Transcription
Apply that to the military. We spend what? About a trillion. How much do the Chinese spend? About a third of that. Just compare the prices, what they get for a third of that. And you realize who is the real superpower, or getting to be a superpower.
Gold rallied now about what 35%. And all central bank reserves and BRICS are moving on to gold. Okay. Now, not counting the new, I would say schizophrenic, or I, I would, I would say a random rather than schizophrenic, because schizophrenia has this pattern, but here is random. Our new random president is definitely convincing people to stay even further away than the previous, less random, but more predictable, but of course, no less nefarious one.
As I said, there's an S-curve, and you've got a problem from that. Uh, immigration, or migrations here in Western Europe, anywhere. We have problems understanding, um, you know, uh, dominance and geography, mostly because historians are statisticians, and I'm a statistician, so view things differently. And you've got to look at, uh, history more as a process than as some kind of, uh, textbook museum description of things.
In 2007, when I published "The Black Swan," it's an old book now. Strangely, it came back to the bestseller list. Not long after, someone warned me. He said, "Your tweets are going to make your books extinct." Okay. Out of print. Okay. Anyway, so it looks like things are working in reverse.
So, uh, the United States had about 20% of the world economy. I'm using Purchasing Power Parity, which is the most rational one. Europe, same thing, 20%. What's Europe now? What's the EU now? 20%, and China 6%. Now, the US is about what, 15%? And declining, dropping. Europe is about 14%, and really dropping. And was China north of 20%? Okay, so I'm talking about within the life of a book, right? Okay, so you think that the future is going to be any different, but there's something called compound growth. Very small differentials in growth can produce monstrously large outcomes. And this is what Warren Buffett discovered, okay, over time. So, are we talking about the next generation, even half a generation from today, we know who's going to dominate the planet.
Okay, someone may argue, well, PPP, you know, uh, is not real. Is there real dollars? Even in real dollars, the story is similar. But the other thing I'm going to say now that we're talking about weapons at PPP, how much would it cost to produce this chair? Probably made in China. Probably cost $1 there. How much would it cost to make that chair here? A lot. I mean, we, and in the military, apply that to the military. We spend what? About a trillion. How much do the Chinese spend? About a third of that. Just compare the prices, what they get for a third of that, and you realize who is the real superpower, or getting to be a superpower. And if it's not a superpower now, wait about two hours, I don't know, or, uh, or two weeks, or maybe two months. Just like we see buildings coming out of nowhere. Now, this is not pro-China, anti-China. This was just a description. And as I noticed in "The Black Swan," we have difficulties dealing with, uh, projecting things, with the way we project how things will happen based on a very primitive analysis of the past, no, even, you know, no consideration of second-order effects.
So this is now, you can expect that this meeting about war may have to take place in Beijing because you may find it more important to convince them than a bunch of people in Washington who are overpaid because of, you know, that. And then we have disease. They don't have the three diseases we have. The first one is educational cost. $100,000, you know, what do they produce for you? You know, I mean, as a professor, we have students coming in very qualified. How much does an education cost? It's not one order of magnitude. It's two orders of magnitude less. Okay. The second point is healthcare. By now, China's 20% of the, uh, Nature Index and publications, largely in biology, medicine. Okay. So, you know that their, and their healthcare is improving very fast, and you know how much cheaper it is for them to do business. And our, the third problem is the military. You know, they don't yet have the $53,000 trash can. You remember years ago, the $3,000 toilet seat, you know, that caused uproar. It got worse. Well, the $53,000 trash can is going to get worse. That was what Boeing charged taxpayers.
So there is an S-curve in life, in biology, everywhere. This I discuss in "Antifragile" in great detail, that things go up with accelerating returns, convex, and then it slows down. And you've got to imagine that that too applies to economic growth. Once you have a two-car garage, do you want to have a five-car garage? Maybe. Yeah, some people like to have five cars. All right, some people collect cars, but in general, the incentive is not there. So, China is growing fast. Why? Because they still have people who don't have a car, okay? Don't have a car garage. So, it's still growing, okay? They've got a lot of people, and, and you can, you know, you have your own growth to take into consideration. So, whereas when, where, whereas Europe, they have their one-month vacation, they'd like to grow, but there's no incentive. So you have diminishing growth, and it's entirely healthy. You reach a destination. It applies to your life, you know, same thing with food. You don't have food, you want a lot of food, and then you saturate.
