep state, the blob, who are determined to stop any change to our country that is going to revive it. That's what I'm talking about today. He is the former CTO of Coinbase. He's the author of a book called The Network State and he's setting up his own alternative society of tech entrepreneurs on an island off Malaysia with a view to challenging the orthodoxy in the West.
Well, I'm delighted to be joined by Balaji to talk about the future of Britain and the West and whether or not and how we can save ourselves from our current position. Balaji, what do you think is needed to get Britain on the right track? What do we need to do to create a startup country?
Well, so, I actually have a book on exactly this topic. I call it Network State. I have somewhat unconventional views on this. I think we're going to need to do it internet first. That is to say, in so far, you know, Orwell's saying, if there's hope, it lies in the proles, you know, from 1984, right? So, I think if there's hope, it lies in the code. And, you know, the startup company starts on the internet first and I think the startup country does as well. And that means you have to build a community online and crowdfund territory and elect a basically you know you guys have this concept of shadow government in the UK which you know Americans don't know but basically it's like almost like a parallel government in waiting which is promoting it's saying do policy X rather than policy Y right and so like that concept but an internet shadow government which is all consensual it's all within existing law but it can crowdfund a large enough swath of territory to show that it's actually got a better government. And you know, as I was talking to one of your colleagues beforehand, of all the people in the world, the Brits are very well optimized for doing this because you've you know, you started New York overseas. Why not start New London overseas, right? Show how it's done and then have the British diaspora reform Britain.
So what you're saying is we need to export a certain number of people, create an alternative reality and show what Britain could be like. I mean I would argue that that is happening around the world that people are using institutions that were developed in Britain like parliament, like free markets, like free speech. And they're frankly doing it better than us. And we've lost sight of what made us great. And instead we've been subsumed by this technocratic state that has stopped us doing those things like innovation, new companies, new ideas. They're being suppressed at the moment.
That's right. And I think, you know, the only quibble I'd have there is even the word technocratic almost gives them too much credit because they're kleptocratic, right? They're basically stealing the money or, you know, awarding it to all these nonsense NGOs or quangos as you guys call them. And when I say stealing, legally stealing, right, in the sense of there's a process and there's a bunch of people getting it and there's laws, but it is essentially going down a rat hole. And yes, exactly. Britain, you know, like Britain has an amazing, you know, multi-hundred-year run, much to be proud of. The Brits have much to be proud of. And people, you know, obviously from English to common law to so many things from modern capitalism, the joint stock company arguably at least certainly in part. And so there are arguably more people of British descent certainly there's more people of Irish descent overseas than in Ireland. I think there's something like 8x as many people who call themselves Irish Americans as people in Ireland. And it's probably, you know, I haven't counted, but I think it's certainly in that ballpark number of people who are descended from British people abroad. And so you don't have to reform from the inside. You can reform from the outside. In a sense, Dubai is kind of serving that role right now where hundreds of thousands of young Brits have gone there and they're thriving in a place that was a former British colony but forked.
Exactly. And we do hope to come to the end of this decline era that we're in. And the next election is likely to be 2029 in my view because Labour parties turkeys are not going to vote for Christmas. So in 2029, if you could say what would help create that Britain 2.0, that Britain startup state, what would be the key elements of it?
I think the key element is a relatively small group of Brits going overseas, getting a piece of territory and actually crowdfunding it and doing it from scratch.
But they're not going to need to go overseas if Britain is under new leadership. That's my point. So yes, so we're looking ahead to 2029 and what needs to happen before 29 and then what needs to happen in 29, right?
So I think it is I think it will be some it's sometimes easier to reform a system if you have a working example outside it. I mean you guys have things like the Isle of Man and various kinds of like little sort of jurisdictions that are you know how like City of London is its own thing within London and so on and the Isle of Man is kind of got its own laws and Jersey has its own laws and so and so forth. There might be some pocket that is and you know you have this because of the former empire you've got all these little pockets around the world that have interesting idiosyncratic rules right so there might be some pocket which the rules give a shield against the deep state kleptocratic kind of thing that you're talking about but if not and you know that'd be something to research then just I think it's hard to do it within for the same reason it would be hard to start Google within Microsoft but Google outside Microsoft could reform Microsoft I think that's maybe my so while agreeing with almost many may not like every single line but let's say 95% of the diagnosis I think the prognosis has to be or the way to solve it is to go slightly outside the system rather than completely working within the system.
Got it. So what does success look like though once you've done all that once you've created this group of people who are outside Britain who create a new version of our country successfully harbor the innovation the excitement that we've lost in Britain what how do you then transfer that back?
