The Reason Interview With Nick Gillespie

Today's guest is Neal Stephenson, the bestselling author of Snow Crash, The Diamond Age, and Cryptonomicon. His latest novel, D: Heavy Water, revisits the early days of World War II, when scientists were racing to understand nuclear fission and a secret mission sought to keep a crucial ingredient for atomic weapons out of Nazi hands.

Nick Gillespie talks with Stephenson about what drew him to this forgotten chapter of history and how revolutionary idealism can give way to authoritarianism. The conversation also explores the internet's early promise of decentralization, how Big Tech came to dominate it, and why the metaverse hasn't lived up to the vision Stephenson introduced in Snow Crash. They discuss his early work with Jeff Bezos at Blue Origin, President Donald Trump's disruption of American politics, and why Stephenson believes the West's Enlightenment values remain worth defending.

0:00—The failure of the metaverse

9:59—Did the internet fail on its original promise?

14:36—The impact of technology conglomerates

17:22—What we get wrong about the Puritans

21:45—Mother Earth Mother Board

25:14—Blue Origin and space exploration

31:22—D: Heavy Water synopsis

35:49—Creating characters with nuance

40:00—Francoists

41:29—Atomic bomb development

44:13—Communism

46:22—Cryptonomicon

50:06—The Big U

52:46—Stephenson's literary influences

55:23—Democracy and politics

1:00:28—The aftermath of 9/11

1:05:34—Faith and science

Previous Reason features:

"Neal Stephenson's Past, Present, and Future," by Mike Godwin

"Wiki Magazines on the Way, Neal Stephenson Is Awesome," by Katherine Mangu-Ward

"Intelligence at Work," by Anders Monsen

"If We Told You Neal Stephenson Invented Bitcoin, Would You Be Surprised?" by Peter Suderman

"Neal Stephenson Wants to Tell Big Stories," by Tyler Cowen

"Neal Stephenson's Polostan Is a Compact Epic About Communism, Science, and the Dawn of the Atomic Age," by Peter Suderman

The post The Untold Story Behind the Race for the Atomic Bomb appeared first on Reason Magazine.

Today's guest is Ted Brown, the Libertarian Party candidate for U.S. Senate in Texas. Brown is facing off against Republican Ken Paxton and Democrat James Talarico in a closely contested race. Brown received more than 267,000 votes in his 2024 Senate campaign and is now challenging both major parties on their commitment to individual liberty. He argues that Republicans have abandoned limited government while Democrats increasingly embrace economic policies that undermine the free market.

Nick Gillespie talks with Brown about Paxton's corruption scandals, Talarico's hostility toward billionaires, and why Texas ranks poorly on personal freedom despite its business-friendly reputation. Brown makes the case for returning to an Ellis Island–style immigration system, cutting federal spending to confront the $40 trillion national debt, and ending America's military involvement in the Middle East. They also discuss abortion rights, government surveillance, online age-verification laws, and how regulations drive up the cost of healthcare. Brown explains what it will take to rebuild the Libertarian Party and why he believes a senator could accomplish more by stopping bad legislation than by passing new laws.

0:00—Freedom in Texas

4:01—Paxton's corruption

6:21—Talarico's platform

8:53—Texas governance

10:33—Ellis Island–style immigration

13:58—Abolishing the federal income tax

15:29—Entitlement reforms and defense spending

18:19—Abortion

21:21—Transgender healthcare

22:24—Age-verification laws

25:05—Healthcare and property insurance

31:22—Who is Brown appealing to?

33:27—The Libertarian Party

36:08—Brown's pitch to undecided voters

39:06—Threats to individual liberty

The post Could a Libertarian Swing the Texas Senate Race? appeared first on Reason Magazine.

Today's guest is Tarek Mansour, the 30-year-old billionaire co-founder and CEO of Kalshi, the prediction market platform where users can trade on the outcomes of everything from elections and economic forecasts to sporting events and the weather. As prediction markets surge in popularity, Kalshi is facing legal challenges from states that argue it's operating an illegal gambling business. But Mansour insists that prediction markets are fundamentally different from casinos and sportsbooks and that efforts to restrict them threaten a powerful new source of information about the future.

Nick Gillespie talks with Mansour about Kalshi's battles with state regulators, why he believes the gambling industry is trying to stifle competition, and how prediction markets can help businesses manage risk. Mansour explains why ordinary people can sometimes forecast economic trends more accurately than Wall Street professionals. They also discuss Mansour's journey from growing up in Lebanon to building a multibillion-dollar American company and his concerns about rising inequality and the declining enthusiasm for entrepreneurship. Mansour argues that capitalism needs to give more Americans a stake in its success without sacrificing the innovation that makes it possible.

0:00—How prediction markets differ from casinos

4:55—Do prediction markets serve a public good?

8:18—Markets, price discovery, and the economy

11:36—Why does Kalshi ban insider trading?

14:06—CFTC and federal regulation

17:26—How Kalshi differs from Polymarket

22:30—Do prediction markets have a corrosive effect?

25:03—Kalshi's ban on athlete harassment

26:49—Arizona and New York lawsuits

31:30—State versus federal regulation

33:45—Why is Kalshi exploding in popularity?

35:57—Mansour's background and the American Dream

39:55—Wealth gap narratives and an inclusive economy

42:39—Will a Democratic Congress hurt Kalshi?

45:17—Mansour's prediction for Kalshi

47:48—Will state lawsuits require a Supreme Court decision?

Producer: Paul Alexander

Director of Photography: Kevin Alexander

Camera Operator: Meagan O'Rourke

Audio Engineer: Ian Keyser

Transcript

This is an AI-generated transcript. Check all quotes against the audio for accuracy.

Nick Gillespie: This is The Reason Interview With Nick Gillespie. I'm talking today with Tarek Mansour. He's the co-founder of Kalshi, the prediction market platform that allows people to win or lose money, or invest or not money, on everything from election results to weather outcomes to who will win Dancing With the Stars and, of course, all sorts of sports. Thank you so much, Tarek.

Tarek Mansour: I'm excited.

You're 30 years old, you're a billionaire, and you are a big believer in prediction markets as truth machines. I want to talk about that in a minute. But first, Kalshi gives money to a lot of nonprofits, including Reason Foundation, the nonprofit that publishes this podcast. There are no conditions on this interview.

Tell me first, what is a prediction market, in the simplest terms possible, and why is it different than a sportsbook?

I think a prediction market, in the simplest terms possible, it really is like the stock market. We're matching buyers and sellers in an open marketplace that is competitive. The thing that they're trading is not a small, specific subset that Johnny Wall Street cares about, whether it's a stock or a bond or a credit default swap or all these kinds of sophisticated things. It's simple questions about the future.

Right. So everything is yes or no?

And some things are actually more like, is it going to go up or down? And there are more structures now. But I think a prediction market is just a generalization of the stock market. One way to think about the stock market is actually a prediction market on the prices of stocks on companies.

And you make money not on whether or not you bet right or wrong. You're not the house. You run the platform, so it's like you own the casino. And you're not staking anything…

No, it's exactly the opposite. We're exactly like owning the stock market. We're like the New York Stock Exchange, right? The New York Stock Exchange is not in the business of pricing a stock or setting the prices. They're in the business of matching buyers and sellers.

And so you may have an opinion that something's going to happen, and somebody else may think that something is not going to happen. And we match the two of you to settle that disagreement of opinion via trade.

Historically, that's about stocks. Someone thinks Apple stock is going to be worth more than the current price, more than $100 per share, and someone thinks it's not actually going to be, that it's overpriced. They make a trade as a way to settle that difference of opinion.

The difference in a prediction market is you're doing it on whether Brexit is going to happen or not. And you may think that it's very likely that Brexit happens, and someone else, your counterparty, may think that it's not very likely it's going to happen.

And let's say the market right now is trading at a 40 percent chance, 40 cents on the dollar. You may want to buy, and the other person wants to sell, and we match the two of you. And I take 0.7 percent. So if you put in $100, the other person puts in $100, I take 70 cents.

And now, very quickly, explain why that's different from a sportsbook, like why you're not Fanduel….

Here's how I'll explain it, and I'll get back to exactly the sportsbook analogy.

So when the first version of financial markets came around, and very few people know this, people think that the first financial market was the stock market, but actually it wasn't. It was the commodities market.

The first real example of a financial market was the rice futures exchange in Japan. And then in the U.S., it's really become very popular at the end of the 19th century. It was farmers, they were trading on the price of grain using grain futures, and then over time, it evolved to oil futures, etc.

And at the time, it was really interesting because when I tell you about grain futures right now, you don't think gambling. You think boring, mainstream financial markets.

But at the time, the states were suing the Chicago Board of Trade, saying this is gambling. And what was the claim? It was saying, "Well, farmers are betting on the price of grain. They're speculating, and so it looks and feels like gambling. What's the difference?"

And at the time, they didn't have sportsbooks or casinos. They had the bucket shops, which were different from the Chicago Board of Trade.

So what were the bucket shops? A bucket shop was a place where the shop, which was functioning like a casino, set the prices. They would say, here's the price of grain, and here's what I'll let you buy, and here's what I'll let you sell.

And then the purpose was basically, it was a casino. Farmers would come in, bet against the bucket shop, and then they would lose money. And if you made a little bit, if you were a smart, sophisticated trader, they would ban you. You know, the card counters get banned from the casinos.

It continues to happen on sports betting.

In sportsbetting or casinos, right? Like, if you're a smart, sharp trader, you get limited. And if you maybe have some addiction issues or you lose consistently, you get promos, and you keep coming back. That is the gambling business model. That is the end.

And when people were claiming that the exchange was gambling, at the time, the Supreme Court ruled in favor of the Chicago Board of Trade.

And the basis was very simple. It's like, yes, some people are speculating, which looks and feels like betting, sure. But the mechanism is different, and there's a public good that comes out of it.

The mechanism is a free, neutral platform that lets people trade against each other. And what it needs and incentivizes, it incentivizes the card counters, the smart traders, because the public good that it brings is the informational knowledge that it gives to people.

Talk a bit about this, because this is key to your argument, and we'll get into the regulatory structures and the cases against you, but that prediction markets serve a public good because they give more information about what is likely to happen or how actors are going about their business. How does that happen?

In particular, at a place like Kalshi, you can bet on whether it's going to rain tomorrow or how much. How does that in any way create information that is useful?

Yep. So our weather forecast, so when people are trading on whether it's going to rain tomorrow or not, what happens is you get price discovery.

Some people think the odds of rain are a little bit higher than the market, so they buy it, which moves it a little up. And then some people think it's lower, and it moves it a little down. And that continuous thing is how a stock moves. That's why we call it price discovery.

Price discovery is essentially, there's a quote from a Supreme Court decision in 1905. It's really neat. It's like this idea that speculation is the self-adjustment of society to the probable.

Which is like it's the self-adjustment of the market, the wisdom of the crowds, to what we think is going to happen.

There were papers actually a week or two ago that compared our weather forecast, like the forecast from the prediction markets on the weather, to the most accurate national blended average of weather station forecasts, and we were 10 percent more accurate.

I mean, just very quickly, how does that happen? Because Joe Schmo betting on the weather, he doesn't have satellite information.

So let me give you a little bit of history.

Prediction markets, I think the founder of prediction markets is Friedrich Hayek, the economist. He used to call them information markets, not prediction markets.

And what was the sort of central thesis? At the time, he was saying we have a knowledge problem. The knowledge problem is that our decisions in society, whether it's D.C., whether it's executives, are centralized.

It's you and I sitting in a room and making a very critical decision about the future of the country. But the information that's relevant to that decision is actually very decentralized. It's sitting with a bunch of different people, hundreds of thousands, millions of people distributed across the board.

So we need a magnet. We need the mechanism to bring that information from everyone so we can make better decisions over time.

That's what markets do.

That's exactly what markets do. Market prices are a very good aggregator of information.

Ok, so then the idea is that somehow the people who are betting on the weather have some kind of meaningful knowledge that otherwise would not be—

And by the way, people are not even usually, for example, for the Senate race right now, they don't buy Democrat or Republican and then hold it till maturity. They buy if they think the price is underpriced, and they sell if it's overpriced. They're constantly trading these things.

But the key thing here, when I started the company in 2018, a few years before that, Philip Tetlock did…

At the University of Pennsylvania.

He's actually at MIT.

Oh, I'm sorry. Ok.

And it's about superforecasters. And the whole thing, he was trying to figure out the science of forecasting. What are these people who are good at forecasting?

And he pitted a bunch of elites on geopolitics, the big pundits, and he pit them against a bunch of random dudes, basically, and had them predict geopolitical events. And guess which group did better? The random dudes.

And it was amazing because it tells you a little bit that actually there is a lot of wisdom in this idea of the wisdom of the crowds. The average people, if you add them all up, and all their bits and pieces of information, you end up getting a way better solution and result than the small group of elites.

And this gets reflected, I mean, the way Hayek talks about it in "The Use of Knowledge in Society" and throughout all Austrian school of economics, is markets and prices are discovery systems that transmit information.

That's exactly what it is.

And prediction markets are like transmitting information about a much broader… We used to care about— farmers used to care about what the price of grain is going to be. Why?

And I go back to the farmer. Imagine we had banned grain futures as gambling at the time. There's a very clear net impact on society today, which would be what? Why would it be important?

That price discovery that was happening was giving the farmer predictability on what the price is going to be of grain in September. So now I'm in March, I know how much I can invest, how much I can plant.

If you take that away from them, what would they do? They would plant less. They would just, because with less predictability, you can invest less. And so actually, our food supply would go down. That's how critical grain futures are.

So that makes total sense. And then just to press on this a little bit, as a libertarian, I like markets and everything. I like prediction markets, etc. But what is the positive social externality, other than people being able to express themselves or entertain themselves, with like betting on Dancing With the Stars?

Well, I think to me, some people may disagree on the lines, but a lot of people care about that. And I'll give you a lot of examples.

At a high level, it seems like we agree with the premise that getting smarter, even if it's a little smarter, about what's going to happen will enable us to make better decisions and allocate resources more effectively and manage risk more effectively, right?

Now, what's interesting is actually I always think of this as like, you want more markets on more things because like—

It's more information.

It's more information. It's just that simple.

And I'll give you an example. This was the same argument that was made. So there were two types of commodity derivatives that were banned. Onion futures, which I can tell you the story, there was a wild story.

The second one is box office futures. Box office futures, in 2010, there was an exchange that was trying to bring them to light, which is an idea to do price discovery on how successful a movie is going to be beforehand.

Guess who killed it?

I'm assuming the movie companies.

The big ones. Why? Because they wanted less information. And the argument was at the time, well, it's frivolous. What is the purpose of knowing if a movie is going to be successful? It's a frivolous thing…

And this is called a Keynesian beauty contest or something, where you're betting on what you think other people will say is going to happen or something.

Yeah, I mean, but in this specific one, it's more like they were saying, "Look, knowing if this movie is going to be successful or not, that seems frivolous. It's not like grain futures. We should ban it."

But they actually had an ulterior motive, and there's a reason they did not want price discovery, for two reasons.

Because one, if the market can predict ahead of time how successful a movie is going to be, it'll be harder for them to juice the three or four weeks of box office they get in a bad movie before the word gets out. And there was a second reason. If you have a market that will tell you upfront, actually, "This team is doing a good job, even though it's a small team with a smaller brand," you may attract more investment to the smaller studios, which was going to bring more competition to the space. You will get more efficient….

I mean, markets are democratizing, ultimately, or they push against centralization.

More information is always better, and oftentimes monopolies and incumbents want less information because, you know, the markets usually reduce…

Well now let me… I want to get to the regulatory structure you're currently under, plus what various states are trying to fit you into, a different kind of regulatory structure. But just on this moment, let's stop for a second.

If more information is always better, why do you ban insider trading? Because there is an argument that insider trading is absolutely the best information, and it changes prices very quickly and makes markets clear more—

And libertarians, that's the argument, and the free market side of me always tells you that you want more. You want as much as possible.

And you want, like, when Practical Magic 2 is coming out, you want people in the studio who have seen it, who know it sucks, to change, you know, to…

I would argue yes, in theory. I'll say where in practice.

But maybe right before, I want to just make, because you asked me about the gambling distinction, which we'll get to with insider trading.

The gambling business model is one where the thing they incentivize for their customers is fun and entertainment and to keep losing. That's why they give you the suites and the drinks, and they keep you losing.

Prediction markets, what they incentivize is going out there, like markets, seek knowledge, seek truth, and then come to get rewarded for it in the open market. That is why there is a fundamental difference.

And it doesn't matter what the topic is. It could be grain futures. It could be weather. It could be economics. It could be sports. It doesn't really matter. The structure, the former structure, is what really matters.

Now, on the other argument, I agree with you. It's like, well, the insiders, should they be allowed to trade? And the way I always answer the question is, why is insider trading banned in the stock market? Because in theory, we would get more accurate prices in the stock market.

And there's a very practical reason, and this is how markets should be regulated. And I strongly believe that. That's why we took a pro-regulatory-first approach to this.

Because markets can only exist if there are fair rules of the road and the competition is fair and equitable across all the participants. So I think actually…

And people need to believe that the market are not…

Otherwise, they stop trading.

Free markets, in my view, if you take the opposite of free markets, it's this idea that there's a privileged, closed circle that has access to specialized information. Right? And the key thing in the line I was drawing is, if the information is something you can access by doing research and work and putting in the effort, no matter who you are, then it's fair game.

