June 30, 2025 • 45 mins
Author and thinker Virginia Postrel joins me to talk about California’s past, present, and future, from anti-growth politics to the rise of AI. We get into what dynamism really means, why creative destruction is inevitable, and how housing and regulation shape everything.
00:00 Intro
03:58 California's Changing Landscape: A Historical Perspective
07:43 Political Shifts: The Republican Party's Decline in California
10:27 Change in the California Ideology
16:24 CA vs. TX
22:45 The Impact of AI
27:22 AI Displacing White Collar Jobs
30:50 We've Seen This Before
37:30 Lessons for California's Future
Keywords: California, Virginia Postrel, AI, housing crisis, innovation, future of work, white collar unemployment, creative destruction, economic resilience, California politics, The Future and Its Enemies, Silicon Valley, zoning laws, startup culture, bits vs atoms, California regulation, elite overproduction, laissez-faire, local knowledge
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
In California what people want to do is be great.
And what does it mean to be great?
It's to be Steve Jobs as he saidto John Sculley when he was
luring him from Pepsi. Do you want to sell sugar water
for your life or do you want to change the world?
It's the change the world thing.White collar unemployment is
absolutely going to happen. I mean, I you know it is going
to happen. That is dynamism.
(00:21):
You don't have growth without change.
It was a literal anti growth movement.
I was all over the state, but itwas particularly strong here.
Hello everyone, and welcome backto the California Future Society
podcast. This week I have a great
conversation with Virginia Postrel and I don't know if
you're familiar with the conceptof comics, comic, or an artist
(00:43):
artist. This is someone who isn't
necessarily a household name, but there's someone who is
highly respected and well known within their field.
I think of Virginia as like a thinker's thinker.
She's someone who, particularly within this field of thinking
about the future and how do you cultivate a more dynamic,
prosperous future. She's someone who's been
thinking about that for decades,like we talked about, and she's
(01:04):
someone who's highly respected, and her work pops up all the
time when you talk to people in that field who are thinking
about those challenges. And right now it's in
California. There's no more pressing time to
be thinking about how do we makea more abundant future.
And that's what she and I talk about.
We talk about how California haschanged in the decades since she
first moved here. Particularly we start with the
political scene and how Republicans and some of these
(01:27):
structural elements are as much to blame for how the state has
changed as the Democratic Party.We then talk about AI a lot.
We talk about how whether it's the looming fears around loss of
white collar jobs or existentialrisk, how AI has become this
central player in a broader cultural debate and dynamic
about what is the future going to look like and what is
(01:48):
technologies role in it. And lastly, we talked about
California's resilience, how this is not the first era where
California has faced challenges and how overtime through waves
of booms and busts, the state has remained resilient and
dynamic. And how even despite all the
challenges we face today, it is still very possible for
California to emerge and have a more dynamic future if we can
(02:10):
get a few things under control. So it's a great conversation.
As always, you can subscribe wherever you're listening or at
California futuresociety.com. With that, here's Virginia.
OK Virginia, I'm so excited to have this conversation.
I don't have the book with me, but you know just last week was
rereading the Future and it's enemies.
I've read a lot of your work over the years and so been
(02:31):
looking forward to this. Can you give as a starter of the
conversation, just introduce yourself and your connection to
California. OK, Well, I'm Virginia Pastrell,
as you said, and I am an author of four books, the first of
which is The Future in Its Enemies, which came out in 1998.
I moved to California in 1996. At that time because of my then
(02:58):
new husband's job, now old husband's job, a different one,
but the same husband, and I was editor of Reason magazine in the
1990s. I I started working at Reason in
in a lower level position when Icame out here and I have been a
(03:20):
columnist for a lot of places. At the moment my primary
affiliation is with Works in Progress magazine where I both
Commission articles and write. I yeah, like I said, I admire
your work. I feel like the Future and its
enemies has this it's cult classic status for anyone who's
thinking about what does it taketo have a more dynamic future?
(03:42):
And through the great work of Works in Progress and other
outlets, that conversation around progress studies and
technology is really hot right now.
But, you know, you've been someone who's been thinking
about it for, you know, 25 plus years or so.
So as a starting point, thinkingabout California specifically,
do you think California is more or less dynamic than when you
moved here? And if it's changed, why?
(04:03):
Yeah. Well, I think it's less dynamic,
significantly less dynamic than when I first moved here.
Excuse me? That is most obvious in the
field of housing as opposed to, like tech.
When I moved here from Boston in1986, one of the most striking
things and one of the things I really liked, I moved to Los
(04:24):
Angeles and it was that it was really easy to find an
affordable apartment in Boston. I had had to pay an agent a
month's rent in addition to the security deposits for the
landlord just to find a place. You know, it was a very tight
housing market, especially if you didn't have a whole lot of
(04:45):
money, which I didn't at that time.
And when it came out here, it was, I mean, I had somewhat more
money, but that wasn't the big difference.
The big difference was just you could get a lot more for your
money and and there was a plentiful supply.
So this is in the mid 80s and itwas also a period where lots and
(05:06):
lots of people were moving to California.
Lots of people were moved over like my husband and me were.
They were moving from other parts of the country.
Lots of people moving from overseas as well or from Latin
America. Partly, particularly in Southern
California. That was because the defense
(05:26):
industry era space was booming because of the Reagan defense
build up and that meant lots of jobs for everything from
aerospace engineers to line workers.
There was also in Southern California quite a bit of light
manufacturing of various kinds, as well as the things that
Southern California continues tobe known for.
(05:48):
Hollywood and all that. But there was a feeling, and I
have to correct this, you know, is it that I was just young?
What part of it is that? But there was definitely a there
was a kind of energy in the sortof culture and vibrancy that was
(06:09):
palpable. And that I don't think is as
strong today, particularly in Southern California.
Unfortunately, that very soon after I got here unleashed a
backlash. There was quite a, you know,
there was a literal anti growth movement.
(06:30):
I was all over the state, but itwas particularly strong here.
It focused primarily on restricting construction,
whether it's construction housesor of commercial buildings.
But just the the ethos that growth is bad, that having all
these new people moving here is bad, that sort of caught hold.
(06:53):
And then also just over time, there was an increasingly
restrictive regulatory environment.
And at the same time, which was driven by the demand of, you
know, a lot of it was driven by the demand of people who had
lived in California for a long time as well.
And that's not just on construction, but that's on, you
(07:14):
know, there was a period in I think it's the early 90s where
in various air pollution restrictions were put on in
Southern California that made itessentially like impossible to
paint anything. That wiped out a lot of the the
(07:35):
light manufacturing jobs that have deployed a lot of sort of
blue collar workers as well as, you know, the managers and stuff
too. So that was when you first
started to see, you know, peopleleaving the state for else
elsewhere. And then the other thing that
happened is that the political environment change.
(07:57):
So all of this stuff that I'm describing is happening in a two
party state. Yeah, yeah.
And it's where you don't know which party is going to win the
governor's race or the, the senatorial race.
And that starts to change in the90s.
And it, it, it, there's lots of reasons for it and there people
(08:22):
have studied it. But but one thing that people
don't talk about as much as theymight is that the Republican
Party sort of shot itself in thefoot and, and, and in a
grassroots way. Not this is not, you know, the
elders of the Republican Party somehow deciding to do it.
(08:45):
Yeah. Yeah, So you would have a
politician, a Republican like Tom Campbell, who was the
congressman who it, you know, was a student of Milton
Friedman. He later, after his political
career, became the Dean of Chapman's law school.
He is, by any normal definition,a, you know, sort of free market
(09:09):
conservative type. But when he ran, he was the
slightly more liberal person in the Republican primary.
And, you know, people voted the primary voters, and I would
include myself here, voted for me because up until 96, I was a
Republican would vote for the, you know, the more hardcore
(09:33):
person who was, you know, and we're not talking about, you
know, sort of MAGA fire eaters. This is a long time ago.
But and that was really a mistake.
I mean, that was the problem with, you know, part party
primaries and it's something that I watched the Democrats
nationally doing this to themselves, you know, in and and
(09:57):
I was like, don't do that. They'll be sorry.