So first is you have videos for example I like a small example I was in Dubai and I was just walking past a group of Brits and they had basically like a miniature UK there, you know, and there was no crime. Everybody was happy, they were laughing, they were playing some old British song, they were, you know, sipping tea and so it's really like almost out of a picture book kind of thing. And the larger scale that is beyond like a cafe scale to a town scale, right? And you're taking videos of it and maybe you're cryptographically timestamping them or witnessing them so people know that's not AI, right? And you have visitors who can come by and see it and you start to drain many of the most talented people out to this, right? And as you do that, eventually there's like an IQ flipping where there's enough of the smart Brits that say obviously this is the way to go and then the existing system doesn't even have people who can argue for it anymore. And you sort of you've reformed by draining out all of the IQ, all of the talent, all of the wealth and so on and so forth. The existing system is just a husk and the new thing has risen and then it can you know acquire or it's like it'll be an obvious way to flip, right? Arguably this is sort of you know well I this will sound much more negative than I mean it but that's sort of what happened with like UK and the US right where a lot of the smart people went out to the US and the US became bigger than the UK right and so I think that it's possible to have especially in the age of the internet that could happen much faster I don't think it has to take 150 years or what have you could have something where the top 100 thousand the top million or something like that already there's like 500,000 Brits that have gone to Dubai. Something like that. And now you've got something where outside of Britain, you know, for example, Demis of DeepMind, right, that was done out of the UK, right? That's obviously changed the world. That's led to Google Gemini. He had to go outside to really have that have the full flowering of what it could be, right? And I think if you have enough of that happen that is actually how you know you mentioned in your book for example China Russia are gaining on the west in many ways right that you know these authoritarian states are China in particular I think one of the reasons that they have reformed or they've gained such strength is that they had the example of Hong Kong they had the example of Taiwan they had the example of Singapore that were under Anglo management And that's actually what led Deng Xiaoping to reform communism into capitalism in 1978, the market economy. So we have an example of the diaspora in a sense or the overseas islands reforming China and certainly the Indian diaspora helped reform India. It showed that Indians could succeed under capitalism and with the internet and tech and then folks brought that back to India and it's reformed. So that would be how I'd approach it. I don't think you actually need that many people or that long a time period. I think probably on the order of a million people would do it if there was a new London abroad and then everybody at home would say why can't we live like that?
One of the policies I sought to put in place when I was prime minister is the idea of opportunity zones where you would essentially create geographical places in Britain where the normal regulations wouldn't apply where there would be low taxes where you could do fracking you know and you would create a pull towards those locations because people could see it was working. So it was the same idea you're talking about but within the country. I mean, I can't tell you the level of system resistance to that because they absolutely hate the idea of any bit of Britain being able to be a tall poppy, being able to be more successful than the rest of the country, but I thought it would create a race to the top. And I know how difficult the system resistance is. But when you say creating a sort of little Britain outside Britain, if you like it, that is essentially already happened. You know, if you look at the United States of America, it's got, you know, very similar culture to Britain or indeed Australia, a very similar culture to Britain. But the GDP per capita is now 50% higher in America than it is in Britain. But the issue is people in Britain don't see that. They're not experiencing the fact that people have bigger houses, drive better cars, you know, can go on holiday more. You know, the sheer abundance in the United States compared to Britain, they're not seeing that. So even if you did set up this idealized Britain, I'm not sure it translates to the people on the ground in Britain who are ultimately the people that need to vote to change things.
Well, so it's a good point. Here would be my counterargument which is I actually think you can count the US's success. I think you can also count to some extent the UAE, Singapore and all the other former British colonies have done really well, right? Net-net, you know, like all kinds of people want to dump on Britain in the past and there's something to that, but net-net British colonies have done phenomenally well and Singapore forked that and took that in like maybe a Lee Kuan Yew direction and Dubai went in an MBZ direction and so on and so forth. So you have many overseas examples of which the US is certainly the biggest and most successful but there's others as well to draw on and my view is those overseas experiments their purpose was eventually to just govern Singapore or govern the UAE or govern the US but this would be something where the purpose in part would be to reform Britain. So the people who'd be going overseas would be doing so with the eye towards beaming back the Instagram posts and you know the WhatsApps and so on and be like look at this over here is pretty good. Liz Truss is right you know the regulatory sandbox the special economic zone it's working over here. You know, there's this great site if you can go to if you want to put it up on screen or something the open zone map. And this shows all these regulatory sandboxes and special economic zones around the world. And there's lots of them. And what's interesting is many governments want to do this. They have like they've almost got the opposite problem that you did, which is the government actually has a political will. They have like a special economic zone in Kazakhstan or something like that. So, they do have that. What they lack are the talented people. And so you could take the talented people, expats from Britain, and put them there. 2 plus 2 equals 5, right? Not in the orbital sense. Okay. The whole is greater than sum of the parts. Let me put it a different way.
