Why We Need the Rich for Democracy & Tech Progress with John McGinnis, Professor at Northwestern University

(Intro Narrator at 00:00:00) Today, we're talking to John McGinnis, professor at Northwestern University, about his latest book, Why Democracy Needs the Rich, and why the wealthy are the linchpin of technological progress in the United States. You're listening to Joel Beasley, Modern CTO.

(Joel Beasley at 00:00:21) So when I got this opportunity to talk about your book, Why Democracy Needs the Rich, my first question was, why did John feel the need to even write this book? I didn't even know that there was a conversation about democracy not needing the rich. Can you explain to me what inspired you to write this?

(John McGinnis at 00:00:40) Well, I think it's become quite clear. I think the timing of this book could not be better. Even before writing it, there were a lot of people who were writing both politically and academically about how the rich are a threat to democracy. Bernie Sanders says that billionaires shouldn't exist. There are academics who very much worry about the fact that rich people have more influence. And so the essential problem is that, for them, democracy should be everyone should have equal say in democracy, and rich people, by virtue of their money, have greater influence, and that distorts the democratic process. So I think that's the essence of the claim that if you're really committed to democracy, which is rooted in political equality, wealth is really very distorting when it goes into the political realm. And it's very hard to prevent wealth from going into the political realm, and we should try to erect all sorts of ways of preventing rich people from having more influence than other people.

(John McGinnis at 00:01:50) I think that's the essence of the complaint of many politicians. The current mayor of New York City also doesn't want any billionaires, which is sort of amusing because his city has the most billionaires in the world. So that's the essential critique. It's a critique of the rich as creating an inequality in democracy and distorting democracy in their own interests away from the great things democracy would otherwise do for poor people.

(Joel Beasley at 00:02:29) Okay. And then just for context, I'm not a super political type of person. I don't read a lot in this area and spend a lot of time here. I'm actually too busy building companies and running businesses. Do you find that some of the wealthier people don't know that this is happening, or am I just living under a rock individually?

(John McGinnis at 00:02:50) Oh, I think this is a very important political trend. If you go back to right after the financial crisis, there came the Occupy Wall Street movement, and their slogan was all about how the 1% are really the dreadful characters who are creating ills in our society. So I think it's been around at least — I mean, it's been around, of course, since Aristotle. People have worried, people interested in democracy have worried about the wealthy, and I think there actually was more reason to worry about them in a world where the society was very static because then the wealthy were a kind of constant group. They really didn't change.

(John McGinnis at 00:03:39) That's completely different from our society. But it's been a constant concern in political theory and particularly of democracies, but it's come to a political concern, I think, after the financial crisis. It was a concern again in the so-called Gilded Age in the nineteenth century. People made those kinds of complaints. But in our age, I think it begins with the financial crisis, and it's gotten renewed interest, I think, with people like Bernie Sanders and, of course, the new mayor of New York City.

(John McGinnis at 00:04:16) So I do think the wealthy are very much aware of that, and there are some very important policies that are going after them, policies like wealth taxes, which really are unprecedented in American history. There's a ballot initiative in California that would take, claiming just on a one-time basis, but at least have a way of recurring, just take 5% of everyone's wealth who has over a billion dollars. So I think that's gotten people's attention. It's gotten their attention so much that some of them are moving from California. So I think it's a very live political issue and it affects, of course, technology as well.

(John McGinnis at 00:04:59) I would argue that our AI progress has been very dependent on very wealthy people's coordination and invention of our AI. That's really our big advantage over every other place in the world, not only through their coordination, but through the investment of venture capital. That's what makes us the AI leader. And so I think it's also a threat. This movement is a threat to our technological supremacy, which is very important to our national security.

(Joel Beasley at 00:05:31) All right. I'm on board here. I definitely want to talk about AI, but first, I want to understand the incentive structure. The incentive structure for people to trash on the wealthy — can you just tell me what it is?

(John McGinnis at 00:05:48) Well, the incentive structure is, in my view, that the wealthy do have more influence than the average person, but that's true of all sorts of people in democracy. It's true of academics, the media, entertainers, what I call the professional influencers of democracy. So one reason is reducing the influence of the wealthy increases their influence. And so I think it's a kind of status competition between different kinds of elites. Because most ordinary people, you point out that you don't follow politics really closely, really are not present mostly in democracy most of the time.

(John McGinnis at 00:06:34) That doesn't mean they don't have some important effects when things go really badly and they really see that, and that's an important constraint on government. But for most of the time, they don't actually focus on that. But we have a whole set of professional influencers, and this is well known. Going back to the nineteenth century, people like Samuel Coleridge said, well, we actually need people to guide our society now that the nobles and the clerics aren't guiding anymore. And he thought — he called it the clerisy — and those turn out to be people who are very good at talking: reporters, academics, and they tend to have a viewpoint.

(John McGinnis at 00:07:20) Unlike the rich who have very various viewpoints on society, they're very left wing. And so I see a central motivation in displacing the rich as giving them more influence for their schemes of democracy. So that's one of the incentive structures. And another incentive structure is an all-too-human trait. People are envious of other people. And so that's a way of gaining power, organizing people's envies, and politicians are very good at organizing people's pathologies.

