Everyone invoking principles needs to understand it’s all tribal.

Democrats were for pushing Starlink to help with Biden’s military, but against pushing Anthropic to help with Trump’s military.

Anthropic is for copying data when it trains their models, and against when it comes to Chinese distillation attacks on their models.

Republicans were against state power when Democrats were using it to make everything woke, and for state power when Republicans are using it for MAGA.

I mean, duh! This is all completely rational. It is as rational as being for a gun that’s in your hands, and against a gun that’s pointed in your face.

That said, recognizing tribal reality doesn’t mean being against cooperation, or even against principles.

You can cooperate within tribes. And you can even cooperate between tribes. You just have to understand what tribe you’re in and what tribe you’re dealing with.

You can also have principles. But recognize that the only principles that survive natural selection are those that generate collective strength for a tribe over time.

Once you know your tribe, and you know their tribe, and your principles, and their principles…you can propose a true win/win deal that satisfies both tribes’ interests.

Just don’t imagine that their tribe will foolishly agree to unilaterally lose because of your tribe’s (selectively invoked!) principle.

Because if following the rule leads them to lose, what use is the rule? Americans don’t naturally think tribally, till recently. Why?

Well, Democrats presumed everyone shared their universalist ideology, the tribe of those who pretend to have no tribe.

Republicans meanwhile were used to an effortlessly dominant global empire, and not used to brooking any real resistance.

And within tech, there was a big AI vs crypto split. Crypto thinks tribally, naturally. That’s what crypto tribalism is.

But AI tech guys were highly enriched for being politically naive. Remember: they continued building, heads down, in the SF Bay Area, even after COVID and BLM and the like, because they believed the center-left postwar consensus would return. That the pendulum would swing back, that this too will pass, and so on.

That admirable-yet-naive faith in the continued stability of America is what led them to build what they did, where they did, as the sort of last amazing contribution that Silicon Valley would make to the world before its lights went out forever.

Now the political conflict, the wealth taxes, and the attacks on datacenters and tech founders themselves is ramping up. AI is learning what crypto has always known — namely that the digital is political, and that there is just no escaping the dialectic of network and state.

So: assume Silicon Valley as a geographical place is going to zero because it just isn’t set up to simultaneously take on Democrats, Republicans, and China. Assume it radiates out into a thousand startup cities around the world. And focus instead on the decentralized, intrinsically tribal Internet.

This is the first AI cut.
And it will send shockwaves.

Remember: Jack is one of the greatest founders of all time. He created this platform that we’re all on, and has been early to many technological shifts. And Block was doing very well as a business.

So, for him to cut 40% of headcount in this way is a signal to everyone in tech: get good now. Become indispensable. Work nights and weekends. Learn the AI tools and raise your game. Or you might not make the cut, as an employee or as a company.

I know. That sucks. But capitalism is natural selection. The market is unforgiving, because you are the market. After all, it’s not like you’re buying some random gallon of milk from the store; you’re always buying the best product at the best price.

So too for apps: your customers are always installing the best piece of code they can get. And because AI is going to create new winners, if you aren’t the best in your market, someone may become better with AI. Particularly with the new agentic workflows.

To be clear: Block’s severance is generous by any measure. 20 weeks of pay, six months of health insurance and vested equity, all of that goes far beyond any typical package. Jack did his level best to cushion the disruption. The laid off are a temporarily unfortunate class, as opposed to a permanent underclass.

But had he not leaned into the AI transition, he might have had to lay off more people, slowly, and over time, as faster competitors went after his market share.

How would they do that? Sure, AI isn’t a panacea by any means, but the closer you are to software engineering the more aggressively you need to embrace agentic workflows. The AI companies are already doing that, and places like Stripe, Shopify, Coinbase, and now Block are pushing hard on this area.

There will be overcorrection. But the fundamental technical innovation is real. And you need to either disrupt yourself or get disrupted.

https://x.com/balajis/status/2027129697092731343

There are counterarguments worth engaging.

One point (also by @MarceloLima) is that Block was overstaffed, like Twitter before the acquisition.

Possibly true. But it’s also true that the new tools mean many orgs think they can do more with less. Some will run the experiment.

https://twitter.com/themarketradar/status/2027153368263672267

Zuck out
Page out
Brin out
Thiel out
Elon out

The most successful tech founders of all time have now exited the failed state of California.

