Dan Wang, author of “Breakneck: China’s Quest to Engineer the Future,” joins me to explore why China builds while America blocks, how lawyers strangled U.S. infrastructure, and why Connecticut trains run slower than they did in 1914. Dan lived through China’s trade war, Zero COVID, and the exodus of 15,000+ Chinese millionaires, giving him unique insight into both superpowers’ pathologies.
We discuss why ribbon-cutting ceremonies matter for societal optimism, how lawyers morphed from deal-makers to obstructionists after the 1960s, California’s high-speed rail fiasco, the rebellion against NIMBYism, the new Death Star versus the Rebel Alliance, and why we need synthesis.
I hope you enjoy this conversation as much as I did. We’ve shared some highlights below, together with links & a full transcript. As always, if you like what you hear/read, please leave a comment or drop us a review on your provider of choice.
— Jim
Links
Our Substack is growing! Subscribe below for more brain-tickling content designed to make you go, "Hmm that’s interesting!
Highlights
Authoritarianism without the Good Parts
Dan Wang: “And the other point I’ll say about authoritarianism is that, you know, I think one of the great tragedies of the past eight months is that every time I take a look at the White House right now, Donald Trump seems to be shooting admiring glances at authoritarians around the world. He’s always talking about what a great head of hair his buddy Xi Jinping has. And I find that certainly pretty bizarre. But there’s now increasing convergence between Trump and Xi. I think that Trump and Xi are visiting misfortune upon the downtrodden. Trump has now made Intel into a state-owned enterprise with American characteristics. There’s a lack of probity inside the Trump administration. And what we’re getting right now is authoritarianism without the good stuff. Authoritarianism without the highly functional trains that authoritarians are legendary for. We don’t have the public order in the streets. We don’t have the functional logistics. And so right now, it’s kind of, you know, authoritarianism with a lot of bizarre characteristics. But I would wish that we had, say, better transit infrastructure.”
Neighbors for More Neighbors
Dan Wang: “I think there [should] be some sort of a program to really give people a sense that there should be more homes… So if we have a few new homes, [people] see a lot of temporary costs, mainly noise, construction, new sewage lines, and all that rest. But they don’t necessarily appreciate how their communities could get a lot better if it were not frozen in amber. That development, to some extent, feels good. Having new transit options feels good. Having new parks and having a more robust tax base in your community, also feels good in all sorts of important ways…
I spend most of my time living in Ann Arbor; my wife is a professor at the University of Michigan. And Ann Arbor, for a while, was... has been a pretty NIMBY town. It’s pretty anti-development, held up by a lot of aging hippies who want nothing to change. And, you know, I like this little slogan that I’ve seen over there: “Neighbors for more neighbors.”
I think that is a very positive message that inspires people about some level of development, that neighborhoods aren’t simply aging and that there is a little bit more new life. That’s the sort of messaging that I would like to see.”
A Shift in Lawyer Culture
Dan Wang: “100 years ago, Jim, a lot of the lawyers were Wall Street types, they were deal maker types. They were working on behalf of some of the robber barons who were building their railways. They were raising bonds for the robber barons, and they were using eminent domain to turf homeowners out of their land…And even throughout the second World War, Franklin D. Roosevelt stacked his cabinet with lawyers. And lawyers were the people who carried out many parts of The New Deal as well. But that was in part because lawyers used to be creative deal-making types.
And right now, what we have is a remnant of the 1960s, in which lawyers followed the lead of someone like Ralph Nader, who, I think is responsible for a substantial part of the lawyerly society, in which, lawyers decided to turn against development. Because Robert Moses had been ramming highways through their neighborhoods. [Because] people were exhausted about the technocrats in charge of the Vietnam War. [Because] people were upset with the Department of Agriculture spraying DDT, as well as pesticides throughout the entire country. And then the lawyers decided to shift away from being deal-makers into more regulators, as well as litigators.
And that was exactly what the United States needed in the 1960s to confront the problems then. But I think we in the 2020s are confronting a new set of problems, such that we don’t have to be still so obsessed with all of the problems of the 1960s.”
Who Is the Rickover of Today?
Jim O’Shaughnessy: “Musk aside, are there other candidates that are living today who could assume a kind of a Rickover role?”
Dan Wang: “Well, I wonder. A lot of the VCs are much more interested in tweeting than governing. If we’re taking a look around the table of the Silicon Valley folks who recently dined with Donald Trump inside the White House, I think that it is a little bit difficult to imagine that these Silicon Valley titans, folks who are running Meta or Alphabet or Microsoft or whatever else, Nvidia, to step away from their lucrative purchase and running very big, powerful companies, to be a relatively powerless member of the bureaucracy. To do God knows what inside the government. I think this is one of these other big problems of the lawyerly society, that it becomes really difficult for talented people to imagine themselves to be doing a lot inside the government because it is so difficult and it is so thankless. And so that is also something I would like to change, that we should increase the prestige of working within the government. Pay civil servants a lot better, rather than trying to cut their jobs as Musk has. And try to draw in some really ambitious people back into the government once more.”
🤖 Machine-Generated Transcript
Jim O’Shaughnessy: Well, hello everyone. It’s Jim O’Shaughnessy with yet another Infinite Loops. I am very excited about today’s guest because we’re gonna be asking the question, what happens when a lawyerly society confronts an engineering state?
My guest today, Dan Wang, has lived the paradox as he writes about in his new bestselling book, Breakneck: China’s Quest to Engineer the Future. Dan is a research fellow at Stanford’s Hoover History Lab, who spent years in Hong Kong, Beijing and Shanghai, and talked with factory managers, coders and party theorists, and developed this powerful framework between lawyerly and engineering. Dan, welcome.
Dan Wang: Jim, it’s a pleasure to be here.
Jim O’Shaughnessy: So, let’s start at the beginning. I love your framework. China can build, the US can block. How did we get here? And explain for our listeners and viewers the broader picture of that framework.
Dan Wang: Well, the broader picture and the way that I arrived at this framework was, as you say, I spent a few years living in China, mostly between Beijing, Shanghai, as well as Hong Kong. And the years that I was in China between 2017 to 2023 felt like a pretty momentous period of time. I lived through the first trade war that President Donald Trump launched, something that quickly morphed into a technology war, which I was studying when I was working as a technology analyst at an economic research firm. I was living through China’s stunning successes in new types of technology development, including things like solar as well as electric vehicles. And I was living through part of the growing repression under top leader Xi Jinping.
And a lot of what I had been thinking about was that, you know, we’re using these 19th century political science terms, like socialist, capitalist, autocratic, neoliberal, whatever that means, to reason through this relationship. And I thought that let’s have a 21st century understanding about these two superpowers, who are sometimes friendly and more often not these days, and how they are trying to confront each other. And so, that’s when I, after the start of 2023... And I should say that the centerpiece of my experience living in China was to have lived through all three years of zero COVID, which I was more or less stuck inside the country.
I decided that I needed greener pastures, at least for a little point, which is why I moved to the Yale Law School in New Haven, not too far north of where you are in Connecticut right now, Jim. But I was a fellow at the Yale Law School’s Paul Tsai China Center, where I substantially wrote this book. So, the way that I thought of China is as an engineering state, which is a country that treats building another mega project as the solution to all of its problems. So whenever China’s economy trembles, the Central Committee, the Politburo, the State Council will announce a big new project to build a new spate of roads or bridges or hyperscalers or coal plants or homes throughout the country. They are also fundamentally social engineers. People who treat the society and people as yet another mega project, as yet another building material to be torn down and remolded as they wish. And they are also economic engineers. People who are willing to push people out of Wall Street, China’s financial system, as well as its tech sector, in order to make kids work in semiconductors or aviation or more strategic industries instead. And a lot of this is driven by the fact that at various points in recent history, most of China’s top leaders, online members of the standing committee of the Politburo, have degrees in engineering.
Then I contrast that with the United States, which I call the Lawyerly Society, because it seems like all the presidents have to go to Yale Law School. If you take a look at the US Senate right now, there are 47 US senators who have law degrees. None of them studied anything resembling STEM. Among the Founding Fathers, most of them were lawyers. First 16 presidents, all the way from Washington to Lincoln, 13 of them were lawyers. The issue with lawyers is that they block everything, good and bad. So you don’t have stupid ideas like the one-child policy. You also don’t have functional infrastructure anywhere.
[I’ll] make just one more quick point about Connecticut, since you and I are both quite familiar with the state. When I was in New Haven, I confess I was sometimes seduced by the pleasures of New York City, and so I would take the Metro North Train down to Grand Central in New York. And the train is good. It takes about two hours to get from New Haven to New York. It is a bit of a slow train, but it is a steady and reliable train. And I was quite satisfied with it, until one day I came across a timetable from 1914, which I found that the trains about 100 years ago were slightly faster getting between Grand Central and New Haven than they are today. And I think that it’s not quite an apples to apples comparison, because the trains make many more stops now, including Greenwich, when it didn’t in the past. But at a first approximation, we’re moving slower than 100 years ago. And this is not the direction that I want things to be moving.