(John McGinnis at 00:08:03) And envy is a human pathology. Now I think it's overrated. I mean, rich people have problems. I think people don't really recognize that their lives aren't quite as different as they think they are. But that's, I think, another universal enduring aspect to it. I think it's become more important in modernity because there's been the rise of this other elite that really sees themselves as governing. The rich are a competitor.

(Joel Beasley at 00:08:36) That would be the influencers. Is that what you're referring to? Okay. So you've kind of got the influencers, these academics, professional influencers as you're referring to them.

(John McGinnis at 00:08:45) More than academics. It's reporters. It's also entertainment. I mean, entertainment's even more politically monolithic than academics, which as an academic, I find hard to believe. But if you look at the statistics, the academics tend to be around 10 to one, left to right.

(John McGinnis at 00:09:07) The entertainers, in some cases, are much more than that score, more left to right. And then also another group that's very important and has a central influence in our society are bureaucrats, because mostly Congress isn't implementing their laws. They delegate huge amounts of powers to hundreds of thousands of bureaucrats in Washington and in the states. And, again, they have very different views from the average person in society. Again, more left wing, so they have influence by virtue of their position.

(John McGinnis at 00:09:45) So it's a very dense group of influencers, and they lean generally in one ideological direction. And not surprisingly, they're not too happy with people who want to come in and offer and fund other kinds of perspectives. And so I think that's the essential — that's one of the largest reasons we see this effort to mute the rich.

(Joel Beasley at 00:10:20) So this is a pressure that's coming down, that's occurring, that inspired you to write the book. And then when you wrote the book, did you take the approach of data and logic? How did you make your argument about why democracy needs the rich?

(John McGinnis at 00:10:37) Well, one is an argument of logic, of the idea that it's important to have a pluralistic, different points of view in democracy. And I show that the data suggests the rich have all sorts of points of view. They're actually not all to the right. There's George Soros. There's Tom Steyer, a high school classmate of mine, on the left. And there are other people, the Koch brothers on the right.

(John McGinnis at 00:11:10) It's much more pluralistic, and that at least gives the right an ability to get their message out. And I think pluralism in democracy, offering different perspectives, is extremely important. But then I actually look at case examples of that and how the rich are very important, not only in countering influencers, but also in giving voice to the voiceless. Because another fact about democracy, which is well understood by political scientists, is that concentrated interest groups like unions or trade associations have more power than the taxpayers and consumers because the taxpayers and consumers have a lot of difficulty organizing in politics. But unions, trade associations, they don't have trouble organizing, and there's a big benefit to them in getting legislation.

(John McGinnis at 00:12:06) Well, the rich actually have some ability to give voice to the voiceless because they don't face these free rider problems of organizing. They can just — their foundation could put a billion dollars for some project. And there are great examples of how the rich have made a difference in that respect. The rich have been very important in getting the environmental movement beginning. They're extremely important in educational reform, and the reason they are is they're not beholden to special interests and they can fund different initiatives.

(John McGinnis at 00:12:40) And that's great for democracy because they fund different kinds of initiatives, and democracy moves by trial and error. So in educational reform, some have been in favor of giving more money to public schools. Some have been in favor of standing up charter schools, which are public independent schools. Some have been in favor of giving more money to vouchers that allow poor people to go to private schools, and then they give money to measure the effects of these various schemes. That's a big advantage for democracy, and it comes from both the pluralism of their views, their independence, and their ability to fund different initiatives.

(John McGinnis at 00:13:27) So I don't just depend on logic. I talk about actually what's happened on the ground in some very important public policy spheres, like the environment and education.

(Joel Beasley at 00:13:41) By the way, I'm a big fan of the school choice concept. I know it kind of varies by state, but this idea that if — I have three kids under the age of 10, and this idea that the school closest to me is a school that they have to go to and they get their $12,000 enrollment, whatever, that through the tax — the school gets funding through the tax for them being enrolled there. The fact that I can't — I come from Florida. I moved to Tennessee. In Florida, I could take that and I could move it. And I could say, okay, we want to take that money and move it. Here, you can't do that. And so that was very frustrating for me because I think the school should have to compete.

(Joel Beasley at 00:14:18) If you give them more freedom, it creates more competition. If you allow me to move my money and move my funds from public to private or semi-private, whatever it's called, that makes the schools have to do better to get the money. And then the counterargument when I actually talked to some of the people in the county was, well, if we did that, the school has debt, the school has this. If we just let everybody go where they want, the school would collapse. And I'm like, let it collapse.

(John McGinnis at 00:14:43) Right. Well, I think you can see why at least some wealthy people would think this is a good idea because how do they make their money? They make their money through a competitive process. Every day, entrepreneurs have to serve their consumers. Otherwise, they're going to do exactly what your interlocutors fear will happen to these schools. They'll close down. And so it's not only that they have a different or they have a pluralistic ideology, they bring a different perspective from what I call the clerisy. Academics, of course, are — at least tenured academics, and I speak as a tenured academic — they don't need to meet a payroll. They've got a captive audience, at least at a place like Northwestern or Harvard. That's not going to close anytime soon.

