October 16, 2024 • 37 mins
In this episode, Ed is joined in the iHeartRadio studios in New York City by Zephyr Teachout, Fordham Law Professor and Author of "Break 'Em Up: Recovering Our Freedom from Big Ag, Big Tech, and Big Money" to talk about corruption, the ways in which we can curb the power of corporations - and why there's renewed hope for a better world.
Zephyr on X: https://x.com/ZephyrTeachout
Zephyr's book: https://www.amazon.com/Break-Em-Up-Recovering-Freedom/dp/125020089X
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
All Zoe Media. Hello and welcome to Better Offline. We
are live in beautiful New York City. I am your
host ed Zitron, of course, and I'm joined today by
(00:23):
Zevity Challenge. She's a professor of law at Fordham Law
School and the author of Break Them Up, Recovering Our
Freedom from Big Ang, Big Tech, and Big Money. Zephyr,
thank you so much.
Speaker 2 (00:32):
For being here, Thanks for having me on ed.
Speaker 1 (00:34):
So let's stalk corruption. So you've talked a great deal
about corruption. But what does it mean in the business
and economic sense?
Speaker 2 (00:42):
Yeah, I mean corruption is it's this idea that comes
from the Latin, you know, the rupt rupture break apart,
and a corruption is breaking apart from within. So it's
internal disintegration.
Speaker 1 (00:58):
That's this.
Speaker 2 (00:59):
I mentioned that because and the deep roots of the language,
because questions of corruption have been central to economic and
political thinking for thousands of years. So one way to
start thinking about corruption, if you don't mind, is to
think about Aristotle.
Speaker 1 (01:19):
Okay, okay, right.
Speaker 2 (01:22):
Because I actually am quite drawn to Aristotle's understanding of corruption,
and I think it's a kind of man on the
street understanding of corruption as well.
Speaker 1 (01:30):
What is it?
Speaker 2 (01:31):
Yeah, it's the idea that those with governing power use
that governing power to serve themselves instead of the public.
So in Aristotle's classic formulation, he talked about the difference
between a monarch and a tyrant, you know, is both
are rule by a single entity. The difference is the
(01:52):
monarch serves the public and the tyrant serves himself. Aristotle's
other two formulations were then the rule by an elite few, right,
So a rule by an elite few is either an aristocracy, right,
an elite few governing for the public, or an oligarchy
elite few governing for themselves. And then finally, the mass
(02:19):
version of this, a little more controversial, especially in modern translation,
was you know, the idea of a polity or mass rule,
and often it was described as democracy, in other words,
people using the public power for themselves. But the key
there is that he saw the corrupted version as being
(02:42):
about how you use your power, right right, a sort
of core internal motivation frankly.
Speaker 1 (02:47):
And so I'm going to guess that that's how you're
looking at tech at the moment, because and to be clear,
I fully agree it feels like and it's talking Matt
Stola a few episodes back and he kind of said
the thing around authoritarianism and new authoritarianism, And you've made
this point too, so do you.
Speaker 2 (03:05):
Think and I think it just before we get into this,
it's important to just then, in very you know shakespeare
thirty seconds way to say, this fight about what is
corruption and what isn't then has become a two thousand
year fight.
Speaker 1 (03:18):
Right.
Speaker 2 (03:18):
So Hobbes, for instance, thought that Aristotle was crazy on this.
He's like, yeah, people are always going to be selfish, right,
And that a flat version of Hobbes. But there's it's
actually a fight about human nature and what's possible with
human nature on the one hand, but it is also
a fight about where public power is versus your private life.
(03:40):
Because Aristotle is not saying, in that formulation or understanding
of corruption that in your private life you can't seek
out yourself. He's saying there's something uniquely dangerous and destructive
to a public when the governing power is self serving.
So when this as applied to the modern the modern
(04:02):
big tech, big ag questions that the underlying philosophical question
then is is this a governing power? And if it's governing,
that's really problematic because it's set up to be selfish, right,
That's that's you know, that's the nature of modern business.
So the selfishness isn't the problem. The governingness is.
Speaker 1 (04:21):
So makes sense, yes, because and that's kind of and
that's kind of the bothersome thing about this because you've
got so many monopolies orligopolies whatever. So one I like
to choose the most people are not. People are kind
of dancing around this one is the cloud empires. You've
got Google, Amazon, Microsoft, Oracle to an extent, though for
different reasons, and they are the ones that set the
(04:42):
terms of how the Internet is built out. Ack am
I in CDNs to an extent, but you can't what
can you even do about something like that? Is that
cloud empire bad or good? It's kind of hard to tell.
But the thing they definitely have is power unchecked.
Speaker 2 (04:58):
Yeah, yeah, I love your language of term setting. And
it's not always obvious, right, but that if you think
of a government, you know what a governing entity does.
If you think of governing not in a flat formal
sense like are you elected or not? But who actually
has the question for whether something is governing? I think
(05:19):
one way to ask that question is does it have
the power to set terms right, right, yeah.
Speaker 1 (05:24):
And which is effectively a tech industry now right, every
big player Airbnb sets the terms for vacations, the cloud
empire set the terms for how cloud storage is monetized
and indeed sold, and how indeed our electric grid is
built out or not as the case maybe, I mean
even Musk with Tesla, and I have many thoughts about
(05:44):
that man kind of sets the terms of how charging
works now, like they have the standard now, even though
he's a mess, And even then when he fired most
of the supercharger team, it's like, oh, this isn't just
about Tesla, this is now the entirety of America is
being let down, right, But what do you do about that?
Speaker 2 (06:01):
Like?
Speaker 1 (06:01):
How you what can I mean, what you and I
can do might be someone limited, But what can society
do with this kind of thing?
Speaker 2 (06:07):
Well, you know, let's start with where we did start
on corruption. Language of corruption. If we think about term
setting by selfish actors as a problem in the political
realm before we then apply it to the realm. We
may not think of as political, but it's clearly political too.
There's a series of strategies for either removing that term
(06:32):
setting power, right or having public regulations, so even if
they're term setting, the terms are fundamentally set by the public.
Speaker 1 (06:42):
Right.
Speaker 2 (06:43):
And so the classic American strategy was to have diverse
sources of competing power in a presidency, right, Senate.
Speaker 1 (06:53):
And ecogress. Right.
Speaker 2 (06:56):
Yeah, so that's a break come up model. And you know,
if you would, it's not just elections, but it's actually
about providing different sources of competitive power at the local
and federal level, local, state.
Speaker 1 (07:08):
And when you say maybe I miss when you say
competitive power, is that so local and federal government stuff?
Is that just? Is that is elections? Part of this?
Are these like what are the different mechanisms there that
help break them up in a governmental sense?
Speaker 2 (07:22):
Yeah, it's all of the above. So right, so if
you have you know, we can be a little glib
about just comparing you know, presidential systems to parliamentary that's
that's one source of difference, but it's not the only
source of difference. It's cantons versus not cantons.
Speaker 1 (07:40):
Right.
Speaker 2 (07:41):
So, so what it is to say is not that
there's an ideal vision I don't think there is, but
that genuinely separating sources of power. So there's some public contestation.
I think of it both as a federal state and
across federal and across state branches as being important. That's
one mechan it's not the only mechanism.
Speaker 1 (08:01):
There are at least options and means in which people
will be cycled out and ideas will be cycled in.
Speaker 2 (08:06):
Right. And then in the election sphere, we're very worried,
as we should be about arenas where there's no competitive elections.
Speaker 1 (08:14):
Right, somewhat scary, Yeah, this is very scary.
Speaker 2 (08:17):
And the lockout of the opportunity for new ideas or
for leverage on a grassroots level, you know. I think
of it often if if there's nobody you could turn to,
if the water smells bad in the morning and your
elected officials aren't doing anything, there's a problem, Like you
want to you know, it doesn't mean you're gonna win,
but at least.
Speaker 1 (08:35):
You have some access to dig right, yeah.
Speaker 2 (08:37):
Right, So then when you apply that that breakup or
divestiture model to companies, you can see similar visions. Right.