I get what you're saying. I think the key issue with this is the ability to transform the country you're in by the use of, you know, because I'm a great I've got great interest in overseas examples. You know, I studied how Chinese students learned maths. I looked at the opportunity zones that President Trump started in his first term. You know, I looked at how the Germans had sort of liberalized their economy. So, I'm more interested probably than most people in how do other countries do things in a successful way. You know, and there are lots of examples out there, but what we have in Britain is we have a problem with an elite who don't actually want to make the country better. You know, fundamentally they have a streak and I think Keir Starmer is an example of this that is ashamed of Britain's past is not proud of the fact that we've got all these former colonies they're doing so well you know they want to cover it up say colonialism was a mistake etc etc so this is the governing class now of Britain who have got those attitudes that seep into the civil service into the media into the establishment overall and those people you know doesn't matter how well America is doing or Australia is doing or Dubai is doing they have their hands over their ears and in fact you know this hence the pull towards China or the pull towards the EU because they actively don't want to know.
Yeah and you know the thing about that just to comment on that for a second I think today for example like India and Indians like are totally willing, able and they just want to have a handshake and trade and partnership and so on with the Brits. I don't think there's any enmity over I think all that stuff is ancient history in many ways and there's really no point in like litigating all that. It's like the French and Germans fought all kinds of times in their history and so and so forth. I very much disagree with the far left trying to...
No, I agree with you. But the point isn't it's not about what the Indians think or what the Caribbean nations think. It's actually it's internal. This is a self-loathing. And in fact, George Orwell talked about it that you have this strand of left-wing intellectualism that hates all this stuff.
That's right. But they are guilty on behalf of people who don't care. Right like which is the funny part right so but the interesting thing is now because those folks are on the internet you can just kind of do a deal directly and actually this is an interesting thing that is happening there is more EU India trade that is happening right and so that is one aspect of this where you can kind of with the internet you can do an end run around it right with smart contracts with remote work with all this kind of stuff the British economy may be in some ways strangled by this kleptocratic kind of stuff. But with the internet, with remote, with the British passport, individuals can exit and collective individual exit can like in a sense, you know, some people and this is an argument I have with a bunch of my friends who are let's say there's a conservative libertarian divide on this particular matter, right? Like should you quote stay and fight or should you use exit over voice, right? You may have heard those two framings of the thing, right? And my view is actually staying is surrendering. And the reason is if you're staying, you're sitting underneath the same tax regime and the same laws and so on and so forth. Whereas if you leave, you're subtracting your like income stream from you're basically voting with your feet against an illegitimate state and you're starving it and then you're also building up the new thing which is under new management and you're setting that new example. And so that's actually why all kinds of people at various times left, you know, why they leave Korea during the Korean War, why they leave China during the Chinese civil war, why they leave Vietnam, why they leave Iran, you know, with the revolution, why they leave Eastern Europe under communism and so on. And I think there's a pro and a con to what I'm saying though. And the con is it does accelerate in some ways the decline because now you know the far left is completely unopposed within the country right on their hand it also strips them of resources so it crashes faster on the third hand it's possible that China for example then has more influence on the fourth hand than the thing abroad actually at least is a free hand and can so there I grant that it's multifaceted but I think at least those people who are 30 or 40% and want to vote against it but are outnumbered individually have an alternative here that's worth considering.
But if you look at the British population, I would argue and you could see this, you know, on the Brexit vote, you could see this in the vote in 2019 for the Boris Johnson government. They do want the policies we're talking about. They do want Britain to be successful. They don't want this hand-wringing human rightsy leftism at all. The issue is that you've got a tech well you didn't describe as technocrats but you know you've got a class of people who's got a grip on the system and the question is can any democratically elected group of people effectively overturn that and take the power away from these people that's the question.
Yes so so my view is all right so let's talk about that for a second I do think that we can and should protect democracy. But I think we can do it in a different way where for example, if Google had tried to be started by a board of directors vote within Microsoft, it wouldn't have worked because it was just so paradigmatically opposite to everything Microsoft stood for. It was, you know, the web and it was the internet and it was the browser and so and so forth as opposed to Windows and Office and the desktop. But they could win in a sense a democratic vote over a different denominator. And actually you know the concept of gerrymandering right like where you change the geography over where a vote is taken right so one important concept I think about a lot is democracy is about the denominator like what's a vote being taken over example is it being taken over Brits or over Australians over Americans or New Yorkers or some county in New York right we take for granted that that denominator is geographically delimited like some county in Wales for example right but it could be just a group of people on the internet, right? Your followers, if you did a binding plebiscite on your followers, they would all back you for some position, right? And that's as legitimate a group as any. They just aren't yet organized geographically. But you could call, for example, a meetup and have them all in one location. Now, they are there geographically, but they're there temporarily. Now, you could actually crowdfund territory. Now, they're there permanently. Okay? So, you've actually printed out your supporters from the cloud into one spot on the land and then you can win the vote there. You know who's doing that? Elon with Starbase. He has actually got a piece of land and he printed it out his supporters there and he won 97% of the vote there to incorporate, right? That's kind of what I'm doing with network school and a lot of these startup societies around the world are doing. So, we still win democratically. The difference is we print out the cloud and we win over a different denominator. It's like the opposite of gerrymandering. It's actually taking the community of people rather than the political system trying to muffle democratic voice. We use the internet to amplify it and we actually have these clusters where all the people who agree can come there and actually have self-determination.