Jim O’Shaughnessy: I literally just gave that example last week when having a conversation with a friend. And because I discovered an even earlier train schedule, and I was shocked, in very much the same way you are. And then I looked at pictures of the trains back then, their interiors. They were much, much nicer. Much more comfortable. The services provided on the train for that less period of time 100 years ago were better. And can we lay all of that at the feet of our lawyers? You know, there are so many lawyer jokes, right? I’m reminded of, I think it was Abe Lincoln who said, “One lawyer in a town will starve. Two lawyers can make a good living.” Is that really kind of foundationally why we are seeing this in America?
Dan Wang: No. I think that we cannot pin all of America’s problems on the lawyers. There’s plenty of blame to go around. I think that if we’re thinking about the Metro North trains in particular, I would say that, you know, the mechanism of the lawyers hurting things has been that a lot of homeowners around Connecticut have put up their hands to say, “Well, we don’t like a rail line in our backyard.” And by repeatedly emphasizing this, they managed to sue Amtrak and the other rail authorities to take slightly more circuitous routes, such that we’re adding about 25 minutes into the train schedule, even for the high-speed trains. And I think that is a feature of the Lawyerly Society, in which individual homeowners are able to put up their hands, hire some superbly well-paid lawyers, and then do things that, you know, I would say, defensively subverts the public interest in some big way.
I would also lay some blame upon America’s mass transit agencies. A lot of the mass transit agencies, including the MTA, have outsourced a lot of their engineering expertise out to contractors, such that, you know, there aren’t even that many engineering experts working inside these agencies. A lot of it is coordinating work with outside contractors as well.
And I think that there is also some blame to go around for the society not so much necessarily valuing a lot of these mass transits. America likes to drive, and there’s no way around that problem. But I think the fundamental issue, I think with the lawyerly society, if we accept that lawyers are, to some extent, a cause of the problem, I think the fundamental problem is that lawyers are, for a very large part, handmaidens of the rich. They’re very good at defending well. Part of that is positive. The US wouldn’t be so wealthy, wouldn’t have created so many companies worth trillions of dollars if the lawyers weren’t around defending the rights of companies like Nvidia. But I think the problem with America today, one of the many problems, is that the country works very well for the wealthy. The wealthy in New York don’t have to deal with affordable housing problems. They buy these skinny skyscrapers in the middle of Manhattan. They don’t take the subway to work. They have much more comfortable options to get to work. And I think what I would like is for the lawyers to step out of the way a little bit, such that we are able to build mass transit for the many, we are able to build homes for the many, that we are able to build all sorts of projects that people desperately need. And it is not a few individual homeowners that are able to prevent this construction.
Jim O’Shaughnessy: Yeah. I think that that is an incredibly valid point. You know, the Merit, which is the other way to get up to New Haven, actually bends out around Greenwich. And I always wondered why that happened, and so I started digging into it. And it turned out if it went straight, it would’ve went straight through a Rockefeller estate, and that’s why it doesn’t go straight. And so there’s this constant tension, yeah, but... In my opinion, between, as you say, the wealthy who have access to lawyers and can pretty much paper anything to death, verse, like, progress, verse not sitting in stasis. Do you think another by-product of this is just the fact that we lose that knowledge, and maybe that urge to be a little more accommodating to an engineer’s mindset?
Dan Wang: Yeah. I think an urge is a good way to think about this because I think that the United States wasn’t always like this in not being able to get anything done. I think that the US used to be an engineering state itself for about 100 years, 150 years, in between the middle of the 19th century to the middle of the 20th century. In which, in earlier times, the US built, you know, a train system that met the coasts. There were skyscrapers in Manhattan and Chicago. There were canal systems. And then in the 20th century, the US builds big projects, like the Hoover Dam as well as the Manhattan Project and Interstate Highway System and the Apollo missions. And, you know, in the earlier days of New York, I think there were... You know, it used to be common for mayors and governors to go to these ribbon-cutting ceremonies and to open up a big new bridge, to open up a big new set of subway stations. New York opened a whole string of subway stations in the year 1925, about 100 years ago now. And also, I think another big state in 1905, so it’s been quite a... Subways are not exactly a new technology, even though our trains and even though our tunnels seem to not have been substantially updated since that time.
And I think what America has very substantially lost, and this is something I observed pretty extensively in China, is that once you have physical dynamism, people really do have a sense of optimism about the future. If you see that your city around you, as many people do in China, did not have a subway system in the past, now you have a thriving subway system. If it did not have a high-speed rail system in the past, now it has high-speed rail. If it didn’t have roads and bridges, if it did not have parks, these are all things that China is building in abundance. And it really gives people a sense that their country is growing better and better. And there are still things like ribbon-cutting ceremonies. And I think that, you know, Americans have lost the sense that ribbon-cutting ceremonies represent something thrilling, the opening up of new possibilities where you didn’t previously expect it. And this is something that China has, and I think this is something... You know, building a new subway system isn’t just only a measure of, you know, some sort of economic stimulus for all of the builders involved in the project. I think that the Communist Party has also built, to some extent, political resilience through these bridges and subways because people feel a little bit better about being in a society that is visibly changing and visibly improving year by year, rather than a country that is moving more and more slowly as folks do in Connecticut.
Jim O’Shaughnessy: And how much of this do you think is a sequencing problem? It’s a bit like the argument that we got leapfrogged in the United States with cellular technology, cellphones, et cetera... because a long time ago, we built a pretty antifragile landline system. And we were like, “Ah, yeah, that’s great. We’ve got this great system.” And meanwhile, we got [laughs] out-competed, out-installed on the cellular front.
I remember going to various places in Asia and Europe. And being kind of marveling at the fact that my phone worked vastly better over there because they had far more stations, et cetera. You know, we built the subways a long time while we were still a building society, right? And then it’s the shrug. I’m very taken by your idea of the ribbon-cutting demonstrating, physically demonstrating progress to the citizenry.
Another one of your themes that I really like is the whole China and America are mirrors of one another, sort of crass materialism, hustlers, pragmatic get-it-done attitude in both cultures. In what specific ways does contemporary China rhyme with America’s Gilded Age, and where does that rhyme break down, become distant?
Dan Wang: I think it is very defensible to say that China might be in a Gilded Age of its own, in which you had a lot of robber baron types who were building like maniacs and running roughshod over a lot of people. You had plenty of corruption in both systems. And China has mostly substantially limited a lot of the most obvious cases of corruption. But it was also a time of building tremendous wealth among very hungry entrepreneurs. What came after the Robber Baron Age? What came after the Gilded Age? Well, the progressives in the United States took over. People who wanted to bring about some sort of better civil service. People who wanted to bring about less of an element of corruption, people who are very interested in governing society technocratically. And actually there is a more direct rhyme, in which the early progressive era folks in the United States considered themselves to be social engineers, and they were also prominent eugenicists as well. And that is something that I think rhymes very slightly with parts of the engineering state in China today. And I think that... I agree that for a very large part, the US has not so much needed a lot of infrastructure for quite a while, that people were able to afford a shrug with some of its problems, because the country felt like it was relatively well built out. But I think the longer that the United States has failed to build, and I think that it has been going on for decades now for the US to have not built, I think it is less and less of a tenable position that the country could get away with not building substantial amounts of projects.
Because right now, it is really obvious that we have a housing shortage in a lot of the richest parts of the country, especially in a lot of big cities like New York, Boston, San Francisco, Los Angeles. When parts, big parts of Los Angeles burned down just earlier this year, there has not been a vigorous building effort back, in part because homeowners as well as City Council has blocked a lot of redevelopment efforts.
I think the country desperately needs new housing. I think we need a lot more mass transit. It does not make sense that, you know, we are relying on subway systems that were mostly built out over 100 years ago. The New York Subway, which I take all the time, is screechingly loud. And the system does not work all that well relative to other subway systems in Asia or Europe. And we need to build a lot more infrastructure, to say nothing of the vast solar, wind, and transmission deployment that we need to decarbonize our economy. And I think that it is insufficient to greet a lot of these failures with a shrug. And I think that... I think a lot about the California High-Speed Rail Project. I’m a fellow at the Hoover Institution. We think a lot about California high-speed rail over there. Where is our California high-speed rail line that was promised by referendum in 2008 to connect Los Angeles as well as San Francisco? And right now, how many people have ridden California high-speed rail? The number is zero because the first stretch is supposed to be open between 2030 to 2033, connecting two minor points, Merced and Bakersfield. And so, you know, the voters have actually delivered this state of affairs only a shrug. And I find that quite odd that California high-speed rail fails, nobody really cares. We have all these insane cost overruns with New York Subway or a bus stop in Los Angeles or the $1.3 million toilet in San Francisco. People kind of greet it with a shrug and move on. And I say, “That’s not good enough.” Let’s be a little bit like the progressive era politicians who did try to deliver a more effective, efficient government, that did try to hold government accountable to many of its promises. And I say let’s get back to having some ribbon-cutting ceremonies once more.