So what I mean to say is that there's plural
ways to do breakups, right, And that's one of the
things that the electoral or political world can inform how
(08:58):
that can inform thinking about breakups, but it's not the
only way to break up power.
Speaker 1 (09:13):
So what are some ones we're not doing yet then,
because it feels at times like the only thing there
is is just anti trust. And thanks to Ronald B. Reagan,
that's not being awake for a while. Yeah, it's kind
of waking up. Yeah, it's making noises. What are the
other mechanisms I mean that we could even create?
Speaker 2 (09:29):
Right, Well, so there when I sort of think about
anti monopoly, and I know you've talked to Matt before,
but you think of anti monopoly as anti concentrated private
governing power, you know, the tyranny of private governing power,
and anti trust is one part of that. In the
United States, the first real nineteenth century anti monopoly movement
(09:58):
was actually around on discrimination principles. Okay, so the Interstate
Commerce Act, which came out of farmers coming together saying
down with monopolies. The first thing they asked for was
open access. Basically what we might think of his open access.
(10:20):
You know, on the same terms non discrimination right. You
have the access to whether it's a grain elevator or
a train, to not have differential treatment. And so it
is a key way to break up power. We may
not think non discrimination equals breaking up power, but.
Speaker 1 (10:41):
That would makes sense. Yeah, because I was just talking
with Corey doctor Rowe about this, yes, and he had
suggested that one of the main things is the government
forcing interoperability between platforms. Everyone has to have the same standard.
So you can look at posts from Twitter x threats
and I'm not even talking about the feediverse necessarily just
open stand Why do you well? I mean, is there
(11:02):
a reason why these things just don't happen? Is it
that they're not being pushed through? Is that the lobbying
is powerful? Like? Is it all of the above? I
guess right, right?
Speaker 2 (11:12):
Is it? The ability to discriminate between counterparties is extremely.
Speaker 1 (11:18):
Valuable, right as you know, right, yes.
Speaker 2 (11:21):
Right, and especially true if you have anopoly power, right right, right.
So I'm I'm laughing because I'm just trying to think
of the right point of intervention. So maybe going to
history again is useful. So we see the eighteen nineties
and this first the first effort is and always claiming
(11:44):
first is difficult. It's all jumbled.
Speaker 1 (11:46):
Together, right, History is a mess.
Speaker 2 (11:48):
History is a mess. There's because there's I'm going to
do my own little segue. Even within corporate charters, there
were anti monopoly provisions in the nineteenth century, really, but
basic rules that said, you can only engage in this
certain line of business. Right, the government will only grant
you a corporate charter and all the privileges that accompany
(12:12):
that in the event in so long as you stay
within the line of business for which you applied to
the charter.
Speaker 1 (12:18):
Does that make sense? Why don't they do that anymore?
Speaker 2 (12:21):
Well, in I'm going to get my dates wrong, but
the gesture right late nineteenth early twentieth century. Actually it
was a little earlier. There was a real effort to
engage in.
Speaker 1 (12:38):
Appreciate the question.
Speaker 2 (12:39):
And I'm being the academic worried about sloppiness, so worry people.
Speaker 1 (12:44):
Get things right, so don't worry about Yeah.
Speaker 2 (12:47):
No, I I want to put the asterisks there for
the corporate law historians who are listening. But there were
you know, there's really interesting. There was a move towards
free corporation anybody should be able to incorporate as an
anti corruption.
Speaker 1 (13:05):
Move, which kind of makes sense a lot. I can
understand the logic, right.
Speaker 2 (13:11):
And then there's a because the idea is, oh, if
you can only get a corporate charter if you're friends
with somebody. That's a pretty corrupt system.
Speaker 1 (13:18):
Right, that makes sense. Well, but now they've moved on
to other ways of doing exactly.
Speaker 2 (13:23):
And then the other part was an effort to expand
what all corporate charters have since become, which is you
get a charter to do whatever is legal in the state. Right,
that's now what a corporate charter is. This a long
digression to say that anti monopoly impulses have showed up
in a lot of different areas of law, right, not
(13:44):
just in federal anti trust and railroad law.
Speaker 1 (13:47):
So interesting because it it almost feels like, because I
mean fairly blaming Ronald Reagan, I feel like we can
all do it every day, but it feels as if
it's just been a slow bleed for like hundreds of years,
where we just the ramifications of decisions at the time
that probably made perfect sense because at the time of
corporate charters were very limited. There wasn't much commerce. There was,
or at least more limited commerce. It almost feels like
(14:10):
we need to bring that back because an episode I
think I just wrote recently, even I was thinking about Salesforce.
Salesforce one of my least favorite companies. And if you
ask what Salesforce does, that is a very long answer
because they do CRM, they do data lakes, they do AI,
they do chatbots, they do different kinds of chat. But
they have all of these things and they do it
(14:31):
by vacuuming up these companies. They eat them alive and
then and now they do it much like Microsoft, as
a means of making sure you don't buy another product,
because we've got everything here like a buffet. Can we
stop that? How do we stop these acquisites? It almost
it feels as if acquisitions are the first place to start. Yeah, yeah,
(14:52):
to make it much harder.
Speaker 2 (14:53):
Well, so stopping We were talking about different elements of
anti trust or vanta monopoly. So one element is non
discrimination rules. And that doesn't mean that every industry should
be subject to radical non discrimination rules in all cases,
but that if there are industries that the ability to
(15:14):
discriminate between counterparties is going to allow for exploitation and
extraction and shutting down of new entrants, then non discrimination
is really important.
Speaker 1 (15:24):
Yes, right.
Speaker 2 (15:26):
Anti trust then also very important, And the first step
in antitrust is not allowing bad as the American system
has it set up, is not allowing is not allowing mergers. Now,
I'm not as familiar with the Salesforce corporate structure, but
I gather that one of the things you're talking about
(15:46):
is the way in which one we've been quite lax
until recently on merger policy. Yes, but we also haven't
until very recently, until Canter and CON's recent merger proposals,
we've had this highly formal understanding of where threats lie.
Before we see threats primarily with horizontal acquisitions. I'm a
(16:09):
shoe company buying another shoe company, right. Secondarily between vertical integration,
I'm a shoe company buying a shoelace.
Speaker 1 (16:19):
Choice, right.
Speaker 2 (16:21):
But the conglomerate merger, the merger in adjacent agency, adjacent institutions,
has sort of been assumed to be, well, that's not
a threat because it's not about dominating that dominating either
that vertical or that horizontal. And one of the interesting
buried parts of the merger guidelines, which I think is
(16:42):
really important, is a recognition that I forget the exact language,
maybe Canter just said this in a speech, but these
these don't fit anymore. Yeah, right, Like when when Amazon's
buying Whole Foods. Well maybe they're using the data of
the Whole Food's customers to create a moat somewhere else.
Speaker 1 (17:05):
Well, it's just it almost feels like we need to
start asking them why do you need this so bad?
And make them justify it and not be totally open
to it because I don't even know why they bought
it other than the data, for sure, because whatever. But
also it's another way of conquering another commerce vertical.
Speaker 2 (17:22):
Now, I think there's so much. I mean, I think
there is so much that we miss psychologically as well
as economically when we think about mergers as if everybody's
just rational, like yeah, yeah, there's also a lot of
boys playing risk.
Speaker 1 (17:39):
I'm not I fully agree, because there's a lot of
One of my prevailing theories with tech right now is
that everyone says, well, open AI, for example, well they're
going to work it out because he's really smart. It's like,
what if he isn't what if they don't have any idea?
What if they're just doing this salesforce great example, they
just bought a digital storage company and it's not really
(17:59):
obvious why, but you know they're going to work it out.
I guess I saw a piece of the information saying, oh,
Benningoff's got it back. It's like, what is he? God?
What is going on?
Speaker 2 (18:08):
And it almost with the more capitalists lashing around, actually,
the less likely that we should think that all these
decisions are rationals.
Speaker 1 (18:15):
And on top of that we've got there's a very
irrational feeling to the economy. I've said a lot about this. Yeah,
that's really interesting. Well, because a lot of these companies
will spend like thirty billion dollars Okay, I'm being a
little like ten billion dollars to make three hundred million,
and I guess that you can't really stop Like, maybe
you don't stop that, but at some point you have
to wonder if that's a symptom of these big, ungainly
(18:37):
monstrous companies that they just had the companies that do
everything and thus do nothing.