(John McGinnis at 00:15:45) And so they have a different mindset from the wealthy and the entrepreneurs who are in the market. So it's not an accident that where do we see people enthusiastic at least about trying out school choice and then testing, seeing what the results of it? It's wealthy people who test results every day in business. And so I think it's very important to understand that one of the advantages of the rich are not only the ideological diversity they bring, but a different kind of perspective, which I think is the market perspective rather than what I would think is also characteristic of the influencers, a kind of top-down perspective. The idea is we can plan things out. We've got a great plan, and we don't want to subject it to competition.

(John McGinnis at 00:16:49) In some sense, that's what academics do. They have a great theory, and at least in many areas, except for the natural sciences, it's not really very substantially tested. So I do think that's a great virtue of the influence of the rich in democracy.

(Joel Beasley at 00:17:07) You're really opening up my mind to a lot of things today, John. I guess I'm realizing right now how much of a bubble I live in. I just — I have my family, I have my church, my community, and I just focus on — I wake up every day and just focus on getting things done, trying to accomplish things. And so this idea that you're expressing that there's these people out there — even earlier, you've mentioned several times in the interview this concept of people wanting power distributed evenly. I don't even know how to talk about that. It's like, no, probably not. Not every individual. It may be something along the lines of competency, contribution, or your stake in it. You know what I'm saying? This idea that people are just saying — can you explain the power distributed evenly, what they're actually advocating for?

(John McGinnis at 00:17:57) There is this idea in democracy, right, that everyone has an equal vote. So there is an idea of equality there. And the concern of the — and there's a very interesting book by a professor at Harvard, Scanlon, who takes that idea and shows that if you really believe that, well, it's a little worrying that even if people formally have an equal vote, if actually people have really differential amounts of influence, how much equality is there in democracy? That's the concern. But I tend to agree with you that other than the formal equality of the vote, the idea that one could actually have equal influence is just a kind of fantasy.

(John McGinnis at 00:18:45) Because as soon as you give, for instance — let's begin with something I teach, I'm a constitutional law professor — with the right of free speech. That's a right. Not everyone's going to use it equally. A lot of people aren't going to be concerned at all to speak up about political issues. They've got better things to do.

(John McGinnis at 00:19:04) Other people are going to be eloquent and going to be persuasive. Some people aren't going to be persuasive at all, so that's going to give them different amounts of authority. Some people are going to be left a newspaper by their grandfather, like the person who runs the New York Times. That gives them a certain amount of more influence than the average person, not because they're actually that wealthy. I mean, they're wealthier than the average person, but because of the huge power of the New York Times to set the daily agenda of the news.

(John McGinnis at 00:19:44) So the idea that we can even hope for equal influence is silly. And then your point, I think, is an important one. Would we actually want equal influence? It seems probably not because some people, and I argue this in the book, probably have better ideas and more useful views about policy. And our democracy, I argue, builds that in because we have a representative democracy, not a democracy which we did. There wasn't the idea of democracy in ancient Athens.

(John McGinnis at 00:20:18) Actually, people essentially voted on everything. That might give them more equal influence, but that's not true. We have an election, and then we have representatives. And representatives don't take everyone equally. That's not the way they work at all, and not surprisingly, because what they want to do, at least one thing they want to do, is have policies that seem to do something good.

(John McGinnis at 00:20:45) Because if they don't have policies that are going to do something good, they may be less likely to be elected at the next election, right? That's certainly true of the president and to some degree of representatives as well. And so they're going to look for information that's useful to them. And my argument is, not surprisingly, in a commercial republic like ours where the economy is so important, the wealthiest often have very useful information about how to get good policies, more useful information than just the person off the street.

(John McGinnis at 00:21:18) So even our representative structure of democracy, at least in a commercial republic like ours where commerce is so important, of course, the wealthy are going to have some more influence. And it makes a lot of sense if you think it's important to have good economic policies that favor economic growth because they'd likely know something about that.

(Joel Beasley at 00:21:43) Yeah. I mean, look. When I was younger, I was pretty poor. And for a long time, I didn't like wealthy people. And I wanted to get money.

(Joel Beasley at 00:21:53) And I just had to learn because I didn't like them for some reason. It was just baked into my environment or whatever it was. But I would see a Lamborghini go down the road and I'd be like, they're a horrible person. But then something happened in my twenties when I figured out I had to take care of myself and generate income and all of this. And I started to realize that, oh, wow, the only way to get legitimate money is by being really useful to your fellow human beings. You can rob a bank, of course, but most people aren't robbing banks. You have to do something that's so valuable people are willing to give you their money and then you have to do it so effectively that you can generate profit while providing the value or service to them. And then it became brilliant. Now when I see Ferraris, I'm like, oh, what are they doing that's so useful to everyone else?

(Joel Beasley at 00:22:38) You know? And so I had a big maturity or switch in as I grew up. Did you grow up poor? Or what was your journey like?