But if it's information that you only will have privileged access to because, I don't know, you work in government or you're an executive at a team, then it's unfair. Then it creates an unfair dynamic that over time dries up liquidity and makes actually the market less efficient because nobody will trade. People won't trade.

So this helps explain, you noted you co-founded Kalshi in 2018. You went to the Commodity Futures Trading Commission to get licensed and regulated at the federal level. So when people say, "Oh, you guys are completely unregulated," that isn't accurate. But you're…

It's completely inaccurate.

Yeah. How does the CFTC regulate what you do? And then we'll get into how and why states might be trying to change that.

Yeah, I mean, I think they're two entirely different… There's a reason why the states are trying to change that, and we'll talk about that. It's fundamental protectionism.

So the beauty of the Commodity Exchange Act, why did it come? It actually got created after this whole fight that the Chicago Board of Trade was having with the states. And Congress, in '74, enacted the Commodity Exchange Act to actually preempt two types of laws: state insurance laws and state gaming laws.

And there's a reason why. Because on an open exchange, in grain futures or on Kalshi, there are two types of activity: speculation, which looks and feels like gambling, or hedging, which looks and feels like insurance.

The difference between those two is they're being done on an open market.

And why do you need the federal statute? Why didn't they let the Chicago Board of Trade be done state by state? It's because it didn't work. And here's the easiest way to explain it. Imagine we siloed the New York Stock Exchange, the stock market, state by state, where in New York, you can only buy Apple stock from New Yorkers.

Imagine we had 50 different New York stock exchanges, different prices, different rules, fragmented liquidity.

What would happen? Worse prices, a bunch of deadweight loss, lower liquidity. You probably won't be able to, if you're in Kansas, you won't be able to buy as much stock as you want.

It is a completely anti-market kind of structure.

What you want is a federal, uniform set of rules that apply across all 50 states that promote and foster this sort of multilateral, peer-to-peer idea. Someone in California is trading with someone in Texas, and you want as much information as possible. You don't want to silo information. That's the anti-market view.

And what does regulation mean, and why is it important for us, first, for us to really get regulated as commodities? It's because the rules that apply to trading on oil futures or interest rate swaps or politics on Kalshi are largely the same.

So what do you want to prevent against? You want to prevent against insider trading, prevent against market manipulation, so doing things that move the market price unnaturally for profit. You want to add sensible guardrails around knowing who your customers are and money laundering and that sort of thing.

And I believe in this, and I think this is where the regulation is very important. It's like all these products, whether it's grain futures or sports betting or prediction markets or trading options on Robinhood, most of the use is fine.

And it's not about people winning or losing. I think the competition, some people are going to win, some people lose.

But there's some degree of irresponsible use. I do believe in that. And I believe in individual freedom. People should be able to choose, but I think there should be some regulations on irresponsible use so that companies are not targeting those types of behavior.

The sportsbooks constantly target those types of…

Yeah, so let's just, real quickly, how do you guard against insider trading? I mean, you ban it, but how do you know whether insider trading is happening? How do you know whether or not somebody who has a problem is continuing to use Kalshi? How do you find out?

Yeah, so insider trading, I mean, it's the ever question for a stock market. How do you know? And it's largely a very similar mechanism.

So one, you have to verify all customers. It's like onboarding onto Schwab, opening a brokerage account. You have to…

Are you covered by know-your-customer rules?

Yeah, yeah, yeah. As a regulator.

And that is distinct from something like Polymarket, which is based offshore, and they're struggling with the idea that there may have been a member of the U.S. military who bet on Maduro being removed because he was part of the operation, which is kind of a classic case of insider trading.

It certainly is insider trading, for sure.

Because insider trading is like, are you trading on material nonpublic information? So do you have a piece of information that you're not supposed to disclose legally? And trading is a form of disclosure. You can't go say it, so you…

Ok, so you follow KYC, but then, yeah, and then how? So how do you…?

And then you have the same systems as the New York Stock Exchange, which basically flag suspicious patterns.

I mean, insider trading or market manipulation, the patterns are always weird. You always have an account that is trading hundreds of dollars, and now they're trading thousands of dollars all of a sudden on an asymmetric shot. What's happening, right?

And the last piece is you enforce. So when you find someone, we have, as a self-regulatory organization, we can impose fines all the way to referrals for criminal prosecution.

And the last piece that's so interesting about the prediction market, so I think it's even unique compared to some of the financial markets, all of our trades are public. It's all fully transparent.

So our customers, because why is insider trading bad? There's someone who gets harmed when someone commits insider trading. It's the person on the other side. That person is extremely incentivized to whistleblow, usually.

And so, George Santos basically tried to commit insider trading on Kalshi a few months ago. We had 100 whistleblower complaints within a few minutes because traders immediately tell us, "Oh, this is weird," and they can all see it publicly.

And that's actually kind of a curse because the press talks about insider trading cases on prediction markets all day because they're so easy to flag.

That's actually a blessing, if you really think about it, because it's so obvious. It's so clear.

So let's talk about…

You're committing a crime in broad daylight, right?

Yeah. So the state of Arizona, I mean, there's about 20 jurisdictions, I guess states, also some Indian tribes and things like that, that are bringing suits against Kalshi.

Arizona, earlier this year, launched a criminal indictmentthat you're running an illegal gambling operation. New York state, we're talking in New York, and you guys are headquartered in New York, right? It's saying that you are basically, I guess it's not a criminal indictment, but they think you owe them billions of dollars because you're essentially a gambling operation.

What do they get wrong? And what do they get wrong about your structure?

I mean, let me read to you something that I've sort of been looking at recently that I've been sort of really into.

I'll read you one of the court opinions, and here's how it sort of goes:

"We are clearly of opinion that dealing in these markets is void by the common law, for, among other reasons, that it is contrary to public policy. It is not only contrary to public policy, but it is a crime. A crime against the state, a crime against the general welfare and happiness of the people, a crime of religion and morality, and a crime against all legitimate trade and business. This species of gambling has become emphatically and pre-eminently the national sin. In its proportion and extent, it is immeasurable."

And they go on and on about how horrible this activity is.

This is the Illinois Supreme Court. It is from actually 1888. And it's about grain futures, not prediction markets.

And I think the same thing is playing out.

And is this simply, I mean…

It really is as simple because we have the same structure.

And the topic never mattered under the federal law. But states misunderstood it, and they just looked at grain futures at the time as like… Because people don't understand markets. Markets have always been something that people…

They're counterintuitive.

And I always think, imagine we had banned grain futures back in the day. We would have ruinous consequences. It's today one of the bedrocks of the U.S. economy. We would not be able to function without grain futures.

And everybody benefits. I mean, there are individual winners and losers, but you get a more stable supply of food, better planting, better forecasting.

I think about 100 years from now, when there's going to be the next generation of entrepreneurs coming around and expanding the universe, they're going to be looking at this and thinking, "Imagine we didn't have a good gauge on where elections are going to land, on where geopolitics are going, the weather, the climate, the hurricanes."

And you're starting to see today, our fastest-growing segment is actually businesses hedging on Kalshi.

How do they do that?

You can take a position because you want to make money, speculate, but a lot of people take positions because they want to reduce their risk toward an event.

So the same way that grain farmers would short the price of grain so that if the price of grain goes down in six months, they would offset their revenue loss, we see a lot of businesses do the same.

So one example, we have now hundreds of businesses that do the same, it's like sports bars hedge against their home team losing every game.

Why? Because if the team wins tonight, I will make $2,000 in revenue. If it loses, I'll make $800 in sales. And my cost is the same because I have to stock up on inventory. So it's $1,200, $1,200 no matter what.

So when the Knicks win tonight, I make $800. The Knicks lose tonight, I lose $400.

Unpredictability like that is very bad for small businesses. So they buy no on the Knicks. So they short the Knicks winning in a way that essentially compensates their P&L so they're up $300 no matter what.

And why is that important? Because predictability, it's a bit like how the airlines hedge their price fluctuations, predictability helps with investment, helps them make their decisions.

Quick question before we get to why the states are bringing these suits the way they are. Does the financialization, or does the prediction marketizing of everything, does that have a corrosive effect, say, on sports?

In leagues, and this goes back to the 1919 World Series in Chicago, the Chicago White Sox famously had some players who threw it. But when everything is being bet on, everything is being speculated, does that end up undermining something fundamental?

So one, it shouldn't be everything. Two, I just want to be clear, we are not adding anything to sports. Sportsbooks have existed, like DraftKings and FanDuel, and if you see all the cases of players doing bad things, they're actually on the sportsbooks.

Can I ask what percentage of your revenue, or…?

I mean, it's like 65, 70 percent now, but it's going down. So it was 96 percent nine months ago. So it's going down very quickly because sports is a great way to educate people about probability. They get it. It'sMoneyball. Our customer is the Moneyball type.

And then over time, they do politics and economics, and everything else is growing.

But I want to make a key point about this, which is very important. The notion that prediction markets all of a sudden now allow people to bet or trade on sports, it exists already. The question is, do you prefer it in an open and fair marketplace where everything is transparent, or do you prefer it in a closed marketplace where everything is opaque? That is the question.

And then I'm a pro-regulation guy, so I think there's war, terrorism, assassination, violence, wildfires, things that create moral hazards, that should not be traded on. We should not have markets on those things because the incentive is, it's too easy to go and create a fire.

But we also, as a market, we don't go… Most of the issues that you see is things…So we have standards that are more strict than the states' gambling rules around things not being very easily manipulated in the Commodity Exchange Act.

So we don't, for example, do markets on whether the next play is going to be a ball or a strike. The sportsbooks do these, and that's actually the vast majority of cheating cases, etc.

And that's also why we believe that regulation is very important, because when you set the right guardrails on what markets should be in, what markets should not be in, and how do you police those types of activities, and when you find someone that does it, how do you punish them very heavily? The last thing I'll say is we actually ban athletes from trading on anything that relates to their leagues.

I'm sorry, anything at all, or just on…?

Anything in their leagues. Yeah, the same way we ban politicians or members of Congress from trading on things that relate to Congress.

Yeah.

All of that goes into our…

That's like the only place where Congressmen can't bet on what they're about to legislate.

They can do it on the stock market, but not on Kalshi.

Kalshi was a sponsor of the U.S. Open, which is kind of interesting, and there's a growing acceptability.

And the NHL and MLB, and you're going to see a lot of other leagues.

But you've also recently you said that you are going to limit people who are abusive toward sports figures.

Yes.

Explain that, because now are you saying, as a condition of entering contracts on Kalshi, you're going to limit the speech of people? Or how does that work?

That's a great question. I mean, look, I think there are certain bad cases where, and by the way, it's not just about sports. It exists in really anything.

But I think the idea that someone… We always want to be careful about regulating the bad behaviors out of the system. And I believe that. I'm a very free markets guy, but I do believe in sensible guardrails. I do. And we may disagree on that point.

My view is the highway should be wide enough for people to compete and thrive and do all the great things you're going to do. You have to have a fence at the end of the highway to make sure people are not driving themselves off the cliff.

And I think it needs to be very delicate and needs to be very careful. You don't want to make the highway one car at a time because that's terrible. And so in this specific case, you have issues sometimes where people get over their skis and they go and harass…

Yeah, I mean, if you lose $2,000 or $10,000 or $200 because somebody dumps the fifth set at the U.S. Open, you're probably going to yell at the person who lost.

Yeah, yelling is one thing. Harassing and following them online and doing all the weird stuff that sometimes… And by the way, we haven't seen any evidence of that happening on Kalshi. That has historically happened on the online sportsbooks and some of the other mechanisms. I just want to be ahead of it. I don't like that idea.

Ok, so then here, is there any… When the state of Arizona says, "Ok, you're like a gambling operation, you're like the Mafia coming in and you're running this billions of dollars," New York is doing something similar.

In New York state, I think on a typical sportsbook, they take 51 percent of gross revenue. They make a lot of money by taxing and regulating this, and obviously they want money from you. Is there any other reason that they're doing this?

The casino lobby. I mean, the casino lobby is… The foundational thing is a few things.

So when an incumbent gets threatened competitively from a challenger, what does the incumbent usually do?

Go to the government.

It's litigate, then legislate, and then finally, when you realize that this is here to stay, you innovate, right? That's the basic 101. It's always been par for the course.

And why? Because incumbents, inevitably, when you get big enough, you want less competition. That's what you really want. And that's what's been playing out here.

And by the way, it's not just about sports. We launched perpetual futures recently, and CME, the Chicago Mercantile Exchange, the Board of Trade, sued us over it.

And usually the policy argument is never, "I'm losing some revenue due to competition." It's like you come up with a bunch of reasons, like, "Oh, it's too risky. It's too whatever," so they can get policymakers riled up.

And they usually have very orchestrated lobbies and comms functions that do these sorts of things.

But if we look at it foundationally, first, it's interesting. We have zero evidence of cannibalization between what we are doing and the gaming companies, but also the sportsbooks. Why? Because my core customer is a trader. It's the guy who has 17 monitors and like is doing math and stats, and that's 70, 80 percent of my volume. That person is banned in the sports world.

Ok, yeah.

Right? Because they're making money.

I mean, so do you think people are using Kalshi to make money, or is it a form of entertainment? Because casinos and sports betting is really entertainment…

Do you think some people use options in the stock market as a form of entertainment, like on Robinhood?

Yeah, I suspect that.

I mean, on Robinhood, for sure.

But there's a great, actually from Illinois, that was more recent actually, like a week or two ago, which is saying that just because something— financial, these prediction markets are swaps, they're financial instruments, they just happen to be fun.

And that's not… Fun is not a problem because when you look at the grain futures market, I always go back because the parallels are so clear, 95 percent of the transactions are speculative.

Sometimes I get farmers having fun. They're gambling, speculating on something.

But the key thing here is that you can win on Kalshi. The bulk is people who are doing sophisticated things, and it's a more sophisticated market.

What is the percentage overall of winners versus losers?

It's a zero-sum game. It's like the stock market or active trading in the stock market.

I'll ask you this question this way: How many hedge funds outperform the S&P every year?

Yeah, I mean, in a given year, I don't know how many.

What do you think is a number, roughly?

Uh, 50 percent?

50? It's like 20.

Ok.

It's amazing. Like 20 percent of hedge funds win. Yeah, like 20 to 30 percent—

And then over time, none of them do.

No, there are, I mean, there are big winners like Citadel and Renaissance. That are like really big winners.

Why? Because competition. Competitions are hard, right? Imagine that number was 50. What should that tell us? If it was 50-50, 50 percent win, 50 percent lose, it would just be a game of chance. There's no skill in this thing.

Anything that has skill, like how many people win the NBA Finals in their careers? It's a very small subset because competitive environments require skill, and when that happens, you're going to have…

So how are you…?

So the answer is actually, if 80 percent of hedge funds lose on the stock market, our numbers are closer to 60, 65 percent of people losing, which is actually more of an equalizer.

Because the one thing we see on Kalshi is actually a much larger diversity of people end up being winners. If you look at our top performers, 79 percent of them went to public school. Our top traders, they're 2x more likely to have worked in retail than worked on Wall Street.

It's kind of amazing if you think about it.

Our best inflation forecaster is a random guy in Kansas who's never traded in the financial markets, just likes…

How does he do it, then? Do you know?

He's read about the economy for 20 years, loves reading about it, very, very calibrated. He's been thinking about it a lot.

And this goes back to Hayek and Tetlock. It's the idea that information and knowledge sits anywhere. They're not sitting with the elites.

And by the way, the Federal Reserve put out a paper in February. It's called "Kalshi and the Rise of Macro Markets."

They compared the Wall Street forecasts, the Bloomberg, on inflation, economy, GDP growth, unemployment, against the Kalshi forecasts for those things, which is Main Street—- Wall Street vs. Main Street.

And the result was actually Main Street was more accurate than Wall Street, and it's also real time. We move in real time.

So is your strategy, obviously you're fighting lawsuits, but is it ultimately like you're going to come up with a number that you say to New York state and Arizona, and you say, "We're not going to give you 51 percent of gross revenue," but do you keep working until you get to a point where they're like, "Ok, we'll live with it"?

I mean, I like to take the optimistic view of things, which is I think there are some people who just don't understand it. So part of it is we're just sitting down and explaining what I just explained.

Right, right.

Because the superficial view on prediction markets, like any markets, it's always the same. Society has always had an affect reaction to prediction markets. It comes around, and they're like, "That feels like gambling. It feels wrong.

It's either random or it's rigged," right?

Exactly. It's either random or it's rigged, and it's financialization of stuff.

Not because they're bad or good, just because they are hard to understand. And when you explain it more and it gets a little bit more normalized, people, "Oh, that's actually pretty cool."

And you always see it. When I start with a meeting and I end with a meeting, the opinions on this go, "Oh, actually, it can make us think about the future a little bit better. It could depolarize us because now people are thinking more instead of saying stupid things on Twitter."

Clearly, you're not describing any meetings that you've had with the New York State Department.

Well, I mean, look, I can't speak about specific meetings, but my point is, over time, it requires education. There are parts that don't understand, parts that, yeah, there are lobby groups and casinos that are pushing really hard to protect their turf. Or I don't even think they're protecting it. They're not getting cannibalized. I think their view is like, "Oh, it's a big industry. We should have it, too." It's a little bit that sort of thing.

The thing that they're misunderstanding is that this cannot exist state by state.