I mean, arguably they already are.
But but you know, where you in the primary, you have to appeal
to the most, you know, to the most hardcore people, and then
you lose. You not only lose the election,
but over time you lose more and more of your sort of people who
(10:22):
either officially or unofficially affiliate with you.
Well, I want to dig into this concept of the Republican Party
losing its mandate in Californiabecause I think so many times
California becomes the embodiment of all things wrong
with the Democratic Party, right?
And people from Fox News, from anywhere else, it just because
it's the blue state in the same way that Texas, the red state.
(10:44):
And that's how it gets talked about, nationalized political
coverage. But as much as people like to
complain about the Democratic Party in California, like you're
saying, there's another party, They're here.
They had power for a significantamount of time.
And but their own actions in part led to where we are today
in a one party dynamic. And how much of it is the
primary piece that you just laidout, which I know has also
(11:07):
changed? Right now we have jungle
primaries after Schwarzenegger reforms.
We can talk about that. That was like closing the barn
door after the horses left. Yeah.
Yeah. And now it just reinforces the
one partiness of this. Yeah.
Well, the other piece I was going to ask you about, I know
when I was rereading the book, you talk about the California
ideology, particularly that era.And one thing that I always find
(11:29):
striking is, you know, politicalparties at the state level,
particularly in today's politics, are very nationalized.
They're oriented towards DC and many state members and state
Assembly, state Senate are vyingtowards the congressional seat
or that Senate seat whenever opens up down the line.
And in a place like California, there certainly are parts of
California that are very red. If you're in the Central Valley,
(11:50):
that's kind of classic Republican even to this day.
But a lot of California is unique.
It is different. And even if there are some,
whether it's libertarian or freemarket orientation of voters, it
looks distinctly different than other parts of the country, say
like an evangelical Bible Belt type of voter.
In the South. Yeah.
And so people always complain ortalk, you know, pitch the idea
(12:12):
of like, a third party in California or a novel political
approach. But how much do you think it's
that? Like, California is unique, and
the Republican Party has just failed to tap into California's
uniqueness in some ways? Well, I think going back, So I
have a friend. I haven't seen him in a long
time, but former colleague Bill Eggers, who ran for a state
(12:37):
legislature seat down in the South Bay.
Hope I'm getting this right. It was a long time and he was a
classic. Somebody at the time had used
the phrase Beach Republican, which is kind of what getting
that it's a it's a very different ethos from both the
(13:00):
Country Club kind of, you know, George HW Bush kind of tradition
or the, you know, sort of Southern type and more free
market. And you know, I worked with him
at reason more business oriented, that sort of thing.
(13:22):
But when he ran, he, you know, the especially in a state
legislature seat, it was all about mailers because it's a low
information environment. There is state is so big that
except for senator, governor, maybe mayor, you don't really
(13:43):
get information about this. And so there were two things
that he got in trouble for. One was abortion, where he
really didn't want to take a position.
I mean, even even knowing him, I'm not sure what he really
thinks. I would guess, again, this is a
(14:05):
guess, Bill, if you're listeningto this, I would guess that he
is right where most Americans are, which is in the mushy
middle. Yeah, kind.
Of that Clinton era. Uncomfortable with late term
abortions, not wanting to be, you know, sort of not liking the
(14:26):
idea of abortion, but not, you know, neither neither of the
official party sides. But because he was running as a
Republican, he had to take an anti abortion stance.
So that was just that was a it was a litmus test.
And, and so that was one thing. And the other thing was my fault
(14:47):
was I had, I forget how this involved him, but I had
editorialized against the pants bill.
And this was a bill in the stateLegislature that said that
employers could not require female employees to wear
dresses, basically to wear skirts.
(15:09):
And, you know, as an employer, Ithink that's a ridiculous rule,
but I didn't think it was the state's business to intervene in
that. Workplace attire.
Yeah, workplace attire. I mean, the circumstances under
which you would have such a ruleare rare.
And I'm willing to, you know, live and let live and market and
(15:33):
let you know there are other places that would require women
to wear pants like I just and, and so I had attacked that and
somehow Bill had quoted my attack in something or
something. Anyway, he got attacked.
He got tagged with my view, which than was unthinkable
(15:54):
because how can you have and this is a problem I think in
California was a problem that has gotten more how if if you
don't like something, it should be banned.
Yeah. And I think that cuts against a
culture of tolerance and, and italso called cuts against an
(16:14):
entrepreneurial culture because it it, it's counter to
experiments. Yeah.
Well, I want to ask you about that and to talk about broader
culture and not just partisan dynamics, because it's easy to
complain about California. I find myself doing it
frequently. And but people outside the state
will often point out an inherenthypocrisy or tension of, OK,
(16:37):
sure, you're saying that the state is dynamic and maybe it's
relatively not as dynamic as it was 30 years ago.
But in absolute terms, it's still the most dynamic place in
the world. Arguably maybe outside of like
Shenzhen or something like that or other parts, you know, but
it's still yeah, yeah, they have, yeah, it's still up there.
And similarly on this point, youknow, you can say that, OK,
California, yeah, there's burdensome regulations.
(16:59):
They drive businesses out of thestate.
It's an anti business environment.
Yet at the same time, you know, 4th or 5th largest economy in
the world if it was its own nation state.
And it's still. And so how do we reconcile those
tensions and how do we react this place where California has
this culture of, of banning anything that they don't like,
like you're saying, yet at the same time being this fountain of
(17:22):
innovation and dynamism in many other dimensions, right?
Well, I think first of all, it still has this culture and this
glamour, which we can talk aboutwhat I read, yeah.
I'd love to, yeah. But of the of being the place to
go to do creative things, to do creative great things.
I mean, I, so I've lived in LA since 1986, except I lived in
(17:45):
Dallas from 2000 to 2007. And Dallas has an
entrepreneurial culture as well,but it's very different from the
one out here. And so and, and again, New York
is different. So my husband and I used to talk
about this. You say New York is the arena
and New York is all about being on top.
And guess who quintessential NewYork?
(18:06):
It's a, it's a culture about dominance.
It's like you want to be. And this is the culture that
gave us Donald Trump. It's the cultural dominance
Dallas, and I think this is probably true of other parts of
Texas as well. It's more about being rich.
I mean, it's just about having stuff.
It's about, you know, and partlythat's because it's it's a place
(18:32):
that's closer to the experience of being poor.
I mean, false is like that, you know, and and so people may do
great things there and they may build fantastic organizations,
but they're the fundamental local culture.
A little less so in Austin, but in places like Dallas and
Houston is this, you know, get rich.
(18:54):
I mean, it's a, you know, be theself-made man or self-made
woman. Sell oil, get the ranch.
Yeah. Ross Perot.
Yeah. Yeah, right.
Or actually, you know, I sort ofunfair to George HW Bush because
he didn't do the Connecticut Yankee thing.
He actually went out and became an oilman and it was so.
And then there's California. And in California, what people
(19:16):
want to do is be great. I mean, and what does it mean to
be great? You know, it's to be Steve Jobs
thinking about, you know, as he said to John Sculley when he was
luring him from Pepsi. Do you want to sell sugar water,
you know, for your life or do you want to change the world?
It's the change the world thing.It's the it's the dream of being
(19:37):
an artist that pull pulls peopleto Hollywood.
I mean, you know, people, they don't say, well, I want to make
some genre movies and do this. I mean, even if they do, I mean,
and and they want to make great new reinvent genre movies.
I mean, you know, there are lotsof people who are doing very
ordinary things in their actual lives.
But what motivated them is this notion of they want to do
(20:00):
something that is fantastic. And I think that culture is
still present here and and it pulls a lot of people, but the
cost of joining that culture hasgone up.
Over that I've been here. So that's one thing you know,
(20:20):
and then the other has to do with the nature of the
regulatory burden or? Tell me.
More, yeah, very much. OK.
So it's very people talk about bits versus atoms.