(John McGinnis at 00:22:49) Well, so I was very, the way I, it's sort of interesting in the way I grew up. I certainly grew up very well off, but I went to school with people who were far better off than I was. So I always felt poor. So for instance, I went to school, my grammar school, which is a private school, with the great grandsons of Henry Clay Frick, J.P. Morgan, Mayer Lehman, all sorts of people who were, and their families were far wealthier. My problem, I complained to my parents...

(John McGinnis at 00:23:30) Again, I want to be very clear. We were very nicely off and lived very nicely, but I was complaining to them, well, we weren't going on spring vacation to Switzerland. Why weren't we doing that? So I have this rather dual perspective in the sense that I certainly grew up among some of the ultra wealthy, but was not that myself. But I saw then also saw these people as real people as well.

(John McGinnis at 00:24:02) So I saw that while they had a lot of problems with some of their families, I thought had many more problems than we did. So I didn't have the same kind of envy, I think, that people have of the ultra wealthy because I knew the ultra wealthy and some of their families were going through divorces and other difficulties. I was better at school than the best people in our class were another fellow, Andrew Clark, and myself, who came from, again, from well-off families, but not these ultra wealthy families. And so this made gave me a different perspective on it. These were just people with wealth as one of the axes of their world, but a lot of other axes of the world of which I seem quite competitive.

(John McGinnis at 00:24:53) And so in that sense, I figured it's even earlier perhaps than you and for different reasons, I never felt any envy of people. You know, after I got over the fact that I wasn't going to Switzerland on spring vacation, I got over that and I've never felt any envy of the people who have who have far more money than I do.

(Joel Beasley at 00:25:14) Yeah. And even today, I don't feel envy over people who are ultra wealthy or much farther than me. I mean, you can get pretty far in life. And once you get to this point, it's really just about your choices. Like, if you choose to be happy, if you, it forces me, going from being poor to going from being to being wealthy, forced me to become a better person and to learn more about myself.

(Joel Beasley at 00:25:42) And to me, that journey was the most valuable part, not the actual money.

(John McGinnis at 00:25:47) Right. And one other thing I'd like to emphasize too about the wealthy, particularly today with technology, because I know your program focuses a good deal on technologies. A lot of what our ecosystem of our commercial republic creates, I think, has really reduced the effective difference in the lives between the wealthy and individuals. Let's take an example of someone like myself, a professor in the seventeenth century and compare me to a duke. Our lives would have been utterly different then.

(John McGinnis at 00:26:25) They had retainers. Maybe I was lucky in the sense I had some access to a library. But what about our world today? Our world today, again, created by entrepreneurs, a world where everyone has a private library in their phone. People have, getting pretty close to the equivalent of a chauffeur through Uber. That looks a lot more like a chauffeur than when I was growing up and I had to hope to hail a taxi on New York City.

(John McGinnis at 00:26:59) All these things, one way of thinking about it is we're sort of, they're dematerializing the world, and it's material things that are really scarce, and immaterial things are less scarce. And insofar as we go to a more information-structured society, people's lives, at least the middle class people, I want to separate out actual poor people without skills, that's a different problem. But the difference between middle class and the wealthy in their day-to-day life is, I think, very, very different. I met, for instance, Peter Thiel, and I think, well, what do Peter Thiel and I do most of the day? We sit on screens and think through things.

(John McGinnis at 00:27:39) So it's true. He has a nicer house than I do, but it's not as dramatically different as a world two hundred years ago between someone ultra wealthy and someone who lives a more middle class existence. So that's something also I think that's completely missed out on the modern wealthy, how much they're doing to reduce the lived experience of people in our lives.

(Joel Beasley at 00:28:14) Yeah. Can you explain to me the problem, the poor people without skills problem?

(John McGinnis at 00:28:18) Well, that's just, I don't want to say that people who have no interest in accessing the internet or ability to read or are comfortable with that benefit from the private library that we all have today, right? So I don't want to downplay that we still have problems in society with people without skills. That's not the vast majority of people, but you, of course, observe people in any city like that. And that is a serious social problem, and I just don't want to seem to dismiss that as something that the wealthy through their creations are getting rid of.

(John McGinnis at 00:29:00) That remains a serious problem, but the question of inequality as opposed to the question of poverty, I think is overblown for the reasons I've suggested, that the lived experience of people who at least have some skills and abilities to read and have some income, I think their lived experience is much more like wealthy people than the lived experience of similar people, middle class people a hundred years ago was the wealthy then. That's my point.

(Joel Beasley at 00:29:34) I'm going to take a little sidestep here because there's just a question that I really want to ask you because I don't talk to a lot of constitutional professors and things like that. So is it okay if I just take five minutes and just share a couple ideas?

(John McGinnis at 00:29:49) Sure.

(Joel Beasley at 00:29:50) Okay. You could feel free to tell me how I'm wrong or what I'm not thinking about. When the concept of free speech came up a few years ago under my radar, I started looking at it because my default position was, uh, free speech is good. We should have unfiltered free speech. Like, there should be no, I should be able to make any noise I want to make with my mouth. And then I realized that, okay, well, saying I'm going to kill someone or, you know, there's other things in inciting violence.