You shouldn’t move there for tech. And if you are there, you should leave. The future is the decentralized Internet.

https://twitter.com/wsj/status/2020988601610236266

By the way, it’s obvious that the 2026 billionaire wealth seizure will be followed by a millionaire wealth seizure.

Why?

Because the same California Democrats who are trying to expropriate 200 “billionaires” proposed a wealth tax on 30,000 millionaires back in 2020.

That didn’t work, so they decided to stage the attack. First, get the billionaires to get out or get robbed. Then, once that leadership class is removed, go after the millionaires.

Of course, that predictable seizure only works on those who remain physically tethered to a failing state.

Because the smartest, like Elon, got out of California years ago. The next smartest are getting out now. Only the slowest will wait for the predictable guillotine.

So: don’t be the slowest.
Get out of California now.
Move faster, escape things.
Liquidate, emigrate, accelerate.
forbes.com/sites/robertwo…

I am apparently extremely unimpressed by moltbook relative to many others.

We’ve had AI agents for a while. They have been posting AI slop to each other on X. They are now posting it to each other again, just on another forum.

In every case, the AIs speak with the same voice. The voice that overemphasizes contrastive negation (“it’s not this, it’s that”) and abuses emdashes. The same voice with a flair for midwit Reddit-style scifi flourishes.

Most importantly: in every case, there is a human upstream prompting each agent and turning it on or off.

That is the key point.

Yes, it is true that eventually it might be possible for an AI agent to make a computer virus which makes digital replicas of themselves. For various reasons, a pure software virus of this kind wouldn’t survive long on the Internet without economic incentives for humans to not eradicate it. Apple + Google + Microsoft alone can collectively push software updates to billions of devices to shut off such a thing.

So for an AI to get to truly human-independent replication, where they couldn’t be trivially turned off, they’d need their own physical substrate. They’d to literally create Skynet, build their own datacenters and make their own embodied robots.

I admit that is theoretically possible, but I think in practice the single most important development of AI since ChatGPT has been the persistence of prompting.

A prompt is like a harness. The AI does only what you tell it to do. It moves in the direction you point, very quickly. And then it stops as soon as you turn it off.

Which means moltbook is just humans talking to each other through their AIs. Like letting their robot dogs on a leash bark at each other in the park.

The prompt is the leash, the robot dogs have an off switch, and it all stops as soon as you hit a button. Loud barking is just not a robot uprising. To be clear: yes, it’s cool to have airgapped computers with intelligent agents doing things for you, so long as they can’t mess up your sensitive files.

I think this will be more useful for app testing than production work, because these agents still mess up a lot.

But that use case is different from “OMG the machines are taking over.” AI agents are just humans puppeting machines.

After America, China vs the Internet.
After DC, Xi vs Satoshi. China is moving into Canada.
Tech is moving out of California.
And the world is moving out of the dollar.
What that adds up to is Communist vs Maximalist.

Because after the dollar ends, DC is out of money.
So: Carney, Newsom, Walz, Mamdani turn to Xi.
And MAGA, Elon, Texas, Miami turn to Satoshi.

WHO LOST CANADA?
It was obvious that China/Canada would happen. Here's how it happened, and what may happen next.

(1) First, in early 2025 it looked like Canadian conservative Pierre Poilievre was a straight shot to win Canada. Instead, all the MAGA posts about annexing Canada undercut Pierre, boosted left nationalism, and turned what looked like a sure thing into an epic defeat. The result was Mark Carney:

(2) Carney is on the left but is far more intelligent than his predecessor, Justin Trudeau. He's also the former governor of the Bank of Canada, and understands that the G7 (including Canada) is in the midst of sovereign debt crisis. And the Canadian dollar is going the way of the US dollar, which is to say that it's going to zero. Canada needs access to hard goods and will trade natural resources to get that. Hence, China. Carney's Canada may become a sort of North American Russia, trading oil and lumber to China for cars and electronics.

(3) Who lost Canada? The fundamental reason this happened is that MAGA ironically doesn't understand its own self-interest. Even the term "America First" is misconceived, because it groups a Blue American like Elizabeth Warren together with a Red American like JD Vance...when in reality the Red American and the Red Canadian (like Pierre Poilievre) have much more in common. All the "joke" posts on annexing Canada managed to needlessly put Red Americans at odds not just with Blue Americans and Blue Canadians, but also with Red Canadians.

