Balaji Srinivasan & Steven Glinert: What If the Internet Replaced the Nation State? | MTS Live

On the left, there's a lot of people who think you can just push a button to end homelessness, end poverty, just take all of Elon's money, and they just don't do any math. And they don't have any understanding of scarce resources. Scarce resources in the physical world. They don't understand scarce resources monetarily, right? They just think there's a cornucopia, a bounteous mother. Government is GOV is God, government is God, but the bounteous mother form of God, which can just hand out everything, right? And the rightist while moralistic often is subject to a different but symmetrical, somewhat symmetrical version of this where they think if the leftist thinks there's infinite money the rightist thinks there's infinite power. The rightist does not viscerally understand oh I need to work for votes. I need to get political support. Just like the leftist doesn't understand scarce resource in the physical world. The rightist doesn't understand scarce resources in the digital world. That they actually need to get all these people to agree with them that this is a good thing. And you can't just point a gun at everybody, right? And there's limits to just brute force.

All right. So, can I show some slides or should I get started? Go ahead.

Helmet guy. You know, the thing is, so like this guy actually had a decent TikTok, which I'll talk about in a second, by the way, which is funny. Basically, he has like a million followers on TikTok since 2022. He has never been a jingoistic nationalist on TikTok. In fact, I actually can't think of a single pro-American thing he's or anti-Chinese thing he's ever posted on TikTok. Right? So all the patriotism, uber patriotist, whatever kind of thing, uber nationalism is only on X, right? And the persona on TikTok is a completely different person. And I didn't actually understand that until actually like, you know, a few hours ago or whatever when he has something where he's like, 'Oh, Edin did nothing wrong.' Basically, right?

But leave it just, you know, the problem is like, you know, and someone a lot of people said, 'Why are you being so nice?' Blah, blah, blah. And the way I approach things is you know tit for tat in game theory.

Like basically there's a version of tit for tat where like you start out nice, right? I will basically cooperate with someone who will cooperate with me. I always start out nice. Steve, I mean whatever. You've seen me in business over the years. I always always start good.

I'm not. And I try like basically I'm always looking for the win-win. That is to say, how can that person win? You know, like empathy. It's funny. The problem is, you know, wokes weaponize the word empathy and they use it to mean give me all your money and die or whatever, right? And you're evil, whatever. But the thing is empathy in the sense of understanding the other person's incentive structure and how they get a win is important even if you're just a completely cold-blooded business person. Right. Right. In fact, the first thing I do when in any slide deck, any conversation before we go and do a presentation is how does that person win, right? How did they get a promotion? How do you know how did they how does their business make money? How did they advance in life? They have like three sometimes they even haven't even thought through their KPIs or whatever, right? And so like as an example, a concrete example, an academic, what is their number one thing they care about? They care about getting a first author paper on a study. What do they not care about so much? Maybe the IP licensing or something like that. So, there's a win-win where you can give them a grant, they do a study, they get a great new first author paper, and then you have, you know, IP license obviously subject to whatever other rules the university and so on has, right? As an example. Anyway, so coming back up like I always try to enter every discussion as win-win as possible and try to seek common ground and that was basically impossible here. I was just you know but anyway what I want to do is I want to actually show you what I'm thinking about here. Can are the slides on screen or not?

Yes. Okay, great. All right. So you see the thing where it says internet first. Internet is not a place but there will be internet places.

Yep. Okay. Are those when I'm full screen?

Oh, cool. Okay.

Okay. Great. All right. So, I wrote a book on this. I just want to briefly explain what I'm trying to do first and motivate it and then we can have a discussion perhaps. Okay. So, I wrote the network state theory and I opened up the network school and that's practice. Okay. Basically to show that you can essentially print out the internet that you can actually build physical social networks. I think that's the next step for what we're doing in tech where we are not simply building data centers with closed doors but we're building tech communities. Think of it as, you know, look, all these people are leaving Silicon Valley. You know, you have Larry Page and Zuck and Sergey Brin, Elon, of course, Peter Thiel, Travis Kalanick of Uber, all left California. Jeff Bezos left Washington. It's no longer the place for capital formation. And unfortunately, talent can't get into the US either. And so, basically, Silicon Valley as we know it is actually over. This year of IPOs, in my view, is like the last giant bang on the thing. And we need to decentralize Silicon Valley around the world. And in fact that already exists in a sense where there's a network of these Silicon Valleys. There's Silicon Valley of Uzbekistan and Moldova, all these places want a Silicon Valley of X. They've wanted it for many years. But now is actually the time to decentralize Silicon Valley just like we have Google offices and data centers around the world. We actually have the tech community all over the world because tech community draws from the world. Right? Okay. So that's out here behind network school. We did the first one here. Let me give a little bit more theory. The concept of being internet first, what it means, what it means for our values, what it means for the world. So, first, internet first. So, can you guys see the screen where it says the internet century?