(Joel Beasley at 00:30:25) So I'll make my point here. The first one I want to talk about is inciting violence. That's, isn't that partly of how our country was formed? How can that be illegal and related to free speech when it's how we had the revolution?

(John McGinnis at 00:30:41) Well, I think the thought is that at that time, we really didn't have a democratic system. So there's a relation between free speech and democracy. So the idea is that once you have a democratic system, there's less reason and there's really no justification for inciting violence to overthrow or do things to that system because there's a way of redressing one's grievances. The colonists' point was, well, they really couldn't, they didn't have an avenue for that because they weren't represented in Parliament. So I do think that free speech and democracy are something of a package deal because what free speech does is it allows people to articulate their grievances and democracy to allow people to address them.

(John McGinnis at 00:31:34) So I don't think it's hypocritical to suggest that we get rid of violence beats so long as there are avenues for political change that democracy permits.

(Joel Beasley at 00:31:50) So your view of free speech, how should it be?

(John McGinnis at 00:31:53) Well, I mean, free speech is a, there's a whole course in free speech, so it's very complicated to ask what my free speech idea is. I think it's, I'm sure, rather close to yours. I think so long as you don't incite violence, so long as you don't use it to commit fraud, right, in some sense to go back to the to the core responsibilities of a citizen, which is, you know, not to harm other people. So long as it's not used to facilitate directly the harm of other people through fraud or violence, I think free speech should be permitted, even if it's false speech, because we don't always know what speech that's false. And one other point I make in this book just to draw it a bit back to the book, is I point out that Twitter, I think, has become much more open since Elon Musk took it over.

(Joel Beasley at 00:32:52) Oh, for sure.

(John McGinnis at 00:32:53) Right. But because, and that was because, really, he kicked out the clerisy who was running Twitter. There was ninety-nine percent of people who were involved with Twitter contribute to one political party beforehand. And they also, you might say, well, they had kind of corporate interests as well. They wanted to make sure that their advertisers weren't annoyed by some pesky person who was speaking absurdly.

(John McGinnis at 00:33:24) And Musk has really changed that, and that's again something I think someone who's rich, right, in this case, the richest man in the world has done that. And that's not surprising because, again, that I think goes to a different perspective of the clerisy from a business person. I think a business person is much more likely to think that freedom of speech is just like another right of property and so people should be able to use it except for fraud and violence. Whereas the clerisy, I think, has a perspective that we really want to socialize people to be better. And so that's why I think they're so concerned about disinformation.

(John McGinnis at 00:34:06) Right? That the disinformation may make people less good. Now I'm not confident of that because, of course, who's going to decide what's disinformation is always the problem. But that gives them a different perspective, and so I don't think it's at all surprising that we see a view of a wealthy person like Elon Musk, which is much more laissez-faire than the clerisy who generally wants to think about how, just like other things, how information is going to shape people to be in a better way. And they have, they of course have an end point and goal of what is better and so some of this disinformation doesn't seem to be shaping people in that way and so they're much more likely to want to shut down free speech or have the government make sure that Twitter shuts some speech down. And so I think it's not surprising we see that fault line as well between at least some of the rich and what I call the clerisy, the professional influencers.

(Joel Beasley at 00:35:11) Interesting. You know, when I vote, I usually only, there's twenty or thirty things to vote on, and I usually only vote on one or two of them, the things that I know about or I've researched. Is that common, or do most people just Christmas tree it?

(John McGinnis at 00:35:33) Most people just vote for their team. Okay. Because for two reasons. One is having a team makes things more interesting. We've got someone to root for.

(John McGinnis at 00:35:45) And so I think politics you have to think of as kind of like a sport in that respect. And then I think I referred to this before, the problem that people just don't have much incentive to do any research on any issues because there's a concept, again, well known in political science, a science called public choice, of what's called rational ignorance. It may be strange to hear a professor say it's rational to be ignorant about politics, but it is. Because what is the chance that your vote is going to make a difference in the outcome of the election? Less than, at least in a big election, they're being hit by lightning on the way to the polls.

(John McGinnis at 00:36:26) I mean, the votes are just, even representative elections to our house, they're almost never decided by one vote. I don't know how many ever decided by one vote. So it's just vanishingly unlikely. So from an instrumental point of view, it just doesn't make any sense to spend a lot of time thinking about the election because your vote isn't going to be decisive.

(John McGinnis at 00:36:52) And so that's a huge problem for democracy. Now there are some ways of getting around that. People have some sense of what Republicans stand for and what Democrats stand for. Maybe that's the team aspect that has some good aspects to it. But that's the reason that for most people, they don't really spend much time about the issues.

(John McGinnis at 00:37:14) And if you'll note, even the news media spends an awful lot of time not on the essential issues, but on trivia.

(Joel Beasley at 00:37:23) I don't watch that stuff. That'll melt your brain.

(John McGinnis at 00:37:26) Trivia about the politicians because that's at least somewhat more interesting to most people. Most people are not academics. They, even beyond that, they're not interested in the issues. Some of the issues are pretty complicated. They're not economists, and so they have difficulty following a lot of the deep policy arguments.