Jim O’Shaughnessy: Yeah. The progressive sans the eugenics, right? Because the social engineering is, you know... I’m very difficult to pigeonhole politically. I guess the closest definition would be that I’m fiercely anti-authoritarian. But by the same token, as I’m listening to you, you sound incredibly erudite and are making very straightforward suggestions that I would very much support. I don’t know if you’re familiar with the work of my friend Phillip Howard. I’m a trustee on a board called Common Good. And Phillip has been writing book after book after book about the fact that we are drowning in rules and regulations that essentially paralyze us. And I think one of your terms was that, you know, America is living amid the ruins of an industrial society. And I’ve been on the board at Common Good for more than a decade, and I’m very frustrated by the fact that as compelling as Philip’s arguments are, as compelling as your arguments are, we nevertheless find ourselves mired in this stasis. Like if you were given the shot to, you know, go convince a mayor somewhere or a governor somewhere to make this a campaign platform and actually, you know, come through and deliver on it, what would the advice be? What would that program look like?
Dan Wang: Yeah. Well, I think the challenge with America is that the mayors and the governors, as best as I can tell, I’ve not spoken to a high number of them, but the mayors and the governors are just as frustrated as I that critical things that people need do not get built. Two weeks ago, I was speaking at the Abundance Conference in Washington, DC where there’s a lot of people very motivated by these same concerns. And there was, to the Abundance Movement’s credit, big bipartisan numbers of both Democrats as well as Republicans coming over, and many of them were local government officials who were saying that, “We wanna build more homes. We wanna build better mass transit.” And they were mostly unable to do so. And I think the tragedy of a lot of this is that, you know, the rules are in place, the culture is in place, entrenched homeowners are in place who are able to put their hands and, you know, in 1,001 small ways frustrate the wills of the mayors as well as the governors in order to actually build anything. And this is why I am pretty deliberate in saying that the problems of America, or the problems of the lawyer-led society. The problems are you and me and everyone else who object to some aspect of change or development that might hurt any individual. But, you know, they also don’t find this argument compelling that on average over the longer run, we have greater benefits if we have some element of change.
I absolutely wanna sign on to your agenda to be against authoritarianism. I left an authoritarian country and am here in the US, and I’m very glad for that. The challenge, I think, is that I would say that, you know, it is not only an authoritarian system that is able to build pretty good mass transit. What I am always saying is that the US should study China because the US should study a lot of best practices around the world. But the US doesn’t have to become China. The US doesn’t have to emulate China. The US does not have to copy China. Let’s only get to European and Japanese levels of construction. The data coming out of Paris and Madrid and Tokyo are that these cities are able to build subway systems at about one-eighth or one-ninth the levels of New York City. And arguably, you know, it is much more difficult to dig a tunnel in Paris or Madrid because it’s just much more archeology involved in these places than New York City. And so these countries are also not really known for trampling on the rights of its people. So let’s just get... We don’t have to be China-level here. Let’s just get to Paris, Madrid, Tokyo levels of construction.
And the other point I’ll say about authoritarianism is that, you know, I think one of the great tragedies of the past few months, we’re recording in September, you know, of the past eight months is that every time I take a look at the White House right now, Donald Trump seems to be shooting admiring glances at authoritarians around the world. He’s always talking about what a great head of hair his buddy Xi Jinping has. And I find that certainly pretty bizarre. But there’s now increasing convergence between Trump and Xi. I think that Trump and Xi are visiting misfortune upon the downtrodden. Trump has made now Intel into a state-owned enterprise with American characteristics.
There’s a lack of probity inside the Trump administration now. And what we’re getting right now is authoritarianism without the good stuff. Authoritarianism without the highly functional trains that authoritarians are legendary for. We don’t have the public order in the streets. We don’t have the functional logistics. And so right now, it’s kind of, you know, authoritarianism with a lot of bizarre characteristics. But I would wish that we had, say, better transit infrastructure.
Jim O’Shaughnessy: As would I. And I love it, authoritative without any of the good stuff. And they always said, even though it was incorrect, they always said, “Well, at least Mussolini made the trains run on time.” Which he didn’t, but [laughs] it was a great analogy. My personal view on this is that, you know, I often frame things as people are going either/or instead of and, right? So I’m kind of a, we need both Athens and Sparta, right? We need open inquiry, civic flourishing, but discipline and capability. We need Apollo and Dionysus, right? Form and clarity, energy and innovation. These are enduring tensions. And as you note, our form of government was kind of designed to muck up the works, the separation of powers and everything else. What prescriptions would you offer for getting us to the point where we don’t have to be authoritarian at all? What are the prescriptions that you would give to, “Hey, here’s how we can achieve these goals and stop letting, you know, the common public areas just disintegrate into shabby versions of what they used to look like”? Yeah, I mean, again, Grand Central. That used to be like when... Still, whenever I go into Grand Central, it’s an incredibly beautiful place. You look at all the Carnegie Libraries around the country, they’re gorgeous. What is the catalyst to get... And I think that there’s a movement afoot, I’m kind of part of one, that is really gunning for, “Come on, let’s return to fixing what we got, building what we need,” et cetera. But what would your prescription be?
Dan Wang: First, I wanna sign on to your idea of synthesis. That we don’t have to always be choosing or, let’s choose and. I strongly believe that. Part of the reason I moved from China to the US was because I craved pluralism. And China does not have much of a measure of pluralism. What China has is one official voice that is meant to speak above the register of absolutely everyone else. And I think that the US does embody very significant aspects of pluralism. And I would like for there to be, frankly, a little bit more pluralism in the American state. Because right now, it seems like the American government is made up of the lawyers, by the lawyers, and for the lawyers. And again, I think that it is pretty striking that the US Senate is mostly lawyers. You know, yes, we should have some lawyers among them because they’re a legislative body. But let’s also have a few more engineers. Let’s have a few more scientists. Let’s have a few more dentists. I don’t even mind a few more dentists in the US Senate. That’s totally fine with me. I wanna have a few more economists in there as well. But it does not make sense to me that so much of America’s elite government class is extremely lawyerly. And so, out of... As a first cut, I would like to say, let’s have a few more economists and engineers within the government. I would like for fewer of the most ambitious kids who are coming out of American colleges to default to going to the Yale Law School or the Harvard Law School, or any of these big law schools. You know, there’s other ways to get into public service rather than studying at very prestigious law schools.
I would like for there to be more people from Silicon Valley also entering government as well. And so my message on this is that I think that the world would be a lot better if the US could be, say, 20% more engineering. We do not need to return to the Robert Moses years. We do not need to be like the Chinese. Let’s just have a little bit of reasonable, reasonably priced construction, the things that we desperately need. And that’s my simple message. And I would love for China to become 50% more lawyerly, because I think that everyone around the world, especially many Chinese, would enjoy much more flourishing if they lived with a state that actually respected individual rights. I think that Chinese are creative, they’re funny, they’re marvelous in all sorts of ways, and they are facing an overbearing government that is uninterested in letting them give full play to their own talents. And I think I am slightly more optimistic about United States to turn more engineering than I am about China turning more lawyerly. In part because I think there are various movements bubbling up. Abundance Conference in DC two weeks ago felt pretty dynamic, had a lot of good energy, people were laughing. We contrasted ourselves with the Scarcity Conference, which just took place in DC, which is otherwise known as the National Conservative Conference. But I think there are good movements. I think that Philip Howard is doing really important work. But Jim, which movement are you pressing to help us get a little bit better at government?
Jim O’Shaughnessy: Yeah. Well, my movement, as I mentioned, I’m on the board of Common Good. I lean very heavily toward the let’s build, but let’s keep the rule of law, let’s keep our pluralistic society. And I worry with a lot of the new innovations that I’m fully taking advantage of, that that becomes kind of a cognitive chasm if we keep them in the hands of only elites, whatever country we’re talking about. Okay?
And, you know, AI, for example, I think is an innovation right at the level of Gutenberg. And I would hate to see a centralized panopticon controlled by a few take over that incredibly important and powerful technology. One of the reasons I support open source AI. I’m not opposed to others having closed source as long as there is a continuum, and as long as the open source gives users the ability to maybe train the model on different data, for example. You know, the large language models we have right now have been trained mostly on the pile... which everybody knows. [laughs] My immediate thing when I hear pile, I fill in shit. Pile of shit. [laughs] And one of our projects here at O’Shaughnessy Ventures is to train it on some of the earlier American writings, and European, the can-do attitude that you’re advocating for. A lot of people in this country are very unaware of the fact that, as you pointed out earlier in our conversation, America was one of the greatest engineering countries in the world for a long period of time. And if you go back and you look at the writing of that era, not just about engineering, but about, you know, life, about all of those types of things. William James, for example, we’re converting a lot of his non-digitized writings into digital format so that we can fine-tune models on it. As long as the continuum and... Back to that, I don’t want either/or, I want and. I want the ability for people to see their great ideas through, to have the ability to allow for a plurality... I’m very big on cognitive diversity.