Why not?

Because, you know…

Ok, because gambling does. And I know you make a big distinction.

With gambling, you go against the house, and you bet against the house. It's localized. That's fine.

But I'm a peer-to-peer market. You don't want the Californians to trade only against Californians, and Texas…

Again, why is New York… Do you prefer a national New York Stock Exchange or 50 different…?

I'm a citizen of the world. So, yeah.

But the point is, exchanges are peer-to-peer, and they require liquidity. They require a large diversity.

It's like Marketplace, Airbnb. Imagine eBay. You can only buy the bag that you want from people in the same state. That doesn't make any sense. You want diversity. The more diverse the participation, the more information, the more it works.

Why do you think prediction markets, and obviously there have been prediction markets probably for as long as humans have had language…

You know what the first one was, right?

I don't.

Pope elections.

Oh, ok.

In the 1400s.

Ok. Yeah, and well, Intrade, which was a predecessor, which was another business, or got run out of business in 2013, was very good at predicting who was going to be pope.

But why does it seem to be exploding now in popularity? Is it that the tech got better? Is it that people have more money?

I think it's two things. One, we approached it from a regulatory-first approach. I always wanted to create a financial market and broaden it into more things.

Prediction markets are just the financial markets. They're just on a different topic. That's it. People are complexifying this.

But the second thing is, when I started in 2018, I think the demand is because, I think it's the polarization that's happening in the country.

And we feel like there's more information than ever, but less truth than ever. Because the filters, the things that are filtering our information, are biased. They're partisan, they're extreme, they're polarized.

The social media algorithms, and you see, you look at two different Twitter feeds and they look entirely different. People have different conceptions of the truth, of what's happening on the ground.

Because if you write seven paragraphs of thoughtful analysis on Twitter, you get two likes. If you write something crazy, like something racist or something ludicrous, just straight-up stupid, you get 10,000 likes.

Because it's clickbaity. It's like the 10-second Reel on Instagram.

I was like, there will need to be, there was going to be a lot of demand for a source of information where the filtering mechanism is very transparent and it's very aligned with truth.

And that's markets.

We used to always joke, when I did my master's at MIT, and I was doing a Ph.D. or working on Wall Street are mostly the same thing, except that you have to be right on Wall Street. You have to do analysis in both.

But my point here is about the incentive structure of the prediction market. It's very, very simple. The seven-paragraph thoughtful analysis probably makes money, and the stupid, extreme takes probably lose money. And all you have to trust is that people like making money and they dislike losing money. That's it.

It's interesting to me that, Kalshi, you were born in California, but you grew up in Lebanon. Your co-founder was born and raised in Brazil.

Can we read anything into that, that these are the two founders, people from countries that are peripheral to, in a way, certainly to America, but kind of to the global economy?

I just think it's naive. It's like the American dream.

I mean, my mom, when we… So I was born in California, moved back to Lebanon. My mom, I grew up with a single mom, and she's kind of a tiger mom. Not kind of. She was very much a tiger.

It would be a lion, right, in Lebanon?

In Lebanon, it would be a lion.

But the whole thing was, like, "You have to go back to the U.S. because that's a country that will, if you have good ideas and you're smart and you work hard," and she knew I was always, like, a math nerd…"You're going to make it, it will reward you for doing that."

And she was right.

She was a ballerina, but also a lot of similar sort of thinking in our household.

And we showed up here, and we're so excited. There are so many different things you can build, and you can challenge the status quo. It's a country that lets you challenge the status quo in a way that no other country lets you.

And that's amazing. That's something we should really cherish, and like keep….

Do you worry about that? I mean, again, we're in New York, which elected a democratic socialist as mayor. You have Donald Trump Jr.as a special adviser. Who you hired, or you announced, a week before the inauguration of Donald Trump Sr. in a second term…

That's not right. That's actually what happened.

Ok. Well, I mean, the press release went out, I think

I don't know, but we actually had done it before the elections. It was not a political decision.

Well, what I'm getting at, though, is that MAGA, Donald Trump has nationalized the economy or socialized it in ways that were unthinkable since FDR.

So on both sides of the aisle, we seem to be pulling away from free market ideology or belief in free markets or belief that America is a place where you can define yourself.

But the people on the left say, "No, you're defined by who your parents were, what race you belong to, what gender or sexual minority." People on the right want to kick out people like you, right? I mean, they don't want Middle Easterners coming to America, even if you're an American citizen.

So, I mean, look, I…

So are you worried about the America that you've moved back to?

Yes, I am worried. I don't think it's necessarily a political thing. I just think it is a structural thing that's happening in the economy that we have to kind of contend with.

I'm 30, so I was going through school like 10 years ago, and when I was going through school, there was still this energy. People were excited. They were pumped. They wanted to build, they wanted to do things, they wanted to start companies.

And my cousin now is going to Columbia, and you don't feel that energy anymore. That, to me, is the most concerning part.

Where did it go?

I think part of it is there is structural changes happening that society is battling, where there's AI, there is wealth disparity that's being created that is extreme.

And then that is also not… When I think about free markets, I always say the foundation of free markets is everybody needs to have a shot in the competition, right? Everybody needs the same rules, the same rights, and the same obligations.

And if people stop believing that, the competition is tilted. The competition is not a level playing field. I think that's kind of an opposite view to fair markets.

And I'm not here to say, look, the solution is simple. But I think we would argue that capitalism is a good thing, but what we need to contend with and be aware of is that a lot of people are not part of it. They don't feel like they're part of it.

And that's a reality. That's a truth on the ground that we cannot just…

Is it that they're not part of it, or is it that they don't feel they're part of it?

It's equivalent, though.

Yeah. I mean, because one of the arguments about social media, which clearly has a lot to do with this type of stuff, is that the median household income, the median individual income in America, is at all-time highs. It keeps going up, despite the financial crisis, despite COVID, despite geopolitical Sturm und Drang.

But people feel like, "I'm not getting as much as Donald Trump Jr. has, so I feel ripped off," even if they're doing better. I mean, is it important to know what the narrative is and what the facts on the ground are?

And frankly, I do think, because I don't want this to sound partisan, I do think it's bipartisan. I think people on both sides…

Yeah, no, I agree with you completely.

And we engage. Kalshi has engaged. People have talked about Don. We have advisers on the other side of the aisle, Democrats, across the board. And I frankly talk equally to Republicans and Democrats. And there is a lot of thought on both sides about how do we deal with this?

And my view is we may be being a little bit too ideological about capitalism versus socialism.

And to me, it's more like, I think most people would agree that we want a free, competitive economy. We want people to have a shot. We want people to feel part of the system.

And my view is a little bit more practical. It's like, "Look, if the wealth inequality is too out of whack, we need a little bit of a dampening mechanism. Just bring it back."

Is that mechanism, is it heavy taxation? Is it regulation that prevents the formation of new businesses? Is it…?

I don't think we should ever prevent or slow down innovation or prevent the formation of new businesses. My view is more that we need to think about ways to bring the people who feel they're out of the system into the system.

There are simple, kind of naive ways to think of it. I always think, could you have the most successful companies in America, or the rising top 200 tech companies, take a small 1 or 2 percent of their stock, voluntarily?

And I do believe, actually, you sit down with a big enough group of founders and give it to, let's call it whatever, you can define a set of households in America and put it in their children's accounts.

And the thing I love about that idea is all of a sudden people feel, they understand, actually, ok, AI, space, tech, fintech, all these different things that feel completely distant and far removed from you right now, they're tangible.

And it's actually, oh, it moves up over time. And as we're creating value as a society, we're doing the thing that America does: innovate, push the boundaries, take risks. There's tangible value that basically accrues over time.

And to me, it's like we don't need to… Capitalism, it's too much ideology versus, how about the middle ground? Let's make sure we bring people along. And it's not going to hurt the very top that much to do a little bit on the margin.

So you're facing a huge amount of regulatory uncertainty. There's also a huge amount of political uncertainty that's kind of bigger than that.

My view is all companies, tech companies, are facing a lot of that. AI as well…

Well, and technological uncertainty, all of this kind of stuff. But for the midterms, is there an outcome that is better for Kalshi or worse?

I'm frankly, not sure. The idiom is like, "Well, what are you going to do when the Democrats take over?"

And I don't know. Frankly, the internal view is, to me, we've built relationships on both sides. I found actually there's a big group of people on both sides that actually are largely are where we are, which raises my second point.

Who are some of the Democrats? I mean, I think I know some of the Republicans, but many of them are anti-prediction market. But who are some of the…?

I know, it's many. I mean, I think there are some on both sides of the aisle, but I think there's a big group on both sides that is actually pro.

But without naming names, to me, the thing that we're really focused on is what we've been focused on from day one.

We're a company that spent the first four years of our company getting regulated upfront, which is very unusual for Silicon Valley. It's very, very unusual.

And I always say I'm pro-sensible regulation. Banning something is not a form of regulation. It's actually the ultimate deregulation because you're moving it offshore, and you're just closing your eyes and letting it go crazy. And that's what happened with crypto. We banned a bunch of stuff onshore, it went offshore, and people lost their money.

To me, it's always be sound on policy, truly. Try to actually, let's put the ideology aside. Let's actually get it right and communicate that over and over and educate what is right.

And I always say there are certain types of markets that shouldn't exist because those are moral hazards that could create issues. Like the military strike market should not have existed. And we never did it because we're regulated in the U.S., but no one should be able to do it.

Number two is ban insider trading. We have to, because if there's a privileged set that has access that the rest of America does not have, that ruins the markets over time. It destroys trust in the system. We don't want that.

And three, sensible guardrails. There's going to be irresponsible use for any of these products, whether you're trading options on Robinhood or crypto on Coinbase.

Or you're going to the neighborhood bar. You want somebody to send you home when you've had too much.

That's right. Most people who drink alcohol, it's fine. It's great, actually. It is a social lubricant. I mean, there's a small percentage, sub-1 percent, that end up destroying their lives. You want to regulate that out of the system. I believe in that.

And it's like any technology. You have upsides, the steam engine, and then you have your carbon dioxide emissions. Regulation reduces the emissions and optimizes the upside.

And it's always delicate. It has to be delicate and balanced. But it's usually not the best thing for getting a bunch of clicks on social media, right? That's the…Policymaking is boring.

So about 15 years ago, or I think it was 2013, Intrade, an Irish-based prediction market, was regulated out of existence in the U.S.

They were unregulated.

Ok. Well, they were, but they had a CFTC license.

No, they didn't.

Oh, ok.

So we're the first to have gotten the CFTC…That's the difference.

That's the difference. Thank you.

But what would you put the odds on of you, in five years, Kalshi being bigger than ever and in a clear regulatory market, or…?

I think they're very high. They're very, very high. I mean, we have 30 million customers in the market, right? I mean, it's very big.

And again, the choice is, if you were to ask me whether prediction markets exist in five years, that's 100 percent.

Yeah, of course.

Because it's not a question of whether they're going to exist or not. It's just whether we're going to regulate them the right way.

You think they will be legal and public and transparent.

Certainly, yes. I mean, I think it's because they're here. I think the question is now, do we regulate it? Do we add the sensible guardrails? Do we just drive it offshore and close our eyes?

But I think usually, again, time is with us because even if you compare it today versus six months ago, way more people understand it. There's much less energy than before.

And the one thing I'll say, the media, you know this, the media just loves the scandals. When the insider trade happened on Maduro, that was like a three-month cycle. It was never-ending, right?

That's what all people would hear about it. And they wouldn't say Polymarket, they'd say prediction markets. They would lump us in.

But it's going to take some time for people to understand that actually, that was a one-off. There are like 30 million customers who are using these things. And yes, there's some bad in any system, and we're going to have to regulate it, but the positives are exciting.

Because to me, you're seeing now, we have thousands of businesses that rely on this.

I mean, people in the Keys around hurricane season start calling in and buying yes on hurricanes in their town because insurance companies don't insure their homes anymore. We have so many insurance use cases that are proliferating right now on sports, on weather, on esoteric things.

Like, there's this bill. I don't know if you saw the story about the goat herder in California. There's a bill in the legislature that was being passed that was going to move. He has 3,000 goats, move goat-herding wages from $70,000 to $40,000, which is going to drive him out of business.

He started calling insurance companies to underwrite this risk. They're like, "We're not going to. I mean, this is crazy."

And so he came to us, and we set up a market. Within two or three hours, the market said there's a 10 percent chance of it happening. Then he bought a $50,000 hedge that would pay out $500,000 if the bad thing happens, and it happened.

So now he has the war chest to go and diversify his business and stay afloat and all that. More of that is basically going to happen.

I guess a final question is, are the lawsuits against you at the state level or at the nonfederal level, is that going to require a Supreme Court decision, do you think?

You know, I just think, for us…

Because the Supreme Court has, I mean, some of these suits are proceeding, so you have a legal argument, which strikes me as pretty solid, but I'm not a lawyer. But is it going to take a Supreme Court decision? I don't know what this is all…

I think maybe. I mean, I think that we'll see. I think there are a lot of things that are in flux because some of the courts where we lost, it was based on a rule that has been changed now.

There are a number of new rules that are regulated that the federal agency, the CFTC, has put forth now. So that's kind of changed. It invalidates a lot of these opinions for good reason.

So it's a bit of a reset that's going to happen.

How important is the actual head of the CFTC to your future?

It's very important, but these things, it's like a push and pull, and some people may disagree with this regulator, right?

My point is that Congress explicitly gave the authority to the CFTC to regulate market structure this way, no matter what the topic is. That's really the law.

And they even say if something is gaming, which you can say the sports game is a game, the CFTC can decide what to do with it. That's the law, and they can decide to allow it and regulate it in a certain way.

You may disagree with the regulations. Some people tell me, well, maybe they're not stiff enough on this or not stiff enough on that.

But that's why you have the separation of powers. Congress delegated their authority to the agency. If you're unhappy with the agency, there may be a shift in two years. There'll be another agency that might be more strict or more loose.

And that's the natural, it's par for the course, natural course of history.

But to me, it's like, as we learn and as data surfaces, as we understand these things better, the better for us. Because the truth and the data is on our side. The best way to tell a good story is to have a good one, and I think we have a good one.

All right. We're going to leave it there. Tarek Mansour of Kalshi, thanks so much.

The post Are Prediction Markets Just Gambling? Kalshi CEO Responds appeared first on Reason Magazine.

Today's guest is Brazilian economist Fernando Ulrich, one of Latin America's leading experts on Bitcoin and a longtime advocate of free market economics. His 2014 book, Bitcoin: The New International Currency, helped popularize the cryptocurrency in Latin America, where decades of inflation and government mismanagement have made alternatives to state-controlled money especially appealing. But Ulrich doesn't believe Bitcoin needs to replace the dollar to succeed, and he argues that its greatest contribution may be challenging the government's monopoly on money.

Nick Gillespie spoke with Ulrich at the Winds of Change conference in Buenos Aires, where they discussed why the AI investment boom may be drawing capital away from Bitcoin, whether Javier Milei has delivered on his promise to transform Argentina's economy, and how stablecoins are threatening national currencies. They also explore the Austrian school of economics, the risks of protectionism, and why Ulrich believes Bitcoin can expand individual freedom even if it never becomes the world's dominant currency.

0:00—Is Milei delivering on his economic promises?

4:29—Argentina's central bank

7:35—Bitcoin as a payment system

10:10—Bitcoin's adoption rate and volatility

16:38—Is AI a bubble?

19:03—What does Paul Krugman get wrong about Bitcoin?

23:13—China's relationship with Bitcoin

24:24—Differences between Bitcoin and stablecoins

28:25—Subjective value theory

32:40—The Cypherpunks and the concept of exit over voice

37:49—Will an economic crash accelerate Bitcoin adoption?

40:04—Tariffs and free trade

44:18—Why Bitcoin won't replace all currencies

45:26—Nationalism

48:39—2046 Bitcoin prediction

The post Bitcoin Is a Threat to Government-Controlled Money appeared first on Reason Magazine.

Today's guest is Mark Cuban, the billionaire entrepreneur and former Shark Tank star who is now on a mission to reform the American healthcare system. Through his companies, Cost Plus Drugs and Cost Plus Wellness, Cuban is trying to make healthcare more affordable by cutting out middlemen and making pricing more transparent. But he argues that fixing America's healthcare system will require breaking up massive conglomerates that wield enormous power over pricing and competition, often at the expense of patients.

Nick Gillespie talks with Cuban about why he supports bipartisan legislation from Elizabeth Warren and Josh Hawley to break up Big Medicine. Cuban explains how artificial intelligence can expose hidden costs in health insurance contracts and transform the way doctors diagnose and treat patients. They also discuss Cuban's support for Texas Democrat James Talarico and his belief that political parties have outlived their usefulness. The billionaire entrepreneur makes the case for restricting social media algorithms for children under 16 and discusses why he isn't particularly worried about socialism's growing popularity among young people. Finally, Cuban reflects on how Ayn Rand's The Fountainhead shaped his understanding of capitalism and why he believes helping others is part of being a successful entrepreneur.

0:00—James Talarico and the Break Up Big Medicine Act

4:13—Healthcare conglomerates and "contractual terrorism"

15:39—Drug pricing and pharmacy benefit managers

26:58—How AI will transform healthcare

33:04—The Trump administration's policy reforms

34:22—How does Cost Plus Drugs work?