Now, the, what is the problem there? The problem is that it is the countries that have reached saturation that have the most debt. Amount of debt. And that's when you need to grow. There's a French expression: "One only lends to the rich people." So the problem is, you get rich, and then you borrow, you borrow a lot, and then now you need to grow, and how are you going to grow? Okay. And, and of course, you have blunders like by this current government. They don't realize that the aim of these tariffs is to prevent growth. Why? Because the economy has 4% unemployment. So if you're, you know, you're going to have someone who's a brain surgeon, you're going to have to move resources into lower-margin items. Of course, you're going to slow down economic growth. It's the equivalent of asking for more balance, um, a brain surgeon to become a gardener once a week, you know, take care of his garden or her garden, uh, on grounds that, hey, you know, he's already ripped off by, by gardeners. You've got to do it yourself. That's the reasoning of the Trump administration. Well, that depresses GDP. So it's going to, is, you know, I'm sure there are economists. Yeah. I mean, they say I disagree with the economic establishment at that point. That's pretty much orthodox economics.
So, so we have a problem now with that metastatic government. And of course, you know, uh, irresponsible fiscal policy. All right. And we don't have the political mechanism to correct for that. Okay. Handsome here, because people can understand that debt is, is maybe interesting when you're growing in the lower part of the S-curve. But it's a bad thing up top, and you've got to do something quickly because soon most of our expenditure will be servicing the debt. Ah, ah, but there is a problem. And what is the problem is that you've got to borrow. No, you depend on borrowing, and guess what? You need foreigners or locals, ah, to buy your debt. Now, what did, uh, uh, former President Joseph Biden do in 2022? He convinced any human being on the planet who is not part of the US government to avoid US-denominated assets. Why? Because if you freeze, if you, you freeze assets in your own currency, you're discouraging anyone from, it's no longer a safe currency. If, if you, because you had breakfast with the first cousin of someone who knew Putin when he was a student in St. Petersburg, now your assets are frozen. Okay. What are you going to do? Avoid the dollar. Hence, go where? Go ahead.
So we have more and more transactions conducted in US dollars, nominally with the money stored in gold. And guess what? By forcing the EU to do the same, and even Switzerland to freeze assets, you're, you're basically convincing people that that's what we've got to do. So gold rallied now about what 35%. And all central bank reserves and the BRICS are moving on to gold. Okay. Now, not counting the new, I would say schizophrenic, or I, I would, I would say a random rather than schizophrenic, because schizophrenia has this pattern, but here is random. Our new random president is definitely convincing people to stay even further away than the previous, less random, but more predictable, but of course, no less nefarious one.
As I said, there's an S-curve, and you've got a problem from that. Uh, immigration, or migrations here in Western Europe, anywhere. When the economy becomes mature, it so happens that fewer people are interested in, uh, cleaning bathrooms. They're more interested in teaching, uh, medieval history than cleaning bathrooms. You can't blame. Do you want to blame him for that? Okay. So, you run out of people to clean the streets. You don't yet have robots to do that, and what do you do? And you don't have domestic services, you know, so you import people, okay? Hence, immigration in mature economies, Western Europe, and dependence on that immigration in the US. I tend to ride my bicycle because I became a cyclist since 2018, which changes my life. So I added, uh, more books, and of course, uh, the activity of cycling. So I go to neighborhoods, and all I see is Latin American workers. I mean, I didn't ask them for their, uh, uh, immigration status, but, but I think I can just looking at the statistics make my own inference.
So now, what happens if you deport a substantial number of these people? A brain surgeon, as I said, will have to do what? Go mow the lawn, learn masonry, and, you know, and then of course, empty the garbage can, that stuff like that that a brain surgeon prefers to delegate. No. Now, the, and then, you know, what happened during COVID when we had a small little shortage of labor? What happened to prices? Restaurants had to close because waiters were asking astronomical numbers of dollars. Well, that's what would happen without immigration. This is what's not sinking in. That it's fine. You want to be an ethnostate, you're welcome. Free. It's freedom. But what comes with it is that you're going to have to teach your people to clean bathrooms. All right? So, you've got to decide. And it's a market that decided immigration. This is why Meloni got elected on a platform, an anti-immigration platform. And guess what? Immigration increased in Italy. Okay? And, uh, and it would have been worse if Ukraine did not supply Western Europe with all these people eager to work, doing anything. Okay, so that's the problem we have now with ICE. I mean, they fundamentally know that the US economy would collapse without illegal immigrants, simply because that's how it was built. You had to reverse. You have people have to have no lawn. You had to change the culture, reduce the size of houses, and live in prefabs. I mean, of course, the prefabs would be made in China and shipped here, or maybe made in some in Mexico with Chinese equipment. But, so, but you can imagine what would happen if you want to restrict immigration. So, you, you have this, you can't have the pioneer tool. So what happens that the solution they're opting for is a solution of humiliating the workers, but sort of keeping them here. Okay, that's what is happening with ICE. So somewhat as vicious, and not far from here. I mean, you can, you can ride a bike, you know, uh, to where the person is operating, and it looks like that's the only motive because economics doesn't match the, uh, I mean, the output is not what so it's simulating. So, or maybe getting for. So we have a problem here and elsewhere.