Speaker 2 (18:42):
Well, there's this interesting reminds me of this research. I
wish I could find it around the urge to merge?
Have you heard about that?
Speaker 1 (18:47):
No? No, no, I think this is older research.
Speaker 2 (18:50):
But somebody put together a bunch of grad students and
compared them to CEOs, like would you do this merger?
And those who already had power to get really.
Speaker 1 (19:01):
They just get grabby.
Speaker 2 (19:02):
They get grabby, right, and and denying that there's a
power hungriness, yes, is just denying, like do we not
learn anything from thousands of years of literature and history?
Speaker 1 (19:15):
They want to own more, and I think that like
Elon Musk, is want to choose as well. Because as
we speak, we just on the day after the Robotaxi event.
What I thought it was illegal to make stuff up
when you're a public company, but I guess Elon Musk
has special rules. But that actually kind of brings me
to a point. What do you do with people like
Musk who they're evil and they're very clearly corrupt in
(19:39):
some way, but they're not really breaking a law. How
do you moderate the power of someone like Elon Musk?
Outside of anti trust? Anti trust has done nothing like
SEC could barely touch him. What how do we start
bringing these people back down to earth?
Speaker 2 (19:52):
Wow? Well, anti trust is part of it, campaign finance
is part of it. U and there are maybe I'm
answering to glibly, but there there isn't a single answer
I do There isn't.
Speaker 1 (20:08):
Yeah, I know that there isn't one. If there was,
I assume someone would have done it. I mean there is,
but that's not legal.
Speaker 2 (20:15):
And and then there are industry specific abuses and challenges
that it's not. You know, just just because you and
I are interested in anti monopoly law or you know
what the FTC could do tomorrow doesn't mean that there
aren't real challenges with specific industries that are unique, unique
(20:36):
foreign policy challenges with starlink right right, unique policy levers
too that could be used with some areas of maybe you.
Speaker 1 (20:47):
Shouldn't have national security clearance. That's a good start, right,
But it's I think it comes back to that thing
he was saying, though. It's the It almost as feels
as if the media kind of definitely the government doesn't
look these things and say, oh, they're accumulating power. They're like, oh,
they're just accumulating markets, and you know that's okay, it's
still bad, but like they're fine with it. And it
(21:09):
feels like we actually really have to stop getting like
there must be new legislation to stop that, or maybe
just it's as simple as what if we stopped companies
getting so big? Yeah, what if we just started pinning
them down a bit and disincentivizing that specifically.
Speaker 2 (21:26):
Well, there there is clearly a problem of gross power, yes, right,
And there have been various efforts in the past to say, well,
we should just limit gross power, not simply I think
this is what you're getting at, abuse of such gross power, right.
Speaker 1 (21:43):
Yeah.
Speaker 2 (21:44):
And the senator who has a famous Senate office building
is a heart named after him, was actually an advocate
of this in the seventies, you know, really concerned about
mere accumulation of power. I don't want to poo poo that,
but I also don't want to suggest that we've reached
(22:04):
the limit of what we can do with existing tools.
I mean, we still have an underfunded FTC, that's an
underfunded DOJ, and we have a whole series of other
agencies that just start using their power right now.
Speaker 1 (22:30):
Actually that's a good Like the EPA and the FDA.
I'm not an expert in either, but it feels like
they are a They are potentially avenues in which we
could start going off to data. We could start making
standards of consumer data or I don't know, standards of
care for the cloud companies. But also I think that
we have when you talk about the governing systems, we
(22:53):
have a real problem with Silicon Valley, for example, there
isn't discussed much, and it's the old boys network. It's
the fact that if you are to grow beyond a
certain scale, it must come from Sequoia, Coetu, Andreas and
Tiger and past a certain point right.
Speaker 2 (23:08):
Right, that's the club and we all and everybody knows.
Speaker 1 (23:11):
That is that. And they fund based on accumulation of power.
Character dot Ai was funded by Andres and Horowitz. That
company doesn't make much money at all. And on top
of that, they got reacquired by Google. They were made
to be acquired. They weren't made to be real companies.
And it almost feels as if we need to reevaluate
how finance happens at the private stage as well, because.
Speaker 2 (23:34):
I would love to know more about that, because I
only have an impressionistic sense of that being true.
Speaker 1 (23:38):
But when you say that, well, what it is is
so character dot ail chip. So it's founded by guyed
known Shazi. I'm going to mess up his name someone
on email me. He was one of the original people
who wrote the Transformer paper that underpins most generative AI.
He made this company, which was a chatbot company. You
could talk to anime characters or I think Hitler. It's
not a great company at all. It's a pretty bad one. Actually,
(24:00):
they got absorbed into Google. The company still exists, but
all of the people work at Google now for two
and a half billion dollars. And the problem is that
I think there are litanyar problems with it. It's that
the limited partners who fund vcs don't really give a
shit if they're good or not. They give a shit
if there's a return, if they can get that. And
(24:21):
as a result, the way that venture capital is allocated
is predominantly not it's the biggest lion Silicon Valley by far.
Is that startups get the majority of money. No, the
majority of money in startups goes late stage. The minority
goes to early stage, which is insane based on what
most people assume. And it feels that I don't know
(24:43):
how you start fixing this. But if you think about
from how you're describing corruption, it really is these governing
systems that are allowed to exist. And I think it's real.
Speaker 2 (24:52):
It's really interesting. And so when you're talking about the
motivation of this club, you think it's about power, right,
and what kind of power? So just give an example
of a kind of power that you might seek that
doesn't actually lead to great returns.
Speaker 1 (25:08):
I mean pretty much every investment in open ai. Open
ai is a company that bleeds more than five billion
dollars a year, will in twenty twenty four, They'll bleed
more next year. Investing in them for a theoretical return
is what I think most of them are doing. But
I think a lot of them are doing this so
that they have a piece, They have something stuck into
what they believe a power center is. It's to show
(25:29):
off to everyone that they've still got it, that they're
able to get into big deals as a means of
getting into other big deals. Oh, we were good enough
to get a quarter billion dollars into open Ai. Now
we can get into other deals. We're still seen as
the hot thing. Perhaps that is actually a return of
sorts in that it's a marketing effort. But I I
refuse to believe all of that money is just there
just for returns. I think a lot of it might
(25:49):
be there, And.
Speaker 2 (25:50):
To be fair, I mean power eventually leads to returns. Yes, right,
it's not necessarily the short term return.
Speaker 1 (25:57):
But it's also gets back to what we're talking about
about logical thinking. Right, Because these people like the other thing,
and I get in lots of arguments about this open
AI episode went out this week and people have really
pissed at meks they say, well, they'll work it out.
I want to find all.
Speaker 2 (26:12):
Those great examples of you know, the armies that marched
in the wrong direction for two weeks sleep.
Speaker 1 (26:18):
I just think of the Schleifen plan. It was the
smartest thing at the time in World War One, but
it went the wrong way and it curlled to inward
and then they lost, probably for the better. I think
I think we can all agree the causes shouldn't have one,
but nevertheless, but that those.
Speaker 2 (26:31):
In power actually I mean, there's a very deep point here,
which is not only that a lot of people are
just people are will make some good decisions because they're human,
but that there are particular pathologies that actually come along
with the accumulation of power. And speaking of psych research,
there's some I think they're Berkeley, California researchers who argue
(26:55):
that accumulation of power is as bad as getting a
poll stuck through your head in terms of the impact
it has on your on your ability to process certain
kinds of information.
Speaker 1 (27:05):
I like that because it is funny watching people get
super rich and look at Elon Musk. I'm not saying
he was a great.
Speaker 2 (27:12):
Guy before, but it's but there's a theory that pathological
people gain power, and there may be some truth to that,
but I think it's really important to recognize what accumulation
of power actually does to somebody. It makes them less
likely to be able to accurately guess the emotions of
those who are speaking with them, okay, right right, which
(27:33):
you can imagine and I'm probably seeing. It makes them
less likely to observe personal boundaries, more likely to eat
like cooking monster with the crumbs falling all over their chest. Right,
So you actually are starting to miss out on a
lot of subtle cues that are the gather part of
the gathering of information. And I don't know what impact
(27:55):
it has on other other cognitive functions.