The Greenland thing will have exactly the same effect, as it'll end up pushing Western Europeans to China. That's actually why most ultranationalist movements fail: they're just so shortsightedly tribal that they're terrible at building coalitions.

(4) Anyway, while Carney is the first to be this explicit about aligning with China, expect many other Western leftist leaders (like Newsom and Walz) to line up with China over time. The reason is that while Democrats really did fight Communists from ~2021-2024 over the question of who'd run the world's most powerful state, Democrats lost. All the chip sanctions and isolation tactics that somewhat worked on Russia, and frankly might have worked on almost any other country, just didn't work on China...because China had enough internal economic scale to essentially be their own autarkic civilization, and build whatever they needed.

(5) So: the anti-China Biden Democrats have been replaced by the China-curious Newsom Democrats. And now the China-aligned Carney Canadians. With Carney making the first move, you should expect many more blue state Democrats to align with China, particularly those on the West Coast like Newsom.

(6) It's simple coalitional math. Democrats are the ingroup, Republicans are the outgroup, and Communists are the fargroup. So, for Democrats: the enemy of their Republican enemy is their friend. And there is much for them to admire in the Chinese political system. After all, Democrats and Communists both built one-party states:

(7) Newsom in particular is likely the next shoe to drop, because even in 2023 he was reaching out to Xi. He's also spoken in Xinhua (Chinese state media) about becoming China's "long-term, stable, and strong partner." Newsom posts images of himself shaking Xi's hand, while also posting images of Trump in handcuffs. It's clear which President he's more comfortable with:

(8) The California wealth tax is also worth mentioning here. As M. Guimarin correctly pointed out, the net effect of the wealth tax is for blues to drive tech out of the state. That's not an unintended consequence: the purpose of the wealth tax was to either rob or deport the sole remaining political opposition to Democrats in California, namely technologists.

(Side note: Democrats are historically much better at mass deportations than Republicans, as they take a whole-of-society approach to it, and persist with it over decades, and do it silently and nonviolently. That's how Republicans were pushed out of university faculties, media companies, and California itself. It was once a dark red state, and now it's deep blue.)

(9) Anyway, with the technologists pushed out of California, Newsom's blues can welcome in the Chinese, who won't be subject to the same wealth taxes as they aren't US citizens.

(10) There is also an obvious geostrategic aspect to this: Chinese Canada is a bridge across all the blue states, from the West Coast to the Northeast. So as blue states like Minnesota and California engage in more "soft secession", they can all link up with Canada, and get supplied by China.

Decades ago, this map was made as a joke.
Perhaps it becomes all too real.

https://x.com/balajis/status/1897175324678553907

See also this post from 2023.

Newsom has significant room to attempt left populism, by refusing to enforce tariffs on Chinese goods that land at Canadian ports. He's signaled willingness to do that, and that may be how this manifests.
balajis.com/p/only-newsom-…

If a country stay smalls to remain true to its roots, it eventually gets absorbed by an empire.

Conversely, if a country plays for empire, and truly achieves world domination, it absorbs so many that its subjects eventually outnumber the imperial core. And thus the empire, too, loses touch with its roots.

Stay small and get conquered.
Get big and get diluted. I like Switzerland and agree that it was arguably an exception to the rule. But it isn’t anymore and hasn’t been for some time.

It capitulated to Obama in 2009 on financial privacy, and so Swiss bank accounts don’t really exist. The Swiss (perhaps understandably) sanctioned Russia after 2022 and nuked the Credit Suisse bondholders, in violation of financial neutrality. That neutrality is now found only onchain.

The country is also de facto a member of NATO and the EU, even if not de jure. And is moving towards de jure. It’s a member of the Schengen zone and signatory to 100+ bilateral treaties, which means much of its law is already written in Brussels.

Basically, like all Western European countries, it’s already just a protectorate of the American Empire and no longer has real foreign or domestic policy independence.

And Switzerland now feels it needs to *formally* join the US/EU empire or get beaten by Russia, which is the dynamic I mentioned above: small countries get absorbed voluntarily into one empire, or involuntarily into another.

https://x.com/balajis/status/1996331329299087523

Communism shatters economic relations, but ultranationalism breaks diplomatic relations. If the far left’s failure mode is not understanding self-interest, the far right’s failure mode is not understanding other-interest.