So mostly the regulatory burden in California and in the rest of
the country is on doing things that change the physical world
or making things. So as long as you're dealing
(20:43):
only with ones and zeros mostly,you're not going to be highly
regulated. And that may or, or you know,
there is regulation that affectsthe movie industry, but it's
general regulation. For the most part, movie
industry is protected by the 1stAmendment.
Yeah, it's, it's and, and especially today, where even
(21:08):
some of the regulatory burden ofFCC regulation that used to
affect, you know, what you couldput on TV, run away.
So there's a tremendous ability to be creative as long as you're
not trying to alter the physicalenvironment.
And then the other thing has to do with it.
(21:30):
Things tend to be regulate. There's this funny thing about
new versus old because the one hand regulation tends to be
trying to stop new things or off.
Yeah, on the other hand, if they're new enough, maybe you
can get them going before that kicks in and and surprised with
(21:53):
the would be regulators or you can find a workaround.
I mean, you think about something that does involve the,
the, the physical environment would be something like Uber
where they found a workaround. They went they instead of
trying, they knew they couldn't get licensed as taxis, but they
went to the state and got licensed as I think it's like.
(22:14):
Public utility. Yeah, yeah, yeah.
You know, they, they found a workaround to and then once that
happened, then they got big enough and everybody loved the
having that service and there was competition from Lyft and
that that it became sort of too big to stamp out.
So I think that that's part of it is we can talk a little bit
(22:36):
about how who comes to Silicon Valley has changed, but but I
think that ethos is still a big part of the state and a big part
of the state's dynamism. Yeah, I think that makes perfect
sense. And I think another way that
I've heard people frame it and thought about it in my own way.
You know, how do you reconcile this puzzle of of overreach
while still being dynamic? Like you're saying?
(22:57):
The bits versus Adams piece is abig part of that.
And you know, Silicon Valley wasoriginally hardware, like the
defense industry was huge. Lockheed was, yeah, it was like
building silicon prefabs and doing.
Yeah, the defense industry was big.
And California's rise, particularly in these last,
let's say, call it 50 years to global status has come at this
(23:19):
time when you could afford to only focus on software, only
focus on bits. And like the software explosion
in second Gold Rush really has been taking place.
And so California, I know Peter Thiel in his very contrarian,
provocative fashion, has made the comparison to like a Petro
state. But something like you can do
whatever regulatory decisions that you want in the built
(23:40):
environment and make it as impossible as you want for
anyone because it doesn't matter, because you have this
fountain of wealth that continues to fill the state's
coffers, bring new people in, continue to drive the state
forward. California is much more than
just the software economy. But I do think that there's some
explanatory power there. And so I want to dig into that
concept of new versus old, and particularly around AI.
(24:02):
So I'm stepping back to this bigger question of the cultural
fight for the future of being for dynamic society versus being
something a little more stasis and static.
AI really is at the forefront ofthis debate and seems even
though it's already the hot topic, it seems prime to take
potentially the number one role in, I think a lot of political
(24:25):
dynamics and forces. And you know, there's looming
fear of of white collar job loss.
There's even the existential risks.
There's also a lot of extreme optimism of this new industrial
revolution, this new intellectual revolution.
How are you thinking about AI interms of a dynamic future and
what should we be thinking about?
Yeah. Well, OK.
So first of all, some of this is, you know, there are people
(24:48):
who know much more about AI thanI do.
And so I can only sort of use other people's thinking to some
degree that it's very specific. I tend to discount the
existential risk because I've probably because I'm old here.
One of the big points in the future in his enemies, which is
(25:12):
something I, you know, develop out of Friedrich Hayek's work
on, on the use of knowledge and society is the importance of
localized knowledge. And a lot of that, like, you
know, let's go back to the pantsbill.
You know, you sitting in the legislature do not know the
circumstances of every single small business in California and
(25:32):
why they might or might not wanttheir female employees to wear
skirts or pants or whatever. And really, don't you have more
important things to do? And that sort of there's that
kind of local knowledge in AI. There's another kind of local
knowledge too, which is just outand out expertise.
And, and you can see from the extreme, you know, signing
(25:57):
bonuses that are allegedly beingoffered to Frontier, you know,
software engineers, you know, that are like $100 million
signing bonus. That tells me very, very few
people on the planet actually understand this stuff to the
degree that they could make wisedecisions about how to design,
(26:24):
how to avoid certain pitfalls. Now, the fact that they could
make wise decisions and that they're the only ones who might
be able to make wise decisions does not mean they will make
wise decisions. But I think trying to figure
(26:45):
out, you know, trying to legislate against existential
risk, it's just, it's not going to work.
I mean, it's, it's at some levelyou have to just be a little
trusting and fatalistic. That said, I'm far less worried
about existential risk just because it it is a, it is, it's
(27:08):
a very, it's downside. It's a very, very, very large
downside risk, but it's a small problem, very small probability,
yeah. And there's a lot of speculative
jumps to get there in the logic flow.
You know, you can read these compelling stories that read
like gripping sci-fi and you feel the emotional rise, but you
know, the gap between us turninginto paper clips, There's a lot
(27:29):
of speculative jumps that are made.
And so yeah, I'm, I'm, I feel similarly.
So, but white collar unemployment is absolutely going
to happen. I mean, I, you know, it is going
to happen. That is dynamism.
That is, you know, you don't have growth without change.
And white collar people who you know, and specifically white
(27:52):
collar tech people who think they're superior and immune
because of their wonderful brains.
This is not the way the world works.
Hayek, who I mentioned before inthe context of knowledge, he had
this much less commented upon essay where he made a
distinction between merit and value.
(28:15):
And this was in the context of arguments that you know, because
it was more of the context of egalitarian arguments at the top
in the mid 20th century. But it applies to this, and the
idea is value is supply where supply and demand cross.
In 1990, my value as a columnistwas much higher than it is
(28:42):
today, even if I write the exactsame column.
And that's not because I knew more than or I was a better
writer than. No, if anything, I know more
now. I definitely know more now, and
I'm probably a slightly better writer.
The difference is that there wasthis huge increase in supply and
journalism jobs, you know, and, and payment for writing, you
(29:07):
know, plummeted. And that's just supply and
demand. And that's the the value at any
given time. That's not your worth as a human
being. Yeah, you're the worth.
If you make more money, you are not a more valuable, you're not
a more meritorious human being. And you may be a more
meritorious human being, but it's not because of the money,
(29:29):
you know, and it's not because of the things that get you the
money necessarily the market andcare about your merit as a human
being that much, you know. Yes.
And that's a very hard idea for financially successful people to
take on board. And it's funny, right?
(29:50):
Because the fear for a long timewas that the low end of the
labor market was gonna be the long tall truck drivers that
make up 10% of the male workforce or something like
that, right? This manual labor, that's who we
need to worry about. And now that it's inverted and
it's on a lot of white collar jobs, I think back to ideas like
elite overproduction or some of these.
(30:11):
I've worried about that as something that's more socially
and politically destabilizing relative to something like
existential risk because it's very tangible.
And we've seen patterns in the past when there's large scale
labor market disruptions, you know, that can have long
standing political ramifications.
And even if zooming out big picture, the transition is a net
positive and this creative destruction yields a lot of
(30:31):
fruit. The path getting there in any
given year or five year period or 10 year period if it's rocky
enough can be really, really challenging and I think creates
a lot of concerns for people andit's hard to know how to
navigate that on the front end. Yeah, One thing I will note is
that a lot of people who read and, you know, even like the
future and its enemies, they assume that it was written out
(30:53):
of the sense of optimism in the early days of the Internet
because it has a lot in it aboutthe early days of the Internet
because that's when it was writing it.
But actually it arose more from the extreme economic pessimism
of the early 90s, particularly in Southern California, because
(31:14):
all the people who moved here inthe 80s because the Reagan
defense boom, well, you know, the end of the Cold War was like
really good for the world, but it was not good for Southern
California. It was that.
And it wasn't just closing bases.
It was, you know, you don't needall those weapons.
You don't need to be producing so many weapons and all these
(31:35):
things so and there was this much talked about oh.