Speaker 1 (27:57):
I mean, I'm somewhat extract here, but if you look
at Silicon Valley, which is now dominated by a few
vcs and Sekoya used to be pretty good. They invested
in FTX, they invested in open ai. They actually didn't
go in the latest open ai thing. But Mark Andresen's
a great example. So from what I've heard Mark andresen
In like the eighties was a decent enough guy. He
(28:19):
was like a regular fella. Now as of two years ago,
he reads comprehensive biographies of Hitler and Funds and claims
that people like Nick Land are the patron saints of
techno optimism. It's almost as if the more power he gets,
the more brain damage he receives.
Speaker 2 (28:34):
Ye.
Speaker 1 (28:34):
And it's but when you think of this in the
realms of Silicon Valley and how harmful this is. If
most of the big checks come from a certain few
who have accumulated so much power, and most of those
big checks are going to late stage companies, it's going
to reinforce the same thing. We are not going to
innovate much further because the money is going to the
same guys, from the same guys in the same way
(28:56):
and the same Sam Altman is a great example. This
man has been fired for three companies, including Open Ai.
He has done like some of the stuff about his
sister is truly grizzly as well. But on top of that,
he's a liar. He lies regularly, and he's also not technical.
He doesn't know what he's talking about. But I think
as he And this is actually kind of funny to
think about. As you watch Samon went over the years,
(29:16):
he gets even dumber. The thing I hate using that
phrase in general, but it's Samon. I don't care. He's
worth billions, but with him, he sounds sillier. The more
stuff he says, the more out of whack it gets reality,
and the more just ridicaent.
Speaker 2 (29:29):
Yeah, right, and so the you know, there's people are
going to be ridiculous in the world, and our job
as a society is to make sure that they don't
accumulate governing power. Right, that's our job, yes, right, because
the people who are going to be genuinely and who
are being genuinely hurt are those who I just use
the example from this week in New York, a great
(29:52):
Bloomberg story investigating how Uber and left drivers are now
locked out. Yes, of Uber and Lyft just locked out.
You're going to work, You're an hour into your shift,
you go to the bathroom.
Speaker 1 (30:06):
Locked Yeah, you looked out. So you don't become a
full time is it the classification full time employment?
Speaker 2 (30:12):
No, they just can't access the app.
Speaker 1 (30:14):
Why is Uber looking amount then.
Speaker 2 (30:16):
Because they're trying to do a run around around a
New York City law that says if cabs are empty
over a certain number of hours, then they have to
increase their.
Speaker 1 (30:27):
Per mile rate. Huh does that make sense?
Speaker 2 (30:30):
Yes? And so they're saying, well, when they're locked out,
they're not an empty cab.
Speaker 1 (30:35):
They're not a cab at all, right, they're no longer.
They're no longer?
Speaker 2 (30:38):
Is it?
Speaker 1 (30:39):
This is a dumb question, and we can wrap off
after this one. But why does no one ever think
of these It feels like they make these very interesting
and useful laws and then they're like, ah, they won't
work it out, but they always do. What is it
just a limit of what Look, maybe you can speak
to this. Is it just the limit of what you
(31:00):
can get past? Or is it just you can't think
of everything? Or is it just hard to get that
down in paper when you're facing off against multimillion dollar lord.
Speaker 2 (31:11):
Look, I think they're breaking the law, but that doesn't
mean it's a perfectly air tight law. And this is
a no. I actually think it's a big deal, So
I'll say it. I think that there is a societal
failure to date to recognize the risk to workers of
how big data can be used to individually exploit them.
Speaker 1 (31:33):
Yes, absolutely, and that this is.
Speaker 2 (31:35):
A major deal for labor, not just for gigwork, although
it's the clearest in gigwork, and that we should more
comprehensively think about this and get out ahead of it. Basically,
you know, if you can banfracking before it comes to
New York, it's a lot easier than after it's already there.
Speaker 1 (31:50):
Yes so, and it almost will. We need to just
start by classifying this stuff. We don't know what these
companies have, we don't know how the algorithms will, we
don't know what they're doing too well.
Speaker 2 (32:00):
But this is a really important point because when we
talk about power and we talk about governing power, we
are in a new era of a kind of new
governing power, right, Like the mere friction that I just
couldn't collect data on what baseball team you like, and
you know how long you sit on a that Now
that looks like some limit in what I used to
(32:21):
be able to know about you. But there was just
lots of informational great freeing informational gaps, right, And that
meant that even if I had certain amount of market power,
maybe non monopolistic market power, there was only there were
limits and how much I could as an employer or
(32:44):
somebody interacting with you exploit you. There still are limits,
but the need for anti trust, the need for non
discrimination laws, the need for stopping mergers. Yes, you know,
so much greater now than it was thirty years ago
because of big data. It's a game changer in terms
(33:04):
of how power can be used to exploit and then
to build more power.
Speaker 1 (33:10):
So to wrap us up, I know that we have
been quite negative and this show kind of times me
like a little bit of a downer. Perhaps, can what
should give people hope right now?
Speaker 2 (33:22):
Should?
Speaker 1 (33:23):
Yeah? I think there's a lot.
Speaker 2 (33:25):
Basically, I think that we, you know, split the hemispheres
of our brain apart in nineteen in the nineteen seventies
and decided that politics was in one arena and economics
was in another, again defying all of human history, right,
and we may not have all the solutions right now,
(33:45):
but the spheres of the brain have rejoined.
Speaker 1 (33:48):
So you think that is like a I do think
people are an awakening.
Speaker 2 (33:51):
I think there's a deep awakening and a deep I
don't know that you need an awakening on the ground,
but an elite there's been a transformation in talking about
how antitrust relates.
Speaker 1 (34:03):
To politics and this consciousness of the of the problem
with this kind of power.
Speaker 2 (34:09):
Yeah, so instead of just just sort of imagining it's
possible to cabin economic power and not have it bleed
into political power or vice versa, I don't think that's
credible anymore, right, And I think that the the sort
of the final blow to that way of thinking. It'll
(34:29):
still exist, they're still trying to come back. But was
the was COVID the supply chain disruptions and price hikes right,
because basically the promise from the seventies on was let's
just separate all economic and power thinking, right, and we promise.
Speaker 1 (34:52):
You low prices we have and we have not had those.
Speaker 2 (34:56):
So the the you know that the internet meme, you
had one job, they had one job, and they had
already failed in the crash of two thousand and eight,
but after COVID, that failure is complete. So I just
think there's a totally different way of thinking about power
and economics. And that's exciting what chair Con and the
(35:18):
FTC has been doing. I mean they don't stop every day.
Speaker 1 (35:22):
Yeah, its it's real.
Speaker 2 (35:25):
It's understanding that governing power held in a public entity
can be innovative and exciting and engaged and enforce the
law and curious. So that's also changing a really deep
paradigm we've had for thirty years, which is all innovation
comes from, you know, the people that Mark had recent funds, right, right?
And Look, I really want a lot more innovation in
(35:48):
the private sector.
Speaker 1 (35:49):
Well why, I would love there to be more cool
stuff and bets the things. I would love for AI
not to be destructive and actually help people. Yeah, and
I guess like maybe some things could change to actually
make that possible.
Speaker 2 (36:03):
Well we but for AI in particular, I mean a
lot of these these worldviews are sort of this epical
struggle inside the AI fight, right, It's uh, we need
to understand AI as a power problem, sure.
Speaker 1 (36:21):
Right, and not just as not just as a business one. Zephyr,
thank you so much for joining me. It's such a
pleasure to have you on.
Speaker 2 (36:29):
Likewise, thanks for having me on.
Speaker 1 (36:30):
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(36:50):
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(37:12):
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Apple Podcasts, or wherever you get your podcasts.