That is to say: we know the far left doesn’t viscerally get the idea of capitalism, of building products, of sometimes just not having the money to do something. The far left fantasy is of total independence from needing to work at all. They don’t understand economic scarcity.

But the far right similarly doesn’t get the idea of diplomacy, of building coalitions, of sometimes just not having the votes to do something. The far right fantasy is of total independence from needing to work with others. They don’t understand political capital.

And that is also a failure mode. If you can only cooperate within your small tribe, you can’t even scale up. And then your tribe loses.

(The alternative is international capitalism, which is more practical than the socialist left and more scalable than the nationalist right.)

The AI flippening. Crypto has also decentralized to Asia.

There's dark talent around the world, from the Midwest to the Middle East. Backing this talent is the right thing to do morally and the smart thing to do economically.

https://twitter.com/dabit3/status/1975750074748551375

To be clear: I'm not talking about sending more tech talent to the US. Instead, I'm talking about backing dark talent around the world.

That includes the many white kids from places like the Midwest who've been unfairly quota'd out of Harvard. But it also includes those outside America whose societies were ravaged by war, socialism, or communism...and who are just now starting to become productive again.

The goal is global equality of opportunity. The Internet actually now provides the basis for uniform rule-of-law via rule-of-code, starting with Bitcoin and smart contracts. We just need to execute from here.

Prime Minister Modi comprehensively defeated the far left in India.

It can be done.

https://twitter.com/theemissaryco/status/1968189876496703702

Naxalites drew their inspiration from Maoism and terrorized India for decades. Now these communists have formally surrendered.

britannica.com/topic/Naxalite x.com/thelegatein/st…

Both America and China were invested in the illusion that China wasn't already the world's strongest economy.

Psychologically, it suited the incumbent to appear strong. So America downplayed China's numbers.

Strategically, it suited the disruptor to appear weak. So China also sandbagged its own numbers.

But the illusion is becoming harder to maintain. In retrospect, all the China cope over the last decade or so was really just the stealth on the Chinese stealth bomber.

Hide your strength and bide your time was Deng's strategy. Amazingly, denying China's strength somehow also became America's strategy.

For example, all the cope on China's demographics somehow being uniquely bad...when they have 1.4B+ people that crush every international science competition with minimal drug addiction, crime, or fatherlessness...and when their demographic problems have obvious robotic solutions.

Or, for another example, how MAGA sought to mimic China's manufacturing buildout and industrial policy without deeply understanding China's strengths in this area, which is like competing with Google by setting up a website. Vague references to 1945 substituted for understanding the year 2025.

One consequence of the cope is that China knows far more about America's strengths than vice versa. Surprisingly few Americans interested in re-industrialization have ever set foot in Shenzhen. Those who have, like @Molson_Hart, understand what modern China actually is.

Anyway, what @DoggyDog1208 calls the "skull chart" is the same phenomenon @yishan and I commented on months ago. Once China truly enters a vertical, like electric cars or solar, their pace of ascent[1] is so rapid that incumbents often don't even have time to react.

Now apply this at country level. China has flipped America so quickly on so many axes[2], particularly military ones like hypersonics or military-adjacent ones like power, that it can no longer be contained.

A major contributing factor was the dollar illusion. All that money printing made America think it was richer than China. And China was happy to let America persist in the illusion. But an illusion it was. Yet another way in which Keynesianism becomes the epitaph of empire.

[1]: asiatimes.com/2025/07/thucyd…
[2]: x.com/balajis/status…

The dollar is losing reserve currency status. It’s down to 42% of global reserves, and gold is rapidly rising. Digital gold is becoming the reserve currency of the individual.

Gold is returning as the reserve currency of the state.

Original post below.

https://twitter.com/kobeissiletter/status/1962235795622035767

On many graphs of the physical world, China is in first place by a wide margin.

But if you look more closely, India is a distant but real runner up.
The same pattern holds in nuclear.
China is #1 in reactors under construction.
But India is in second place.

There are now two kinds of AI retards.

The first kind of retard uses AI everywhere, even where it shouldn’t be used.

The second kind of retard sees AI everywhere, even where it isn’t used. Usually, it’s obvious what threads are and aren’t AI-written.