Okay. So, the single most important force on the entire world yet still underestimated is the rise of the global internet. It is the first thing you see often when you wake up in the morning and the last thing at night. It is perhaps it's even monitoring your sleep or doing fitness tracking. Perhaps it's even doing some sort of agent that's acting for you online, right? So, it's completely ubiquitous. And you know that, you know, fish can't see water. As Orwell says, it takes a capital effort, a huge effort to see what's in front of one's nose. The internet's in front of your nose all the time. Arguably, the key moment was 1991. It wasn't just the fall of communism in the Soviet Union. It was also the rise of capitalism on the internet because something called the NSF acceptable use policy that was repealed and that was actually a thing that was blocking capitalism on the internet. Up to that point, the internet was an educational and military network only. And all the guys said, 'Hey, if you legalize capitalism on the internet, you're going to get spam and scams and porn and malware.' And of course, they were right. But we also got all the dotcoms and it was net good, right? So even despite the fact that the internet is the single most important force on the world, it is still underestimated because we put every transaction and communication online, but there's still layers that operate offline like the currency, the presidency, the military. That's all going to change. We're going to enter what I call an internet first world. And what I mean by internet first, it's a play on words. It means at least two things. It's both a technological idea like, you know, you say mobile first or AI first, right? You know, mobile first company, AI first company. But it's also a political idea like America first or your country first. Internet first is in my view the scaled alternative to both nationalism and socialism. And if I describe my ideology, I'd say I'm internet first. That is to say global techno-capitalism. And millions of people are not really location first. Like the flags over here do not actually describe what your actual social network is. If you take your WhatsApp group chat or your Twitter followers or whatever and you print them out on the map, it looks something like the thing below, right? The digital diaspora is the core feature of our online existence. The reason we don't see it is we don't have good maps of the internet. Now by the way to be clear the mapping of the physical world was actually itself a technology because a straight line on a physical map is a very unnatural thing. You needed to establish not just the concept of latitude longitude you needed surveying techniques later you needed aviation and overhead flights and all the kinds of stuff GPS coordinates that we have today. We take maps for granted, but much of the world for a long time is unmapped. And really the internet right now, all this network over here is from Facebook and that exists on Facebook servers. Twitter's network, you can map it on Twitter servers. We're just starting to have with blockchains an open web where we can actually map at least all the financial connections and with something like Farcaster or Lens all the social connections. But it'll take a few years to eventually get there until we have a decentralized social media platform where we can make maps like the below. Okay. The point though is this is actually where you live. You live in the center of a network, not really in your location. And the reason I say that is, you know, if you take a circle of 100 meters or 100 miles and or if you instead take your top 100 contacts, the latter is much more important to you typically, right? Those could be remote workers, they could be internet contacts, they could be vendors around the world. Essentially, geography is not the primary mechanism of organization. This changes something that was true for 400 years since the Peace of Westphalia in 1648, which is that geography was upstream of both culture and law. So people who were near each other shared the same culture and therefore they share the same law. No longer the case. You can live in the same apartment building, have a totally different culture. That's why people disagree in law. That's why the fights are getting so bad. Okay.

So first is the internet was actually built in part to resist exactly that to resist a nuclear attack look at the graph below can you bomb that the entire point is that decentralize can you bomb Bitcoin? Can I in theory I suppose you could try to go and bomb every single data center around the world? Go ahead.

That's not the core point by the way. Go ahead.