43:08—The backlash against billionaires

47:52—Political parties and Texas governance

51:50—The rise of support for socialism among Gen Z

55:11—Would Cuban back a social media ban for minors?

55:50—The influence of Ayn Rand

Producer: Paul Alexander

Audio Engineer: Ian Keyser

Transcript

This is an AI-generated transcript. Check all quotes against the audio for accuracy.

Nick Gillespie: This is The Reason Interview With Nick Gillespie. Thanks for listening, watching, however you're consuming this. My guest today is Mark Cuban, the former majority owner of the Mavericks, now a minority owner, if memory serves. And that's partly because you're going all in on Cost Plus Drugs, a company and a business model about prescription drugs and, more broadly, wellness and health care. We're going to talk about that in a little bit, but right now, you have recently in a very tight Texas Senate race, you've endorsed James Talarico, or you're speaking with him, partly because he has talked about coming up with a health care plan that you think will reduce health care costs. Can you talk a little about the Talarico plan and why that was so important for you in terms of signing on to appear with him?

Mark Cuban: I mean, really, what we agreed on is that we need to pass Elizabeth Warren's and Josh Hawley's Break Up Big Medicine Bill. And that was the fundamental reason why I supported him. I mean, there are other reasons as well, but I think that as long as we have these huge conglomerates that dominate the economics and provision of health care, the system's not ever gonna work, and we're gonna get what we have right now.

So, identify what is the main problem with health care right now? Is it just that everything costs too much, and that's because of the big conglomerates? Or is it that the quality of care is no good, the rate of innovation is dying?

What's the main problem with health care?

It's the economic side. I mean, the U.S. has the best health care in the world. It's not even close. The problem is, it's not accessible to everybody, but it's not affordable to most. And that is underpinned by how the biggest conglomerates in the country, that do hundreds of billions of dollars each in revenue each year, dominate the economics of health care.

So how is the Break Up Big Medicine Act or bill how is that gonna actually reduce costs? Because I know in the past you've talked about being a small-l libertarian. You're obviously very much in favor of capitalism. You don't hate billionaires. You don't like wealth taxes. You like free markets. How is the Break Up Big Medicine Act gonna work? Because one of the reasons we're where we are now is because of all of the past government intrusions into the market or structuring of the market. I mean—

No, that's wrong…OK, let's just…

I mean, the government already spends about 50 cents of every dollar in the healthcare ecosystem. So it's not like this is a market, right?

Well, it's not a market. You're correct though. Right? But in order to have an efficient market, you have to have price discovery. In order to have price discovery, you can't have gag clauses in every single contract that every single health care—you can't have gag clauses in every single health care benefits contract that's signed. Period. End of story.

And who commands those gag clauses? The big companies that need to be broken up. And it's not an issue of what the government is doing. It's specifically an issue of the choices that are being made by the CEOs and C-suites of those companies.

You look at the largest vertically integrated health care companies: 3,000-plus subsidiaries, $150 billion in intercompany transfers. That's more than the GDP of 13 states. And so they literally dominate the economics. And that's just one company.

If you go to the top three, the point of this is, the leverage is not with the federal government in this particular case. The definitions, the relationships, the pricing, the rules are being set by these big conglomerates. And if you were to break them up, it would change.

Ok, so we can work through a more specific example. What's the worst conglomerate, then, or the biggest healthcare—vertically integrated provider? And how are they bilking everybody—customers, doctors, hospitals, unless they own the hospital system? Who's the worst, and how is that working?

UnitedHealthcare. They're the ones that have thousands of subsidiaries, $150 billion, $160 billion in intercompany transfers. They either contract or employ more than 10 percent of the doctors in this country.

Out of those 3,000 subsidiaries, they own pharmacy benefit managers, they own health care providers, they own what they call ASOs, third-party administrators that administrate care. They own Medicare, Medicaid, MCOs that manage Medicaid for states. There's just—I can't even begin to start to list all the different things that they control.

So one of the ideas behind a vertically integrated company is that they— if you are sourcing your own cost inputs, you can do things more efficiently, and you pass that on to the customers. So McDonald's grows its own potatoes because—

Sure, I know I get it. I know the potential benefit. Yeah.

Oh, no, no. I know that. So explain—

It's also a choice. So, here's the choice. You can pass it on and say, "Look, we're going to be more efficient and pass on the benefit of our efficiency." And the easy way to understand whether that's occurring—there are two easy ways.

One, to ask anybody who uses their services or any of their peers, and just ask them: Have you felt like you've been the beneficiary of their scale?

Based on the polls going around for these midterms, right, the number one issue is affordability, and the number one underpinning of that affordability is the cost of health care.

Number two, being a healthcare geek, I will read the transcripts of their quarterly earnings conference calls. The one thing I have yet to ever hear them say over the past four or five years is that, "Based on this investment, based on this new technology, based on this acquisition, we are going to be able to reduce the cost of care or services to patients that receive that care." Not one.

So patients just don't show up in the way you're talking about it? It's like…

Not at all.

We've streamlined like our costs—

Right. Well, not even necessarily streamline our costs, but what does show up is: "We are going to be able to increase our earnings along with our previous trend. We are going to be able to increase our margins and our revenue for specialty medications," right? There's just a long list of things that they are pushing.

And the bottom line of this—and every capitalist, every CEO has to decide who they're responsible to. Typically, in a public company, which all of these are, they're responsible to shareholders. And that's not necessarily a bad thing if they're aligned also with their customers, their ultimate customers. It may not be the direct customer, but the ultimate customer, which is a patient.

They are not aligned. Not only are they not aligned with the patients, they're not aligned with any other stakeholders.

When you talk to corporations, big or small, a solo entrepreneur, 100 employees, 100,000 employees, and you say, "How are your health care costs doing these days? Are they going down? Are they going up?" And obviously, the response is they're going up.

And you talk to their members, their employees, their families: Are your deductibles and premiums going up or down?

And so the proof is in the pudding that they're aligned with their shareholders, but they are not aligned with their ultimate customers. And that creates a disconnect. And those are the decisions that they've made. In one case, with a tragic outcome, unfortunately.

And so going back to the Break Up Big Medicine Bill and the outcome, when you have somebody who is that big and has that much control and that much regulatory capture, it's AT&T time. It's Standard Oil time, again.

Yeah, I mean, but then it gets complicated. And I don't want to spend too much time on this, but in the sense that when Standard Oil got broken up, they were actually charging the least for their products in their history.

This should be easier then, right? Because now these guys are charging the most.

No, no. Well, I'm saying it gets complicated because you mentioned regulatory capture, and this is part of the problem. Like, if UHC, if UnitedHealthcare is so bad, why do companies keep using them as a benefit?

I'm so glad you asked that. Why do they keep on buying from them, right? Why do they keep on doing business with them? Right?

Right.

So I spend most of my days going to CEOs and explaining to them how they're getting ripped off and how they are getting worse outcomes by dealing with these big conglomerates. Almost all my days. And what I can tell you—

I'm sorry to interrupt, just real quick, because just to get you on the record on this. You're not against bigness per se…

No!

Right? Big conglomerates—because people like Elizabeth Warren often are like, if it's a big company, break it up, right?

Not the issue to me at all.

If I were running that company, I'd be like, "We are so efficient. We are so good at what we do. We use AI and technology better than anybody, so good that we're pushing prices down." And because of that, we'll make more money.

And you know what? Even if we don't make more money, we'll make enough to keep our shareholders happy. But you know what? I'd rather be a great citizen of this amazing country of ours, and if that means better health care at less cost, and our P/E ratio needs to be a little higher to get that stock price where we want it, I'm good with that.

That's how I would—so I have no problem with scale.

The problem I have, like when you talk to people who work for these companies, when they say, "Yeah, I work for whoever," the first thing they say to me is, "I'm sorry. I need the job."

It's not like they're proud. It's not like, "Hey, we're doing such amazing things." And so that's the underpinning of all of this.

So go back to your point on why do companies hire them, right?

I spend so much of my time—literally before this call, I dealt with a group of people who were HR representatives and buyers of these services. And I said, "Do you like these companies that you're dealing with?"

They refer to the big insurance companies as the BUCAs, right? Blue Cross Blue Shield, United, Cigna, etc.

And they're like, "No, we don't like dealing with them."

I'm like, "Why do you?"

"Well, because our CEO just doesn't understand health care costs and health care benefits. And they may know somebody or do business with them."

Like, I've literally talked to humongous banks who have said that we're not going to switch because we'll lose their deposits and banking relationships.

Ok, that happens. So let's put them out.

So now I was talking to this group today, and I started giving examples of places where those big companies were taking advantage of them. And I went directly to contracts because most of the contracts are comparable.

So I call them contractual terrorism.

The city of Dallas, we'll use them as an example. Their pharmacy benefit manager contract: 1,300 pages. There's no human or humans or enough coffee on the planet.

I don't even know if the AIs are capable of scanning that.

Well, the AIs are capable of doing it, right? You kind of got ahead of me there, because before they were able to push things through.

So, like, for pharmacy benefits, there are these things called rebates, where the manufacturers give money back to the pharmacy benefit managers, and they have the choice of how to distribute it from there depending on the contracts, right?

And one of the biggest sources of rebates is something called specialty drugs. They're supposed to be more complicated drugs. Just as often, they're not, but they call them specialty.

But in these contracts, and I literally asked the question of this group who has a good understanding of their contract, I said, "How many of you have a clause in your contract that says specialty rebates, specialty medications either get a flat rebate or no rebate?"

They all raised their hands.

And then I said, "In that contract, doesn't it also say that that PBM owned by that big BUCA—"

That's the pharmacy benefit—

Benefit manager, right, gets to determine what is a specialty drug or not. So in some cases, it could be generic, it could be a little pill, and they call it a specialty drug so that they get to arbitrage the rebate or to retain the rebates instead of sharing them.

So going back to the question of why would a company do this, and it's even worse on the medical side. That's the pharmacy side.

There's no company that, if you work for a company that's self-insured, and God forbid you need to get some major surgery, and so they send you a bill, not even specifically to you, but for the whole company every week or every month, right? And the company just writes the check for the bill, and they may or may not even get examples of the claims so they can reconcile them to what was actually charged or paid to the hospital.

So you have these huge companies that have no way of reconciling whether or not what they were charged is what was paid to the hospital or doctor or provider.

So I was like, why do you do this? Why are you letting yourselves be taken advantage of? And it's because, "Well, it's just happened, it's changed so rapidly, and the prices have gone up so rapidly. We're still in the contract. We're still doing it."

And I'm like, so let me give you the way to resolve this. And this goes back to AI.

So what I've done, and I've done it for my companies, I've helped other companies do the same, I've helped states do the same. Now, with AI where it is, and it's only recently capable of doing this, you can take a 1,300-page contract. You can take a 600-page contract, and I tell them, take the PDF file of all of your health benefits contracts and put them into your favorite large language model and just use this prompt: "Where are they ripping us off?"

And within five minutes, you'll see, boom, boom, boom, boom, boom. Because it's contractual terrorism. They only have to squeeze through a couple of things that the lawyers don't see, and that changes the whole contract, and everything economically references the contract.

So part of, I mean, in any kind of market that's not working well, price signals are arbitrary or buried. There's a lack of transparency. People don't know what they're paying for, what all of the benefits are, how much they cost, and things like that.

There's also, and I know you've talked and written about this, where it's exacerbated by the fact that the company, I mean, a health benefit, it's not what your main company is doing. They're offering it for a variety of reasons. And this goes back to World War II or wage and price controls and things like that.

You know, whatever my company…I don't even know what my—Reason Foundation, the nonprofit that publishes this podcast, I don't know what they pay monthly for my premium. And I barely know what my premium is.

And do you know what your deductible is? Do you know?

Yes, I do indeed. And I had a kid last year, so I'm always hap—

Let me ask you a question, over $1,500 a year?

Yes, for the overall, it's like $6,000.

OK, so $6,000. Have you ever been prescribed, or has anybody in your family been prescribed, a brand medication?

No, I gave up on brand medications a while ago. I always go for the—but what's your point?

No, my point is that brand medications without generics, right?

Right. Yeah, yeah.

So let's just take a drug like Xarelto. The list price of Xarelto, sold by J&J, is $600. The way the system is structured by these big BUCAs and their pharmacy benefit managers is such that during your deductible phase, you and pretty much everybody else, unless your company negotiated something different, have to pay the full retail list price for that medication.

That's insane. Now the question becomes, why does that happen?

And I'm going to explain to you, and this is way inside baseball, how pricing for brand medications is done in the United States of America.

We'll, excuse me, we'll take a drug like Xarelto because it's easy to understand and use. $600 list price. When J&J sells that to one of the three big wholesalers—there's three of them that control 95 percent of the pharmaceutical transactions—when they sell to that wholesaler, you know what they sell it to them for? List price, $600.

Sounds crazy. If they came on Shark Tank, Kevin would probably say, "Take them out behind the barn and shoot them," because it makes no sense that multihundred-billion-dollar companies don't negotiate a discount.

But they're lucky in that the brands will give them 5 percent back if they prompt pay and give them some data.

So now let's just say 5 percent from a $600 drug means the net cost to the wholesaler is $570. That sets the floor for what they can charge pharmacies because they're not going to sell it for less than they pay.

Now what happens next, then, is now a pharmacy has paid $570 for that drug. When you walk in, or any of your family members walk in, or anybody who works for the foundation walks in who has a comparable deductible, the pharmacy can't sell it to you for less than $570 because that's the charge.

Now that's ridiculous in and of itself because you know how much J&J actually nets, give or take, for that medication? It's not $570. It's about $300.

Their yield, their net revenue is about half of the list price. And so where does that delta, the $570 minus $300, where does that go? That goes to the pharmacy benefit manager.

Now, if this was a real market where they didn't have control because of their control of formularies and lives covered, then J&J and all the other brands in the same situation would then sell to the wholesaler at $310. Remember, their net yield was $300, so they'd make $10 more.

And remember, the wholesaler was selling to the pharmacy for no markup. They make their money on generics, right? So they could sell it for $320 to the pharmacy, and they'd make more. And then the pharmacy could sell it for $325 to you and your family or any underinsured or uninsured patient, and they'd make more.

So everybody would make more, but more importantly, more people would be able to afford their medications, and more people would be able to adhere.

So the question becomes, why does it not happen that way? Because in a capitalist society, people are going to act in their own self-interest. That's the beauty of capitalism.

People are always going to find shortcuts and disrupt so that I can get you something…

Right, wherever they can. So I'm going to tell you why it doesn't happen, right? Because those big PBMs owned by the big BUCAs, they control these things called formularies, and they control the formularies for 85 percent of people who receive pharmacy benefits.

And the formularies are the drugs that are covered by a particular plan?

Correct, correct.

And if your medication is not on that formulary or it's on a low tier, because you know in your tiers for your own health care, right, you might pay zero, $10, $50, coinsurance, whatever it may be.

Well, so these PBMs are saying to the brand manufacturer, they've told me this, that if they don't play the game this way, sell at list price and only give a 5 percent, don't do it at net, if they don't play the game that way, they will diminish their positioning on that formulary, not just for that drug, but for their entire portfolio.

It's the same reason Cost Plus Drugs doesn't have a lot of brands, because they've said the same thing: If you work with Cost Plus, then we will diminish your position on the formulary.

So two quick questions that I think will clarify what you're talking about. One is, where did the pharmacy benefit managers come from? They weren't always part of vertically integrated institutions, well let's start with that. PBMs have been around at least since the '60s, and the whole idea, and it makes sense, is like, we're going to arbitrage a lot of possibilities, and we'll sell more drugs for the people who are making them, and we'll sell them cheaper to the people who are buying them.

But really just processing claims. Right? Somebody, there's a prescription, and you have insurance—

Yeah, how do we go from there to, I mean, PBMs in a lot of ways, those are your white whale, right? That's what Cost Plus Drugs is going after. That's where you tend to—

The whole thing. They're not a unique company. They're part of these vertically integrated companies, right? So culturally, they are the same, right? Optum Rx has the same organizational culture as United, CVS, etc.

So how did they get there? Vertical integration.

And once an insurance company who already had X number of plans that they control now buys a PBM, what they say to the employer and Medicare Advantage plans, they'll say, well, let's just start with employers, right?

Self-insured employers. Sixty-seven percent of people who get insurance through their company get it through a self-insured employer. That's about 150 million, 160 million people, right? And so those all go through a PBM at some level.

And by being able to control that, plus Medicare Advantage plans, plus Part D plans for Medicare, they have such market dominance. It's like they have more customers than Amazon does.

And just imagine Amazon saying, "If you don't do business the A, B, or C way that I demand, we're not going to allow you to sell on Amazon. Or we're going to make it so that somebody has to make 15 searches to find you."

That's the equivalent of what these vertically integrated companies are using their PBMs to do.

Yeah, how does the Break Up Big Medicine Act specifically address this issue of vertical integration?

Well, it's breaking them up by definition, right?

I mean…

So then what's the benefit. Right, how do we get the lower prices and all that, right?

And so without having the market dominance to define and threaten, to say, "Look, we're not going to work with you unless you do it our way. And if you don't do it our way, you're going to lose access to 180 million customers," it ends that.

Yeah. And it says things like, if you are a medical provider, you cannot own this type of company. So, I mean—

So then we can talk about medical loss ratio and all that.

It tries to end vertical integration or limit vertical integration.