All Zoe Media. Hello and welcome to Better Offline. We
are live in beautiful New York City. I am your
host ed Zitron, of course, and I'm joined today by
(00:23):
Zevity Challenge. She's a professor of law at Fordham Law
School and the author of Break Them Up, Recovering Our
Freedom from Big Ang, Big Tech, and Big Money. Zephyr,
thank you so much.
Speaker 2 (00:32):
For being here, Thanks for having me on ed.
Speaker 1 (00:34):
So let's stalk corruption. So you've talked a great deal
about corruption. But what does it mean in the business
and economic sense?
Speaker 2 (00:42):
Yeah, I mean corruption is it's this idea that comes
from the Latin, you know, the rupt rupture break apart,
and a corruption is breaking apart from within. So it's
internal disintegration.
Speaker 1 (00:58):
That's this.
Speaker 2 (00:59):
I mentioned that because and the deep roots of the language,
because questions of corruption have been central to economic and
political thinking for thousands of years. So one way to
start thinking about corruption, if you don't mind, is to
think about Aristotle.
Speaker 1 (01:19):
Okay, okay, right.
Speaker 2 (01:22):
Because I actually am quite drawn to Aristotle's understanding of corruption,
and I think it's a kind of man on the
street understanding of corruption as well.
Speaker 1 (01:30):
What is it?
Speaker 2 (01:31):
Yeah, it's the idea that those with governing power use
that governing power to serve themselves instead of the public.
So in Aristotle's classic formulation, he talked about the difference
between a monarch and a tyrant, you know, is both
are rule by a single entity. The difference is the
(01:52):
monarch serves the public and the tyrant serves himself. Aristotle's
other two formulations were then the rule by an elite few, right,
So a rule by an elite few is either an aristocracy, right,
an elite few governing for the public, or an oligarchy
elite few governing for themselves. And then finally, the mass
(02:19):
version of this, a little more controversial, especially in modern translation,
was you know, the idea of a polity or mass rule,
and often it was described as democracy, in other words,
people using the public power for themselves. But the key
there is that he saw the corrupted version as being
(02:42):
about how you use your power, right right, a sort
of core internal motivation frankly.
Speaker 1 (02:47):
And so I'm going to guess that that's how you're
looking at tech at the moment, because and to be clear,
I fully agree it feels like and it's talking Matt
Stola a few episodes back and he kind of said
the thing around authoritarianism and new authoritarianism, And you've made
this point too, so do you.
Speaker 2 (03:05):
Think and I think it just before we get into this,
it's important to just then, in very you know shakespeare
thirty seconds way to say, this fight about what is
corruption and what isn't then has become a two thousand
year fight.
Speaker 1 (03:18):
Right.
Speaker 2 (03:18):
So Hobbes, for instance, thought that Aristotle was crazy on this.
He's like, yeah, people are always going to be selfish, right,
And that a flat version of Hobbes. But there's it's
actually a fight about human nature and what's possible with
human nature on the one hand, but it is also
a fight about where public power is versus your private life.
(03:40):
Because Aristotle is not saying, in that formulation or understanding
of corruption that in your private life you can't seek
out yourself. He's saying there's something uniquely dangerous and destructive
to a public when the governing power is self serving.
So when this as applied to the modern the modern
(04:02):
big tech, big ag questions that the underlying philosophical question
then is is this a governing power? And if it's governing,
that's really problematic because it's set up to be selfish, right,
That's that's you know, that's the nature of modern business.
So the selfishness isn't the problem. The governingness is.
Speaker 1 (04:21):
So makes sense, yes, because and that's kind of and
that's kind of the bothersome thing about this because you've
got so many monopolies orligopolies whatever. So one I like
to choose the most people are not. People are kind
of dancing around this one is the cloud empires. You've
got Google, Amazon, Microsoft, Oracle to an extent, though for
different reasons, and they are the ones that set the
(04:42):
terms of how the Internet is built out. Ack am
I in CDNs to an extent, but you can't what
can you even do about something like that? Is that
cloud empire bad or good? It's kind of hard to tell.
But the thing they definitely have is power unchecked.
Speaker 2 (04:58):
Yeah, yeah, I love your language of term setting. And
it's not always obvious, right, but that if you think
of a government, you know what a governing entity does.
If you think of governing not in a flat formal
sense like are you elected or not? But who actually
has the question for whether something is governing? I think
(05:19):
one way to ask that question is does it have
the power to set terms right, right, yeah.
Speaker 1 (05:24):
And which is effectively a tech industry now right, every
big player Airbnb sets the terms for vacations, the cloud
empire set the terms for how cloud storage is monetized
and indeed sold, and how indeed our electric grid is
built out or not as the case maybe, I mean
even Musk with Tesla, and I have many thoughts about
(05:44):
that man kind of sets the terms of how charging
works now, like they have the standard now, even though
he's a mess, And even then when he fired most
of the supercharger team, it's like, oh, this isn't just
about Tesla, this is now the entirety of America is
being let down, right, But what do you do about that?
Speaker 2 (06:01):
Like?
Speaker 1 (06:01):
How you what can I mean, what you and I
can do might be someone limited, But what can society
do with this kind of thing?
Speaker 2 (06:07):
Well, you know, let's start with where we did start
on corruption. Language of corruption. If we think about term
setting by selfish actors as a problem in the political
realm before we then apply it to the realm. We
may not think of as political, but it's clearly political too.
There's a series of strategies for either removing that term
(06:32):
setting power, right or having public regulations, so even if
they're term setting, the terms are fundamentally set by the public.
Speaker 1 (06:42):
Right.
Speaker 2 (06:43):
And so the classic American strategy was to have diverse
sources of competing power in a presidency, right, Senate.
Speaker 1 (06:53):
And ecogress. Right.
Speaker 2 (06:56):
Yeah, so that's a break come up model. And you know,
if you would, it's not just elections, but it's actually
about providing different sources of competitive power at the local
and federal level, local, state.
Speaker 1 (07:08):
And when you say maybe I miss when you say
competitive power, is that so local and federal government stuff?
Is that just? Is that is elections? Part of this?
Are these like what are the different mechanisms there that
help break them up in a governmental sense?
Speaker 2 (07:22):
Yeah, it's all of the above. So right, so if
you have you know, we can be a little glib
about just comparing you know, presidential systems to parliamentary that's
that's one source of difference, but it's not the only
source of difference. It's cantons versus not cantons.
Speaker 1 (07:40):
Right.
Speaker 2 (07:41):
So, so what it is to say is not that
there's an ideal vision I don't think there is, but
that genuinely separating sources of power. So there's some public contestation.
I think of it both as a federal state and
across federal and across state branches as being important. That's
one mechan it's not the only mechanism.
Speaker 1 (08:01):
There are at least options and means in which people
will be cycled out and ideas will be cycled in.
Speaker 2 (08:06):
Right. And then in the election sphere, we're very worried,
as we should be about arenas where there's no competitive elections.
Speaker 1 (08:14):
Right, somewhat scary, Yeah, this is very scary.
Speaker 2 (08:17):
And the lockout of the opportunity for new ideas or
for leverage on a grassroots level, you know. I think
of it often if if there's nobody you could turn to,
if the water smells bad in the morning and your
elected officials aren't doing anything, there's a problem, Like you
want to you know, it doesn't mean you're gonna win,
but at least.
Speaker 1 (08:35):
You have some access to dig right, yeah.
Speaker 2 (08:37):
Right, So then when you apply that that breakup or
divestiture model to companies, you can see similar visions. Right.
So what I mean to say is that there's plural
ways to do breakups, right, And that's one of the
things that the electoral or political world can inform how
(08:58):
that can inform thinking about breakups, but it's not the
only way to break up power.
Speaker 1 (09:13):
So what are some ones we're not doing yet then,
because it feels at times like the only thing there
is is just anti trust. And thanks to Ronald B. Reagan,
that's not being awake for a while. Yeah, it's kind
of waking up. Yeah, it's making noises. What are the
other mechanisms I mean that we could even create?