Interesting. Called Falling down with Michael
Douglas as a laid off aerospace engineer, it was.
And at the same time also in that period more nationally, you
were having downsizing and and sort of we're having companies
(32:01):
eliminating layers of middle management getting, I mean they
were getting more efficient and more productive, although any
given set of layoffs is not always going to be wise.
But there was, that was a periodin the early 90s where there
was, I won't say there weren't necessarily high levels of white
(32:26):
collar unemployment, but there was a visible and certainly felt
level of insecurity in white collar jobs that had previously
been assumed to be. And And so part of even though
(32:47):
this isn't, I mean, I don't really write about this
literally in the book, but it was one of the things that I was
observing in, in that and thinking about in that early
period in the early 90s, which sort of led.
And I mean, I wrote the book in the late 90s, but it was, yeah,
the things I was was thinking about.
(33:09):
It's so interesting you say thatbecause I think for myself and
maybe every generation does thiswhere they assume that they are
unique and that the lessons of history don't necessarily apply.
But I think for myself, facing the challenges of California,
I'm a fourth generation California.
And I'd hear these stories of, you know, my great grandpa
moving here in the Depression togrow oranges and my dad's side
coming, you know, to find opportunity and being the first
(33:30):
one in his family to go to college.
And just thinking of California as this idyllic place of
opportunity that, you know, and,but we've, we've lost, we've
spoiled Eden and now my generation has to bear the cost.
But I read all of Kevin Starr's works when I was trying to get
to learn more about California history and his book in the 90s.
His last one is California on the Edge.
Talking about that precarious position of that era and that
(33:53):
uncertainty and and learning California history made me
realize, Oh no, this is not the first time.
This time is not different. There's been ups and downs
before, so it's helpful to thinkabout that and know.
That we haven't even talked about the riots in 92 or, or
the, you know what led to them and then California being
California being this incrediblycreative place, you know, out of
(34:15):
all that we also got West Coast hip hop yeah, you know, and,
and, and fortunes were made and.Orthe.com bubble bursting in San
Francisco and that. Being.
Tax over, right? People thought, yeah,
absolutely. All these ridiculous companies
like Amazon.com because you know, they would lump everything
together. They would do like pets.com and
(34:37):
Amazon.com as if they had the same, you know, ridiculous
business model. It was all absurd.
And, you know, I, I was more sequished because even though I
wasn't very old at the time, I was only in my 30s.
But in 1984 I went to work at Ink Magazine, which was the
(34:57):
magazine that covered small business and it and it had just
celebrated its 5th anniversary. It was a very successful
magazine. And one of the reasons it was
successful was that everybody and his brother had a personal
computer company and every personal computer company was
advertising in Inc, both becausethey were small businesses and
(35:19):
because small businesses could now, you know, or to have a
computer and do their accountingon it and all that sort of
thing. So about a year after I got
there, half the advertisers who had ever advertised in ink were
gone, like they no longer existed because there was this
huge shake out and computer industry and things and video
(35:44):
games and all of that sort of thing.
And this happens people over invest, you know, people don't
know which company is going to be the one.
And so they, you know, they bet on this sector.
And, and when I say they, I meaninvestors, but also individual
entrepreneurs who they try to dotheir thing and and then
(36:07):
eventually gets built up and eventually there's a shake out
and a lot of away. And and that's that's creative
just. Yeah, I'm filming this from my
parents office and I can visiblyremember when I was a child
unboxing a gateway computer herewith the distinct, you know, cow
print. And to think that at the time,
(36:27):
right, that was, I didn't think that I was young, but you know,
people thought that they were going to be one of the long term
players. So and.
Then and one of the companies that is still around and is
incredibly valuable but almost went out of business is Apple.
So they survived that shake out that I was talking about.
But you know, at the turn of thecentury, they were, they were
(36:49):
down to like 2% of the market. And you know, and, and I
remember in the, I don't know, this is when I was in Dallas.
It was in the early 2000, they were started opening up their
retail stores, which was genius.I mean, it was a big risk, but
it was smart because part of it was like if you had an Apple,
(37:11):
which I did, it was very hard toget it serviced or to get any
answers to any questions. And so that solved that problem.
And to like the third, the thirdApple store in the country to
open was actually in the suburb of Dallas.
Remember, going there like this is smart.
Well, I realize we're coming up to time, you've talked about
(37:35):
California's resilience riding these waves of creative
destruction. And it seems like by all
accounts, and who knows, maybe five years from now, we'll be
looking back and laughing at this.
But it seems like we're on, on the premise of another wave of
that with AI, for all of its promises and challenges and the
reassortment that comes with that.
As someone who believes in the positivity of the power of
(37:57):
dynamism, the need to Foster andcultivate it, what are the
lessons that we should be learning from past challenges?
And, and what are the kind of the prescriptions to for a state
like California to be more dynamic and to, to ride this
wave well? Well, you know, there's this
term laissez faire and it has the certain meaning in in, you
(38:17):
know, politics and economics, but it really just means let us
do. And and I think California needs
more of that attitude. I'm not saying, you know, it
should have a completely laissezfaire or anything goes, yeah,
economic environment, but it needs to go a little more in
that direction. And I also subscribe to the
(38:39):
housing theory of everything that.
Yeah. Can you explain that in a couple
lines? Yeah, The Housing Theory of
Everything is the title of an early article in Works in
Progress magazine, which you can.
Find and it's a great article, everyone should read it.
Yeah. And it was written by guys who
are, I think all three of them. I can't remember who the authors
(39:01):
were, but I think there it's, it's very British, but
everything applies here as well because Works and Priors is
based in London. And the theory is if, if you get
housing right, a lot of problemsgo away.
And if you get it wrong, a lot of problems come.
And this is everything from you.You increase inequality and and
(39:28):
deep. Environmental challenges or the
cost of daycare goes up. And I mean everything gets and,
and you're and you hurt the economic growth prospects and
you hurt people's ability, especially sort of middle to low
income people's ability to better their condition.
Because one of the really important is that if you are,
(39:53):
let's say you're a Bart, this isan example.
Somebody actually an economist actually gave me, let's say
you're a bartender, which his brother was in Ohio and.
You could make a lot more being a bartender in San Francisco, as
it's a much more economically dynamic and growing place than
wherever you are in Ohio, but the cost of housing will more
(40:18):
than cancel that out. That's not what it was like
through most of American history.
It used to be in America when there, you know, people could
move regular people, not just the star cutting edge people
getting $100 million signing bonuses to do AI, but just
regular people could move to theplaces that were growing and and
(40:42):
be able to reasonably afford an apartment.
I mean, in a way, although obviously I'm highly educated,
but I've never been in a highly paid job way.
This applies to me as well. You know, I had no trouble
coming to Los Angeles in 1986. In fact, increased my increased
my standard of living. That used to be the norm and
(41:05):
it's no longer the norm. Now.
We expect that, you know, we're going to price these places as
if they're luxuries and we do that through housing because the
anti growth people in the in the80s won.
They won. They got what they wanted.
(41:25):
They made it hard for newcomers and they made it hard to build
things. And I in defense of the baby
boomers who get blamed for everything, these people were
not mostly baby boomers. Some of some of the leaders
were, or they actually even theyI think were mostly very late
Silent Generation. It's like the World War Two
(41:46):
generation who came out here anddid great.
The baby boomers did not get hitas hard by the restrictions, and
that would apply to me as well, but they weren't the source of
the restrictions. It just took a while for them
really to work out. Boomers have been absolved.
(42:07):
We we leave them there, Yeah. The Boomers have much to account
for, but just this. We'll take that off their tab,
yeah. Thing, just because we didn't
get hurt by it as much as starting with Gen.
X, it doesn't mean we caused it.Oh, well, this has been so much
(42:29):
fun. I really enjoyed this
conversation. And yeah, you know, like you're
saying, California is more dynamic because people like
yourself and people like my parents and millions of other
people were able to come here and better their lives.