So hear me out. The thing is first you have to identify the pole of network and state cloud and land like these are it's like you know north and south poles for example it's two extremes right and then there's many intermediates between those two poles but you're talking about are conflicts between the network and the state and in China yes the state basically triumphed over the network and Xi Jack Ma before Jack Ma could Elon X okay meaning Xi went and basically expropriated Jack Ma before Jack Ma had any ideas of maybe doing something that could undermine Xi's power. Okay. But in America, the network has triumphed over the state. Why? At least up to this point. Like what's upstream of all politics? X, right? What is basically taking over the financial system? Crypto, right? Stable coins, right? What is like essentially the center of the US economy right now? AI and data centers, right? So, and then obviously who's it's the top 10 tech companies and so on and so forth. Whenever anybody talks about what America is, they're only talking about if they're pointing to the success case, the tech stack, right? And you know, do politicians need their X accounts? Absolutely. When Trump was deplatformed in 2021, he wasn't politically powerful, but when he was replatformed, he was again, right? Network over state applies in the West. State over network applies in the east. Now the thing you're talking about yes there are tensions between network and state but first we have to it's like capitalist and communist right like it's something where there's a tension between the group and the individual and you can frame it in a few ways I mentioned cloud and land so you can put the network up here and the state down here you could also say the state is top down and the network is bottom up so you could put them like this you could say the network is internationalist and the state is nationalist so you can make them left and right like this but you could also say the network is capitalist and the state is communist or socialist and so you could flip them like this. Okay. So these are like two forces that juxtapose and Thiel I think had in my view obviously I think is a precursor or forerunner. He talked about technology and politics but I actually think network and state are more precise ways of talking about the same thing because they're actually structures right so it's not just technology in the abstract sense the fundamental technology of our age is the internet. Even the electric car revolution is in part driven by battery technology which has improved due to smartphones which of course driven by the internet. So anyway, net is it's not simply that the state can just right this is something you know Stephen I'll give you the ball back and I'll maybe get some more slides in too. The it's like a state is not all powerful like when an order is given all kinds of people need to actually do it. Obviously Trump was in his first term resisted by the deep state right and they didn't actually do what he said he would say something it wouldn't get done and now actually everybody does what he's saying and they're building the UFC on the white house lawn or whatever. Okay. So which is, you know, that's a different failure mode. And so the which is by the way that you want third worldism, that is third worldism. Okay.

Lucotropicalism.

Yeah. Also lucotropicalism.

The thing is with that said, there's actually some amazingly good things that are happening due in part to the administration which is the absolute rampage of amazing biotech innovation, right? That is in part due to the relaxation of approvals and so on and so forth. So we're getting these wonder drugs. So this is just a very high variance thing where we're getting the it's the best of times and the worst of times. The best of times technologically, the worst of times politically, right? Okay. The best of times network, the worst of times state. And so the more you are an internet American, the more you are associated with the global network, overall things are good to fine to great, right? The less you are associated with that or the less you're associated with China. Basically, I think you know people who are associated with either China or the internet like an offline Chinese person to the extent such thing exists, they've got an improving standard of living. If you're associated with the internet, you've got an improving standard of living, which is lots of people in India, Malaysia, the US and so on and so forth who are internet people. But if you're, you know, antithetical or opposed or economically opposed to both, like a very offline person whose factory is disrupted by the Chinese, then you've got a bad time and you're going to be opposed to both. Right. All right. Let me pause there. More I can say.

The pope had no terrestrial power but he could impose his will on emperors he could impose his will on the holy emperor he could impose his will on kings he had power it just he had no armies right and then you but I guess what I think about a lot is like You had this period where the pope and the emperor went back and forth in terms of the pope could assert power over the emperor in certain city states and in certain structural ways. There's a it's the it starts with an I there's something

Investiture crisis. Yes.

I know. No, but the thing is it isn't the case that the state always wins because you can have religious conversions. There's a reason people say the pen is mightier than the sword. There's a reason Google is so gigantic. It's never fired a shot. Right. So the thing is I think we're in an age right now due to the rise of the right where there is an enormous over rotation on like people will constantly tell me something like Balaji, you don't understand hard power. Let me explain to you what a gun is or whatever, you know this kind of thing right and in reality often that person not you guys but that person doesn't understand hard power because I will start showing them that the US military is made in China that the supply chains are there that you can't fight your factory that the Tomahawk and the JDAM all the US armaments depend on China that it's number one in steel and cement and cars and then they start crying right then they get mad right because what they thought they had and this is actually my main point of departure from you know I have friends all over the West obviously, but the western leftist believes implicitly that if they lose the argument that they can always resort to coercion in the form of taxation and the western rightist believes implicitly that if they lose the argument they can always resort to coercion in the form of invasion and that's been true for like 500 years and it's particularly true for America for the last 35 years since the unipolar moment of Kuwait after right around the time of Gulf War I but it's no longer true and so coercion doesn't work anymore and you have to use persuasion. Why does coercion not work? Because even the NSS national security strategy of 2025 acknowledged it's a multipolar world now, right? Like that's why there's a withdrawal from Asia. That's why there's they're withdrawing from Iran. That's why there's at least a standstill with Russia, Ukraine. That's why it's a grudging schizo pullback, but it's happening. And so what that means is that having a gun is not everything. You know, like somebody quoted to me, they're like, 'Oh, yeah. Well, Balaji, how many divisions has the pope?' You know, which is Stalin's quote. And I said back to them, you know, as the other saying goes, Blue Jeans and rock and roll have more power than the Red Army. It's not like the USSR collapsed due to invasion, right? It collapsed due to essentially a dysfunctional in a sense nervous system. So that's another way of thinking about it. The network is like the nervous system and the state is the body, right? And if you're Christopher Reeve and you're really muscular or you're just a big person, right? And Christopher Reeve, you know, Superman, he fell off a horse, right? Tragic accident and he had the body of Superman, but he fell off a horse. He's paralyzed. So, if the network isn't coordinating the state or if there's two networks that are smashing the state against each other, which is what's happening in America, then it can't just, right? Because to just do something means take away all constraints. Actually, I'll say one more thing on this and I'll give you guys a ball. So, you know, there's another meme that I critiqued recently, which was to be clear, I think it comes from a good place, but it's like the just push the button, you know, meme, right? Which is just restore law and order. Why don't you know, don't ever think about pushing that button.