Speaker 2 (09:29):
Right, Well, so there when I sort of think about
anti monopoly, and I know you've talked to Matt before,
but you think of anti monopoly as anti concentrated private
governing power, you know, the tyranny of private governing power,
and anti trust is one part of that. In the
United States, the first real nineteenth century anti monopoly movement
(09:58):
was actually around on discrimination principles. Okay, so the Interstate
Commerce Act, which came out of farmers coming together saying
down with monopolies. The first thing they asked for was
open access. Basically what we might think of his open access.
(10:20):
You know, on the same terms non discrimination right. You
have the access to whether it's a grain elevator or
a train, to not have differential treatment. And so it
is a key way to break up power. We may
not think non discrimination equals breaking up power, but.
Speaker 1 (10:41):
That would makes sense. Yeah, because I was just talking
with Corey doctor Rowe about this, yes, and he had
suggested that one of the main things is the government
forcing interoperability between platforms. Everyone has to have the same standard.
So you can look at posts from Twitter x threats
and I'm not even talking about the feediverse necessarily just
open stand Why do you well? I mean, is there
(11:02):
a reason why these things just don't happen? Is it
that they're not being pushed through? Is that the lobbying
is powerful? Like? Is it all of the above? I
guess right, right?
Speaker 2 (11:12):
Is it? The ability to discriminate between counterparties is extremely.
Speaker 1 (11:18):
Valuable, right as you know, right, yes.
Speaker 2 (11:21):
Right, and especially true if you have anopoly power, right right, right.
So I'm I'm laughing because I'm just trying to think
of the right point of intervention. So maybe going to
history again is useful. So we see the eighteen nineties
and this first the first effort is and always claiming
(11:44):
first is difficult. It's all jumbled.
Speaker 1 (11:46):
Together, right, History is a mess.
Speaker 2 (11:48):
History is a mess. There's because there's I'm going to
do my own little segue. Even within corporate charters, there
were anti monopoly provisions in the nineteenth century, really, but
basic rules that said, you can only engage in this
certain line of business. Right, the government will only grant
you a corporate charter and all the privileges that accompany
(12:12):
that in the event in so long as you stay
within the line of business for which you applied to
the charter.
Speaker 1 (12:18):
Does that make sense? Why don't they do that anymore?
Speaker 2 (12:21):
Well, in I'm going to get my dates wrong, but
the gesture right late nineteenth early twentieth century. Actually it
was a little earlier. There was a real effort to
engage in.
Speaker 1 (12:38):
Appreciate the question.
Speaker 2 (12:39):
And I'm being the academic worried about sloppiness, so worry people.
Speaker 1 (12:44):
Get things right, so don't worry about Yeah.
Speaker 2 (12:47):
No, I I want to put the asterisks there for
the corporate law historians who are listening. But there were
you know, there's really interesting. There was a move towards
free corporation anybody should be able to incorporate as an
anti corruption.
Speaker 1 (13:05):
Move, which kind of makes sense a lot. I can
understand the logic, right.
Speaker 2 (13:11):
And then there's a because the idea is, oh, if
you can only get a corporate charter if you're friends
with somebody. That's a pretty corrupt system.
Speaker 1 (13:18):
Right, that makes sense. Well, but now they've moved on
to other ways of doing exactly.
Speaker 2 (13:23):
And then the other part was an effort to expand
what all corporate charters have since become, which is you
get a charter to do whatever is legal in the state. Right,
that's now what a corporate charter is. This a long
digression to say that anti monopoly impulses have showed up
in a lot of different areas of law, right, not
(13:44):
just in federal anti trust and railroad law.
Speaker 1 (13:47):
So interesting because it it almost feels like, because I
mean fairly blaming Ronald Reagan, I feel like we can
all do it every day, but it feels as if
it's just been a slow bleed for like hundreds of years,
where we just the ramifications of decisions at the time
that probably made perfect sense because at the time of
corporate charters were very limited. There wasn't much commerce. There was,
or at least more limited commerce. It almost feels like
(14:10):
we need to bring that back because an episode I
think I just wrote recently, even I was thinking about Salesforce.
Salesforce one of my least favorite companies. And if you
ask what Salesforce does, that is a very long answer
because they do CRM, they do data lakes, they do AI,
they do chatbots, they do different kinds of chat. But
they have all of these things and they do it
(14:31):
by vacuuming up these companies. They eat them alive and
then and now they do it much like Microsoft, as
a means of making sure you don't buy another product,
because we've got everything here like a buffet. Can we
stop that? How do we stop these acquisites? It almost
it feels as if acquisitions are the first place to start. Yeah, yeah,
(14:52):
to make it much harder.
Speaker 2 (14:53):
Well, so stopping We were talking about different elements of
anti trust or vanta monopoly. So one element is non
discrimination rules. And that doesn't mean that every industry should
be subject to radical non discrimination rules in all cases,
but that if there are industries that the ability to
(15:14):
discriminate between counterparties is going to allow for exploitation and
extraction and shutting down of new entrants, then non discrimination
is really important.
Speaker 1 (15:24):
Yes, right.
Speaker 2 (15:26):
Anti trust then also very important, And the first step
in antitrust is not allowing bad as the American system
has it set up, is not allowing is not allowing mergers. Now,
I'm not as familiar with the Salesforce corporate structure, but
I gather that one of the things you're talking about
(15:46):
is the way in which one we've been quite lax
until recently on merger policy. Yes, but we also haven't
until very recently, until Canter and CON's recent merger proposals,
we've had this highly formal understanding of where threats lie.
Before we see threats primarily with horizontal acquisitions. I'm a
(16:09):
shoe company buying another shoe company, right. Secondarily between vertical integration,
I'm a shoe company buying a shoelace.
Speaker 1 (16:19):
Choice, right.
Speaker 2 (16:21):
But the conglomerate merger, the merger in adjacent agency, adjacent institutions,
has sort of been assumed to be, well, that's not
a threat because it's not about dominating that dominating either
that vertical or that horizontal. And one of the interesting
buried parts of the merger guidelines, which I think is
(16:42):
really important, is a recognition that I forget the exact language,
maybe Canter just said this in a speech, but these
these don't fit anymore. Yeah, right, Like when when Amazon's
buying Whole Foods. Well maybe they're using the data of
the Whole Food's customers to create a moat somewhere else.
Speaker 1 (17:05):
Well, it's just it almost feels like we need to
start asking them why do you need this so bad?
And make them justify it and not be totally open
to it because I don't even know why they bought
it other than the data, for sure, because whatever. But
also it's another way of conquering another commerce vertical.
Speaker 2 (17:22):
Now, I think there's so much. I mean, I think
there is so much that we miss psychologically as well
as economically when we think about mergers as if everybody's
just rational, like yeah, yeah, there's also a lot of
boys playing risk.
Speaker 1 (17:39):
I'm not I fully agree, because there's a lot of
One of my prevailing theories with tech right now is
that everyone says, well, open AI, for example, well they're
going to work it out because he's really smart. It's like,
what if he isn't what if they don't have any idea?
What if they're just doing this salesforce great example, they
just bought a digital storage company and it's not really
(17:59):
obvious why, but you know they're going to work it out.
I guess I saw a piece of the information saying, oh,
Benningoff's got it back. It's like, what is he? God?
What is going on?
Speaker 2 (18:08):
And it almost with the more capitalists lashing around, actually,
the less likely that we should think that all these
decisions are rationals.
Speaker 1 (18:15):
And on top of that we've got there's a very
irrational feeling to the economy. I've said a lot about this. Yeah,
that's really interesting. Well, because a lot of these companies
will spend like thirty billion dollars Okay, I'm being a
little like ten billion dollars to make three hundred million,
and I guess that you can't really stop Like, maybe
you don't stop that, but at some point you have
to wonder if that's a symptom of these big, ungainly
(18:37):
monstrous companies that they just had the companies that do
everything and thus do nothing.
Speaker 2 (18:42):
Well, there's this interesting reminds me of this research. I
wish I could find it around the urge to merge?
Have you heard about that?
Speaker 1 (18:47):
No? No, no, I think this is older research.
Speaker 2 (18:50):
But somebody put together a bunch of grad students and
compared them to CEOs, like would you do this merger?
And those who already had power to get really.
Speaker 1 (19:01):
They just get grabby.