And I know in the intro to one of Kevin Starr's books
summarizing his history, he talks about California's
original promise being that of instant transformation, being
the place of opportunity where you can, the place where you can
(42:51):
come and, and better your life. And whether it's be less
restrictive on businesses, whether it's fixing the housing
problem and getting to a point where we can restore that
affordability. I hope that we can retain that
dynamism in the future. Me too, thank you.
Well, thank you so much for joining Virginia.
This has been a lot of fun. Thanks.
(43:45):
The. The.
(44:45):
This. The.
(45:48):
The.
In California what people want to do is be great.
And what does it mean to be great?
It's to be Steve Jobs as he saidto John Sculley when he was
luring him from Pepsi. Do you want to sell sugar water
for your life or do you want to change the world?
It's the change the world thing.White collar unemployment is
absolutely going to happen. I mean, I you know it is going
to happen. That is dynamism.
(00:21):
You don't have growth without change.
It was a literal anti growth movement.
I was all over the state, but itwas particularly strong here.
Hello everyone, and welcome backto the California Future Society
podcast. This week I have a great
conversation with Virginia Postrel and I don't know if
you're familiar with the conceptof comics, comic, or an artist
(00:43):
artist. This is someone who isn't
necessarily a household name, but there's someone who is
highly respected and well known within their field.
I think of Virginia as like a thinker's thinker.
She's someone who, particularly within this field of thinking
about the future and how do you cultivate a more dynamic,
prosperous future. She's someone who's been
thinking about that for decades,like we talked about, and she's
(01:04):
someone who's highly respected, and her work pops up all the
time when you talk to people in that field who are thinking
about those challenges. And right now it's in
California. There's no more pressing time to
be thinking about how do we makea more abundant future.
And that's what she and I talk about.
We talk about how California haschanged in the decades since she
first moved here. Particularly we start with the
political scene and how Republicans and some of these
(01:27):
structural elements are as much to blame for how the state has
changed as the Democratic Party.We then talk about AI a lot.
We talk about how whether it's the looming fears around loss of
white collar jobs or existentialrisk, how AI has become this
central player in a broader cultural debate and dynamic
about what is the future going to look like and what is
(01:48):
technologies role in it. And lastly, we talked about
California's resilience, how this is not the first era where
California has faced challenges and how overtime through waves
of booms and busts, the state has remained resilient and
dynamic. And how even despite all the
challenges we face today, it is still very possible for
California to emerge and have a more dynamic future if we can
(02:10):
get a few things under control. So it's a great conversation.
As always, you can subscribe wherever you're listening or at
California futuresociety.com. With that, here's Virginia.
OK Virginia, I'm so excited to have this conversation.
I don't have the book with me, but you know just last week was
rereading the Future and it's enemies.
I've read a lot of your work over the years and so been
(02:31):
looking forward to this. Can you give as a starter of the
conversation, just introduce yourself and your connection to
California. OK, Well, I'm Virginia Pastrell,
as you said, and I am an author of four books, the first of
which is The Future in Its Enemies, which came out in 1998.
I moved to California in 1996. At that time because of my then
(02:58):
new husband's job, now old husband's job, a different one,
but the same husband, and I was editor of Reason magazine in the
1990s. I I started working at Reason in
in a lower level position when Icame out here and I have been a
(03:20):
columnist for a lot of places. At the moment my primary
affiliation is with Works in Progress magazine where I both
Commission articles and write. I yeah, like I said, I admire
your work. I feel like the Future and its
enemies has this it's cult classic status for anyone who's
thinking about what does it taketo have a more dynamic future?
(03:42):
And through the great work of Works in Progress and other
outlets, that conversation around progress studies and
technology is really hot right now.
But, you know, you've been someone who's been thinking
about it for, you know, 25 plus years or so.
So as a starting point, thinkingabout California specifically,
do you think California is more or less dynamic than when you
moved here? And if it's changed, why?
(04:03):
Yeah. Well, I think it's less dynamic,
significantly less dynamic than when I first moved here.
Excuse me? That is most obvious in the
field of housing as opposed to, like tech.
When I moved here from Boston in1986, one of the most striking
things and one of the things I really liked, I moved to Los
(04:24):
Angeles and it was that it was really easy to find an
affordable apartment in Boston. I had had to pay an agent a
month's rent in addition to the security deposits for the
landlord just to find a place. You know, it was a very tight
housing market, especially if you didn't have a whole lot of
(04:45):
money, which I didn't at that time.
And when it came out here, it was, I mean, I had somewhat more
money, but that wasn't the big difference.
The big difference was just you could get a lot more for your
money and and there was a plentiful supply.
So this is in the mid 80s and itwas also a period where lots and
(05:06):
lots of people were moving to California.
Lots of people were moved over like my husband and me were.
They were moving from other parts of the country.
Lots of people moving from overseas as well or from Latin
America. Partly, particularly in Southern
California. That was because the defense
(05:26):
industry era space was booming because of the Reagan defense
build up and that meant lots of jobs for everything from
aerospace engineers to line workers.
There was also in Southern California quite a bit of light
manufacturing of various kinds, as well as the things that
Southern California continues tobe known for.
(05:48):
Hollywood and all that. But there was a feeling, and I
have to correct this, you know, is it that I was just young?
What part of it is that? But there was definitely a there
was a kind of energy in the sortof culture and vibrancy that was
(06:09):
palpable. And that I don't think is as
strong today, particularly in Southern California.
Unfortunately, that very soon after I got here unleashed a
backlash. There was quite a, you know,
there was a literal anti growth movement.
(06:30):
I was all over the state, but itwas particularly strong here.
It focused primarily on restricting construction,
whether it's construction housesor of commercial buildings.
But just the the ethos that growth is bad, that having all
these new people moving here is bad, that sort of caught hold.
(06:53):
And then also just over time, there was an increasingly
restrictive regulatory environment.
And at the same time, which was driven by the demand of, you
know, a lot of it was driven by the demand of people who had
lived in California for a long time as well.
And that's not just on construction, but that's on, you
(07:14):
know, there was a period in I think it's the early 90s where
in various air pollution restrictions were put on in
Southern California that made itessentially like impossible to
paint anything. That wiped out a lot of the the
(07:35):
light manufacturing jobs that have deployed a lot of sort of
blue collar workers as well as, you know, the managers and stuff
too. So that was when you first
started to see, you know, peopleleaving the state for else
elsewhere. And then the other thing that
happened is that the political environment change.
(07:57):
So all of this stuff that I'm describing is happening in a two
party state. Yeah, yeah.
And it's where you don't know which party is going to win the
governor's race or the, the senatorial race.
And that starts to change in the90s.
And it, it, it, there's lots of reasons for it and there people
(08:22):
have studied it. But but one thing that people
don't talk about as much as theymight is that the Republican
Party sort of shot itself in thefoot and, and, and in a
grassroots way. Not this is not, you know, the
elders of the Republican Party somehow deciding to do it.
(08:45):
Yeah. Yeah, So you would have a
politician, a Republican like Tom Campbell, who was the
congressman who it, you know, was a student of Milton
Friedman. He later, after his political
career, became the Dean of Chapman's law school.
He is, by any normal definition,a, you know, sort of free market
(09:09):
conservative type. But when he ran, he was the
slightly more liberal person in the Republican primary.
And, you know, people voted the primary voters, and I would
include myself here, voted for me because up until 96, I was a
Republican would vote for the, you know, the more hardcore
(09:33):
person who was, you know, and we're not talking about, you
know, sort of MAGA fire eaters. This is a long time ago.
But and that was really a mistake.
I mean, that was the problem with, you know, part party
primaries and it's something that I watched the Democrats
nationally doing this to themselves, you know, in and and
(09:57):
I was like, don't do that. They'll be sorry.
I mean, arguably they already are.
But but you know, where you in the primary, you have to appeal
to the most, you know, to the most hardcore people, and then
you lose. You not only lose the election,
but over time you lose more and more of your sort of people who
(10:22):
either officially or unofficially affiliate with you.
Well, I want to dig into this concept of the Republican Party
losing its mandate in Californiabecause I think so many times
California becomes the embodiment of all things wrong
with the Democratic Party, right?