Limit vertical integration, right. Because once you get market—and there's another part that we haven't talked about that goes hand in hand with doing capitalism the right way.

So in order to have an efficient market, and you mentioned this, you have to have price discovery. In order to have price discovery, you have to have price transparency and some level of contractual transparency. Because if the prices are in the contract, then you have to have some transparency there.

You know the old Fight Club thing? The number one rule of Fight Club is you can't talk about Fight Club. The number one rule of pharmacy benefit manager and ASO and other contracts from these vertically integrated companies, their number one rule is you can't talk about them. They have complete gag clauses.

So they literally say that—well, I'll give you a better example.

TRICARE, that offers all the pharmacy benefits for all the people serving in the military, retirees as well, right? They have their plans and everything. And for certain of their plans, particularly if you're a retiree who lives off base, you don't live on a military base, then you have to order certain generics from Express Scripts slash TRICARE, and the copay is like $16.

Well, it's cheaper in many of those cases to buy from Cost Plus Drugs. Just proving the point that it's not necessarily getting the best price dealing with a bigger company.

But that's not the bad part. That's not the bad.

We still have no idea, none, zero, how much taxpayers pay for those same drugs because they prevent everybody from seeing it.

Elizabeth Warren said she was willing to go and sit in a SCIF in order to be able to look at those prices, and they refused to allow it.

And a SCIF is a secret room where you can read super top-secret documents.

Yes, right. And they still wouldn't show them to her.

And so here we are taking taxpayer money. And if they're doing such a great job, you would think they'd be proud of their pricing.

"Mark Cuban, you can't touch our pricing with Cost Plus. We want everybody to see that. We'll put you out of business"

Yeah. So, I mean, part of the idea is, like, if you introduce transparency into more markets and people understand what other people are paying, you get a more informed market, and innovation is going to happen, prices will probably come down.

What you're talking about, like if you're going to the city of Dallas and you're saying, "Hey, here's a way for you to push back on your benefits provider and maybe to shop for better things." Part of it is information, part of it is regulation, and something—when I think of two people I hate for different reasons, but with almost equal ferocity, it's Josh Hawley and Elizabeth Warren. Most of the time when they're talking, I'm like, "Hey, all I know is my freedom is going to end up on the cutting room floor," right?

But there's regulation, and then there is the ability of individuals to make choices, meaningful choices.

I guess you talk a lot about AI in very positive terms, and you've laid out one way in which AI might help by just making people capable of understanding documents, contracts that they're about to sign.

In this particular case, absolutely.

Yeah, what are the other ways that you think AI is going to transform and improve the quality and quantity of medicine and health care?

One is drug discovery.

We'll get to the point, I don't know when, where we'll be able to take genetic information about ourselves, if we choose to, and make that available to far more advanced artificial intelligence than we see today, and say, "Analyze this. Tell me what I should be concerned about." Or, "Here's everybody in my family. Let's compare it and look for deltas and see how we can use AI to improve our health or wellness."

Make, like, personalized medicine.

Yeah, I'll give you a perfect example, right?

I have to take Synthroid for a thyroid scenario. And I was taking iron supplements because I work out and I sweat a lot, and my iron levels were low. I had no idea you couldn't take them at the same time. None. My doctor didn't know because you can't remember everything. And so I put it into Claude, and boom, I found out you've got to take them at least four or five hours apart.

Simple, simple, simple example.

We're all using Dr. ChatGPT and Dr. Claude to a certain extent. Doesn't make them perfect, doesn't make them accurate in all cases, but it gives us access to this information we otherwise didn't have.

But to go back to your question, as AI gets more advanced, not only will we be able to use it for personalized medicine, but it's capable of memorizing everything.

Now, AIs don't know the consequences of their actions. AIs don't have ethics, right? AIs are not smart. They're just able to combine things in ways that they've seen before or ways that you tell them to do. But within that constraint, doctors will be able to use them to more efficiently and effectively make determinations about somebody's health. So I see it as a big positive as long as we all understand that there are certain things that they can't do.

I'll give you one more example.

The minute an AI is released, we're done training and it's made available to the world, it's out of date.

This brilliant conversation you and I are having right now, no AI knows about. And even if it's published, unless you publish a transcript along with it, it has no way to consume the video itself.

So there's always built-in latency. And so because of that, it's always going to be behind.

And you talk about a capitalistic system and how people adapt. Well, researchers and doctors who publish are recognizing that, "Hey, maybe it's smarter that I don't publish, I don't try to patent this particular device or approach to solving a health care problem. Instead, I'll just keep it to myself and either sell it to a company that can benefit from it or put it in my own model."

And so that means you're going to have disparate information in different models.

AI is probabilistic. It's not deterministic. You're not going to ever get a scenario where you put something in four different models and you get the exact same answer.

So within health care, we have to understand those constraints. And by understanding those constraints, we can use the tools to our benefit. And I think that improves health care in a thousand different ways.

Let's talk a little bit about the regulatory framework. Donald Trump and Robert Kennedy, secretary of Health and Human Services, talked, particularly for round two, or the second term for Trump, talked a really big game about changing the regulatory apparatus at places like the FDA.

It costs anywhere from a billion to several billion dollars, might take more than 10 years, to bring a drug to market. By the time it comes to market, part of its patent life is already over, et cetera, and things like that.

Are there regulations, are there policy changes that the Trump administration has made that you're bullish on, that you think were in a right direction?

I think with things like biosimilars, which are effectively injectable generics, they removed one of the steps, which I thought was smart. Because having that, I forget the exact terminology, my partner knows this stuff better than I do, but having that third-tier trial to confirm what you already know is going to happen, and there haven't been any exceptions to prove that you need it, I thought that was really smart.

But I don't get involved in the FDA side in depth as much as I do on the commercial side.

Right. Well, let's talk about Cost Plus Drugs and explain the mechanics. Before this, I went to—and of course, because he has to put his name on everything, Trump started a prescription program online, TrumpRx. It's a government program where you can get coupons, basically, for things.

One of the drugs that I take is an off-patent statin, and it used to be known as Crestor, right, when it was on patent. And I looked up on the TrumpRx plan, it would cost me $8.60. And then I went to Cost Plus, and it said it would be $5.66. This is for a 30-day supply, 10 milligrams. And then I'm on Cigna, and it costs me zero when I fill that prescription.

But it doesn't cost you zero, right? You're paying it.

Yeah, absolutely right. And unfortunately, it costs my colleagues something. They chip in a little bit as well. But how does Cost Plus— how does it work? If you go there and you already have insurance, how do you use it in a way that you know what you're going to pay for a drug, and it's probably going to be cheaper?

So two different paths, right?

So if you have insurance, then if you work with one of the big PBMs, the big three PBMs, you're not going to be able to use your insurance with Cost Plus Drugs.

There are about 35, give or take, pass-through PBMs that we partner with. So if you have insurance cards from them, you just go in there and click on insurance, and you put in the card ID, and you get the benefit. It's probably going to be a zero copay, but we'll ship it to you, right? Because that's the benefit of sorts.

If you happen to be somebody who is on a Medicare Advantage plan and are prescribed a drug that's not covered, it's not on your formulary, or there's a high copay or high coinsurance, that's a perfect customer for us because you can come to us. We're far less expensive, including shipping and handling and everything, and you use us to save money.

And if you're in one of eight states, Tennessee, Texas, and a few others, then you can also count that against your deductible.

If you're completely uninsured, then we're a godsend for you, particularly if it's an expensive medication, and particularly now with biosimilars. So now there's a biosimilar for Humira. There's a biosimilar for Stelara. Last year, Stelara would have cost you or your employer or somebody $127,000. Now our cost is $365 plus shipping.

Yeah. What limits the types of drugs that you offer? Because I noticed, I think when I looked today, there were no GLP-1s, right? You don't do things like Adderall or the generic versions of Adderall. Explain why those are—

On controlled substances, we just don't want to fight the battle, right? Because there are just too many risks, and we wanted to make sure that we weren't in a position of contributing in ways we didn't want to contribute.

In terms of GLP-1s and brand medications and specialty medications, as I referred to earlier, the big PBMs have gone to the brand manufacturers, specialty manufacturers, and told them, "If you deal with Cost Plus Drugs, we will diminish your positioning on our formulary."

Now the question becomes, why? Why do these huge conglomerates care about us?

Well, there's a study that's getting ready to come out that says every area of health care costs has gone up over the past 30 years, except starting in 2022, the cost of generics started to level off and then started going down.

That's when we launched, January of 2022.

And the reason that happened, and the reason these big PBMs and conglomerates are afraid of us, is because when you go to Cost Plus, you put in your statin, right? And we showed you our actual cost, and then we showed you our markup was only 15 percent.

And so if we were to do the same thing with brand drugs, all of a sudden, all that premium, remember we talked about the pricing of brand medications, all that premium margin that is going to PBMs to keep or distribute would be gone.

Because everybody would finally know the actual cost, just like they know the actual cost of biosimilars and specialty generics and general generics, like you saw.

Do you think, in a market sense, is the function of Cost Plus, obviously, is to sell drugs or deliver them to people who need them at prices they're willing to pay or want or can afford, but is part of it also that it disciplines the big guys? Because if what you're saying is true, they're going to have to start taking into account that if we keep squeezing this stone—

So then where are the limits of that effectiveness? When I mentioned Standard Oil, at its peak market share, was selling its products for the least amount. It was because they had a monopoly. They had over 90 percent of market share in home heating oil and lighting and things like that. But they acted as if they were constantly about to be…

Go out of business.Yeah, yeah…

Right. So, I mean, where are the other places in the medical industry? In recent essays, and preparing for this, you said, well, it's not the pharmaceutical companies, because they're often—

They're not innocent, but they're not the worst—

Yeah, ok. It's not the doctors. It's not the government. But when I look at it, it's like the American Medical Association and other groups that govern the number of medical licenses that get issued every year or the number of resident beds that are available. They're not doing anything to increase supply.

No, I agree. I'm not saying I agree with that, right? But the AMA is not a government entity either.

Well, it's quasi, right? Because you have to show—but I'm saying, how do you bring that same kind of market force, that kind of comp….This is like real competition to say, "You know what? My competitor, who's got 90 percent market share, is selling something for $10 a unit. I'm going to sell it for $8 a unit, and I'm still doing well, and you're making out better, and they're going to have to change." How do you bring that to bear on the larger healthcare system?

Because what it's missing is not only price, but trust. Nobody trusts the economic side of health care. You don't. I don't care who you are, right? Every poll, everything says…right.

I look at trust as a formula: Trust equals transparency divided by self-interest.

We're completely transparent. We show our costs. We're still the only pharmacy that publishes a price list. We have a programming interface where anybody can pull down our pricing anytime they want.

So we're completely transparent there, and we only mark up 15 percent. So that's fair, right?

And so that's what differentiates us to start, right? So people can work with us, and they trust our pricing. They know what it is.

We charge the same price to everybody, no matter who you are, where you are, what time of day it is. It doesn't matter.

When our volumes go up, like with TrumpRx, it's a portal. As you saw, you can come find your way to us. Our volumes went up. Our costs went down.

At Cost Plus, we pass those cost cuts on to our patients. We were able to lower the price of 190 more drugs. And so we're able to start with these drugs, right? We're also getting involved with manufacturing. We manufacture drugs that are sterile injectables that are on the FDA short supply list.

We also have used AI and used robotics to shrink the size of our initial manufacturing plant from football-field size, so about 5,000 square feet. And over the last five years, we've been able to shrink that into the size of a tractor-trailer.

We call them pods. And these pods are going to be our biggest business. They're our most disruptive business because we've been able to combine AI and technology so that we can take these little things, tractor-trailer size, and ship them anywhere.

Ecological disaster, weather disaster, God forbid, war disaster, we can put them there and, depending on what kind of pod it is, make any kind of drugs.

And because we can daisy-chain these things together, we're able to manufacture in volume so that we can manufacture generic tablets cheaper than we can buy them from India.

So then let me, and this might seem like a leap, but in what you just described, and particularly the trust divided by self-interest, all of what you're talking about, all this innovation, why do people—or let me say this: If there's anything that's less popular than data centers and AI, it's billionaires like yourself.

What you just gave is a riff that is, if you believe in free minds and free markets, that's been Reason's catchphrase for decades, this is beautiful. And you're describing exactly how the system should work.

But we have, in contemporary America, people, including people like Elizabeth Warren, the governor of California, who want billionaire taxes. There are members of Congress who have staff members who say every billionaire is a policy failure.

Where is the anger? And when I say people like you, there aren't that many billionaires, but in terms of economic innovation and people doing well, it seems like it's worse now.

If you can't pay your rent, if you can't pay for your medications, if you can't pay for daycare, if you can't pay for food, you're just mad.

And when you're mad, you're not looking to say, "Ok, let me find a logical construct to define why I should be mad or why I'm in these circumstances." You're just mad.

And when you're mad like that, and I've been broke, right? Six guys living in a three-bedroom apartment, et cetera, no money in the bank. You're just mad at whoever is a convenient target.

And so I don't begrudge them. Hopefully, they'll eat me last.

I understand why politicians say billionaires are a policy failure because we're an easy target. I don't blame them for doing it that way. But as an entrepreneur, I'm still going to do what entrepreneurs do. It's why I did Shark Tank for 15 years, because I wanted people to be excited about being an entrepreneur. I wanted them to see, when they watched the show and somebody walked in on that carpet from Idaho or Iowa or wherever with nothing, they had a chance for their American dream to come true.

And if they can do it, I wanted them to think, "I can do it."

And so do you feel like that dream is still alive? Or is it, because when people talk about, ok, it's hard to make rent, it's hard to do this, it's hard to do that. All of this struggle is always real. But is it just that that's the struggle? I mean, are things worse now than they used to be?

No, they're not necessarily worse, right? But we communicate differently now than we did before. Each of us is on social media at some level, whether we know it or like it or not. And each of us gets our own unique feed on social media.

There's no more Walter Cronkite. There's no more Dan Rather, where we all have communal shows that we all watched and basically understood and agreed on some level.

And there's a reason why, right? I mean, those disappeared partly because they weren't really giving people what they wanted, right?

Regardless of what it was, technology is technology. It's going to find its place, right?

I mean, I started the very first streaming company because people didn't have access to, in my case, Indiana basketball or music or whatever it may be, shows.

So people want more, but what's changed dramatically is how algorithms distribute content to each of us individually.

We all get our own individual feed on each of our social media platforms. Mine's not like yours, and they're like snowflakes. No two are alike.

And because of that, engagement increases with anger. And so every one of those algorithms has an incentive to make us mad.

Because the madder we get, the more we consume. The more we consume, the more ads that are sold. The more ads that are sold, the more subscriptions that are bought, et cetera, et cetera.

And because of that, if I'm mad about not being able to afford my rent, I'm mad about the cockroaches in the kitchen, I'm mad about the cost of beef, whatever it may be, you better damn well believe I'm getting a lot of that in my social media feed.

And if someone comes along and in that feed says it's this billionaire's or that billionaire's fault, what do you think I'm going to believe if that's 30 percent of the content I consume in any given day?

That's what's changed dramatically. And I say this all the time: Whoever controls the algorithm controls a lot of people.

Yeah. You have, in the 2024 election, I believe you're a political independent, but you came out and talked about how you wanted Kamala Harris to win. You were backing her. You're backing Talarico against Ken Paxton, the Republican Senate candidate. There's, of course, Ted Brown, the Libertarian candidate, who looks like he's going to cover the spread in Texas.

But I guess in terms of politics, at the state level, there's a real experiment going on. I'm talking to you from New York. New York City, New York state, and California are pursuing one model of governance, it seems, which is high tax, high regulation, high social services, or this is what they claim.

And then you have places like Texas and Florida that are saying we're going to do less tax, less regulation, we're going to give less services.

How do you feel about being in Texas? You've been there for decades now. It's your home place. Is Texas a better model compared to, say, California and New York state? Or how do you gauge that?

It's the ultimate capitalist decision, right? I mean.

Where you live.

Yeah, where do you live. And politicians, they sell what people will buy, what voters will buy.

And in terms of how I feel about Texas, when I got here, it was pretty much blue, and then it was purple, and then it was red, and it'll change again, just like multiple states, right?

What a conservative is today is far different than it was 11 years ago, you know? And the parties are completely different. If it were up to me, I'd get rid of all political parties. I think they've outlived their usefulness. They're just a way to raise money and to try to aggregate power as opposed to the power of ideas.

I don't give to politicians. I don't give a penny to politicians. Either you agree with what I have to say and you think it's of value to you, or you don't. And I have no intent of changing that.

Either my ideas stand up on their own, or they don't.

And in terms of my own philosophy here in Dallas, I'm an entrepreneur. And Dallas has been, Texas has been, great for me as an entrepreneur, been great for my family. I owe a lot to the city and the state, but it's changed radically, to use that term, over the years that I've been here.

Do you feel like it's getting better, getting worse, or it's just—

No, it's going to change no matter what.

The only constant is change.

My dad used to say, "You don't live in the world you were born into," you know? And it's the same thing here, where especially now with AI, I mean, there's always, like my kids, one was born before the iPhone, two weren't. Shit's going to change.

And so I don't look at it and say, "Well, pick this point in time, is it good? Is it bad?"

I look at it and say, "What can I do to make the world better?"

Look, I'm one lucky guy, right? My life is so much different than I ever possibly imagined.