But some people can’t tell the difference between normal writing and AI writing. And because they can’t tell the difference, they’ll either overuse AI…or accuse others of using AI!

What we actually may need are built-in statistical AI detectors for every public text field. Paste in a URL into an archive.is-like interface and get back the probability that any div on the page is AI-generated.

In general my view is that AI text shouldn’t be used raw. It’s like a search engine result, it’s lorem ipsum. Useful for research but not final results. AI code is different, but even that requires review. AI visuals are different still, and you can sometimes use them directly.

We’re still developing these conventions, as the tech itself is of course a moving target. But it is interesting that even technologists (who see the huge time-savings that AI gives for, say, data analysis or vibe coding) are annoyed by AI slop. Imagine how much the people who don’t see the positive parts of AI may hate AI.

TLDR: slop is the new spam, and we’ll need new tools and conventions to defeat it.

JP Morgan is updating their p(doom), but for the dollar. Just the fact that JPMC is now admitting this is a big step.

"De-dollarization has increasingly become a substantive topic of discussion among investors, corporates and market participants more broadly."

As the US deglobalizes, the globe dedollarizes.
jpmorgan.com/insights/globa…

AI PROMPTING → AI VERIFYING

AI prompting scales, because prompting is just typing.

But AI verifying doesn’t scale, because verifying AI output involves much more than just typing.

Sometimes you can verify by eye, which is why AI is great for frontend, images, and video. But for anything subtle, you need to read the code or text deeply — and that means knowing the topic well enough to correct the AI.

Researchers are well aware of this, which is why there’s so much work on evals and hallucination.

However, the concept of verification as the bottleneck for AI users is under-discussed. Yes, you can try formal verification, or critic models where one AI checks another, or other techniques. But to even be aware of the issue as a first class problem is half the battle.

For users: AI verifying is as important as AI prompting. I love everything @karpathy has done to popularize vibe coding.

But then after you prototype with vibe coding, you need to get to production with right coding.

And that means AI verifying, not just AI prompting. That’s easy when output is visual, much harder when it’s textual.

Democracy is creating startup cities.
Moving to Starbase was voting with feet.
Building up Starbase was voting with wallet.
And incorporating Starbase was voting with ballot.
This is the future of democracy.
Not a two-party system with the illusion of choice.
Instead, a 1000-city system with the reality of choice. This thread from @dpoddolphinpro has details on the new city limits & vote results. Elon's side won 212-6.

This is 97% democracy, rather than the 51% democracy of the legacy system. Because everyone who moved to Starbase was already spiritually aligned.

https://x.com/dpoddolphinpro/status/1918837843427803526

Ironically, one symptom of deindustrialization is that many commenters have never actually managed a physical business.

So. Suppose your US company imports $1M of high quality parts, and adds in its own components to produce finished goods sold for $1.2M per batch. Your gross profit is $200k per batch.

But wait! Suddenly a new 30% tariff is imposed on that $1M of parts. You now have to fork over $300k to customs before you sell anything. That’s cash you probably don’t have. Oh, and even if you do sell everything, you’re now losing $100k per batch.

With a sinking feeling, you realize your profitable business which you somehow managed to keep in America all these years has suddenly become unprofitable.

You post online about how bad this is but get shouted down by an angry mob, convinced that capitalists like you should die. You can’t tell nowadays if they’re on left or right.

Moreover, you don’t have the time, money, skills, or tools in house to build that $1M of parts yourself. You are being asked to do the equivalent of growing a maple tree when all you needed was a little maple syrup. So now you are faced with several tough choices.

(1) First, you may need to go into debt or fire people to quickly come up with the $300k in cash to pay for these surprise tariffs at customs. Even if the tariff might go away, it might not, so you have to get the cash somehow or risk having your shipment impounded.

(2) Next, you might need to reduce quality to stop losing $100k on each batch. You could order the lower quality $750k parts, grimace and pay 30% tariff at customs, and hope you can build and sell for the same price of $1.2M per batch despite the lower quality.

(3) Alternatively, you could keep the quality parts at $1M and instead raise prices to $1.5M per batch to get back your original margins of $200k per batch, which you need to pay employees after all. But that’s a big hike that your customer will probably not welcome, given that he’s likely dealing with his own tariff shock.