Speaker 2 (19:02):
They get grabby, right, and and denying that there's a
power hungriness, yes, is just denying, like do we not
learn anything from thousands of years of literature and history?
Speaker 1 (19:15):
They want to own more, and I think that like
Elon Musk, is want to choose as well. Because as
we speak, we just on the day after the Robotaxi event.
What I thought it was illegal to make stuff up
when you're a public company, but I guess Elon Musk
has special rules. But that actually kind of brings me
to a point. What do you do with people like
Musk who they're evil and they're very clearly corrupt in
(19:39):
some way, but they're not really breaking a law. How
do you moderate the power of someone like Elon Musk?
Outside of anti trust? Anti trust has done nothing like
SEC could barely touch him. What how do we start
bringing these people back down to earth?
Speaker 2 (19:52):
Wow? Well, anti trust is part of it, campaign finance
is part of it. U and there are maybe I'm
answering to glibly, but there there isn't a single answer
I do There isn't.
Speaker 1 (20:08):
Yeah, I know that there isn't one. If there was,
I assume someone would have done it. I mean there is,
but that's not legal.
Speaker 2 (20:15):
And and then there are industry specific abuses and challenges
that it's not. You know, just just because you and
I are interested in anti monopoly law or you know
what the FTC could do tomorrow doesn't mean that there
aren't real challenges with specific industries that are unique, unique
(20:36):
foreign policy challenges with starlink right right, unique policy levers
too that could be used with some areas of maybe you.
Speaker 1 (20:47):
Shouldn't have national security clearance. That's a good start, right,
But it's I think it comes back to that thing
he was saying, though. It's the It almost as feels
as if the media kind of definitely the government doesn't
look these things and say, oh, they're accumulating power. They're like, oh,
they're just accumulating markets, and you know that's okay, it's
still bad, but like they're fine with it. And it
(21:09):
feels like we actually really have to stop getting like
there must be new legislation to stop that, or maybe
just it's as simple as what if we stopped companies
getting so big? Yeah, what if we just started pinning
them down a bit and disincentivizing that specifically.
Speaker 2 (21:26):
Well, there there is clearly a problem of gross power, yes, right,
And there have been various efforts in the past to say, well,
we should just limit gross power, not simply I think
this is what you're getting at, abuse of such gross power, right.
Speaker 1 (21:43):
Yeah.
Speaker 2 (21:44):
And the senator who has a famous Senate office building
is a heart named after him, was actually an advocate
of this in the seventies, you know, really concerned about
mere accumulation of power. I don't want to poo poo that,
but I also don't want to suggest that we've reached
(22:04):
the limit of what we can do with existing tools.
I mean, we still have an underfunded FTC, that's an
underfunded DOJ, and we have a whole series of other
agencies that just start using their power right now.
Speaker 1 (22:30):
Actually that's a good Like the EPA and the FDA.
I'm not an expert in either, but it feels like
they are a They are potentially avenues in which we
could start going off to data. We could start making
standards of consumer data or I don't know, standards of
care for the cloud companies. But also I think that
we have when you talk about the governing systems, we
(22:53):
have a real problem with Silicon Valley, for example, there
isn't discussed much, and it's the old boys network. It's
the fact that if you are to grow beyond a
certain scale, it must come from Sequoia, Coetu, Andreas and
Tiger and past a certain point right.
Speaker 2 (23:08):
Right, that's the club and we all and everybody knows.
Speaker 1 (23:11):
That is that. And they fund based on accumulation of power.
Character dot Ai was funded by Andres and Horowitz. That
company doesn't make much money at all. And on top
of that, they got reacquired by Google. They were made
to be acquired. They weren't made to be real companies.
And it almost feels as if we need to reevaluate
how finance happens at the private stage as well, because.
Speaker 2 (23:34):
I would love to know more about that, because I
only have an impressionistic sense of that being true.
Speaker 1 (23:38):
But when you say that, well, what it is is
so character dot ail chip. So it's founded by guyed
known Shazi. I'm going to mess up his name someone
on email me. He was one of the original people
who wrote the Transformer paper that underpins most generative AI.
He made this company, which was a chatbot company. You
could talk to anime characters or I think Hitler. It's
not a great company at all. It's a pretty bad one. Actually,
(24:00):
they got absorbed into Google. The company still exists, but
all of the people work at Google now for two
and a half billion dollars. And the problem is that
I think there are litanyar problems with it. It's that
the limited partners who fund vcs don't really give a
shit if they're good or not. They give a shit
if there's a return, if they can get that. And
(24:21):
as a result, the way that venture capital is allocated
is predominantly not it's the biggest lion Silicon Valley by far.
Is that startups get the majority of money. No, the
majority of money in startups goes late stage. The minority
goes to early stage, which is insane based on what
most people assume. And it feels that I don't know
(24:43):
how you start fixing this. But if you think about
from how you're describing corruption, it really is these governing
systems that are allowed to exist. And I think it's real.
Speaker 2 (24:52):
It's really interesting. And so when you're talking about the
motivation of this club, you think it's about power, right,
and what kind of power? So just give an example
of a kind of power that you might seek that
doesn't actually lead to great returns.
Speaker 1 (25:08):
I mean pretty much every investment in open ai. Open
ai is a company that bleeds more than five billion
dollars a year, will in twenty twenty four, They'll bleed
more next year. Investing in them for a theoretical return
is what I think most of them are doing. But
I think a lot of them are doing this so
that they have a piece, They have something stuck into
what they believe a power center is. It's to show
(25:29):
off to everyone that they've still got it, that they're
able to get into big deals as a means of
getting into other big deals. Oh, we were good enough
to get a quarter billion dollars into open Ai. Now
we can get into other deals. We're still seen as
the hot thing. Perhaps that is actually a return of
sorts in that it's a marketing effort. But I I
refuse to believe all of that money is just there
just for returns. I think a lot of it might
(25:49):
be there, And.
Speaker 2 (25:50):
To be fair, I mean power eventually leads to returns. Yes, right,
it's not necessarily the short term return.
Speaker 1 (25:57):
But it's also gets back to what we're talking about
about logical thinking. Right, Because these people like the other thing,
and I get in lots of arguments about this open
AI episode went out this week and people have really
pissed at meks they say, well, they'll work it out.
I want to find all.
Speaker 2 (26:12):
Those great examples of you know, the armies that marched
in the wrong direction for two weeks sleep.
Speaker 1 (26:18):
I just think of the Schleifen plan. It was the
smartest thing at the time in World War One, but
it went the wrong way and it curlled to inward
and then they lost, probably for the better. I think
I think we can all agree the causes shouldn't have one,
but nevertheless, but that those.
Speaker 2 (26:31):
In power actually I mean, there's a very deep point here,
which is not only that a lot of people are
just people are will make some good decisions because they're human,
but that there are particular pathologies that actually come along
with the accumulation of power. And speaking of psych research,
there's some I think they're Berkeley, California researchers who argue
(26:55):
that accumulation of power is as bad as getting a
poll stuck through your head in terms of the impact
it has on your on your ability to process certain
kinds of information.
Speaker 1 (27:05):
I like that because it is funny watching people get
super rich and look at Elon Musk. I'm not saying
he was a great.
Speaker 2 (27:12):
Guy before, but it's but there's a theory that pathological
people gain power, and there may be some truth to that,
but I think it's really important to recognize what accumulation
of power actually does to somebody. It makes them less
likely to be able to accurately guess the emotions of
those who are speaking with them, okay, right right, which
(27:33):
you can imagine and I'm probably seeing. It makes them
less likely to observe personal boundaries, more likely to eat
like cooking monster with the crumbs falling all over their chest. Right,
So you actually are starting to miss out on a
lot of subtle cues that are the gather part of
the gathering of information. And I don't know what impact
(27:55):
it has on other other cognitive functions.
Speaker 1 (27:57):
I mean, I'm somewhat extract here, but if you look
at Silicon Valley, which is now dominated by a few
vcs and Sekoya used to be pretty good. They invested
in FTX, they invested in open ai. They actually didn't
go in the latest open ai thing. But Mark Andresen's
a great example. So from what I've heard Mark andresen
In like the eighties was a decent enough guy. He
(28:19):
was like a regular fella. Now as of two years ago,
he reads comprehensive biographies of Hitler and Funds and claims
that people like Nick Land are the patron saints of
techno optimism. It's almost as if the more power he gets,
the more brain damage he receives.
