E42: China's tech crackdown, CRISPR breakthrough, practical climate change solutions & more

COVID-19: Delta Variant and Public Response

• The hosts claim to be two weeks ahead of national media regarding the Delta wave, having previously warned of vaccine breakthroughs and potential lockdowns.
• Vaccinated individuals can contract and transmit the Delta variant, though vaccines continue to prevent severe illness and death; protection is a spectrum rather than binary.
• Global "carrot and stick" strategies are emerging to combat vaccine hesitancy:
  • Israel: The government mandates vaccination for entry to venues with 100+ people (synagogues, malls, sports games), with mandatory on-site testing for the unvaccinated at their own expense.
  • NFL (Roger Goodell): Mandates vaccination for all coaches; requires unvaccinated players to undergo daily testing and threatens salary forfeiture for teams missing games due to outbreaks.
  • Tech Sector (Google/Facebook): Require vaccination for office return, offering free testing for the unvaccinated (unlike Israel's pay-to-test model).
  • Restaurants (Danny Meyer): Requires vaccination or proof of vaccination for all staff and customers at high-end NYC establishments.
• The Biden administration is expected to mandate vaccination for federal workers or require weekly testing, bypassing the need for a national registry by relying on existing vaccine cards.
• The FBI has issued warnings that creating or using fake vaccine cards is a federal crime punishable by fines or prison, specifically targeting events like Lollapalooza.
• New developments include the availability of oral antiviral pills (similar to Tamiflu for flu) which must be taken early; the hosts predict a future where home testing and immediate antiviral prescription supplement vaccines.
• Israel and potentially the US are preparing to administer third booster shots as the Delta variant challenges initial vaccine efficacy.

Political Implications: US Midterms and Republican Strategy

• Hosts debate whether Republican vaccine hesitancy will cost them the midterms; the consensus is that while fringe Republicans are vocal, mainstream GOP leadership (McConnell, McCarthy, Scalise) supports vaccines.
• Republicans risk losing the House by failing to communicate their vaccination support effectively, allowing fringe figures to dominate the narrative.
• Red state governors are described as struggling to vaccinate their populations, potentially reducing voter turnout due to illness or death among the unvaccinated.
• The "carrot and stick" approach is viewed as effective, citing France where restrictions on public access led to a surge in vaccinations.

China's Economic Crackdown and Nationalization

• China has initiated a severe regulatory crackdown on its tech and education sectors, signaling a shift from the Deng Xiaoping-era bargain (wealth in exchange for no political challenge) to a new era where economic interests are subordinate to CCP national interests.
• Key Events:
  • ByteDance was removed from the App Store.
  • All for-profit education companies were ordered to dissolve.
  • Tencent lost $100 billion in market cap in three days following antitrust rulings on music rights and monopolies.
  • Founder Larry Chan lost 99% of his net worth (from $15 billion to negligible) after his company, Gaokao Technology, collapsed.
• Strategic Shifts:
  • Data Nationalization: China has passed laws stating all data generated by companies belongs to the state; operational control of data is now government-owned.
  • IPO Restriction: China is shutting down the pipeline for major Chinese tech IPOs on US exchanges, effectively "reshoring" the IPO business to domestic markets.
  • Power Consolidation: The government is preventing tech moguls from becoming independent power centers (e.g., Jack Ma's disappearance/house arrest), ensuring no deviation of power from the Party.
• Investor Outlook:
  • Global investors (Goldman Sachs, JP Morgan, SoftBank) face increased political risk; capital flows from China are shifting toward local currency vehicles or exiting entirely.
  • The hosts predict a move toward full nationalization of critical tech sectors, effectively ending the "game" of private entrepreneurship in China.
  • TikTok requires a complete separation from ByteDance and a US-only capital structure to survive, or it risks becoming valueless.

Scientific Breakthroughs: Biotechnology and Energy

• CRISPR Breakthrough:
  • First successful human trial of direct-to-patient CRISPR infusion: 65-year-old Patrick Doherty had misshapen protein buildup (amyloidosis) eliminated after a single infusion; the treatment targeted the liver directly.
  • This validates the "AWS-ification" of biology, where biological problems are treated via programmable genetic toolkits (e.g., mRNA logic gates).
  • CRISPR successfully edited marsupials (a difficult target) to alter traits like hair color.
  • Hosts speculate on a two-class society emerging: those using gene editing for longevity and enhancement (e.g., increased IQ, height, oxygen processing) versus "luddites" who do not.
• Form Energy:
  • Startup Form Energy developed a massive, long-duration battery using iron, which is abundant compared to lithium, cobalt, and nickel.
  • This breakthrough could solve grid-scale energy storage challenges for the transition to renewable energy.
• Superconductors:
  • Hosts identify room-temperature superconductors as a potential "sea change" solution for limitless energy transmission and storage within the next 20-30 years.
  • Most innovators in this field are immigrants to the US, suggesting the country's open environment is critical for solving these physics problems.

Climate Change and Economic Solutions

• The hosts reject "consumption reduction" (e.g., the Green New Deal) as a viable solution, arguing it would require returning to a "Stone Age" and stifling the population needed for innovation.
• Proposed Solution: Market-based mechanisms including carbon trading and carbon tariffs.
  • Negative Emissions Technologies: Creating markets for carbon removal (e.g., Direct Air Capture) by allowing entities to sell permits to those who emit.
  • Carbon Tariffs: Import duties based on the carbon emissions generated during the production of goods (e.g., tariffs on cars from Germany to Britain based on manufacturing emissions).
  • This approach incentivizes innovation in clean production and carbon capture without dictating individual consumption habits.
• Critique of Current Status: Major retailers (Amazon, Target) have net-zero goals, but the CPG companies producing the goods (P&G, Clorox) have not committed to meaningful reduction, shifting the burden to retailers.

Anecdotes and Cultural Commentary

• Quentin Tarantino Stories:
  • Hosts recount Tarantino's persistence in making Reservoir Dogs after years of rejection, funding early films on weekends and building a unique non-linear storytelling style.
  • Tarantino's philosophy is to never seek permission and to self-censor less, focusing on the work itself rather than external validation.
• Jay Cow Poker Story:
  • J Cal and Jay Cow traveled to Boston for an HBS speech; Jay Cow lost $550,000 playing poker against the pilot (who paid $5k to extend the flight time) and a third party.
  • The trip included a "Robin Hood" moment where the hosts' winnings were used to buy steaks for a restaurant patron; Jay Cow complained about the cold and the tiny portion of steak served.
• Robinhood (HOOD):
  • The platform now has 22 million members; hosts believe it could reach a $1 trillion valuation as users become financially literate through low-stakes trading and learning by doing.