And as an empathetic capitalist, right, as a compassionate capitalist, I want to give something back. My next dollar won't change my life, but it can change somebody else's life.

And when I talk to people about capitalism, that's the message I want to convey.

Now, if I was 25 again or 35 again and in healthcare, I'm sure I'd be trying to build as huge a company as I possibly could and sell it for as much money as I could because the one thing that I would want, the one thing I valued most, is time.

And the best way to gain control of your time is through your personal economics.

And so everybody's going to have their different perspective on where they live, how it's doing for them, what comes next. All I can do is try to help where I can help.

You mentioned being 25 again. Does the popularity or the kind of embrace of the idea of socialism, or the term socialism, concern you, particularly among Gen Z?

No.

Explain that, because a lot of people are like, when you hear capitalism is at a kind of historic low in terms of positive feelings, socialism in America is at a historic high, why doesn't that concern you?

So I'll go back to the algorithms and social media again, right?

When I talk to—I have three kids who are now 17, 20, and 23. And I talk to them and their friends, and a couple of them are entrepreneurial.

And their friends will come on and give me all these ideas that they think are great businesses. And I've heard them all, right? You know, shoe drops, dropships. And I'm like, these are old, tired.

Where did you get these? Social media.

How do you understand how to run this business? Social media.

Where did you watch anything? YouTube, right? Or I saw it on Instagram.

So if you take that same concept toward business, the same thing is going to work when it comes to understanding political systems and politics in general.

Kids are getting short sound bites. And if somebody who's popular and goes viral says, "Hey, I just started this business. We're going to be selling widgets at 100 percent markup. That's socialism. I hate capitalism, but I do socialism business the right way," that's the way they're going to convey how they understand something.

We don't live in a world—if I have a problem with Gen Z, it's that they don't read books.

And it's not that they can't learn because AI can be a great democratizer of information. You can ask AI to teach you anything, and like a teacher, it's not always going to be right, but you have that opportunity to learn.

It's just we don't read and consume information the way we used to. And I think that makes it harder for kids to discern between fact and fiction, information and misinformation.

And I think that's the problem again when I—

That also changes with age, right? I mean, like—

Yeah, of course.

You start to figure things out.

Yeah, hopefully, right?

But we don't know, really, because Friendster was 2006 or whatever it was, and then Instagram became popular in 2011 with Snapchat, right?

So that's only 15 years of history, really. YouTube's been around longer, but the algorithms themselves really only started to hit in 2012.

And so we only have about 13, 14 years of history. So we don't know how kids are going to evolve through this period in their lives as they become older. We have no idea.

And so when I see Australia say, "Ok, 16 and under, ehh, no social media." Some people might say, "Well, that's wrong. We don't want government involved. Let the chips fall where they may."

I'm like, no. I really believe that people don't understand how algorithms work, and they don't understand how detrimental they are not only to a kid's mental health, but their ability to learn and how they perceive the world.

I think that's a real problem. Like whe

Today's guest, Nobel Prize winner James Heckman, is one of the world's most influential—and misunderstood—economists. His research showing that intensive, early interventions can help low-income children close achievement gaps has been, he says, willfully misinterpreted as support for expensive and unworkable universal preschool programs that he calls "political ploys."

Nick Gillespie caught up with Heckman at the Winds of Change conference in Buenos Aires, where they discussed whether income mobility has stagnated in America, how the economics profession has been captured by status seeking rather than serious intellectual endeavors, and why AI is helping him extend the depth and breadth of his research into his 80s. They revisit his controversial 1995 Reason review of The Bell Curve, by Richard J. Herrnstein and Charles Murray, and other attempts to quantify intelligence as a fixed thing, and his critiques of economists like Raj Chetty, who argue that when it comes to economic mobility, "ZIP code is destiny."

0:00—The experience of winning a Nobel Prize

3:04—Neighborhood effects on human development

8:02—Education and parental involvement

18:28—Universal preschool

22:31—Family environments

28:40—The problem with the GED

36:13—Title VII and Affirmative Action

40:05—When is intervention harmful?

52:57—Economic mobility

59:07—Javier Milei

1:01:43—President Donald Trump's economy

Upcoming Reason Events

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The post Are Economists Measuring the Wrong Things? appeared first on Reason Magazine.

Dan Osborn is running to become Nebraska's next U.S. Senator, and he's doing it from outside the two-party system. As an independent challenging the incumbent Republican senator and former Gov. Pete Ricketts, RealClear Polling rates Osborn's race as a "toss up." Osborn, a former industrial mechanic, union leader, and Navy veteran, has cast himself as a populist outsider taking down the "billionaire Epstein class." Republicans say he's just a left-wing Democrat in disguise.

In today's episode, Reason Interview guest host Zach Weissmueller asks what led Osborn to, in his words, "reject the notion of a two-party system altogether" and run as an independent. Osborn defends his "independent" label and distances himself from establishment Democrats and the "Democratic Socialist agenda," which he calls "too extreme." He also says he hopes to ally with libertarian Republicans like Sen. Rand Paul (R–Ky.) to rein in mass surveillance and legalize hemp farms, and he explains why he opposes some, but not all, tariffs. Other topics include how Osborn plans to balance the budget without touching entitlements, his concerns about data centers, his views on the Second Amendment and immigration, and his plan to enact mandatory age caps for federal lawmakers, Supreme Court justices, and executive branch officials.

0:00—Introduction

0:50—Why is Osborn running as an independent?

2:02—Where does Osborn break from Democrats?

4:08—Osborn responds to leaked border wall comments.

6:05—Democratic Socialists of America

7:53—Where will Osborn work with Republicans?

10:20—Ending the surveillance state

11:26—Protecting Second Amendment rights

14:10—The Iran war and War Powers Resolution

17:17—The national debt and spending cuts

20:56—Tariff policies

24:47—Data centers

26:27—Age limits on elected officials

28:08—A message for Donald Trump voters

Producer: Paul Alexander

Audio Mixer: Ian Keyser

Transcript

This is an AI-generated transcript. Check all quotes against the audio for accuracy.

Zach Weissmueller: Dan Osborn, thank you for coming on the show.

Dan Osborn: Thank you. Thanks for having me.

You've got a legitimate shot of being Nebraska's next senator, running as an independent. And looking at your platform, it does look like several of your positions don't fit cleanly in a partisan or ideological block, which is what's interesting to me and hopefully some of our audience. So tell me, first of all, why run as an Independent?

Yeah, as the sign says behind me, we call it nonpartisan in Nebraska, your party registration. And I've been a registered nonpartisan or independent since the time I could register to vote. I've never believed in the fact that I have to accept a set of values and principles and reject the other side to be a part of a party. I kind of reject the notion of the two-party system altogether. I think George Washington, the very first independent, he warned us in his farewell address of the two parties and where it could lead and I think we're there. I think we're stuck in a two-party doom loop. Neither side wants either side to have a win and they're not working for the people. That's what I want to change, I wanna change the game.

And your opponent in the race, a Republican, has said that this whole independent thing is fake, that you're just an undercover Democrat. And there was a recent article in UnHerd that described you and several others as "Potemkin Democrats", they say, "MAGA-coded candidates who actually turn out to be conventional liberals behind closed doors". So, how do you respond to this idea that this is just a strategy to run Democrats with different branding in states where they're unpopular?

Where would you say you differ most from your standard Democrat?

Yeah, well, I would have to start by saying that I was recruited by railroaders in central Nebraska, North Platte specifically. They have the largest rail yard in the world to run against Deb Fisher in 2024 because she takes corporate money from the railroads and does their bidding. And she headed the transportation committee that allowed railroads to police their own safety, and now they have death factored in as acceptable. So that's why I got into politics altogether. I was not, I am not an operative. I'm a mechanic. I was also a sailor and in the Nebraska Army National Guard. That's who I am. And that's who I've always been. And you know, I'm doing this, again, to give a voice to the people. But, you know what makes me not a Democrat? Well, I would say— I'd say Joe Biden and Harris failed on the border. I'm a staunch Second Amendment supporter. You know, I suppose the list goes on and on, but again, I think really it's about the money in politics and getting the money out of politics because right now we're stuck in another war in the Middle East and the defense contractors and AIPAC, people like that, are the ones funding my opponent's campaign. And of course, he's gonna rubber stamp another war.

You mentioned immigration is one issue where you're differentiated from the Democratic Party. There was a Politico report on a leaked tape from July where you seem to call, according to the reporting, the border wall, "a symbol of racism" that "does nothing." Do you stand by those comments?

Well, it comes from a place of…the fact that there's no border wall of Canada. And you can put up a wall. And like I said, it's more symbolic than anything because you can put a 30-foot wall up and they're just gonna sell 31-foot ladders, right? One side of the wall says, "closed", the other side says, "now hiring". It's about holding the companies like the meat packers that - you know - exploit the labor, pay them next to nothing, and enrich themselves and funnel money into campaigns so they can keep doing it. There's got to be accountability there. The wall is a piece of it, but I think it definitely doesn't go far enough.

So what is your preferred immigration policy if you had to boil it down?

I think it's going to be getting corporations, small business owners, American workers, labor unions, getting judges and lawyers and advocates into the same room and hashing it out and finding a way—an immigration reform that works for American businesses doesn't undercut American workers, but still allows immigration to occur. Because we know we have..with the Baby Boomers retiring we got a lot of open jobs, especially out on cattle ranches and construction work. We know we need workers to keep this country running forward.

So it's got to find a way to work for everyone.

And then one more background question before we get into some of your policy positions that I think might be interesting for our libertarian audience. You mentioned the railroad workers who recruited you to run in 2024. There's also been reporting again from Politico that the same former Democratic Socialist of America organizer who recruited Graham Plattner to run in Maine was involved recruiting you back in 2024. Are you sympathetic to, this is a rising strain in the Democratic Party, are you sympathetic to the Democratic socialist agenda promoted by the likes of Mamdani and AOC?

No, I think it's extreme. Again, getting into this to protect workers' rights is why I got into this and fighting the money in politics. That's the sole reasons I got into this crazy political-industrial complex, that it is. To hopefully change the game. The Democrat socialist agenda, to me, it's too extreme. And most people that I talk to as I travel the state—I like football analogies. The parties operate from the end zones when I think most people, politics, land somewhere in the 40-yard line, right? And we've had this pendulum over the years. It swings back and forth because the Democrats are in charge - "my health care still sucks." Republicans are in charge - "gas prices are too much" - and so it's just this back-and-forth pendulum. It's got to stop somewhere in the middle and the DSA is not in the Middle.

You've pledged not to caucus with either party, but if elected, you know, this could be a very close margin, whoever gets control of the Senate, and that means you could be a decisive swing vote. So based on your policy positions, some of which you've hinted at here, I can imagine you voting with Democrats on various labor and antitrust issues. Are there any particular Republican senators on the other side of the aisle that you could imagine working with on specific issues?

Yeah, yeah. The legalization and the industrialization of hemp, you know, and for Nebraska it could be billions of dollars as long as we're first in, you know, industrializing the plant. You know, this is a plant, it's drought-resistant, pest-resistent, it pulls heavy metals out of the ground, it could be rotated in for crops for our farmers. And that's going to help make our farmers money. It doesn't need to be subsidized by the government. I'd definitely work with Republicans on that. I know Donald Trump ordered the Department of Justice to investigate the meat packer monopoly. I would love to break those guys up to help create…because right now, I'm a free-trade capitalist person. But right now, unfortunately, this isn't a free market. This is a controlled market by just a few players. We got to break them up to create an economic environment that favors competition, right? Which in turn elevates workers and the middle class. And we've done it before in the 1900s. Teddy Roosevelt broke up Standard Oil, and I think we're there now and we gotta do it again.

Someone, not in the Senate but in the house, who I know has championed that cause maybe from a different angle is Thomas Massie with his PRIME act which is essentially allowing, my understanding, is to allow small beef processors to compete with the big players. That's less of a antitrust argument and more of a you know competitive…trying to level the competitive playing field, I guess. You also pledged to end the surveillance state in your policy platform, specifically by opposing the renewal of Section 702 of FISA. And that's what allows the NSA to leapfrog from foreign surveillance to domestic. That's something Sen. Rand Paul of Kentucky has championed with Ron Wyden of Oregon for years. So there's a bipartisan coalition. He's also tried to prohibit corporations from selling personal data to intelligence agencies. Massie again, has tried to stop facial recognition and Flock cameras from being funded by the federal government.

Would you commit to allying with libertarian-leaning Congress members on those sorts of issues?

Oh, absolutely, 1,000 percent. Yeah, our right to privacy is apex, in my mind. I don't like the idea of our government especially using it for nefarious means to spy on its people. That's fundamentally un-American.

You've mentioned, up top, also you called yourself, "a staunch defender of the Second Amendment." What would you do as a senator to protect Americans' Second Amendment rights?

Well, I mean, we already have the right, right? So it's just gonna be continuing to either block legislation, you know, that restricts our Second Amendment rights. Yeah, it's just continuing to protect it.

You have proposed five-year mental health check-ins for owners of AR-15s, which implies you also want to create a federal registry to track that…

That's false. That's false, yeah. What they did is they took a conversation that I was having out of VFW with a gun owner who had a visible sidearm on him, and we were just having a conversation..and I was talking about that conversation. It wasn't even the original conversation that they said. I was talking about that conversation at another event. And there was a reporter there, they took it completely out of context, and they turned it into my policy.

That is completely false, and definitely a lie to try to win this election.

Yeah, because I heard the conversation. It seemed that you were agreeing with this proposal, but you're saying that's not an official position that you have.

No, no, the gun owner and I were talking about mental health background checks, and we were brainstorming ideas that we had both heard from people and having that conversation. That was it. It was just a conversation. Definitely was not me talking about any kind of policy.

You've also supported banning bump stocks, and that's an issue championed by Susan Collins, who's in another competitive race. Is that another example of a senator you might team up with?

Yeah, I mean, it's certainly not tops on my list of what I'm thinking about. You know, again, I'm thinking about Right to Repair. I'm thinking about going in there and immediately starting to figure out consumer protection issues, breaking up the credit card duopoly - Mastercard and Visa - you know, figuring out ways to keep money in people's pockets right now. The way I live my life. I'm a paycheck-to-paycheck person. And paycheck-to-paycheck people, we tread water. Hopefully we can save up enough money for Christmases and college. But right now with the price of fuel and this war, that's what's first on my mind, is trying to bring costs down for families like mine.

Yeah, so speaking of the war, you're a Navy veteran, you've been a critic of the Iran War and called for a Nebraska first foreign policy. What is that?

Yeah, that's pulling us out of Iran. Like, I'm not anti-war. I understand there's a time for it. This war has not been explained to me. And we've had Nebraskans die in this war. And I think, last count, over 850-some service members have been wounded. Those are real numbers. And besides the costs in lives. It's definitely the cost at home. So, you know, it's Nebraska first because we're getting ready to go to harvest here in the state. We're third in corn. We're fifth in soybeans. We're first in beef. And as soon as this rain stops here, we're going to be drying out our crops and harvesting. So diesel prices are approaching $7 a gallon. And that's a real problem for our agriculture. It's a real problem for all of us who have to put gas in our cars. I mean, I think probably an F-150 is gonna take 140 bucks to fill up right now. That's unsustainable. And so it is, ending this war in Iran is by default Nebraska first.

And, you know, Trump started the war without any congressional authorization. This is a kind of presidential war-making pattern that's stretched back over many administrations now. So this is something the Senate could theoretically do something about—if you make it into the Senate, would you vote for a War Powers Resolution or to cut funding for unauthorized military action?

Yeah, yeah, that's how we do it, right? Congress needs to act as a co-equal branch of government, just like the Founding Fathers intended it to be. And this is a perfect example of not having a spine. Seeing that the damage is caused for, I mean, nobody thinks that Iran should have a nuclear weapon, and, you know, when I served six months in the Persian Gulf, I went through the Strait of Hormuz four times, In both '95 and 1997. We keep an aircraft carrier battle group in the region for that very reason, right, deterrence, and it's always worked. And then we bombed Iran to cripple their enrichment capabilities. So I don't understand, nobody can explain it to me why we're there right now. The only thing that makes sense to me is the military-industrial complex needed to make some money. You know, again, I'm not anti-war. There's a time for it where we have to defend people in other nations, but right now, I think we're at war with Iran for another country. And we got to pull that back.

Another area of interest, I think, for libertarians is, that you have spoken about, you've pledged to tackle the national debt, and both sides continually contribute to that. We're currently at $32.4 trillion in debt held by the public, and your pledge is to do that in part by cutting waste and fraud and partly by not voting for any bill that's not paid for, which is good. But to actually reduce the debt at this point, that means we need to meaningfully cut spending as well.

So what sort of spending would you want to see cut?

It's the inflated spending, right? It's inflated government contracts, you know, the no-bid contracts, Right to Repair– I mentioned that. Military right to repair is huge. You know, these defense contractors lock us into service agreements. They make their equipment proprietary. So our soldiers and airmen and motor pools and air wings can't, or air hangars, they can't work on their own stuff. They've got to have the contractors come in and work on it. That's just, again, that's costing a tremendous amount of money. And the Pentagon, to my understanding, has never passed a federal audit. They have billions upon billions of dollars in unaccounted-for assets. That to me is irresponsible. I'm not suggesting that we have to cut defense spending or our budget currently, because we are in a war, and I understand the global…the world that we live in and our place in it, certainly. But it is about cutting waste, fraud, and abuse. And the Pentagon should not be excluded from that as well.