And people from Fox News, from anywhere else, it just because
it's the blue state in the same way that Texas, the red state.
(10:44):
And that's how it gets talked about, nationalized political
coverage. But as much as people like to
complain about the Democratic Party in California, like you're
saying, there's another party, They're here.
They had power for a significantamount of time.
And but their own actions in part led to where we are today
in a one party dynamic. And how much of it is the
primary piece that you just laidout, which I know has also
(11:07):
changed? Right now we have jungle
primaries after Schwarzenegger reforms.
We can talk about that. That was like closing the barn
door after the horses left. Yeah.
Yeah. And now it just reinforces the
one partiness of this. Yeah.
Well, the other piece I was going to ask you about, I know
when I was rereading the book, you talk about the California
ideology, particularly that era.And one thing that I always find
(11:29):
striking is, you know, politicalparties at the state level,
particularly in today's politics, are very nationalized.
They're oriented towards DC and many state members and state
Assembly, state Senate are vyingtowards the congressional seat
or that Senate seat whenever opens up down the line.
And in a place like California, there certainly are parts of
California that are very red. If you're in the Central Valley,
(11:50):
that's kind of classic Republican even to this day.
But a lot of California is unique.
It is different. And even if there are some,
whether it's libertarian or freemarket orientation of voters, it
looks distinctly different than other parts of the country, say
like an evangelical Bible Belt type of voter.
In the South. Yeah.
And so people always complain ortalk, you know, pitch the idea
(12:12):
of like, a third party in California or a novel political
approach. But how much do you think it's
that? Like, California is unique, and
the Republican Party has just failed to tap into California's
uniqueness in some ways? Well, I think going back, So I
have a friend. I haven't seen him in a long
time, but former colleague Bill Eggers, who ran for a state
(12:37):
legislature seat down in the South Bay.
Hope I'm getting this right. It was a long time and he was a
classic. Somebody at the time had used
the phrase Beach Republican, which is kind of what getting
that it's a it's a very different ethos from both the
(13:00):
Country Club kind of, you know, George HW Bush kind of tradition
or the, you know, sort of Southern type and more free
market. And you know, I worked with him
at reason more business oriented, that sort of thing.
(13:22):
But when he ran, he, you know, the especially in a state
legislature seat, it was all about mailers because it's a low
information environment. There is state is so big that
except for senator, governor, maybe mayor, you don't really
(13:43):
get information about this. And so there were two things
that he got in trouble for. One was abortion, where he
really didn't want to take a position.
I mean, even even knowing him, I'm not sure what he really
thinks. I would guess, again, this is a
(14:05):
guess, Bill, if you're listeningto this, I would guess that he
is right where most Americans are, which is in the mushy
middle. Yeah, kind.
Of that Clinton era. Uncomfortable with late term
abortions, not wanting to be, you know, sort of not liking the
(14:26):
idea of abortion, but not, you know, neither neither of the
official party sides. But because he was running as a
Republican, he had to take an anti abortion stance.
So that was just that was a it was a litmus test.
And, and so that was one thing. And the other thing was my fault
(14:47):
was I had, I forget how this involved him, but I had
editorialized against the pants bill.
And this was a bill in the stateLegislature that said that
employers could not require female employees to wear
dresses, basically to wear skirts.
(15:09):
And, you know, as an employer, Ithink that's a ridiculous rule,
but I didn't think it was the state's business to intervene in
that. Workplace attire.
Yeah, workplace attire. I mean, the circumstances under
which you would have such a ruleare rare.
And I'm willing to, you know, live and let live and market and
(15:33):
let you know there are other places that would require women
to wear pants like I just and, and so I had attacked that and
somehow Bill had quoted my attack in something or
something. Anyway, he got attacked.
He got tagged with my view, which than was unthinkable
(15:54):
because how can you have and this is a problem I think in
California was a problem that has gotten more how if if you
don't like something, it should be banned.
Yeah. And I think that cuts against a
culture of tolerance and, and italso called cuts against an
(16:14):
entrepreneurial culture because it it, it's counter to
experiments. Yeah.
Well, I want to ask you about that and to talk about broader
culture and not just partisan dynamics, because it's easy to
complain about California. I find myself doing it
frequently. And but people outside the state
will often point out an inherenthypocrisy or tension of, OK,
(16:37):
sure, you're saying that the state is dynamic and maybe it's
relatively not as dynamic as it was 30 years ago.
But in absolute terms, it's still the most dynamic place in
the world. Arguably maybe outside of like
Shenzhen or something like that or other parts, you know, but
it's still yeah, yeah, they have, yeah, it's still up there.
And similarly on this point, youknow, you can say that, OK,
California, yeah, there's burdensome regulations.
(16:59):
They drive businesses out of thestate.
It's an anti business environment.
Yet at the same time, you know, 4th or 5th largest economy in
the world if it was its own nation state.
And it's still. And so how do we reconcile those
tensions and how do we react this place where California has
this culture of, of banning anything that they don't like,
like you're saying, yet at the same time being this fountain of
(17:22):
innovation and dynamism in many other dimensions, right?
Well, I think first of all, it still has this culture and this
glamour, which we can talk aboutwhat I read, yeah.
I'd love to, yeah. But of the of being the place to
go to do creative things, to do creative great things.
I mean, I, so I've lived in LA since 1986, except I lived in
(17:45):
Dallas from 2000 to 2007. And Dallas has an
entrepreneurial culture as well,but it's very different from the
one out here. And so and, and again, New York
is different. So my husband and I used to talk
about this. You say New York is the arena
and New York is all about being on top.
And guess who quintessential NewYork?
(18:06):
It's a, it's a culture about dominance.
It's like you want to be. And this is the culture that
gave us Donald Trump. It's the cultural dominance
Dallas, and I think this is probably true of other parts of
Texas as well. It's more about being rich.
I mean, it's just about having stuff.
It's about, you know, and partlythat's because it's it's a place
(18:32):
that's closer to the experience of being poor.
I mean, false is like that, you know, and and so people may do
great things there and they may build fantastic organizations,
but they're the fundamental local culture.
A little less so in Austin, but in places like Dallas and
Houston is this, you know, get rich.
(18:54):
I mean, it's a, you know, be theself-made man or self-made
woman. Sell oil, get the ranch.
Yeah. Ross Perot.
Yeah. Yeah, right.
Or actually, you know, I sort ofunfair to George HW Bush because
he didn't do the Connecticut Yankee thing.
He actually went out and became an oilman and it was so.
And then there's California. And in California, what people
(19:16):
want to do is be great. I mean, and what does it mean to
be great? You know, it's to be Steve Jobs
thinking about, you know, as he said to John Sculley when he was
luring him from Pepsi. Do you want to sell sugar water,
you know, for your life or do you want to change the world?
It's the change the world thing.It's the it's the dream of being
(19:37):
an artist that pull pulls peopleto Hollywood.
I mean, you know, people, they don't say, well, I want to make
some genre movies and do this. I mean, even if they do, I mean,
and and they want to make great new reinvent genre movies.
I mean, you know, there are lotsof people who are doing very
ordinary things in their actual lives.
But what motivated them is this notion of they want to do
(20:00):
something that is fantastic. And I think that culture is
still present here and and it pulls a lot of people, but the
cost of joining that culture hasgone up.
Over that I've been here. So that's one thing you know,
(20:20):
and then the other has to do with the nature of the
regulatory burden or? Tell me.
More, yeah, very much. OK.
So it's very people talk about bits versus atoms.
So mostly the regulatory burden in California and in the rest of
the country is on doing things that change the physical world
or making things. So as long as you're dealing
(20:43):
only with ones and zeros mostly,you're not going to be highly
regulated. And that may or, or you know,
there is regulation that affectsthe movie industry, but it's
general regulation. For the most part, movie
industry is protected by the 1stAmendment.
Yeah, it's, it's and, and especially today, where even
(21:08):
some of the regulatory burden ofFCC regulation that used to
affect, you know, what you couldput on TV, run away.