You know, I think some of our movements here in the country kinda went down the wrong path. They, you know, diversity by color or sexual or whatever. Whereas to me, cognitive diversity is the king of what you wanna be diverse in. And, you know, I advocate simple things like anytime we give an advanced STEM degree or, my goodness, let’s say advanced degree in any of those disciplines, we should staple a green card to it. It is bizarre to me that even with all of our dirty laundry, even with all of the things that are not right in this country, people like you, some of the smartest people in the world still wanna live and work here. And my attitude is, we should let them.
And what’s really interesting is, I used to do a lot of media when I was in asset management. And I found myself in two different green rooms during the same week, this is about 15 or 20 years ago, whenever Hillary Clinton was Secretary of State. And so, the first green room I was in was Bloomberg’s, and there she was. So I went over and I’d met her before, and I said, “I have one question for you. Like, why don’t we staple a green card?” And her reply to me was interesting. It was like, “Oh, I’m absolutely in favor of that.” And then a week later, I’m in a green room at CNBC and the Speaker of the House is there, Paul Ryan, I believe it was at the time. Asked him exactly the same question, he goes, “Oh, I’m entirely in favor of it.” And it just made kind of my blood boil. The yes-ing is not the doing. And so I do believe that there are a lot of pretty simple things that maybe a majority of people in this country would say, “Yeah, that’s probably a good idea,” that just are getting killed dead in their tracks for reasons that are either lawyerly or in some way NIMBY, trying to prevent or trying to retain... “No, this is mine.” Like Rockefeller, “You can’t build that highway through my property.” And it frustrates me that... I’ve been at this and supporting these kinds of initiatives for a long time, and, you know, they creep along at a petty pace.
Dan Wang: Yeah. Well, I think the, um... This is wh- I think you put your finger on one of my core frustrations that I’ve realized, um, over the last, uh, few months, really. Which is that, you know, when I wanted to get pluralism and debate, uh, in the United States, uh, let me tell you, I, I got it in spades, Jim. I think that the, um... Boy, did I get all of the debate that I want. And all of this is, um, important, and it makes me optimistic that the conversations that I’m part of as a result of this book, right now, as a result of being tied up with some of the Abundance folks, as a result of being at the Hoover Institution, there is tremendous energy and debate in trying to improve the country and make it much better. And that, that, that is all really good. But the problem is that America has this perpetual ineffectualness, um, that is unable really to do the sort of things that pretty much everyone wants, right? Hillary Clinton, uh, was a Democrat, or is a Democrat, and, um, former Speaker of the House, uh, Paul Ryan, was a Republican... If Democrats and Republicans agree on, you know, stapling a, uh, a green card to a, a diploma, um, I think that, um, you know, eh, eh, you know, if anything, we are further away from that paradigm, because, um, the present administration is not, um, very thrilled about that sort of idea.
And, you know, this is also one of these things where, you know, I’m thinking about something like the defense industrial complex, let’s say. They, um, US, uh, shipped a lot of ammunition to, um, uh, Ukraine in its self-defense against Russia, rightfully so, but the US hasn’t been able to rebuild a lot of its stockpiles because it can’t get production up. Um, it hasn’t been able to build a lot of drones. Um, every class of US naval ships has been behind schedule for 18 months to five years according to the Government Accountability Office.
And, you know, these are only critical national security goods that our defense industrial base is unable to produce in sufficient quantity. And so, you know, this is, this is what I’m, um, always very puzzled by in America. A lot of good energy, a lot of good debate, but, you know, there’s 1,001, you know, little tugs that help to, um, dissipate the energy of a movement such that nobody ever feels like they have the ability or the power to get anything done. Um, because anytime you wanna do something, uh, there’s just so many checklists, uh, that you have to go through, um, in order to prepare yourself for a future lawsuit. And I think this is the, um, sort of thing that I would, um, really like for the US to get a lot better at, to actually do the things that it wants to do.
Jim O’Shaughnessy: Yeah. I, I, I’m... My Spidey Sense is telling me that we’re probably in the beginning innings of a, uh, I guess you could call it battle, uh, of elites themselves. Uh, I, and, and I sort of just for fun, uh, say that on the one hand, there’s the rebel alliance, which I tend to identify with, and then there’s the Death Star. [laughs] And, and the Death Star is very lawyerly. Uh, it has a million ways to stop you in your tracks. Uh, it is, in my opinion, pessimistic in its very nature. And it is, uh, uh... I don’t wanna get too dramatic here, but stasis is death, in my opinion. Movement is life. And to, to be on the side of stasis and, and mucking up the gears just seems, to me, to be incredibly misguided. I always try to take any argument that I’m, like, really opposed to, and large language models have been very helpful here, create a steel man, uh, uh, that supports that argument. And I must say, like, you know, that it’s very helpful in coming up with, uh, all sorts of things I might have missed. But I mean, does that resonate with you, this sort of, there is this fight that is going on right now? Maybe early innings, but, like, where this group of elites and what I call the rebel alliance, is like, “Okay, negotiations are pretty much over.” [laughs] What, what... We’re, we might be fighting for, you know, kind of the ultimate control here. Does- Does that resonate with you at all?
Dan Wang: Yeah. I mean, first image that you’re introducing to me is, let’s take a look at the Yale Law School alumni list and see if Darth Vader, uh, is among them. Um, quite possibly, yes, huh? Um... I would love for- I think that the challenge with, um, with the rebel movement, with the rebel alliance movement, is that... The challenge is that I think that the, you know, maybe the Death Star is kind of the right image because it is really difficult for even some really motivated rebels to, you know, take many swipes at this Death Star because it’s just so big and it’s just so entrenched. And there are still a million ways for, you know, entrenched homeowners to put up their hands and say, um, um, “No way.” So, I think fundamentally, uh, what we have in the United States is a culture where people feel like there is enough of a degrowth, anti-development mindset, as well as a not-in-my-backyard mindset that, you know, many people would like to have more homeless shelters, um, but nobody wants to have the homeless shelter in their, uh, neighborhood or in their street, or in their district. Um, and so I think so long as that attitude of being against development is there, so long as the, um, you know... It is, it is true that America is very bad at building a lot of things and people don’t wanna put up with the scaffolding and the noise and the extensive construction that, uh, is involved in lengthy construction processes, in part because lawyers make it so. Um, and so long as, um, homeowners really do have access to lawyers, um, block whatever they don’t like, whether that is, um, you know, a, um, a, a highway through, um, a Rockefeller property or something like, um, you know, wind turbines off the coast of Nantucket. Um, so long as people have access to these sort of things, I think, uh, the odds are, are, are, are stacked against the rebel alliance, but then, they always will be. Um, so I think that the, the rebels should not lose heart and should still try to figure out, um, how to, how to get the, get stuff done in the way that’s... Because we need a lot of these things.
Jim O’Shaughnessy: So, uh, I, I... M- my thesis is, you know, the Soviet Union looked like a big, bad Death Star too. And it looked like there was no way you could ever, ever dislodge their control over Eastern Europe, over society, et cetera. But if you looked at the underlying structure of what, uh, built, what the edifice was built upon, it was beginning to rot, [laughs] terminally rot, uh, in the, kind of the mid-1980s. And, and maybe it’s just that I... And I, I in no way want to be Panglossian, but I think we’re seeing some rot in the Death Star right now, and at least some hesitancy. And as an example there, I would say that there are these growing abundance conferences. There are these, uh, much less consequential, but important symbolically... I don’t know if you’re following, uh, the fellow who is building statues again. Um, and... Yeah. So I think we, we might have contributed... Well, we did. We did contribute to, to one of his efforts. Um, and that’s, at least in, in my experience, uh-I’m seeing a lot of activity on the ground that was really absent, uh, say, 10 or 15 years ago. Um, and I, and I... Eh, eh, it’s, it’s always, uh, tempting to try to simplify and say, “Yeah. Then if we get this, this, and this, that will happen.” And I don’t wanna do that because I think this is an ongoing thing. As you note, as long as homeowners are NIMBY and they say, “Yeah, no way,” my next question would be then, okay, let’s assume, let’s stipulate they’re not gonna change. Homeowners are not going to change. What i- what procedural [laughs], what lawyerly way could you make that change where they couldn’t block it?