The fix everything button, right?

Yeah. Yeah. Now, the thing about this is

It's so good.

It's like the thing about it is is there some truth to it? There is some truth to it, which is like if we just had a button we could push that said, hey, enforce the law, restore law and order, you know, like then everything would just work and you know the other people have stupid ideas and so on and so forth. What is missed in that is that the people who have those bad ideas, you have to uninstall those bad ideas via persuasion before the button is built. Like that is to say the reason that or another way of putting it is on the left there's a lot of people who think you can just push a button to like end homelessness, end poverty, just take all of Elon's money. He's so ungrateful. He's ungrateful. He owes it to us. And they just don't do any math and they don't have any understanding of scarce resources. Scarce resources in the physical world. They don't understand scarce resources monetarily, right? They just think there's a cornucopia, a bounteous mother. Government is GOV is GOD. Government is God, but the bounteous mother form of God which can just hand out everything, right? And the rightist while moralistic often is subject to a different but symmetrical somewhat symmetrical version of this where they think if the leftist thinks there's infinite money the rightist thinks there's infinite power. The rightist does not viscerally understand oh I need to work for votes. I need to get political support. Just like the leftist doesn't understand scarce resource in the physical world. The rightist doesn't understand scarce resources in the digital world. That they actually need to get all these people to agree with them that this is a good thing and you can't just point a gun at everybody, right? And there's limits to just brute force. I mean, duh, but also not duh. You know, this is why so many MAGAs seem to believe that there's like adamantium under the Appalachians that America is a physical place has some super resource, right? That as if the American Empire with like a billion people globally and allies around the world isn't mostly held together by diplomacy, treaties, alliances, you're not firing the gun 99.999 whatever percent of the time, however many nines laws do not involve the firing of a gun. That is a very rare occasion edge case. And while the left can not understand that force exists and it is the ultimate backstop, that's true. The right doesn't understand that it's not what you use all the time and you don't use it except in extremely extremely infrequent circumstances. Let me pause there.

Like in a long conflict. Go ahead. Yeah. What you're saying and I'll say something. Go ahead.

I want to just give some numbers here. Okay, here's Can you see the screen?

Wild but here we are. So, can you guys see this the CSIS?

The US military exhausted its inventory of some types of long-range missiles within the first week of a Taiwan conflict. Taiwan used up its entire inventory of anti-ship. So, it's not forget about a long war. It's basically it just goes to zero very very very very quickly, right? And so this is also this is the graph I was saying with the US military is made in China. There's a JDAM, the Tomahawk, the supplier is in China. Okay? And this dominance has been increasing over time. There's some attempt to kind of stop this over here. But basically the thing about a supply chain is I've actually managed supply chains in

You know biotech and genomics. It is complicated for the following reasons. First is the very simplest is you've got a list of your parts in a spreadsheet and you've got supplier one, supplier two, supplier three and country A, country B, country C at price A, price B, price C. And the thing is what you first don't know is who their vendors' vendors are, right? Because those vendors change over time. Any supply chain is dynamic, right? Especially when you've got crazy tariffs and trade war and so on, you're constantly reoptimizing it and so on. And I don't think that America has like one of the things I actually did is you know just in as an intellectual exercise if you actually wanted a rational industrial policy. I actually did have a visual of this here which is this. Let me put this on screen.