Speaker 2 (28:34):
Ye.
Speaker 1 (28:34):
And it's but when you think of this in the
realms of Silicon Valley and how harmful this is. If
most of the big checks come from a certain few
who have accumulated so much power, and most of those
big checks are going to late stage companies, it's going
to reinforce the same thing. We are not going to
innovate much further because the money is going to the
same guys, from the same guys in the same way
(28:56):
and the same Sam Altman is a great example. This
man has been fired for three companies, including Open Ai.
He has done like some of the stuff about his
sister is truly grizzly as well. But on top of that,
he's a liar. He lies regularly, and he's also not technical.
He doesn't know what he's talking about. But I think
as he And this is actually kind of funny to
think about. As you watch Samon went over the years,
(29:16):
he gets even dumber. The thing I hate using that
phrase in general, but it's Samon. I don't care. He's
worth billions, but with him, he sounds sillier. The more
stuff he says, the more out of whack it gets reality,
and the more just ridicaent.
Speaker 2 (29:29):
Yeah, right, and so the you know, there's people are
going to be ridiculous in the world, and our job
as a society is to make sure that they don't
accumulate governing power. Right, that's our job, yes, right, because
the people who are going to be genuinely and who
are being genuinely hurt are those who I just use
the example from this week in New York, a great
(29:52):
Bloomberg story investigating how Uber and left drivers are now
locked out. Yes, of Uber and Lyft just locked out.
You're going to work, You're an hour into your shift,
you go to the bathroom.
Speaker 1 (30:06):
Locked Yeah, you looked out. So you don't become a
full time is it the classification full time employment?
Speaker 2 (30:12):
No, they just can't access the app.
Speaker 1 (30:14):
Why is Uber looking amount then.
Speaker 2 (30:16):
Because they're trying to do a run around around a
New York City law that says if cabs are empty
over a certain number of hours, then they have to
increase their.
Speaker 1 (30:27):
Per mile rate. Huh does that make sense?
Speaker 2 (30:30):
Yes? And so they're saying, well, when they're locked out,
they're not an empty cab.
Speaker 1 (30:35):
They're not a cab at all, right, they're no longer.
They're no longer?
Speaker 2 (30:38):
Is it?
Speaker 1 (30:39):
This is a dumb question, and we can wrap off
after this one. But why does no one ever think
of these It feels like they make these very interesting
and useful laws and then they're like, ah, they won't
work it out, but they always do. What is it
just a limit of what Look, maybe you can speak
to this. Is it just the limit of what you
(31:00):
can get past? Or is it just you can't think
of everything? Or is it just hard to get that
down in paper when you're facing off against multimillion dollar lord.
Speaker 2 (31:11):
Look, I think they're breaking the law, but that doesn't
mean it's a perfectly air tight law. And this is
a no. I actually think it's a big deal, So
I'll say it. I think that there is a societal
failure to date to recognize the risk to workers of
how big data can be used to individually exploit them.
Speaker 1 (31:33):
Yes, absolutely, and that this is.
Speaker 2 (31:35):
A major deal for labor, not just for gigwork, although
it's the clearest in gigwork, and that we should more
comprehensively think about this and get out ahead of it. Basically,
you know, if you can banfracking before it comes to
New York, it's a lot easier than after it's already there.
Speaker 1 (31:50):
Yes so, and it almost will. We need to just
start by classifying this stuff. We don't know what these
companies have, we don't know how the algorithms will, we
don't know what they're doing too well.
Speaker 2 (32:00):
But this is a really important point because when we
talk about power and we talk about governing power, we
are in a new era of a kind of new
governing power, right, Like the mere friction that I just
couldn't collect data on what baseball team you like, and
you know how long you sit on a that Now
that looks like some limit in what I used to
(32:21):
be able to know about you. But there was just
lots of informational great freeing informational gaps, right, And that
meant that even if I had certain amount of market power,
maybe non monopolistic market power, there was only there were
limits and how much I could as an employer or
(32:44):
somebody interacting with you exploit you. There still are limits,
but the need for anti trust, the need for non
discrimination laws, the need for stopping mergers. Yes, you know,
so much greater now than it was thirty years ago
because of big data. It's a game changer in terms
(33:04):
of how power can be used to exploit and then
to build more power.
Speaker 1 (33:10):
So to wrap us up, I know that we have
been quite negative and this show kind of times me
like a little bit of a downer. Perhaps, can what
should give people hope right now?
Speaker 2 (33:22):
Should?
Speaker 1 (33:23):
Yeah? I think there's a lot.
Speaker 2 (33:25):
Basically, I think that we, you know, split the hemispheres
of our brain apart in nineteen in the nineteen seventies
and decided that politics was in one arena and economics
was in another, again defying all of human history, right,
and we may not have all the solutions right now,
(33:45):
but the spheres of the brain have rejoined.
Speaker 1 (33:48):
So you think that is like a I do think
people are an awakening.
Speaker 2 (33:51):
I think there's a deep awakening and a deep I
don't know that you need an awakening on the ground,
but an elite there's been a transformation in talking about
how antitrust relates.
Speaker 1 (34:03):
To politics and this consciousness of the of the problem
with this kind of power.
Speaker 2 (34:09):
Yeah, so instead of just just sort of imagining it's
possible to cabin economic power and not have it bleed
into political power or vice versa, I don't think that's
credible anymore, right, And I think that the the sort
of the final blow to that way of thinking. It'll
(34:29):
still exist, they're still trying to come back. But was
the was COVID the supply chain disruptions and price hikes right,
because basically the promise from the seventies on was let's
just separate all economic and power thinking, right, and we promise.
Speaker 1 (34:52):
You low prices we have and we have not had those.
Speaker 2 (34:56):
So the the you know that the internet meme, you
had one job, they had one job, and they had
already failed in the crash of two thousand and eight,
but after COVID, that failure is complete. So I just
think there's a totally different way of thinking about power
and economics. And that's exciting what chair Con and the
(35:18):
FTC has been doing. I mean they don't stop every day.
Speaker 1 (35:22):
Yeah, its it's real.
Speaker 2 (35:25):
It's understanding that governing power held in a public entity
can be innovative and exciting and engaged and enforce the
law and curious. So that's also changing a really deep
paradigm we've had for thirty years, which is all innovation
comes from, you know, the people that Mark had recent funds, right, right?
And Look, I really want a lot more innovation in
(35:48):
the private sector.
Speaker 1 (35:49):
Well why, I would love there to be more cool
stuff and bets the things. I would love for AI
not to be destructive and actually help people. Yeah, and
I guess like maybe some things could change to actually
make that possible.
Speaker 2 (36:03):
Well we but for AI in particular, I mean a
lot of these these worldviews are sort of this epical
struggle inside the AI fight, right, It's uh, we need
to understand AI as a power problem, sure.
Speaker 1 (36:21):
Right, and not just as not just as a business one. Zephyr,
thank you so much for joining me. It's such a
pleasure to have you on.
Speaker 2 (36:29):
Likewise, thanks for having me on.
Speaker 1 (36:30):
You've been listening to Better Offline. You can find me
on the message that will play immediately after this. Thank
you so much for listening. Thank you for listening to
Better Offline. The editor and composer of the Better Offline
theme song is Matasowski. You can check out more of
(36:50):
his music and audio projects at Matasowski dot com, M
A T T O S O W s Ki dot com.
You can email me easy at better offline dot com
or visit better Offline dot com to find more podcast
links and of course, my newsletter. I also really recommend
you go to chat dot Where's Youread dot am to
visit the discord, and go to our slash Better Offline
(37:12):
to check out I'll Reddit. Thank you so much for listening.
Better Offline is a production of cool Zone Media. For
more from cool Zone Media, visit our website cool Zonemedia
dot com, or check us out on the iHeartRadio app,
Apple Podcasts, or wherever you get your podcasts.
Host
Ed Zitron
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