Dan Wang: Yeah. Well, I think that is a, um, a good question. And I think this is where things get sort of thorny, because, um, eventu- it often involves doing things like removing a rich person’s standing to sue. And I think that is, uh, something that plenty of rich people have objections, uh, over. So- I, I, I might object to that one. [laughs] Yes. Yes, indeed. Um, I think, you know, the way, the way that... I think the, the, the thing to always keep in mind is that it is impossible to build almost anything without upsetting someone. There are homeowners, um, who have objected to an expansion of the UC Berkeley building up a, um, a dormitory. And they used environmental laws to say UC Berkeley did not sufficiently study the idea of students constituting noise pollution, as such. And, you know, to use environmental laws to block something like that feels quite perverse to me. And so, I would like to see, um, some changes in the law. Um, I would like to see some changes in the culture where people recognize that, you know, we need some important pieces of infrastructure, and there’s no way to build anything without upsetting someone, some little person who objects to his or her light, um, being slightly reduced or noise being slightly increased. And I think there has to be some way to, oh, remove the ability of people to continuously tie up projects in court.
So, if we take a look at some other democratic countries, like Canada, as well as Japan, um, there are authorities that have stepped in to say, “Okay, maybe have one round of objections possible to block this project. But then after that, you can’t keep tying up a transit project in lawsuits.” Um, a lot of the environmental determinations, uh, in Japan are made by the Ministry of Environmental Protection. Once it’s made its determination by mostly bureaucrats who listen to public input, their decisions cannot be challenged afterwards in court. And so, I mean, it is going to be a difficult pill to swallow to remove people’s ability to sue, but I think there has to be some statute of limitations to prevent, um, rich people from tying things up, um, endlessly in lawsuits.
And I think there has to be a little bit more recognition that infrastructure, homes, is a little bit more central. And so, I would like for there to be more cultural change as well. And the way that some American states have done this was that, is that it has elevated, um, planning authorities beyond the local city level, which tends to be dominated by NIMBYs. It’s elevated more to the state level, which is, um, a little bit more development-friendly. Because states need tax revenues and cities wanna keep, um, their own, uh, neighborhoods unchanging. And so, there’s various ways to tweak some of these, but I think, um, there’s no way to do everything that we need to do through the status quo.
Jim O’Shaughnessy: You said something that, uh, reminded me of a thesis that I’ve been exploring, which is very simple, everything is downstream of culture. And so, if that thesis is correct, and I’m not asserting that it is 100% correct, but if that thesis is correct, then you would want to be operating at the cultural level in- A- at least in, as one of your, your attack vectors. Um, and again, back to my buddy, Phillip Howard, he, uh, suggested that one way around this, a very lawyerly, uh, suggestion, by the way, because Phillip himself is a lawyer, um, was why don’t we experiment with, uh, specialized courts? And the argument that I discussed with him was medical courts, you know, because we also have a big problem of people suing doctors and care providers endlessly, which adds to the malpractice premiums. And it just, it, it’s... Uh, people forget that things can compound negatively too. And... Um, but, but then also maybe, uh, establish that type of court for building projects, for... Like you mentioned in Japan, there’s that final authority, and once they have ruled, that’s it. You’re done. You, you move on. What kind of effort do you think would it take at the... If e- if we were, if we were agreeing that, at least for the sake of this argument, that we would be better off trying to impact the ability to get those things at the cultural level, what would you advocate?
Dan Wang: I think there would be some sort of, um, a program to really give people a sense that, um, there should be more homes. I think that is an obvious one. And what are the benefits of, um, having new homes? That’s part of the problem of America right now, are... you know, concentrated benefits and diffused costs or concentrated costs and diffused benefits, uh, in which, um, homeowners don’t really appreciate that. So if we have a few new homes, they see a lot of temporary costs, mainly noise, construction, new sewage lines, and all that rest. But they don’t necessarily appreciate how their communities could get a lot better if it were not frozen in amber. That development, to some extent, feels good. Having new transit options, uh, feels good. Having new parks and having a more robust tax base in your community, um, also feels good in all sorts of, uh, important ways. And so, I think there has to be an element of persuasion, um, going on in order to try to convince people that development is good. And then you should, um, ho- hopefully expect a, a bit of a flywheel, uh, of, um, impact to kick in in which people... And you do see these in certain communities in the US which do grow. Um, places especially like, uh, American South or in Texas, where people do feel good about, um, you know, new construction around them and new neighbors and new life around them, and, uh, revitalization to their communities that they haven’t seen before. And so, I think that the, the important part of culture to transform is to, um, make people be a little bit more pro, um, people again.
That’s, that’s how I would put it. I’ve been, um... I spend most of my time living in Ann Arbor. Um, my wife is a professor at the University of Michigan. And Ann Arbor, for a while, was... has been a pretty NIMBY town. It’s pretty anti-development, held up by a lot of aging hippies who want nothing to change. And, you know, I like this, um, little slogan that I’ve seen, at least over there, I’m not sure if it is, um, wider than Ann Arbor, but, “Neighbors for more neighbors.” Um, you know, I think that is a very positive, um, uh, message that is, um... inspires people about some level of development, that neighborhoods aren’t simply aging, um, and that there is a little bit more new life. That’s the sort of messaging that I would like to see.
Jim O’Shaughnessy: O’Shaughnessy Ventures gives fellowships and grants to people who we think are doing and working on interesting things. And this year, we gave one, uh, to a person who’s doing exactly what we’re describing here, but in Japan. Uh- They are going in and they are taking dilapidated housing and rebuilding it, re-imagining it, making it more beautiful. And sort of the effort there is kind of exactly what you were just suggesting. I- I’m, I’m more action-oriented in terms of, like, I think... If I could find somebody here in the United States who submitted a very similar application as the one that we got from Japan, I would fund that. And, and, and I think that the... You know, Jung has that great line, “You are not what you say. You are what you do.” And, we can talk, talk, talk about things endlessly. But if nothing’s happening, if no actions are taken, if you don’t have that new housing built, if you don’t... Right? It’s just that actually probably leads to more despair. Like, “Ugh.” Like, “Oh my God, we can yap, yap, yap, yap, yap. But if we don’t take real action, nothing’s gonna ever change.” And I wonder whether a project... I wonder if you could get a project through more at the state level, or even the local level... where it’s outside of government, where you take philanthropists and you get together a fund. And that fund, uh, works with the mayor or the governor or whatever to do more building, to put up the housing for the homeless that you were talking about. Is that destined too to get lawyered out of the way?
Dan Wang: Well, uh, I’m afraid so. I’m afraid so, Jim. The lawyers are gonna gum it up, uh, once more. But I think what we will need is for the lawyers themselves to, uh, shift in character. I mean, the first and most important thing is that I think, um, for a lot of, uh, listeners of this podcast right now, Jim has already declared about what sort of fellow he would like to, uh, have solicit them. So, um, you know, we know we’ll get funded everyone, so, um, se- send in your pitches. Um, and I think what I would like to see is a c- culture, cultural shift, not just within the broader American, you know, public, but also a cultural shift within the lawyers themselves. Um, you know, 100 years ago, uh, Jim, a lot of the lawyers, uh, were, you know, Wall Street types, they were deal maker types. Um, they were working on behalf of some of the robber barons who were building their railways. They were raising bonds for the robber barons, and they were using eminent domain to turf homeowners out of their land. That’s... Some of that is negative, but, um, that was a lot of what the lawyers were doing. And even throughout the second World War, um, Franklin D. Roosevelt stacked his cabinet with lawyers. And lawyers were the people who carried out, uh, many parts of The New Deal as well. But that was in part because lawyers used to be creative deal-making types.
And right now, what we have is a remnant of the 1960s, in which lawyers, um, followed the lead of someone like Ralph Nader, who, um, I think is responsible for a substantial part of the lawyerly society, in which, um, lawyers, for excellent, excellent reasons, decided to turn against development. Because Robert Moses had been ramming highways through their neighborhoods. People were exhausted about the technocrats in charge of the, uh, Vietnam War. Um, people were upset with the Department of Agriculture spraying DDT, as well as pesticides throughout the entire country. And then the lawyers decided to shift away from being deal-makers into more regulators, as well as litigators.
And that was exactly what the United States needed in the 1960s to confront the problems then. But I think, uh, we in the 2020s are confronting a new set of problems, such that we don’t have to be still so obsessed with all of the problems of the 1960s. We don’t need to keep fixing, um, all of these old problems that have pretty substantially been fixed. And I think what we need is for... You know, I think America will always be a lawyerly society, as it has been since its very founding, as I, as I established. But we can maybe get the public to demand new things. And we can maybe hope that the, um, elite law schools like Yale and Harvard and Chicago and whatever, um, will start training people to recognize that the law has gotten in the way of a lot of things that people desperately need. And maybe the law can be, um, jujitsued in a way to, um, uh, shift in order to deliver things rather than purely obstruct things.