(John McGinnis at 00:37:50) So it's not surprising. I don't want to be too harsh on democracy in that sense because they do understand if there's famine in the country, if there are really disastrous things happening, that gets through to people, and they throw the people out who are responsible for that. So democracy has its virtues. It's just not a very well-tuned machine to get at particular issues. And so it goes back to representative democracy. We hope that, actually, the representatives will study the policy, and that's why it's really absurd to think that everyone's gonna have equal influence because we hope they're going to listen to people who have thought somewhat about the different policies.

(Joel Beasley at 00:38:38) Yeah. Every time you mention the equal influence, what plays in my head is like a late night TV show man on the street interviews when they ask people, like, what is Congress? Or, like, how does the law get made? Or just some basic stuff that people don't understand. I did like your, I guess, sort of analogy to, like, the fine tuning of it.

(Joel Beasley at 00:39:00) So it seems like it works on a very big scale pretty well. A lot of the arguments we have are in the fine tuning of the machine. Do you have any current concepts, things that you think about that could make our current machine better?

(John McGinnis at 00:39:19) Well, I think so. I think that, two in particular. I think that we should have much less ability of Congress to delegate power to the president. We should raise the importance of Congress compared to the president. And the reason for that is, I think, one of our problems today is a problem of extremism and polarization. A lot of people have said that.

(John McGinnis at 00:39:53) And giving power to the president really accentuates that because the president represents the median, the middle of his or her party, of his party. And that's, you know, like at the seventy-fifth percentile. It's not close to the middle. But generally, Congress, the median member of Congress, the member of Congress who's most in the middle is more moderate than the president, and that's a good thing in my view. It also makes, I mean, the policy is gonna less jump around as well, which creates a sense of polarization.

(John McGinnis at 00:40:28) I've gotta get in my guy to because otherwise, the policy, it's gonna be terrible. The policy is gonna be really the extreme the other way, and that leads to a kind of polarization. So less delegation of power to the executive and more control in Congress is one thing I would favor. Another aspect I think I would favor is something we have actually in California, which is top two primaries so that we have an election that first decides who are the two people that are gonna compete in the general election, and anyone can run in it. And one reason for that is that I think it also tempers extremism.

(John McGinnis at 00:41:14) Because at the moment, in a primary system, generally, it's the extreme party loyalists who vote in a primary. And so if you have a very red district or very blue district, it's going to be elected by the very extreme members of that district. They're going to have a great deal of influence. But if you have a top two primary, say you have two Democrats or two Republicans who are running in the general election, they've got to more appeal to the out of power, so to speak, people in their district. So if there were two Democrats, it's gonna make a lot of difference to them who the Republicans vote for in their district.

(John McGinnis at 00:41:56) And so there are incentives to them to be less extreme than if what's decisive is just the Democratic nomination, which is decisive, or the Republican nomination, which is decisive in, I would say, 300, 350 of our congressional districts. And so, again, that's a way of giving voice to what I would call the median voter, the more moderate voter. Because I do think we have a problem of running to extremes, and it's very noticeable in our immigration policy, for instance. We have a policy of Biden, who just seemed to let everyone in and create chaos at the border. And then we have the draconian policy of Trump, which may throw out people who've been here for twenty years.

(John McGinnis at 00:42:43) And I don't think that's where the median voter is. I don't think they want either of those policies. And we'd like to have a structure where Congress is forced not to delegate this power to whoever is president, but forced to make more decisions and have more moderate people in Congress make them. So those will be the two most important changes I'd like to see in our political system.

(Joel Beasley at 00:43:08) I like those. I like you for that. Please push those ideas out into the world more.

(John McGinnis at 00:43:14) No, I do. I write articles, but, of course, not sure who who reads them. But, so.

(Joel Beasley at 00:43:21) Talk to me and Josh. We'll show you how to spice it up. A little clickbait action to get you some more readers. No. This is great.

(Joel Beasley at 00:43:28) I do wanna talk a little bit about AI and technology because you're right. That is what a lot of the audience is. So in your book, what are the lines that you draw to the wealthy and then to improvements in AI?

(John McGinnis at 00:43:43) Well, I think we look at AI. It's usually dependent on the wealthy. Right? So look at our AI. The frontier models are being coordinated by very wealthy individuals from Altman, to Demis Hassabis. I hope I'm pronouncing his name correctly. Either by actual founders of companies or people who are still running those companies like Mark Zuckerberg, or other very wealthy executives are coordinating our frontier models, and that's really the hope that we have that we're gonna stay out in front on AI because AI is a classic example of something democracy or society needs. It's a public good. In other words, the benefits of it go far beyond simply to the consumer or the firm that creates it. For instance, national security is now all bound up.

(John McGinnis at 00:44:49) It's decisive what AI is going to do, so it's very important that we keep out in front. AI is going to be very useful in modeling and maybe solving issues of climate change. It does wonderful things for disease, as I'm sure you know. DeepMind, with solving the problem of protein folding has created all sorts of proteins that are out for companies now to pursue drugs and other ways to address disease. So AI is a public good for all sorts of people and indeed for our national security, yet it's dependent on wealthy individuals. And not only the wealthy companies, but in venture capital.