So there's a tremendous ability to be creative as long as you're
not trying to alter the physicalenvironment.
And then the other thing has to do with it.
(21:30):
Things tend to be regulate. There's this funny thing about
new versus old because the one hand regulation tends to be
trying to stop new things or off.
Yeah, on the other hand, if they're new enough, maybe you
can get them going before that kicks in and and surprised with
(21:53):
the would be regulators or you can find a workaround.
I mean, you think about something that does involve the,
the, the physical environment would be something like Uber
where they found a workaround. They went they instead of
trying, they knew they couldn't get licensed as taxis, but they
went to the state and got licensed as I think it's like.
(22:14):
Public utility. Yeah, yeah, yeah.
You know, they, they found a workaround to and then once that
happened, then they got big enough and everybody loved the
having that service and there was competition from Lyft and
that that it became sort of too big to stamp out.
So I think that that's part of it is we can talk a little bit
(22:36):
about how who comes to Silicon Valley has changed, but but I
think that ethos is still a big part of the state and a big part
of the state's dynamism. Yeah, I think that makes perfect
sense. And I think another way that
I've heard people frame it and thought about it in my own way.
You know, how do you reconcile this puzzle of of overreach
while still being dynamic? Like you're saying?
(22:57):
The bits versus Adams piece is abig part of that.
And you know, Silicon Valley wasoriginally hardware, like the
defense industry was huge. Lockheed was, yeah, it was like
building silicon prefabs and doing.
Yeah, the defense industry was big.
And California's rise, particularly in these last,
let's say, call it 50 years to global status has come at this
(23:19):
time when you could afford to only focus on software, only
focus on bits. And like the software explosion
in second Gold Rush really has been taking place.
And so California, I know Peter Thiel in his very contrarian,
provocative fashion, has made the comparison to like a Petro
state. But something like you can do
whatever regulatory decisions that you want in the built
(23:40):
environment and make it as impossible as you want for
anyone because it doesn't matter, because you have this
fountain of wealth that continues to fill the state's
coffers, bring new people in, continue to drive the state
forward. California is much more than
just the software economy. But I do think that there's some
explanatory power there. And so I want to dig into that
concept of new versus old, and particularly around AI.
(24:02):
So I'm stepping back to this bigger question of the cultural
fight for the future of being for dynamic society versus being
something a little more stasis and static.
AI really is at the forefront ofthis debate and seems even
though it's already the hot topic, it seems prime to take
potentially the number one role in, I think a lot of political
(24:25):
dynamics and forces. And you know, there's looming
fear of of white collar job loss.
There's even the existential risks.
There's also a lot of extreme optimism of this new industrial
revolution, this new intellectual revolution.
How are you thinking about AI interms of a dynamic future and
what should we be thinking about?
Yeah. Well, OK.
So first of all, some of this is, you know, there are people
(24:48):
who know much more about AI thanI do.
And so I can only sort of use other people's thinking to some
degree that it's very specific. I tend to discount the
existential risk because I've probably because I'm old here.
One of the big points in the future in his enemies, which is
(25:12):
something I, you know, develop out of Friedrich Hayek's work
on, on the use of knowledge and society is the importance of
localized knowledge. And a lot of that, like, you
know, let's go back to the pantsbill.
You know, you sitting in the legislature do not know the
circumstances of every single small business in California and
(25:32):
why they might or might not wanttheir female employees to wear
skirts or pants or whatever. And really, don't you have more
important things to do? And that sort of there's that
kind of local knowledge in AI. There's another kind of local
knowledge too, which is just outand out expertise.
And, and you can see from the extreme, you know, signing
(25:57):
bonuses that are allegedly beingoffered to Frontier, you know,
software engineers, you know, that are like $100 million
signing bonus. That tells me very, very few
people on the planet actually understand this stuff to the
degree that they could make wisedecisions about how to design,
(26:24):
how to avoid certain pitfalls. Now, the fact that they could
make wise decisions and that they're the only ones who might
be able to make wise decisions does not mean they will make
wise decisions. But I think trying to figure
(26:45):
out, you know, trying to legislate against existential
risk, it's just, it's not going to work.
I mean, it's, it's at some levelyou have to just be a little
trusting and fatalistic. That said, I'm far less worried
about existential risk just because it it is a, it is, it's
(27:08):
a very, it's downside. It's a very, very, very large
downside risk, but it's a small problem, very small probability,
yeah. And there's a lot of speculative
jumps to get there in the logic flow.
You know, you can read these compelling stories that read
like gripping sci-fi and you feel the emotional rise, but you
know, the gap between us turninginto paper clips, There's a lot
(27:29):
of speculative jumps that are made.
And so yeah, I'm, I'm, I feel similarly.
So, but white collar unemployment is absolutely going
to happen. I mean, I, you know, it is going
to happen. That is dynamism.
That is, you know, you don't have growth without change.
And white collar people who you know, and specifically white
(27:52):
collar tech people who think they're superior and immune
because of their wonderful brains.
This is not the way the world works.
Hayek, who I mentioned before inthe context of knowledge, he had
this much less commented upon essay where he made a
distinction between merit and value.
(28:15):
And this was in the context of arguments that you know, because
it was more of the context of egalitarian arguments at the top
in the mid 20th century. But it applies to this, and the
idea is value is supply where supply and demand cross.
In 1990, my value as a columnistwas much higher than it is
(28:42):
today, even if I write the exactsame column.
And that's not because I knew more than or I was a better
writer than. No, if anything, I know more
now. I definitely know more now, and
I'm probably a slightly better writer.
The difference is that there wasthis huge increase in supply and
journalism jobs, you know, and, and payment for writing, you
(29:07):
know, plummeted. And that's just supply and
demand. And that's the the value at any
given time. That's not your worth as a human
being. Yeah, you're the worth.
If you make more money, you are not a more valuable, you're not
a more meritorious human being. And you may be a more
meritorious human being, but it's not because of the money,
(29:29):
you know, and it's not because of the things that get you the
money necessarily the market andcare about your merit as a human
being that much, you know. Yes.
And that's a very hard idea for financially successful people to
take on board. And it's funny, right?
(29:50):
Because the fear for a long timewas that the low end of the
labor market was gonna be the long tall truck drivers that
make up 10% of the male workforce or something like
that, right? This manual labor, that's who we
need to worry about. And now that it's inverted and
it's on a lot of white collar jobs, I think back to ideas like
elite overproduction or some of these.
(30:11):
I've worried about that as something that's more socially
and politically destabilizing relative to something like
existential risk because it's very tangible.
And we've seen patterns in the past when there's large scale
labor market disruptions, you know, that can have long
standing political ramifications.
And even if zooming out big picture, the transition is a net
positive and this creative destruction yields a lot of
(30:31):
fruit. The path getting there in any
given year or five year period or 10 year period if it's rocky
enough can be really, really challenging and I think creates
a lot of concerns for people andit's hard to know how to
navigate that on the front end. Yeah, One thing I will note is
that a lot of people who read and, you know, even like the
future and its enemies, they assume that it was written out
(30:53):
of the sense of optimism in the early days of the Internet
because it has a lot in it aboutthe early days of the Internet
because that's when it was writing it.
But actually it arose more from the extreme economic pessimism
of the early 90s, particularly in Southern California, because
(31:14):
all the people who moved here inthe 80s because the Reagan
defense boom, well, you know, the end of the Cold War was like
really good for the world, but it was not good for Southern
California. It was that.
And it wasn't just closing bases.
It was, you know, you don't needall those weapons.
You don't need to be producing so many weapons and all these
(31:35):
things so and there was this much talked about oh.
Interesting. Called Falling down with Michael
Douglas as a laid off aerospace engineer, it was.
And at the same time also in that period more nationally, you
were having downsizing and and sort of we're having companies
(32:01):
eliminating layers of middle management getting, I mean they
were getting more efficient and more productive, although any
given set of layoffs is not always going to be wise.