Jim O’Shaughnessy: And that’s a wonderful point, uh, in that the pendulum always is swinging, and it often swings too far. I think, by the way, that you are absolutely right that back in the ‘60s, our rivers were horribly polluted. Our air was horribly polluted. And those changes were necessary at that time. But then to get that mental framework institutionalized, right? And it, it, it’s one of the reasons why another thing that I support, where I got the idea, uh, from The Common Good folks, was, you know, why don’t we just build sunsets into every regulation and law... that we, that we promulgate, right? A 10-year sunset. It doesn’t mean they can’t renew that law. It just means that unless there’s a huge effort made [laughs] to renew that law, it sunsets out of existence, right? Because we... You, you can’t... A- and, and I see this very much in business as well, right? Like, we have a publishing company. And I owe a lot of my success to publishing four books with the traditional publishers. I think they’re great at what they do. But I think that a lot of their, uh, procedures and processes and everything else are stuck in best practices circa 1925 as opposed to 2025. And I saw an arbitrage opportunity there, right? Like, well, [laughs] if, if they’re not going to change, I can start a publishing company that uses all these new technologies and innovations that writers are gonna love. The company’s run by writers, right? My CEO, Jimmy Soni, is a well-known author. Uh, and, and, and advocate for the authors. Um, and, and it seems to me that this isn’t just a problem at the governmental level. By that I mean, uh, you have these entrenched systems everywhere. And, and they’re getting old, and they’re getting long in the tooth. And, you know, my view is, at least on the business side, market forces are a hell of a drug. And, like, if you don’t like the way that, uh, the traditionalists are, are doing it in this country, you can start your own company and take your chances. Now, 90% of startups fail, but... uh, I’m okay with those odds. I, is there... Is there any way to bring that to the far less innovative governmental structure?
Dan Wang: Yeah, I would like to hope so, but then... Um, now we are really wading into the den of lawyers. Um, the... That’s, that it is really... This is where lawyers really rule. And, you know, I have been a fan of various initiatives, um, run by folks like Jen Palka of the US Digital Service, um, which has, um, you know, been, for better or for worse, taken over by Elon Musk’s Doge. Um, and, you know, for the most part, I would say that you can point to some successes out here and there. But for the most part, um, you know, the US Digital Service as well as Doge have not been able to really cut down the thicket of rules that are really, um, you know, governing a lot of these crucial processes that, um, startups and businesses are, uh, should be afraid, very rationally, to, to not get wrong. Otherwise, you will have broken laws, and you don’t, you don’t wanna do that. And so, we have to fix our laws. We have to, you know, apply, you know, some degree of, you know, um, regulatory reform that isn’t quite like Doge, um, which was just so much focused on government headcount, as if headcount was the greatest expenditure of the US government, which it is not. It is mostly defense and entitlements. Um, but I think that, you know, there, there, there could be a more vigorous effort here. And so far, we have not yet seen the super vigorous effort that is really cutting down the thicket of rules, that really helps, um, lawyers, uh, you know, uh, have, have their meal. Right now, I feel like, you know, everything is a, is a full employment for lawyers program. Um, and, um, you know, the, the, the lawyers are very busy having their fill, suing each other. And this is, um... I think we need... We can do better. We can do better than this.
Jim O’Shaughnessy: [laughs] Um, I, I once had an idea for a predator agency. And the predator agency got... Derived its budget from finding all of the antiquated regulations, all of the, uh, misguided laws that were no longer useful, et cetera, uh, and closing them down. And then when it had done as much of that as it possibly could’ve, it itself would die, because its budget was derived-... from finding those inefficiencies. I guess that will probably work better in fiction than in non-fiction. Um, but, you know, we spent a lot of time on America and our problems. Let’s turn to China for a minute. Um, you know, right before I, uh, signed on to have this wonderful conversation with you, I saw the news that China had banned their tech companies from buying NVIDIA chips. Um, and I also was kind of enthralled by your, um, your very cinematic, uh, presentation of, uh, you know, Zero-Covid and what happened at, um, Disneyland, um, in China. And, and then to that, we have this diaspora of the creatives. And people, and you, you, you, I think of as a very brilliant creative. You’re here. You’re not there. And, you know, watch, people vote with their feet, right? And, what could China do to make super creative, dynamic people like you stay there, or want to go there?
Dan Wang: Yeah. Well, my story is that, um, my parents and I emigrated, um, to Canada when I was, uh, little. Um, I mostly grew up in Ottawa. And, uh, you don’t have any Canadian in you, uh, do you, Jim?
Jim O’Shaughnessy: Um, I have, I, I had a 25-year relationship with the Royal Bank of Canada. I managed the O’Shaughnessy Funds up there for them. I’ve been in every province of Canada. And when I was giving one speech, a fellow came up to me afterwards and said, “How long have you been an expat?” And I went, “I’m, I’m sorry?” And, and he goes, “You’re, you’re Canadian, right?” And I went, “No, actually I- I’m an American.” [laughs] And they hate it when you call yourself an American in Canada. You, they wanna say, you, they want you to say, “I’m from the United States,” because they’re part of America too. Anyway, I said, “Yeah, no, I’m, I’m an American.” He goes, “N- no. No, you’re not.” [laughs] I am, honestly I am. And he goes, “Where did you grow up?” And I said, “Minnesota.” And he relaxed, and he goes, “Oh, that’s a nice Canadian province.” [laughs]
Dan Wang: Yeah. Indeed, indeed. That is where we consider the Deep South. But that is... I do hear the way that you say process and a few other words. It sounds quite Canadian to me. So we left for Canada and where I mostly grew up in Ottawa. And I decided to return to China as an adult when I was around the age of 25 to study technology. I’m 33 now. And it is one of these pretty striking things that China calls itself to be enacting the great rejuvenation of the Chinese ethnostate. And I think there are so many Chinese who are willing to depart from the great rejuvenation that is undertaken in their name. I think about three categories of people. There’s plenty of rich people. There’s an estimate out there by some consulting firms that in 2023 and 2024, something like more than 15,000 Chinese billionaires have taken themselves out of the country and moved to places like Japan, Singapore, the UK, the US, Canada, wherever else. A lot of creative types are smoking dope in Thailand, or they’re moving to New York. There’s a big feminist standup comedy show in New York City in Mandarin that takes place once a month. And I’ve been privileged to hear some of these people who are doing their bits over in these places. And there’s also plenty of people who are not so wealthy, who are not so educated who have decided to show up on the US-Mexican border in the Southwest by flying to Ecuador where they don’t need a visa from China, and then walking across the Darien Gap to try to cross over into the United States. Between 2023 and 2024, the US Customs and Border Patrol were apprehending something like up to 40,000 people at its peak of Chinese nationals trying to cross into the border.
And I think there’s a story out there in which a lot of Chinese have wanted to move out of China forever. There’s a long story of the diaspora and immigration and expats among them. But I think at a first approximation, it gives me a little bit less confidence that China will be the great power it aspires to when so many people, rich, educated, not so rich and not so educated, all want to depart. And I think this really has to do with a lot of the sins of the engineering state. They have really smashed a lot of companies, especially those in internet platforms that Xi Jinping does not really value. Things in e-commerce, companies working in online education. A lot of rich people in China feel pretty precarious. If you’re an elite in Beijing, maybe you’re working in the financial industry. Well, last year China announced that it was going to have a $400,000 pay ceiling on anyone working in finance. And maybe you’re working in the e-commerce or online internet industry, and maybe you were working in an industry that the Politburo decided to strangle. And even if you’re in an elite inside the party or the military, you never really know when your patron might be ensnared in some sort of a corruption scandal. In which case, his entire network would unravel and collapse. So, there’s something pretty precarious about living in these authoritarian regimes. This is, I think, pretty endemic to authoritarian regimes. They’re not going to really be able to fix these sort of problems. They are still delivering some degree of wealth creation. They are creating more and more exciting technology companies, but they are also becoming more restrictive on all sorts of cultural production. And so, I wonder to the extent to which China really could succeed fully to be a great power if it is so restrictive. Maybe it is enough for China to figure out advanced manufacturing, which will create more world-leading companies and de-industrialize other parts of the United States. But I think that what I would really love is for China to become a little bit more lawyerly, and... Or a lot more lawyerly, and actually respect the individual flourishing of its own people.
Jim O’Shaughnessy: Yeah. And I, and I think back to Deng’s opening up, uh, markets and a- am I correct in assuming that a lot of the China we see today was really a result of Deng’s, uh, reforms? And, and then, of course, I vividly remember watching Tiananmen Square, et cetera. Like, oh, we, we talked earlier about, you know, Apollo and Dionysus, Athens and Sparta. Is there some limiting factor that just closes down, uh, I mean, the tension, right? Because like, I think of South Korea, for example, they used to be a very authoritative country. Um, and then, uh, they opened up the economy, uh, that created a vibrant, large middle class. And away went the, uh, for the most part, um, not speaking in absolutes here... uh, but the, uh, the, the worst excesses of South Korea’s authoritarian government. And, I kind of was seeing and hoping that that was what was happening when Deng was opening up China as well.