(John McGinnis at 00:45:41) Because venture capital is what allows people to take a whack at some crazy new model of AI. Right? And where does the venture capital come from? It often comes from very wealthy people. In fact, as I'm sure you know, there's this kind of virtuous circle in Silicon Valley.

(John McGinnis at 00:46:03) Entrepreneurs make a lot of money, and what do they do? They plow it back into venture capital, and they then fund new people with ideas. And many of these ideas fail. Right? So they have to take on a lot of risk.

(John McGinnis at 00:46:19) And it's wealthy people willing to take on a lot of risk for investments. You know, someone with $200,000 in the bank, I wouldn't advise they're taking some risky shots. So it's both the companies and the actors, the incentive structure of those who coordinate it, but it's also the ecosystem of funding it.

(John McGinnis at 00:46:46) And it's the United States that does it. We're far ahead of any nation in the West in AI. And I think it has a lot to do with our willingness to incentivize wealthy people to found great companies, to invest and have great returns. It's not a surprise that it happens here, not in France, where there's even greater hostility to the rich, and that hostility is expressed in extremely high tax rates, extremely high regulatory barriers. So it's crucial that we keep that commercial engine humming because AI is so important to our future.

(John McGinnis at 00:47:32) And I'd say one other thing about that as well. People worry about AI. They're right to worry about, well, what are some of the risks of AI? The existential risk that AI is gonna slip humanity's control or at least some malefactor's gonna get control of it. But it's the rich who are funding now think tanks and institutes that are addressing some of these risks. The government isn't gonna be able to do that.

(John McGinnis at 00:47:58) They don't have both the money to hire the people who they need to do that or the, again, willingness to take rather unconventional approaches to addressing risks. That's just not what comes out of government. So even if government finally can come up with regulation, the blueprints are gonna come from these institutes largely funded by the rich. They might even come also from entrepreneurial ideas. As I'm sure you know, I think one of Elon Musk's post-party ideas is this company called Neuralink.

(John McGinnis at 00:48:32) And maybe it will turn out the way to control AI is to link up with AI and control it. Right? That might be, I'm not saying that's gonna be the way.

(Joel Beasley at 00:48:43) I like you, John.

(John McGinnis at 00:48:44) But we need to have a lot of different approaches, and that's an approach that Elon Musk has. And, of course, it's due to his heroic vision of himself in the world. I mean, it's one of his, I don't know, eight companies, Neuralink, but it could be it could be the salvation of humanity. I'm not saying it's gonna be the salvation of humanity, but we don't know what's gonna be the salvation of humanity. And the idea that some bureaucratic committee is gonna figure it out rather than have a lot of different ideas funded by the rich is just the height of folly.

(John McGinnis at 00:49:22) And so both our concern about AI, about both of our need for AI and our concerns about AI, which are legitimate, are both crucially furnished. Both the AI and its potential regulation and guidance, the rich are a necessity for it. And if you think AI, as I do, is a hinge of human history, it's just not like any other technology, we should be very grateful that we have the rich to be both producing it and thinking about how to keep it within bounds because the alternative of just allowing this to government means either we'll be overtaken by China and some authoritarian government, or we really will have serious risks from AI. So I see the rich in AI is really, in some sense, the test case or the most important case for the importance of the rich in democracy.

(Joel Beasley at 00:50:32) Yeah. And as an advantage for our country, we need to be moving fast with the AI. Do you know if there's any incentives that the government offers like tax breaks or, are they, is the government currently incentivizing wealthy people to invest in AI?

(John McGinnis at 00:50:47) No. I don't think so. But I do think that, you know, whatever you think about Trump and my views about Trump are mixed. One thing he did, he completely changed the Biden policy towards AI to be a much more free market view, a much less regulatory view towards AI. That was in his AI executive orders. And so I think in that sense, it encourages people to invest more in AI because, of course, you don't wanna invest in something that you think the government's going to shut down for some reason, for some reason you might not think is a good reason, like for social disinformation or something of that sort.

(John McGinnis at 00:51:28) So in that sense, I do think the Trump policies have incentivized people to invest in AI and moreover, his energy policies also incentivize people to invest in AI because, I'm sure you're familiar with, one way of thinking about AI is at an elemental level, it's the transformation of electricity into intelligence. And so if you have a bottleneck in electricity, you're less likely to want to invest in AI. Right? So this is an essential aspect of the Trump policy. I think Trump's policy towards AI is the most important policy he has.

(John McGinnis at 00:52:11) And even if you have reservations about other aspects of President Trump, if you think his AI policy is better, it may be the reason to support him because nothing is more important for our national security, nothing is more important for economic growth, and otherwise, unless we raise the economic growth rates, we're gonna have huge problems in this country because we have running huge debt and deficits, and our political parties don't want to either raise taxes on most people. We can't just raise them all, we can't even get enough money from raising them all on the 1% or don't wanna cut entitlements. So the only way out of that dilemma is to increase economic growth dramatically. And I think that's the bet President Trump is making here as well as the national security side of things. So I think his AI policy is extremely important.