But there was, that was a periodin the early 90s where there
was, I won't say there weren't necessarily high levels of white
(32:26):
collar unemployment, but there was a visible and certainly felt
level of insecurity in white collar jobs that had previously
been assumed to be. And And so part of even though
(32:47):
this isn't, I mean, I don't really write about this
literally in the book, but it was one of the things that I was
observing in, in that and thinking about in that early
period in the early 90s, which sort of led.
And I mean, I wrote the book in the late 90s, but it was, yeah,
the things I was was thinking about.
(33:09):
It's so interesting you say thatbecause I think for myself and
maybe every generation does thiswhere they assume that they are
unique and that the lessons of history don't necessarily apply.
But I think for myself, facing the challenges of California,
I'm a fourth generation California.
And I'd hear these stories of, you know, my great grandpa
moving here in the Depression togrow oranges and my dad's side
coming, you know, to find opportunity and being the first
(33:30):
one in his family to go to college.
And just thinking of California as this idyllic place of
opportunity that, you know, and,but we've, we've lost, we've
spoiled Eden and now my generation has to bear the cost.
But I read all of Kevin Starr's works when I was trying to get
to learn more about California history and his book in the 90s.
His last one is California on the Edge.
Talking about that precarious position of that era and that
(33:53):
uncertainty and and learning California history made me
realize, Oh no, this is not the first time.
This time is not different. There's been ups and downs
before, so it's helpful to thinkabout that and know.
That we haven't even talked about the riots in 92 or, or
the, you know what led to them and then California being
California being this incrediblycreative place, you know, out of
(34:15):
all that we also got West Coast hip hop yeah, you know, and,
and, and fortunes were made and.Orthe.com bubble bursting in San
Francisco and that. Being.
Tax over, right? People thought, yeah,
absolutely. All these ridiculous companies
like Amazon.com because you know, they would lump everything
together. They would do like pets.com and
(34:37):
Amazon.com as if they had the same, you know, ridiculous
business model. It was all absurd.
And, you know, I, I was more sequished because even though I
wasn't very old at the time, I was only in my 30s.
But in 1984 I went to work at Ink Magazine, which was the
(34:57):
magazine that covered small business and it and it had just
celebrated its 5th anniversary. It was a very successful
magazine. And one of the reasons it was
successful was that everybody and his brother had a personal
computer company and every personal computer company was
advertising in Inc, both becausethey were small businesses and
(35:19):
because small businesses could now, you know, or to have a
computer and do their accountingon it and all that sort of
thing. So about a year after I got
there, half the advertisers who had ever advertised in ink were
gone, like they no longer existed because there was this
huge shake out and computer industry and things and video
(35:44):
games and all of that sort of thing.
And this happens people over invest, you know, people don't
know which company is going to be the one.
And so they, you know, they bet on this sector.
And, and when I say they, I meaninvestors, but also individual
entrepreneurs who they try to dotheir thing and and then
(36:07):
eventually gets built up and eventually there's a shake out
and a lot of away. And and that's that's creative
just. Yeah, I'm filming this from my
parents office and I can visiblyremember when I was a child
unboxing a gateway computer herewith the distinct, you know, cow
print. And to think that at the time,
(36:27):
right, that was, I didn't think that I was young, but you know,
people thought that they were going to be one of the long term
players. So and.
Then and one of the companies that is still around and is
incredibly valuable but almost went out of business is Apple.
So they survived that shake out that I was talking about.
But you know, at the turn of thecentury, they were, they were
(36:49):
down to like 2% of the market. And you know, and, and I
remember in the, I don't know, this is when I was in Dallas.
It was in the early 2000, they were started opening up their
retail stores, which was genius.I mean, it was a big risk, but
it was smart because part of it was like if you had an Apple,
(37:11):
which I did, it was very hard toget it serviced or to get any
answers to any questions. And so that solved that problem.
And to like the third, the thirdApple store in the country to
open was actually in the suburb of Dallas.
Remember, going there like this is smart.
Well, I realize we're coming up to time, you've talked about
(37:35):
California's resilience riding these waves of creative
destruction. And it seems like by all
accounts, and who knows, maybe five years from now, we'll be
looking back and laughing at this.
But it seems like we're on, on the premise of another wave of
that with AI, for all of its promises and challenges and the
reassortment that comes with that.
As someone who believes in the positivity of the power of
(37:57):
dynamism, the need to Foster andcultivate it, what are the
lessons that we should be learning from past challenges?
And, and what are the kind of the prescriptions to for a state
like California to be more dynamic and to, to ride this
wave well? Well, you know, there's this
term laissez faire and it has the certain meaning in in, you
(38:17):
know, politics and economics, but it really just means let us
do. And and I think California needs
more of that attitude. I'm not saying, you know, it
should have a completely laissezfaire or anything goes, yeah,
economic environment, but it needs to go a little more in
that direction. And I also subscribe to the
(38:39):
housing theory of everything that.
Yeah. Can you explain that in a couple
lines? Yeah, The Housing Theory of
Everything is the title of an early article in Works in
Progress magazine, which you can.
Find and it's a great article, everyone should read it.
Yeah. And it was written by guys who
are, I think all three of them. I can't remember who the authors
(39:01):
were, but I think there it's, it's very British, but
everything applies here as well because Works and Priors is
based in London. And the theory is if, if you get
housing right, a lot of problemsgo away.
And if you get it wrong, a lot of problems come.
And this is everything from you.You increase inequality and and
(39:28):
deep. Environmental challenges or the
cost of daycare goes up. And I mean everything gets and,
and you're and you hurt the economic growth prospects and
you hurt people's ability, especially sort of middle to low
income people's ability to better their condition.
Because one of the really important is that if you are,
(39:53):
let's say you're a Bart, this isan example.
Somebody actually an economist actually gave me, let's say
you're a bartender, which his brother was in Ohio and.
You could make a lot more being a bartender in San Francisco, as
it's a much more economically dynamic and growing place than
wherever you are in Ohio, but the cost of housing will more
(40:18):
than cancel that out. That's not what it was like
through most of American history.
It used to be in America when there, you know, people could
move regular people, not just the star cutting edge people
getting $100 million signing bonuses to do AI, but just
regular people could move to theplaces that were growing and and
(40:42):
be able to reasonably afford an apartment.
I mean, in a way, although obviously I'm highly educated,
but I've never been in a highly paid job way.
This applies to me as well. You know, I had no trouble
coming to Los Angeles in 1986. In fact, increased my increased
my standard of living. That used to be the norm and
(41:05):
it's no longer the norm. Now.
We expect that, you know, we're going to price these places as
if they're luxuries and we do that through housing because the
anti growth people in the in the80s won.
They won. They got what they wanted.
(41:25):
They made it hard for newcomers and they made it hard to build
things. And I in defense of the baby
boomers who get blamed for everything, these people were
not mostly baby boomers. Some of some of the leaders
were, or they actually even theyI think were mostly very late
Silent Generation. It's like the World War Two
(41:46):
generation who came out here anddid great.
The baby boomers did not get hitas hard by the restrictions, and
that would apply to me as well, but they weren't the source of
the restrictions. It just took a while for them
really to work out. Boomers have been absolved.
(42:07):
We we leave them there, Yeah. The Boomers have much to account
for, but just this. We'll take that off their tab,
yeah. Thing, just because we didn't
get hurt by it as much as starting with Gen.
X, it doesn't mean we caused it.Oh, well, this has been so much
(42:29):
fun. I really enjoyed this
conversation. And yeah, you know, like you're
saying, California is more dynamic because people like
yourself and people like my parents and millions of other
people were able to come here and better their lives.
And I know in the intro to one of Kevin Starr's books
summarizing his history, he talks about California's
original promise being that of instant transformation, being
the place of opportunity where you can, the place where you can
(42:51):
come and, and better your life. And whether it's be less
restrictive on businesses, whether it's fixing the housing
problem and getting to a point where we can restore that
affordability. I hope that we can retain that
dynamism in the future. Me too, thank you.
Well, thank you so much for joining Virginia.
This has been a lot of fun. Thanks.
(43:45):
The. The.
(44:45):
This. The.
(45:48):
The.
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