Are, are we doomed to, like... Uh, it is... Let me rephrase this as a question. Is it going to be... If I made you bet and we were gonna do a bet, and I’ll take the other side of the bet. Who, who, who are we gonna bet can change and, and move toward, move the pendulum back a little? Is it, is it the engineering state of China as it is currently comprised? Or is it America?
Dan Wang: I’d bet on America. Uh, I think that, um, you know, I am here. And I am, um, prefer to be in a pluralistic world. I, and I think what America has, it’s its own heritage to draw on, um, with respect to having been a former engineering state because it’s certainly built and built and built and built, and overbuilt. Um, and I think that there is robust debate, there are movements, um, that are trying to get America back on track again. And I think the reason that I think that, uh, the engineering state of China will not substantially change in a much more friendly direction is that China doesn’t so much have a lawyerly tradition to draw on. China has never had that many, uh, lawyers, uh, in the first place. It has... You know, I think about the sort of, um, absolutism that the Chinese emperors practiced. Um, way before European monarchs chanced upon this term, um, o- absolutism, the Chinese emperors had been, uh, practicing it. I think it is not much of an exaggeration to say that there’s been a minimal liberal tradition emerging out of China. Um, and where there’s no liberal tradition really defending the rights of individuals or corporations or families against the predations of the state, mostly because the state, uh, created an, an intelligentsia by administering an exam to, um, all of the aspirants in the court. And you don’t get very far in court, um, by advocating for constraints on the power of the emperor. And so, given that there, uh, wasn’t so much of this liberal tradition in China, it has less of this tradition to draw on. Um, whereas the US does have this tradition, does have the pluralism, it does have the energy and movement to try to, um, get to this stage. And what I want to say is that, let’s get to that stage of development where the US is able to build and meet the needs of its citizens. Because it is not entirely wrong for the Chinese Communist Party to say that they have, in some ways, met the expectations of the citizens better than the Americans have. That they have, um, delivered much more compelling income growth, um, physical dynamism, and all sorts of these material ways that people do value. Um, delivered greater public order in the streets. When they, um, point over to the United States and say, “Look at what, um, a lot of buffoonery is going on, um, inside, uh, at Washington DC,” they’re not fully wrong about, uh, stuff like that. And so, what I would love to see is for the US to stop the buffoonery, um, get a little bit more serious about delivering for the needs of its people, uh, and then prove that it is the United States that has a much better system than China.
Jim O’Shaughnessy: Yeah. Well, I, like you... I said I’d take the other side of the bet, but I’m gonna have to hedge because I, I would never short... the United States of America. Uh, and primarily because of all the things that we’ve been discussing. Um, you know, I, I... Just a simple thing occurred to me. What are the chances that this podcast, our conversation could be broadcast in China unedited?
Dan Wang: Um, well, I actually wonder how Chinese, uh, are able to, um, sign on to foreign platforms. If they’re, you know, they’re blocked from watching YouTube. They’re blocked from many aspects of, um, podcasts that’s hosted by, um, Apple Podcasts. Um, so I, um, depending on your means of distribution, um... if you, if you have a means of distribution in which Chinese people can access, I’m not sure if the state listens in on every podcast conversation. That would be too many, uh, Jim. That would be insane. Um, you know? Are they listening to the radio? But they- But we now have an AI that can listen to all of them. [laughs] Yes, perhaps. So, the AI makes a lot of mistakes. Uh, I cannot imagine a lot of censors in Beijing listening to every aspect, every element of these five-hour-long Joe Rogan conversations. Um, they would go nuts. Um- So, I think it is not a min- It is not an, um, mini- a minimal chance that, uh, people in China might, might well stumble on this conversation and might well enjoy it. Maybe they’ll stumble on it. I don’t know if they’ll enjoy it, but, um... you know? It’s, hope is always, hope is always present.
Jim O’Shaughnessy: Hope springs eternal. Before entering asset management, I had a frustrated hobby of fictional treatments. I’m actually, right now, writing my first fictional book, which is really hard. [laughs] But one of the fictional treatments that I did during my, the Paleolithic era of the early-1980s was, it was a thriller. And the basic plot was that it was American policy to try to keep China Communist, because if they ever embraced pluralism and open markets, they would bury us. [laughs]
Dan Wang: Yeah. Indeed, I think that Chinese society is really strong. It is really being strangled by a Leninist system. And I hope that more Chinese people could just be left alone by the engineers for a little bit.
Jim O’Shaughnessy: You would rock and roll, because I like to joke, my CFO and my PA are both Chinese. And I’m like, my entire life is ruled by two Chinese women. [laughs] And they live- I’m so sorry. I don’t know. [laughs] But they do such a good job that I’m not complaining. [laughs] What do you think... I had a thought as I was reading your stuff and getting ready for this, that like, the kind of the ur-pattern, the primitive pattern, like America started as an idea, right? China started with dynasties and with that command and control structure just right there, as you yourself mentioned a moment ago, the whole idea of the absolute rights of monarchs, that’s a Chinese concept. Like, are we trying to fight the base pattern of cultural DNA if we are hoping for a more liberal or pluralistic China? Another reason, by the way, I won’t pull my punch, that I think America probably has a better shot of adding a little more of the engineering, what we used to do quite well, than China becoming pluralistic and adding a little more of the lawyerly.
Dan Wang: Yeah. I think that I am, uh, I, I am a little bit reluctant to say that the cultural DNA must be immutable. Because, um, you’re right that China started as a, with a national conception of, uh, language, heritage, race, and, um, political traditions and ideological traditions. But so then did most countries in Europe. Um, they have their own conceptions of, um, you know, this is, uh, this is what the French are. This is what the British are. Germans are a little bit more complicated. But this is what the Italians are. Um, and, uh, I think that, um, all of these European countries have, to some extent, um, moderated their, you know, their, um, essentialist impulses, uh, to become quite, uh, you know, l- liberal democracies in, in much better ways. And you’re right that the US is, has a more fundamental ideology of a nation. It’s not so much defined by, uh, race necessarily, um, or language. I don’t know. If we ask some people, like J.D Vance today, they would like for America to be more defined by, by race and heritage. Um, but I think that, I- as the Europeans, um, have been able to transition out of this, to some extent, perhaps the Japanese and the Koreans have also transitioned out of this mindset. Um, hope springs eternal that over not years but decades, that China could also have this sort of a shift.
Jim O’Shaughnessy: Hmm. Um, back to America for a minute. Can you give us one historical American builder archetype by name who we’ve forgotten about? And like maybe should remember that person.
Dan Wang: I offer the name of Hyman Rickover, the former US, um, naval admiral. Uh... also known as father of the nuclear navy. Um, he is someone who’s not much discussed, um, if at all today. But he, uh, Rickover, achieved this amazing feat of turning all American, um, n- naval submarines into being nuclear-powered. And by turning it into nuclear-powered submarines rather than diesel-powered submarines, it makes the submarines much more quiet, um, and, uh, more importantly, able to stay underwater, um, essentially at this point now, for the duration of the submarine’s lifetime. Um, they do not need to be refueled for, um, many, many years. And that is an astounding feat of engineering. Um, W- W- Rickover had all sorts of, uh, problems, personality problems. He made a lot of people very mad. But I still feel like it was a lost opportunity for Elon Musk to, um, like start Doge and take a pair of shears, uh, into the US government, rather than building incredible feats of engineering inside the government. Um, Elon Musk, um, to the extent that he was co-president, um, really tried to take down a lot of crucial functions of the US government, such that I think it has become much less effective, uh, for the FDA to lose a lot of staff, such that it is no longer able to approve a lot of, uh, critical life-saving drugs. And so, um, I wish that Elon Musk could have devoted his considerable talents into building inside government as Rickover has.
Jim O’Shaughnessy: Musk aside, are there other candidates, uh, that, uh, are living today who could, uh, assume a kind of a Rickover role?
Dan Wang: Well, I wonder. A lot of the VCs are much more interested in tweeting than governing. If we’re taking a look around the table of the Silicon Valley folks who recently dined with Donald Trump inside the White House, I think that it is a little bit difficult to imagine that these Silicon Valley titans, folks who are running Meta or Alphabet or Microsoft or whatever else, Nvidia, to step away from their lucrative purchase and running very big, powerful companies, to be a relatively powerless member of the bureaucracy. To do God knows what inside the government. I think this is one of these other big problems of the lawyerly society, that it becomes really difficult for talented people to imagine themselves to be doing a lot inside the government because it is so difficult and it is so thankless. And so that is also something I would like to change, that we should increase the prestige of working within the government. Pay civil servants a lot better, rather than trying to cut their jobs as Musk has. And try to draw in some really ambitious people back into the government once more.
Jim O’Shaughnessy: Well, and that’s old [saying]... Uh, that there’s all sorts of shading that you need to do, right? Because back in kind of America’s golden era, if you will, when we were still building and still doing all that, uh, we had a WASP culture, white Anglo-Saxon Protestant culture. And part of that culture was you’ve got to give back. And so you saw a lot of incredibly prominent people who had made their careers in business and, uh, other endeavors go into government because they felt, you know, “We... It’s, it’s our turn now to give back.” And I, and I wonder, so maybe not Silicon Valley, but how about coming over to this coast? Uh, is there anyone, uh, that you could name or a group that you could name who might be able to, to, to do that? To go into government and, and actually make it function better, engineer it better?