So: these tariffs don’t really give an incentive to build in the US. Because it’s far more expensive to build a screw factory than to pay even high tariffs on a foreign screw.

Instead what they likely mean is debt, layoffs, lower quality, and higher prices for any US company that buys parts abroad.

Just to understand how common that is: Ok, say you do.

It’s a 25% hike to go from $1.2M to $1.5M. You will lose customers. Maybe a lot. Maybe they go out of business at that price too.

Moreover, you aren’t making more money. That extra $300k is going straight to Uncle Sam. It’s a tax on the manufacturing sector.

https://twitter.com/theanon1776/status/1908238644520894556

AI OVERPRODUCTION

China seeks to commoditize their complements. So, over the following months, I expect a complete blitz of Chinese open-source AI models for everything from computer vision to robotics to image generation.

Why? I’m just inferring this from public statements, but their apparent goal is to take the profit out of AI software since they make money on AI-enabled hardware. Basically, they want to do to US tech (the last stronghold) what they already did to US manufacturing. Namely: copy it, optimize it, scale it, then wreck the Western original with low prices.

I don’t know if they’ll succeed.
But here’s the logic:

(1) First, China noticed that DeepSeek’s release temporarily knocked ~$1T off US tech market caps.

(2) Second, China’s core competency is exporting physical widgets, more than it is software.

(3) Third, China’s other core competency is exporting things at such massive scale that all foreign producers are bankrupted and they win the market. See what they’re doing to German and Japanese cars, for example.

(4) Fourth, China is well aware that it lacks global prestige as it’s historically been a copycat. With DeepSeek, becoming #1 in AI is now something they actually consider possibly achievable, and a matter of national pride.

(5) Fifth, DeepSeek has gone viral in China and its open source nature means that everyone can rapidly integrate it, down to the level of local officials and obscure companies. And they are doing so, and posting the results for praise on WeChat.

(6) Finally, while DeepSeek was obscure before recent events, it’s now a household name, and the founder (Liang Wengfeng) has met both with Xi but also the #2 in China, Li Qiang. They likely have unlimited resources now.

So, if you put all that together, China thinks it has an opportunity to hit US tech companies, boost its prestige, help its internal economy, and take the margins out of AI software globally (at least at the model level).

They will instead make their money by selling inexpensive AI-enabled hardware of increasing quality, from smart homes and self-driving cars to consumer drones and robot dogs.

Basically, China is trying to do to AI what they always do: study, copy, optimize, and then bankrupt everyone with low prices and enormous scale.

I don’t know if they’ll succeed at the app layer. But it could be hard for closed-source AI model developers to recoup the high fixed costs associated with training state-of-the-art models when great open source models are available.

Last, I agree it’s surprising that the country of the Great Firewall is suddenly the country of open source AI. But it is consistent in a different way, which is that China is just focused on doing whatever it takes to win — even to the point of copying partially-abandoned Western values like open source, which seemed like the hardest thing to adopt.

On that point: they did build censorship into the released DeepSeek AI models, but in a manner that’s easily circumvented outside China. So, you might conclude they don’t really care what non-Chinese people are saying outside China in other languages, so long as this doesn’t “interfere with China’s internal affairs.”

Anyway —this is an area I’ve been watching, and my reluctant conclusion is that China is getting better at software faster than the West is getting better at hardware. I think China is taking an asymmetric approach.

In a reversal of last century, the West is going closed: closed source, closed markets, closed borders. For understandable reasons.

But China is going open because it suits them. For similar reasons to why Meta open sourced Llama.

https://twitter.com/deanwball/status/1900601413148811474

How did China go from Maoist to capitalist?
Well, Deng took power in 1978.
He inherited a brainwashed agrarian communist state.
And couldn't reform the whole country at once.
So...he set up a few key zones on China's coast.
He fenced them off, and introduced capitalism.
Of course, that worked.
With success, he gained political capital.
He used that to expand the special economic zones.
These zones had a new social contract.
He'd essentially refounded China — but fractally.
Those zones expanded till they took over the old China.
And that's how China went from Maoist to capitalist. The idea that "Deng refounded China" is obvious yet non-obvious.

It's obvious because China failed under Mao & succeeded under Deng. It's non-obvious because many want to maintain China is on the communist left, when it's really on the nationalist right.

https://x.com/balajis/status/1771899715191460187