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POLITICAL BILLIONAIRES The clip below is a good encapsulation of what modern China is by Eric X. Li, who’s one of the most thoughtful Chinese nationalists. I appreciate his description, because the Internet is the exact opposite. Because on the Internet, capital (in the form of Bitcoin, and more generally smart contracts) really does stand above any given state. The negative way of framing this emerging reality is that Internet capitalists are now above national governments. The positive way of framing it is: anyone can become an Internet capitalist, and there is now truly global rule-of-code that no state can easily abrogate. Moreover, individuals can’t have their digital rights revoked even by powerful states. As for whether it’s bad if “billionaires” have influence over the government…the reality is that political leaders control many billions in assets. For example, a city like SF with ~$16B in annual budget and 11 supervisors plus a mayor essentially has 12 political billionaires. Each of these political billionaires allocates $1B+ per year in cash, on average. This is orders of magnitude more than a typical tech billionaire allocates. That’s because tech billionaires might have $1B in net worth but perhaps only $10-50M liquid. So: market billionaires actually have far less in the way of financial resources than political billionaires. A market billionaire might allocate perhaps $100M over the course of their lifetime, whereas a political billionaire will allocate $1B+ in a single year. This is a >100X differential. Now, yes, it’s true that political billionaires have less for personal consumption than market billionaires do, but that is (almost by definition) societally unimportant. A political billionaire spending a billion on government worker salaries does a lot more to steer the world than a pair of fancy shoes. One might also argue that political budgets are less discretionary than market budgets, and I’d agree, but the sheer scale of public budgets makes up for it. Even if only 1% of a $16B city budget is discretionary, that’s $160M in discretionary cash per year. Anyway, the point is that anyone in control of a giant public budget is already in full billionaire mode. They are allocating billions in capital, so they are political billionaires. You are going to have billionaire-run government in this sense no matter what. Let me address this point, as it is important. (1) The Chinese system is run like a giant corporation. You have to run a 30k person township before you can govern a 500k person county before you manage a 5M person prefecture. Each level up becomes more competitive, and promotion requires a combination of numerical results plus political standing within the party. (2) So, in China, you’d never go rapidly from a civilian role to high office, like Obama or Trump. You’d have to work your way up. On the other hand, the American system has the theoretical advantage of generating out-of-left-field leaders, which is hard for the Chinese system. (3) Now, the Internet system combines aspects of both the Chinese and American system. Like the Chinese system, there is a tiered, promotional ladder based in large part on numerical results. We call it seed round, Series A, Series B, and so on! However, unlike the Chinese system, the Internet system can rapidly advance talent from all around the world, without the need to conform and pay party dues for years. Moreover, you can bootstrap and rise almost entirely outside the formal system. (4) I am skeptical that the non-quantitative American system can generate the political leaders capable of competing with the Chinese system. For decades, innumerate US politicians have just been completely out-executed in the physical world by Chinese political leaders who are just much more technical than they are (as @danwwang ‘s recent book also points out). And as the American electoral process tilts ever more towards charismatic social media presence, and ever less towards dispassionate execution-oriented mindsets, the trendlines aren’t in the right direction. (5) However, I think the Internet system has already proven itself capable of generating economic leaders who can compete with (and outcompete, in many cases) their Chinese economic counterparts. (6) The question is whether the Internet system can also generate political leaders capable of (peacefully) competing with Chinese political leadership, for some definition of competing. For example: can we use the Internet to create not just new companies but new cities, competitive with the best Chinese cities? We’ll see. This is the long-term project of startup societies and network states. Well… is it good for someone with no experience in allocating capital to suddenly be put in charge of allocating billions? Also, it’s not clear that career politicians actually have less in the way of conflicts-of-interest than businessmen. Career politicos have many interest groups to propitiate.