We're agreed on the need to cut waste, fraud, and abuse, but that's only gonna get you so far. I think that the DOGE experiment showed us that. There's large budget items, and in your platform, you pledged to never cut Social Security or Medicare benefits or raise the retirement age or allow any sort of privatization. How are we supposed to reduce the debt without any reforms to entitlement programs that account for a third of the budget?

Yeah, well, there's, man, probably close to 80 multinational corporations that are here in the United States that don't pay taxes. It's not about raising taxes, it's about paying a fair share. Companies like Amazon, they funnel their profits overseas, they park them there, they don't repatriate it back to the United States, so that's their loophole that they use. Jeff Bezos has his own tax code in the IRS. You know, it's this pay-to-play world that they live in. There's no accountability. I mean, the Epstein files proves that, right? This class of people has no accountability to the American people, to the workers that they employ. But yeah, so it's about the tax code and changing that and closing loopholes. So, you know, if we get the corporations to pay their 5 percent corporate tax, we're talking upwards of a trillion dollars. That we could use. But obviously we got to end that war in Iran. A billion dollars a day over there is not helping anything at all. So it is about accountability and paying a fair share.

You oppose some tariffs, but not others. Walk me through that, walk me through your tariff policy.

Yeah, I think a blanket policy for anything doesn't work. Whether you're talking about minimum wage or whether you're talking about tariffs, you can't just blanket it. You know, for example, for the industry that I'm in—plumbing, steam fitting—a domestic water heater is now $600 more than it was pre-tariff war. That's a big number. The contractor that I work for isn't going to eat that $600. He can't. He doesn't stay in business. So it gets passed on to the homeowner. And that's just one piece of a home. It's getting so expensive to maintain homes because of this. So blanket tariff policies we know don't work. It really hurt our row crop farmers. That's why they had to get bailed out again. Fifty-two percent of our market for our bean farmers got cut off. In Argentina, or China went and bought from Argentina, because they removed their tariffs. And then we bail out Argentina with $20 billion, their farmers. This doesn't make any, this does not make any sense. It's not computing in my brain.

But we do know targeted tariffs can work for industry. There's a reason why the trucks that you see on the road are still F-150s, GMCs, and Rams and Chevys. And that's because of targeted tariffs. So we know some of those tariff policies are beneficial, and we know there are some bad actors out there when it comes to reciprocal tariffs. But this blanket tariff policy, this is a tax on us, and again, that power should be with Congress.

But isn't, if we're just saying targeted tariffs, aren't we giving sort of special carve-outs to certain industries? And also, if you're running on cost of living, you're saying that tariffs undoubtedly make the price of goods that people are buying, including cars, go up. So how do you square that?

Yeah, well, it's squaring it with the manufacturers still being here in this country, right? That's why the targeted tariffs in the auto industry, there's a lot of those full-size trucks are still built here. So that's American jobs, right? The water heater, a lot of the raw materials from the water heater comes from Canada. And actually gets shipped down through the United States down in New Mexico where it gets assembled because too many of our corporations have sold out to Mexico, including my former employer Kellogg's. There's two state-of-the-art cereal plants down there that sell to the United States, and they shut down a plant right here in Omaha in favor of cheap labor. That's a hard pill for me to swallow. So I get angry when I'm understanding what's really happening there. But yeah, so then it gets assembled, and the water heater gets assembled in Mexico, then it comes back up here. So it's tariff, tariffed. So having to understand the industry is a big part of it, where everything comes from, whether you're talking about water heaters, hydronic valves, pipe fittings come from China. And I understand what they say about the blanket tariff policy is about bringing industry back here, but that doesn't happen overnight either. So we have to build infrastructure here, build the plants before we can start keeping targeted tariffs to maintain that industry.

So some of the infrastructure that's being built out now here is data centers, but you're part of the populist backlash against that. You say we shouldn't give them subsidies, which I absolutely agree with, but if they're built without any special carve-outs, why shouldn't they be allowed to just operate like any other industry?

Yeah, I think, well, it's, again, it is what is the data center being used for, right? And so again, no, not a cent of our tax dollars should be going to subsidize them, and certainly our power bills and water bills shouldn't go up a cent either if they come to our communities. So that's the guardrails that I talk about. It is about guardrailing the industry and, you know, we have to protect what we know is good and guardrail from the bad. For example, the data that the data center exists for, is it being used to cause cancer or is it being used to store data for Flock cameras to surveil us? And I know there's a data center just a couple miles up the road from where I live. It's a Facebook data center, and the whole reason of existence - and it got subsidized about $2 million of taxpayers' money to build it - all it does is house the data of deceased people. Why does that even exist? I don't know. So it is about accountability, transparency on what the data is being used for, how much water are they using, how much power are they using, and community benefit agreements for people who live in the communities that data centers are building in.

You're, as we mentioned, you're running as an independent. That is sort of an implicit critique of the two-party system. And you also, interestingly, have a critique and a policy proposal about the kind of gerontocracy that we're living in, the fact that we've got people serving in the Senate, serving in other parts of the government, who are in severely declining physical and probably cognitive health. What do you propose we do about that?

Age limits. You know, there's an age minimum. Stands to reason there should be an age maximum. I don't know what that magic number is, but if you turn, let's say if you're, if you turn 72, before your next election, you don't get to run again. You know, that, that, that may, again, just throwing a number out there, but that, that makes sense to me. And then also, you know, no former member of Congress should be able to become a lobbyist too. We need to take the teeth out of these lobbyists. Like, for example, the pharmaceutical industry, 1,500 lobbyists, it's three lobbyists for every one member of Congress. And, you know, that's why drug prices are unaffordable. They actually get tax breaks for running all those commercials during our football games. You know, Skyrizi, you're taking a bath on the beach or parasailing or whatever they're doing. They get a tax break to run those ads. And that's what 1,500 lobbyists will get you. So no former member of Congress, because they got all the, they got the Rolodex in their phones, right? Of all the power players that could be effective lobbyists, we should ban that.

Last question, because I know you've got to run. Trump is visiting your state the week this episode comes out to campaign for your opponent. He won Nebraska by about 20 points in 2024. So you will need to win some Trump voters in order to win. What is your message to them?

Yeah, I would say, when Trump first came onto the scene, the people that didn't want him to be in power are the same people that don't want me to be in power or to have any kind of seat in the halls of the Senate. It's because I represent an anti-establishment ideas, right? You know, not tearing it all down, certainly like some of those extremes on the DSAs, but it is about breaking this two-party doom loop and operating in the words of Abraham Lincoln in his address, it's a government by and for the people. You know, those principles that we live off of. Instead, right now, it's a government for the corporations and the 1% that control our elections through the money. And again, I don't take the corporate money. So yeah, I would say to those Trump voters, I'm very similar in that regard.

Ok, Dan Osborn. Thank you for talking with Reason.

Thank you. Appreciate you.

The post Can Nebraska's Dan Osborn Win Over Libertarians? appeared first on Reason Magazine.

In the recent New York Times article "In Fighting for Every Black Child, Did I Betray My Own?" 1619 Project creator and MacArthur "genius grant" winner Nikole Hannah-Jones second-guesses her decision to send her daughter to a mediocre public school in New York City.

While Hannah-Jones has received plaudits for honesty and frankness, today's guest, the education scholar Robert Pondiscio, says she fundamentally misunderstands the failure of today's public school system. Rather than confronting basic and urgent issues of competence on the part of teachers and administrators, he writes, she blames racism, poverty, and per-pupil funding issues that are simply not central to education reform. Pondiscio is a senior fellow at the American Enterprise Institute, author of How the Other Half Learns: Equality, Excellence, and the Battle Over School Choice, and a former public school teacher. His Substack, The Next 30 Years, focuses on education reform.

He talks with Nick Gillespie about how the school choice movement has lost its way over the past decade, how wide-scale adoption of education savings accounts is already radically altering K-12 education, and why Mayor Zohran Mamdani's decision to keep an effective reading program in New York City's public schools is a good thing.

Past appearances:

• "Why did schools stop teaching kids how to read?" January 26, 2023
• "Charter Schools Don't Cater To All Parents. Robert Pondiscio Explains Why That's Good," October 16, 2019
• "Is It 'Morally Disturbing' When Charter Schools Skim Highly Motivated Families?" October 16, 2019
• "Should Charter Schools Be Allowed to Push Out Difficult Kids?" January 25, 2016

0:00—Challenging the presumption of competence

8:48—Are teachers held accountable?

11:40—Why aren't there more teachers?

14:51—Charter schools and the achievement gap

21:24—Success Academy and parental involvement

26:22—Standardized testing and student anxiety

29:58—Education savings accounts and teachers unions

34:38—Parental agency

37:29—Mamdani and NYC education policy

44:02—Curriculum reform

Mentioned in the podcast:

"In Fighting for Every Black Child, Did I Betray My Own?" by Nikole Hannah-Jones

"The Lessons We're Not Learning from Nikole Hannah-Jones," by Robert Pondiscio

The post How Nikole Hannah-Jones Gets School Choice All Wrong appeared first on Reason Magazine.

Today's guest is Axel Kaiser, a Chilean-German lawyer, author of The Street Economist, and classical liberal who has spent years promoting free markets and limited government across Latin America. He is the co-founder and board president of Chile's Foundation for Progress and deputy executive director of Argentina's FARO Foundation.

Nick Gillespie talks with Kaiser in Argentina about how Javier Milei transformed libertarianism from a largely intellectual movement into a popular political force and whether that shift can outlast Milei himself. They discuss the decline of Peronism, the resurgence of free market ideas across Latin America, and the tension between populism and liberalism. Kaiser also explains why libertarians need to compete for cultural influence, from universities and think tanks to movies and social media, and why a free society depends on more than limiting government.

0:00—What happens when libertarianism goes mainstream?

3:32—What is Peronism?

7:08—How did Milei make libertarianism cool?

10:41—Will Milei succumb to populism?

18:02—Is liberty more important than democracy?

22:33—The resurgent right in Latin America

25:57—Is Latin America embracing socially liberal values?

29:55—The effects of Venezuela's implosion

37:23—Cultural superstructures

48:05—The influence of movies in culture

53:43—Have libertarians stressed liberty to the exclusion of virtue?

1:00:09—Pope Francis and capitalism

1:05:03—Chile's private pension system

Upcoming Reason Events

The World Premiere of Escaping Venezuela October 13

Today's Sponsor:

Cato Innovation Project: Design your own full-time, paid role at Cato. If we fund your idea, you spend two years executing it. Apply here: http://cato.org/reasonmag.

The post Axel Kaiser Explains the Javier Milei Effect appeared first on Reason Magazine.

Today's guest on The Reason Interview is Anthony Scaramucci, founder of SkyBridge Capital, former White House communications director, and host of The Rest Is Politics. In his new book, All the Wrong Moves: How Three Catastrophic Decisions Led to the Rise of Trump, Scaramucci argues that decades of bipartisan policy failures helped fuel the populist anger behind Donald Trump's rise.

Scaramucci tells Nick Gillespie why he thinks Washington failed to protect American workers from China's rise and how the War on Terror helped destroy fiscal restraint. He also explains why the response to the 2008 financial crisis fueled anger on both the left and right. They discuss what Trump understood about economically frustrated voters, why Scaramucci thinks anger-based populism isn't solving their problems, and what it would take to restore a sense of economic opportunity in America.

0:00–Scaramucci's beginnings
6:12–Economic narratives and living standards
14:58–The Clinton administration, China, and the WTO
29:45–George W. Bush and the Global War on Terror
34:20–When did Republicans abandon fiscal conservatism?
39:04–Barack Obama, TARP, and the rise of populism
43:11–Donald Trump's realization about the GOP
49:24–Joe Biden's failures
54:18–How do we return to an aspirational narrative?
1:02:55–The future of Bitcoin

Upcoming Reason Events

The World Premiere of Escaping VenezuelaOctober 13

Today's Sponsors:

Cato Innovation Project: Design your own full-time, paid role at Cato. If we fund your idea, you spend two years executing it. Apply here: http://cato.org/reasonmag.

The post Anthony Scaramucci: How America Got Trump appeared first on Reason Magazine.

Today's guest is Boston College psychologist Peter Gray, whose new book is Restoring Childhood: How To Set Kids Free in the Age of Anxiety. Gray, who co-founded the free-range parenting advocacy group Let Grow with Reason contributor Lenore Skenazy and The Anxious Generation author Jonathan Haidt, argues that rising rates of anxiety, depression, and mental health issues among younger Americans are not a response to phone-based childhoods but primarily an outcome of K-12 curricular changes tied to No Child Left Behind legislation.

Gray tells Nick Gillespie why kids need more autonomy and unstructured play, why he thinks the internet and online gaming often provide helpful spaces for children, and why he thinks attempts to legally restrict internet access are more the result of moral panic than sound social science.

Previous appearance:

• "Are Kids Depressed Because They Just Don't Play Anymore?" April 25, 2017

0:00—What is the thesis of Restoring Childhood?

6:53—How childhood got taken over by adults

17:23—Parents and micromanagement

23:22—Youth anxiety trends and suicide statistics

34:41—Sociological changes in post-war America

41:57—Jonathan Haidt and smartphones

49:05—How Common Core changed schooling

58:16—Sweden, the U.K., and South Korea

1:02:17—The impact of social media

1:08:49—How schools can restore childhood

1:14:35—How parents can restore childhood

Upcoming Reason Events

The World Premiere of Escaping Venezuela on October 13

The post Why Kids Need More Freedom appeared first on Reason Magazine.

Today's guest is Jon Ronson, the bestselling author of The Psychopath Test and So You've Been Publicly Shamed, host of the podcast Things Fell Apart, and author of the new book The Castle: Adventures in a World of Unraveling Men.

Nick Gillespie talks with Ronson about what happens when the institutions and social structures that once gave people a sense of purpose begin to disappear. They discuss men who have dropped out of work and society, the strange incentives that push people to turn themselves into online brands, and how social media can reward outrage and extremism. They also discuss whether public shaming helped produce today's more disinhibited culture and why Ronson still believes there is an audience for curiosity, nuance, and genuinely open conversation.

0:00—Are men unraveling?

5:30—Chris Mark

14:49—Influencers, gatekeepers, and Greg Chism

22:24—Graham Linehan

32:50—Does public shaming no longer work?

37:55—The human need for meaning

44:19—Andrew Gold

50:22—Social media incentives

58:11—Things Fell Apart

The post Why So Many Men Feel Lost appeared first on Reason Magazine.

Today's guest is C.J. Ciaramella, a Reason reporter whose new cover story traces 250 years of American efforts to build a more humane prison system and the recurring failures that followed.

Nick Gillespie talks with Ciaramella about how the penitentiary system began as a humanitarian alternative to corporal punishment and quickly descended into brutality. They trace the evolution of American prisons through convict leasing, forced labor, overcrowding, and mass incarceration, and discuss why many state correctional systems are now approaching a breaking point. They also discuss the collapse of the bipartisan criminal justice reform movement, what Ciaramella learned from visiting Louisiana's notorious Angola prison, and whether experiments inspired by Scandinavian prisons offer a better way forward.

0:00—Chronicling the history of American prisons

7:08—Humane prison reform

12:11—Why do prison reforms keep failing?

17:16—The prison system and racism

22:23—Angola Prison Rodeo

29:19—Are we coming out of the era of mass incarceration?

32:38—Are American prisons at an inflection point?

37:37—Prison abolitionism and the Democratic Socialists of America

41:44—Bipartisan alliances for criminal justice reform

44:49—Surveillance and the criminal justice system

47:18—The Scandinavian prison model

54:55—Ciaramella's interest in criminal justice

56:41—Prison medical care and family contact

Producer: Paul Alexander

Audio mixer: Ian Keyser

The post Why America's Prisons Keep Failing appeared first on Reason Magazine.

Reason Senior Editor Stephanie Slade joins Nick Gillespie to discuss the future of the American right after Donald Trump, and whether libertarians will have a place in it.

In Fusionism: Liberty, Virtue, and the Future of the American Right, Slade argues that the political philosophy espoused by National Review co-founder Frank Meyer remains a vibrant synthesis of the liberty prized by libertarians and the virtue that is central to conservatives and traditionalists. Slade and Gillespie discuss the development of fusionism in post-war America, the often-unacknowledged common ground between libertarian thinkers like Friedrich Hayek and conservatives like Russell Kirk, and the rise of "post-liberal" figures such as J.D. Vance and Patrick Deneen, who argue that the state should severely curtail economic and lifestyle freedom. Slade explains why she thinks young people are increasingly finding authoritarian politics appealing and why a true renewal of civil society can only come from voluntary institutions.

0:00—What is fusionism?

2:56—Defining Judeo-Christian virtue

8:12—Can you have limited government without virtue?

11:11—Frank Meyer

19:34—Pluralism and rationalism

22:42—Russell Kirk and Friedrich Hayek

35:58—Brent Bozell Jr.

42:34—Conservatism and Catholicism

46:29—The right's embrace of state power

54:46—Are we in a period of societal decline?

1:00:48—How fusionism can revive the culture

The post Why the Right Is Embracing State Power appeared first on Reason Magazine.

Vinay Prasad rose to fame as a COVID-era public health establishment critic. Then he became part of the public health establishment. Now he's back on the outside following his controversial tenure at the Food and Drug Administration (FDA) as director of the Center for Biologics Evaluation and Research (CBER), which is responsible for approving vaccines and gene therapies.