Dan Wang: Well, uh, I am pro-abundance movement and I am pro-common good movement. Um, and, uh, you know, maybe, maybe the people holding the answers, uh, can be found in these, um, in these, uh, movements. Um, maybe, maybe Philip Howard. Maybe we can, uh... enlist him and, and... and a lawyer who knows about the sins of the lawyerly society. What do you think? Maybe you can put in an ask and see if... uh, if he’ll run the government for a little while.
Jim O’Shaughnessy: I, I will put in the ask. Uh, because the thing I love about that, it’s like, uh, uh, I think it was Douglas Adams, “Anyone who aspires to be the president of the United States should in no circumstance be allowed to be s- be the president.” Uh... Philip does not aspire. [laughs] So, so I think he definitely would be- Is qualified. Y- yeah. He’s qualified. He’s definitely qualified. W- what... We’re, we’re winding down here.
This has been so much fun talking to you about, uh, all of this. What’s your most uncertain forecast about China?
Dan Wang: I think that there is always a question of what is going on inside the political system, inside the bureaucracy. I mean, I, I think the, one of the challenges of doing a lot of China analysis over the last couple of years really comes down to a single person. What is going on in the mind of Xi Jinping? And it is kind of an unintellectual question because nobody will ever know, and Xi Jinping won’t tell me, and, um, he won’t tell really anyone. And there’s plenty of... You know, even if you’re inside the, um, highest echelon of the Communist Party, the Standing Committee of the Politburo, there’s seven men who are in this committee, and they very rarely know what’s going on in Xi’s mind. And they don’t know what other people are thinking about either as well.
And so, I think, uh, there’s a, there’s profound uncertainty about what Xi might be doing next. Usually, I would say that Xi’s character is generally pretty cautious. He is not about to start a conflagration over Taiwan. That’s not one of the things that really keeps me up at night in a big way. He does not seem to be super confrontational, at least right now, with Xi Jinping. But so much of it comes down to what Xi is thinking, and that is relatively difficult to predict. Um, and, you know, the course of the economy, the course of politics, the course of diplomacy, of geopolitics, a lot of it rides on understanding him. And so that, um, that, that man of mystery is the person that, um, is the greatest source of uncertainty for most things in China.
Jim O’Shaughnessy: Yeah. I, I think that, um, when you get it down to a single person, you got trouble. Uh, if a, a single person can... affect the outcome of such a vast and storied country... Whatever the country, by the way. Uh, let’s not just pick on China. Uh, that, that is, that is not an optimal situation.
Well, so one last speculation before I, I give you our final question that we give all our guests. Um, uh, and I, and I say speculation intentionally. I’m not asking you to make a forecast. I’m as- I’m asking you to speculate. Uh, America and China are both in a state of becoming, right? Um, and, and which way do you see each tilting? And let’s not put it into the way future. Let’s, let’s put it to... tw- 2035. Uh, give, speculate for me. America, 2035. China, 2035.
Dan Wang: Well, um, I expect that China will have still a fairly dysfunctional economy. Fairly dysfunctional economic s- system, as well as a fairly dysfunctional political system. Um, I don’t think that Xi will be around. Um, Xi, right now, is aged 72. In 10 more years, uh, he would be old enough to qualify to run for US president. Um, so, but, um, I, I, I hope very much that he is not, uh, still running China, um, at that point. Um, and though China’s, um, will be economically dysfunctional and, um, politically dysfunctional, I expect that China will continue gaining strength, their strengthening a lot of advanced manufacturing. Um, right now, I think that China is already making some of the best manufactured products in the world. And I do strongly believe now that “Made in China” is a mark of quality in much a, a way that “Made in Japan,” um, has become a mark of quality as well. Um, I’m hopeful that, um, the United States can get through the turmoil of the next few years. That, um, as voters react to, uh, current events, they, uh, deliver punishment to the, uh, ruling party as they tend to do, um, just naturally, uh, throughout midterm cycles as well as, um, presidential cycles. And I, um, I’m hopeful that we get to a better place where there are not super strong disagreements, uh, with each other, that disagreements are, uh, kept civil. And I’m hopeful that we are able to have a degree of pluralism such that we have a little bit more engineering again.
Jim O’Shaughnessy: Amen to that. I am a big believer in conversation, especially if you disagree with the other person. If you lose the ability to have good faith conversations and debates where people of very different outlooks are still willing to civilly chat with each other, that’s how we go forward, in my opinion. And the tiny contribution I try to make is to try to embrace as many good-willed people that I might not entirely... Well, like I don’t think I entirely agree with anyone or disagree with anyone. But I think the more substantive conversations that people can listen to and expand the way they look at the world. This idea of us versus them, of tribal identity, is poisonous in my opinion. And I just think your average American does not resemble either one of those polarities. I think your average American is still basically a kind of go along to get along, helpful, optimistic type person. And that the intense desire of what I think are not well-intentioned players to divide us and create these tribes doesn’t end well, in my opinion. So I’m 100% in favor of what you’re advocating. I said last question, but what you said made me think of another question.
Is there a way where we could have kind of a “designed in California, but manufactured in Pennsylvania”? So, is that something we could work towards as we get a little more engineers?
Dan Wang: I hope so. But first we need to get a little bit more engineers, and that promise has not been established yet. Um, I would like for there, um, to be more of that. And unfortunately, I think that right now, the, um, direction hasn’t been entirely positive. Since Liberation Day in April, the United States has lost about 40,000 manufacturing jobs. Manufacturing production has contracted for the last six months. And, I mean, I think it is not the right move to strengthen America, American science, um, by, um, slashing in half the funding for the National Science Foundation. And attacking the universities, though I know there’s plenty of problems with universities, this is not going to make America much more of a scientific superpower. And it is especially not to, um, put into chains and deport a lot of South Korean engineers trying to build a factory in Georgia. And I think that, you know, this is going to deter, this action in particular against the South Koreans is going to deter a lot of people from sending over Taiwanese, Japanese, German, whatever nationals, uh, into the US, uh, try to invest in the US and get these, um, programs started. And so, I would like for the US to re-industrialize, uh, presently. All trends that we can see in the data have been negative.
Jim O’Shaughnessy: All right. This has been an absolutely fascinating conversation. We have a tradition here of asking our guests, uh, we say, “Okay, we’re gonna make you emperor of the world, but only for a day. And you can’t kill anyone, you can’t put anyone in a re-education camp, but we are gonna hand you a magical microphone into which you can say two things. And the entire population of the Earth is gonna wake up whenever their next morning is, and they’re gonna say, ‘Oh my goodness, I’ve just had two ideas, and unlike all the other times, I’m actually gonna act on both of these ideas starting now.’” What, what are you gonna incept in the world’s population?
Dan Wang: Well, I think the inception is to, uh, make the US slightly more engineering and, um, uh, China to be much more lawyerly. I think that would do a lot of good for everyone, not in the least the populations. Um, but also, um, you know, I think that would create a thriving world, which, uh, much more of the world would be better off if these two superpowers were not, um, increasingly deepening their own pathologies. I think that, um, they need to fix themselves and stop delivering so many self-beatings, uh, against themselves, and deliver the things that their people need.
Jim O’Shaughnessy: Great answer. I was kind of expecting that one, to be honest. [laughs]
Dan Wang: [laughs] Sorry to be predictable there. [laughs]
Jim O’Shaughnessy: Well, I guess I’ll end on where we, we started in the beginning. I think let’s think and as opposed to or. Right? Because Athens and Sparta contributed to a thriving culture, as different as they were. Uh, y- you don’t wanna go full Apollo, you don’t wanna go full Dionysus. [laughs] You don’t wanna be only left or right-brained. It should be and.
Dan, this has been really, really fun for me. Tell our viewers and listeners, obviously you’re already on the New York Times Bestseller List. They can pick up your book anywhere. Where can they find out more about you?
Dan Wang: You can check out my website, danwang.co, and my book, again, is called Breakneck: China’s Quest to Engineer the Future.
Jim O’Shaughnessy: Which I highly recommend all of our listeners and viewers [to] buy and read. It’s a great read. Thank you so much for your time, Dan. And best of luck, uh... What, oh, final one, what’s next? Are you writing another book?
Dan Wang: Uh, I hope not. Um, it is now time for me to read a few more books again. Um, maybe I would like to read some novels again. So whenever, Jim, you finish your novel, please send it to me so I can have a bit of a beach read, please.
Jim O’Shaughnessy: I, I shall, and that is what I’m designing it to be, a fun beach read thriller. Dan, thanks so much.
Dan Wang: Thank you very much, Jim.