Now, you say, okay, I want to be a museum state, and it's bad to have immigrants. That's fine. You kick the immigrants out. You have your museum state, and, and you say, "Okay, I'm not going to have economic growth." Or maybe the GDP would go down by 30, 40%. That's fine, but you've got to make your choices rationally, not like, like say, I want to eat a cake. I skip the cake now. Lunch. I, I want to eat the cake, but I want to lose weight. Okay? There's no such thing as a shortcut for economies. All right.
Now, let me enter the positive aspects of things. The last, uh, 100 years or so, we were victims of the media, in the sense that you go home, sit, eat your TV dinner, and victim of media was victim of, uh, of course, the suppliers of TV dinners, where families of four would sit down and communicate with the rest of the world, actually not communicate, just receive without communicating. But traditionally, the media, the, the way we humans received information was by trading it. You go to the barber shop, you go to the fishmonger, and you get all the rumors, and you convey rumors. Okay? So, you were both a conveyor and a recipient of information. That, that was the old model. It was destroyed by state media or by big media, where you sit down and you have someone lecturing you, and then you turn the TV off, and then you go to bed. All right? Or you have your, uh, nightcap, and then go to bed, what, depending on your, uh, lifestyle.
So now, what we have, TikTok, SchmickTalk, Google stuff, where you're both conveying information and receiving information, and that's so natural. It's, and it's impossible to control social media, even with all their techniques that it's not easy to control social media, and even more difficult to control AI, because you know, the, then you start having incoherent outcomes if you control AI. It's a little technical, but for now, let me explain that Gaza happened. They should have done the ethnic cleansing of Gaza in, I would say, '97. It would have worked. Okay. You have ABC News, CBS, all that. They would have covered for them. Okay, but, but you can't do it in 2025 because of social media. You can't control social media, even if they, they can botch it, they can censor what is still. Okay. So this is a good, good point, because someone was talking to me about the media in Washington, and I told him, the only people who care about the media are people who are either in a wheelchair or in politics. Okay. So other than that, you know, anyone, uh, under the age of, uh, 31 and a half has no idea what ABC News means. Okay? And even, I mean, I, I never watch TV, but, but even people my generation, a lot of people don't watch TV anymore. So, so this is positive, because here we have the, I mean, I got here via Twitter, okay? So I didn't get here via conventional method.
When we talk about governments, you go to history books and you talk about Henry VII and this and that, and the, the king of France, Colbert, you're talking about a different notion of government. Today in Europe, the government represents about 55% of GDP. In France, depends if you count education or not, up to 70%, I don't know, it depends how you count. High numbers. And here in the US, it's actually higher than reported because the government is involved in directly, and plus you have local government, you've got to add that up. 100 years ago, it was mostly under 10% and often under 5% of GDP. So you realize that the government's role had been creeping up in things that, you know, so when we talk about a dictatorial government in 1900, they couldn't control that much because that was not much of the economy, that was not a large share of the economy compared to today. So government has been creeping up, as just even in, in, in economies deemed to be, uh, driven by Adam Smith. All right, government creeping up. So this is something you can't stop.
Please let me know before we're finished. And then finally, scale matters as a central element of any description. And let me say something. I had an aphorism, uh, inspired by by two brothers, and I was arguing with them about who's libertarian, not libertarian. Why the size and the scale matters. And the aphorism came out like, I'm libertarian at a national level, national meaning US. Uh, Republican at a state level, Democrat at a municipal level, and communist at a family level. All right. >> Got >> So you can be, and, and based on, so, so basically, it depends on scale where do you want the government to be? Because sometimes you can't escape government. If you're a member of a country club, they have a government, they have the rules enforcement, all of that. Okay. So, uh, but that, that this is not a trivial point, because when we compare countries, when we look at the successes of nation-states, all right, the ones that have been successful are tiny ones. Okay. So not, or or within tiny, while city-states, the city-state model has has had has had has had has had has had has had has had has had has had has had has had has had has had has had has had worked beautifully, uh, in history. And when we look at the success of Dubai, because it's small, right? Dubai, Singapore is small, okay? Um, Venice was small and lasted a thousand years. So we look at successful models of governance, okay, you always see scale. And what's happening is that with the growth of the US economy, and of course, hence the complexity of it, we are going away from governance naturally. And, and so you need even more drastic control of the US government than we have had to have in, say, 40 years or 50 years ago. So I don't know. There questions are not allowed, I think. No. Okay. So no questions.