(John McGinnis at 00:53:07) I don't know why people don't spend more time writing about it rather than the other aspects of, you know, President Trump.

(Joel Beasley at 00:53:16) Well, because they weren't coming.

(John McGinnis at 00:53:18) Good copy, or all sorts of ways. But I think that's by far the most important policy of his administration. And I do think, in that sense, he's very much incentivizing people to invest in AI.

(Joel Beasley at 00:53:33) Yeah. Well, that's a whole other different incentive structure you just kinda brought into the conversation. I mean, we know the answer to why people focus on those weird behavioral things. It's clickbait. They have advertisers. They're new shows. They need to make money, and that's a whole different incentive situation. But I did wanna ask you. Did you see that interview with Jensen at NVIDIA, the CEO of NVIDIA and Joe Rogan?

(John McGinnis at 00:54:00) No. I did not.

(Joel Beasley at 00:54:01) He basically credited Trump's energy policies to saving the AI industry in the United States. It was a pretty bold statement too. I was like, wow. I haven't seen a CEO of such a large company make such a statement.

(John McGinnis at 00:54:14) I tend to think that saving might be strong, but, you have to recognize that, it's interesting. Jensen is an interesting example of a rich person who does, of course, have economic interest. And so he certainly wants to keep on the good side of President Trump, so he might want to say even extravagant things, which, for some reason, I think President Trump certainly doesn't discount extravagant things being said about him. But I think he's right.

(John McGinnis at 00:54:50) I think he's right that you cannot have a good AI policy. You cannot have an AI policy that's gonna put America first while strangling its energy production for the very simple reason that there's a direct link between energy production and AI. And so one of the big issues we're gonna see is the left now is focusing on electricity bills as I think a way of trying to constrain, again, energy production or these data centers, and I see that as a big part of it.

(Joel Beasley at 00:55:24) Seen that. I have. Right. Josh and I had a good conversation about that last week off the podcast.

(John McGinnis at 00:55:30) So I think that is gonna be a big political debate. But, again, for our independence and for our national security, I don't know how we'll address that ultimately, but we cannot shut down data centers. Those are, again, the lifeblood of AI.

(Joel Beasley at 00:55:47) My theory was that it's China. I know it sounds really stupid and kinda terse, but, like, they have an incentive for, like, I think I know a lot about energy production and data centers because I own some. And so that is an area where I do have a good amount of knowledge. But when I heard from Josh, our producer, that there's this conversation about, like, the energy bills going up because, alright, that is such a nuanced conversation, John. There are so many different aspects of how you buy and sell energy and how it's happening in different areas. And most of the big data center companies, they're building their own power generation. They're not even affecting the residential. But because the average person can't dive deep into it and spend months owning and operating one of these units to understand how this space actually works, they just see the headline that their bill's gone up 7%, and they're just kinda connecting these two dots that they're loosely connected, but it's giving you an improper view of the actual association.

(John McGinnis at 00:56:49) That's a cost, right? And there are political entrepreneurs who will try to make a lot from ignorance. A lot of people, politicians, they like ignorance if it allows them to push some policies and get votes. So that I agree is a danger going forward.

(Joel Beasley at 00:57:10) Well, you've opened my mind a lot today, John, and I really appreciate it. Is there anything else we want to get out there? Let's plug the book, okay?

(John McGinnis at 00:57:19) The book is called Why Democracy Needs the Rich, and it'll be coming out February 10th, published by Encounter. It's available for preorder now on Amazon. I encourage people to look at it if you're either interested in democracy or the rich or AI. There's a whole discussion of technology. So one other point I make, actually, maybe I'll end on this, is how important technology has made the rich even less dangerous than they once were in this sense. So one of the concerns about the rich in classical political thought was there were just going to be this unchanging oligarchy. And the reason they thought that is, where did people have their money come from? Well, they had a lot of land, and things didn't change very much. That's not our world. Our world is technology is always changing things, and the rich are always changing. The Forbes 400 has changed dramatically, and that's also important for democracy because one concern is always that there's what has been described as the iron law of oligarchy—that some people are just going to get in charge of society and their descendants are going to be in charge, and their descendants are going to be less intelligent than they were.

(John McGinnis at 00:58:37) But there's going to be this stasis. But because of technology and the leapfrogging that goes on in our commercial world, we don't have that. We have a very fluid group who become rich in different ways, and that keeps society actually more open than it once did. And so we should be much less worried about the one real danger of the rich, the static nature of the rich in 2,500 years ago. So it's technology that really has supercharged the rich to be a very pluralist, a very changing group, to make sure that they're not actually a roadblock to social change, but actually sometimes the greatest advocates of it because they're new people. They're people who are made new in every generation. So that's maybe how I would like to end on it, particularly on a podcast about technology.

(Joel Beasley at 00:59:35) Thank you so much for listening. And if you found this episode useful, please share it with a friend or colleague who you think would get value from it. And if you have topics that you'd like to hear discussed on the podcast, either add me on LinkedIn or send me an email: [email protected]. Every time I get an email or LinkedIn message, it absolutely makes my day and inspires me to keep going.