In this interview with Reason's Zach Weissmueller, Prasad, a physician, author, and professor at the University of California, San Francisco, responds to the array of intense criticism he received during his tenure, ranging from agency insiders complaining about his management style to Wall Street Journal editorial writers branding him a "Bernie Sanders acolyte in MAHA drag" to conservative influencers such as Laura Loomer deriding him as a progressive-left "saboteur."

He defends his decision to reject Moderna's mRNA flu vaccine application, which the agency has since approved following his departure, and explains a controversial internal memo in which he wrote that "at least 10 children have died after and because of receiving COVID-19 vaccination" and that "for the first time, the US FDA will acknowledge that COVID-19 vaccines have killed American children." The official FDA report made public after Prasad left identified zero "certain" childhood deaths linked to the vaccine, with five classified as "possibly" and two as "probably."

"They changed the report. I had a draft report with 10 [likely deaths]. They changed it after the media publicity of my letter," says Prasad, who believes the data were altered for "political or professional" reasons.

While he entered the job with the intention to raise the standards for drug approvals, Prasad says his firsthand experience witnessing just how entrenched the political and bureaucratic problems at the FDA are has made him "a bit more libertarian" and open to the idea of "Consumer Reports–style agencies" competing with the government on drug approvals, which would offer "people in America greater flexibility in what kind of products they can try."

Prasad also reacts to the recent publication of top COVID adviser Anthony Fauci's diaries, whom he says is likely guilty of criminal conduct for his role in funding gain-of-function research.

"I can't think of a single policy [Fauci] actually got right when he was running the federal health policy," says Prasad.

Watch the full interview above. The transcript below has been edited for style and clarity.

0:00—Teaser

0:48—Transitioning from FDA critic to insider

2:39—Fauci's diaries

7:40—The origins of COVID-19

9:11—Did Fauci commit any crimes?

11:53—Aspirations for public health reform

13:22—Vaccine skepticism and criticisms

20:10—Moderna mRNA flu vaccine

26:35—COVID-19 vaccines and children

34:00—The Trump administration and deregulation

37:51—Drug approval barriers at the FDA

42:01—Wall Street Journal criticism

46:45—Has Prasad become more libertarian?

53:36—Anthropic CEO Dario Amodei's criticisms of the FDA

57:46—Peptides

59:45—Why did Prasad leave the FDA?

1:02:43—Is true government reform possible?

1:05:45—How can public health regain public trust?

Producer: Paul Alexander

Director of photography: Kevin Alexander

Audio mixer: Ian Keyser

Transcript

This is an AI-generated transcript. Check all quotes against the audio for accuracy.

Zach Weissmueller: Vinay Prasad went from COVID-era public health establishment critic to public health establishment insider and back out again. He is a physician, an author, a professor at the University of California, San Francisco, and former director of the Center for Biologics Evaluation and Research at the FDA. Vinay Prasad, thank you for talking to Reason today.

Vinay Prasad: It's good to be back with you.

So, we had this clearing out of the old guard, the Walenskys and Faucis and Collinses, and this replacement with the new guard, the COVID dissidents such as yourself, Marty Makary, Jay Bhattacharya. What was it like, and did you have any misgivings about stepping away from the role of academia and sort of outside critic and into the public health bureaucracy?

So, I guess one thing to point out is that maybe we changed 4 percent, 2 percent of the FDA. I mean, the FDA is an 18,000-person agency. There's tens of thousands of people still there. Before Marty, the commissioner, and I got there, DOGE had just struck, and maybe they got rid of a couple thousand people. But I think one thing to point out is the system is largely the same as it's always been. And then I think the next thing I'd point out is there are critics of the COVID pandemic response, and then there are critics. And although Marty, Jay, and I are critics of many aspects of the response, I think we don't go as far as some of the most extreme critics out there. So am I glad I did it? Yes, I think I'm glad I did it. It was an adventure. It was a learning experience. I feel like I learned more in one year than I've learned in the prior decade about how the world works. And I'm glad to have improved, I think, some aspects of government, which I think will be enduring, and at least tried to improve other aspects of government, which may not be enduring.

And yeah, I want to ask you a little bit about—or actually quite a bit about—what you learned from that experience. But first, let's stay on the context of that era, that transition. And I think the person who personified kind of the old guard was Anthony Fauci, and he's recently been in the news because he appeared in front of Congress, yet again pleading the Fifth, as Rand Paul kind of exposed or published his diaries. What did those diary entries reveal to you about Fauci's character, the way he was operating through that time?

I think that Fauci has made a lot of serious errors. And I think probably the greatest news story is that the mainstream media, I think, refuses to be honest about his legacy. Anthony Fauci was in his late 70s when the pandemic began. And had he retired, you know, at a ripe old age of 75, I think he would be leaving behind a stellar legacy. But he continued. He pushed it. He stayed through the whole pandemic, and he was the face of many things that I think his diaries get into: what he privately thought while he was publicly saying different things.

Where to begin? The origins of the pandemic. Fauci has not only been a proponent that the only answer to where the virus came from is a natural spillover event. He's gone further than that. He orchestrated a paper published in Nature Medicine called "The Proximal Origin Paper," written by a bunch of people who bolstered that point of view. He, of course, edited that paper before it was published. Then in public, he pretended like he didn't know those people. It was an independent group that validated what he was saying, whereas, in many respects, he sort of puppeted that paper. The people who wrote that paper—Rand Paul has released their Slack channel messages—showing they don't really even believe what they were writing. I mean, their messages reveal considerable ambiguity about lab leak versus natural spillover event.

So in terms of the origin, he also funded EcoHealth Alliance, of course, which had a subcontract to Wuhan. He had a huge role in the origins and sort of at least trying to frame the narrative, making lab leak—you couldn't even discuss it. You know, Facebook put a ban on even talking about the topic.

All right, that's just one thing. Then masking, masking 2-year-olds. I mean, he played a huge role in that. Lockdowns, school closure. He said he didn't close any schools. In his own diary, he says, "I told Bill de Blasio, you need to close schools in New York City." At some point, the man's got to take ownership over the decisions he did make and advocated for. When DeSantis in Florida reopened schools in the spring of 2020, he went on every television show to say what a bad idea that was. Of course, now I think it's very clear. Many of us said so at the time. School reopening was always the right decision. You know, maybe it could have been closed for a week or two, but certainly not beyond that. Fauci kept it closed much longer.

Vaccines. I think vaccines make a lot of sense. COVID vaccines for elderly people who had not yet had COVID. But do they need to be given to a 4-year-old, a 7-year-old, a 12-year-old, a 22-year-old who'd also already had COVID? This is where considerable ambiguity exists. But Fauci, the answer was clear: You need all the shots. You need the initial series. You need a yearly booster. It doesn't matter how young you are or how many times you've had COVID.

Then, of course, Fauci was wrong about—I think he's wrong about almost every single pandemic policy he advanced. Some of his defenders say to me, "Well, at least he didn't tell people to drink bleach." And I said, "Well, is that the bar for a guy who's a doctor and a scientist?" I mean, of course, yeah, drinking bleach is not a good idea. But that's not the bar for an Anthony Fauci-level figure. He should be saying things that are correct, and if they're not correct, he should be collecting evidence to weigh in. He did none of that.

Why do you think that there was such a large disconnect between his public and private thoughts on the virus throughout this? Just as someone whose job it is to communicate science to the public, why wasn't he communicating what he actually knew at the time? For instance, about the origins of the virus.

In the case of the origins, I think he doesn't want to communicate, then or now, because he looks a little bit culpable.

Is it 2011? He writes a Washington Post op-ed called—the title of the paper is "A Flu Virus Risk Worth Taking"—about why we ought to fund gain-of-function research, or research to manipulate the genomes of viruses to perhaps make them more transmissible or lethal, in an effort to get ahead of that and cure it. But that's a gamble. Is that a sound strategy? I think it's pretty clear to say that it has not led to any cures and may have led to one of the worst pandemics in the last 50 years. You know, so that was a bad idea. He's on record as saying that. He's on record as having funded the EcoHealth Alliance group in 2014, despite an Obama-era sort of prohibition on that funding, and he has a presidential pardon that extends so far back that it covers his potential funding of EcoHealth Alliance. So, boy, nobody would rather you think it comes from a natural origin than this guy. He's conflicted. That's the bottom line on that issue.

This is why Rand Paul is pursuing this, because he seems to be wanting to uncover what the origins of the virus are, which somehow we still don't know. It's unclear if we ever will. Do you have any sense, based on what we know now, what's your inclination as to where this came from?

So I use an analogy, and an analogy is you can look at biology or you can look at intelligence. So imagine somebody comes out of the kitchen and they say, "You know what? That waiter peed in the soup." You're going to say, as a biologist, "How can I prove he peed in the soup?" You can sample the soup. You can look for urine metabolites and cells from the bladder. And you could try to figure it out that way. Or you could interview three people in the kitchen who say, "I saw the guy pee in the soup." OK.

And my point is that we have the Central Intelligence Agency, the Department of Energy, the FBI, and they have made an intelligence assessment that they believe it to be a lab leak. In Fauci's own diary, he says he was pulled into the SCIF, which is sort of a confidential room, and he was given information by the CIA where they intercepted some transmissions from China that make them sort of suspicious that it was, in fact, a lab leak incident.

To me, I think the public may never have the full evidence, but I suspect that many intelligence people do, in fact, know the answer. And that answer is probably lab leak. Whether it's malicious or unintentional, I think people can wonder about that. Fauci's own diary admits that the Wuhan wet market, which he went on TV and said was the origin—in his own diary, he writes, at best, it was an amplifying event. He doesn't believe it to be the origin.

You mentioned this pardon that stretches back to 2014, this era when the funding was—when he was authorizing funding in contravention to current U.S. policy, which is we're not going to do gain-of-function research. Do you think he actually committed a crime?

Yes. I mean, I think funding—I think the other thing about it is people will say, "Did that money go directly for this research?" The money went for viral genomic research at a Chinese institute, very similar to the sorts of things we would be worried about. I think that was a crime for which he's been pardoned. I think it's not just my assessment. That's what Joe Biden's autopen thought when he signed—or whoever signed the pardon—that he committed a crime. That's why he has a pardon that goes that far back. I think it was a crime. Now that he's been pardoned for it, I don't know what you can do about it.

How do you think history will remember, or should remember, Anthony Fauci?

I think very poorly. I think this is where the media is completely enraptured by the guy. Put aside the origin. This is a guy who went on TV and told you that you should make your 2-year-old wear a cloth mask. He told you, "Stand 6 feet apart." Later he says, "Oh, the 6 feet, we just made that number up." He told you you should lock down schools. He called Bill de Blasio in his own diary and told him to close schools. Later he says, "Who started this whole school closure thing?"

He said you've got to get a shot, even if you've had COVID and even if you're 20 years old and living in a dorm, even if you had myocarditis. He actually told Rochelle Walensky in his diary to downplay the evidence…

So let's go back to 2021. In 2021, we learned that even if you've been vaccinated, you can contract and spread the virus. I think initially we didn't think that to be true, but certainly by the summer, with different escape variants, we thought that to be true. The decision to mandate a vaccine was not until the fall of 2021, long after we knew vaccinated people could get the virus and spread the virus.

The moment you knew they could get and spread the virus, it doesn't make sense to have a mandate. The whole prerequisite for a mandate is there's got to be enough benefit to a third party that it justifies taking away your autonomy about your body. But he knew that you couldn't justify the benefit if you can still spread it. But he writes in his own diary, "We can't have Rochelle Walensky telling people that fact because it will undermine DOJ's efforts for a mandate." So he knowingly is hiding scientific truths to facilitate a policy preference of a Democratic president with whom he aligns himself. And he does that over and over.

Finally, if you've had and recovered from the COVID virus, we've never had any evidence that you need any additional shots. And yet he never made that an exemption. I think that's a very damning thing. So I can't think of a single policy he actually got right when he was running the federal health policy.

And you kind of rode in on this wave of anti-Fauciism, in a way. At the head of that would be someone like RFK Jr., who's the head of HHS. What was your big hope? We'll get into the specifics of what you were doing at the FDA, but what was your biggest hope as to what the kind of new version of public health might look like or changes that might be made?

Well, I had a very narrow mandate because I was just in charge of biologics at the FDA, and the hope continues, which is that public health could aspire to be honest, to use its powers proportionately and judiciously, to exercise humility. Public health is far from these things. Public health could actually aspire to be bipartisan. Public health does not. It's becoming an increasingly entrenched left-wing discipline run by left-wing ideologues, reaching even more and more absurd conclusions. So what public health can be and what it is are still light-years apart.

So you don't think that has changed very much?

Not much at all. No. I mean, I think changing an entrenched organization with tens of thousands of people is very difficult. There have been some changes. I suspect that there's sort of been a catalyst. The pandemic has been a catalyst. But I don't think a real reform is possible. I suspect it'll splinter into different sort of public health groups and senses of that.

And your role was at CBER, which is the part of the FDA that oversees what they call biologics. So that would be things like vaccines or gene therapies. Vaccines obviously became an increasingly polarized and politicized issue during COVID. What was your goal going in there pertaining specifically to vaccines?

You know, people ask me, like, they say, "Vaccines save lives." I say, "Drugs save lives." Like, the right drug given to the right person at the right time is life-saving, but the wrong drug given to the wrong person at the wrong time can be harmful. Vaccines are the same way. You can't say anything about all vaccines, just like you can't say anything about Tylenol, aspirin, and Plavix all in the same breath. They're all very different drugs.

And yet I think there is a mentality in the mainstream media that vaccines are perfect. They're always perfect. More of them is always better than less of them. There are no problems in the current system. They can never be questioned. And I think that dogma has to go away. But that dogma continues. I mean, you want a recent example? This miscarriage argument. Fauci, in his diary, he says, "Boy, you know, that COVID shot's very reactogenic. People get fevers and they feel terrible. Possible that it will increase the rate of miscarriage."

Now I read people say, "We know for sure it doesn't." Really? You know for sure it doesn't? Well, that's the part where I call it into question. I'm happy to concede that the best available evidence excludes a very large risk of miscarriage. There are some people on the right who said it was an 80 percent risk of miscarriage. That's ridiculous. This is not even possible. 80 percent miscarriages, you'd see that from a mile away. It's not an 80 percent risk of a miscarriage. But neither do we know it's a 0 percent risk. And science has to be very careful to say what we do know and what we don't know.

Pfizer was actually asked to do a randomized study of pregnant women. They were randomizing 4,000 pregnant women in the course of that randomized study to learn whether or not the vaccine is safe and effective and whether it causes birth defects or miscarriage. They're going to look at 4,000 women being randomized. During the course of that study, the American College of Obstetricians and Gynecologists said all women should just get it. And they stopped their study with 300-some women randomized, and the study is inconclusive. It was never run to conclusion. So I think we should be very careful to say we actually don't know about a very modest increased risk of miscarriage. Even to this day.

This dogma that you describe of, you can't criticize anything about vaccines—to the extent that it exists, I imagine it's because of the very strong anti-vaccine movement that's been prominent in American history, spearheaded by people like RFK Jr., who—people kind of jump to these extreme claims of vaccine harms, whether it's the 80 percent miscarriage rates, claims about autism, and so forth. How do you balance that? Like, how do you talk honestly about vaccines without feeding into irrational fears?

Yeah, that's a really good question. I think the only way to do it is to just be completely honest about it. There will always be someone on the internet who says something wrong. But the public health instrument, the professors of the world, the doctors of the world, you can't respond to that by lying in the other direction, to give false statements that are not true in the other direction. But that's what's happening.

On every issue, I just think—hepatitis B at birth. You want to talk about that? This happened while I was there. Bobby Kennedy and others had the idea that in America, if a mother tests negative for hepatitis B, maybe that baby doesn't need the Hep B shot at birth and can wait up to two months to get the shot.

So a rational person would look at that and say, "Boy, there are pros and cons to this." OK. If the mother's really negative, and we know how Hep B is transmitted, largely through bodily fluids and intravenous drug use and these kinds of things, there is still a small chance the baby will get Hep B in the first two months. But it's really small. I mean, let's be honest, it's going to be quite small.

And is there a downside to delaying two months? Maybe you'll actually lose a few people. They won't come back and get follow-ups, so it'll be an additional loss. But what's the upside? Maybe the upside is you'll give people a little bit more control over their bodies and control over their children. They might feel a little better. We live in a time where people are sort of unsure about vaccines.

So I think a fair narrative would be, like, there are pros and cons about this approach. On balance, the numbers here are very, very small. If they want to make this a provision that some people could delay two months if the mother tests negative, I think it's probably reasonable, you know? But that's not the way the narrative was, right? "Bobby Kennedy is going to kill people." And then they said things like, "Before the Hep B vaccine, 50,000 people died a year." OK, sure. That's true. But what does it have to do with his specific policy of shifting from zero to two months in a subset of women who test negative or low-risk?

It's completely tangential.

They've overhauled the childhood vaccine schedule. What are your thoughts on that?

I think that it's—you know, people make a big deal about it, but I don't know—the executive order… I don't know how much it's actually going to do. I think we're going to see the endgame play out, which is the following: There are going to be different vaccine schedules. If you're in San Francisco, where we're sitting right now, you're going to get the full-court-press liberal vaccine schedule, and if you're in Texas, you're going to get the conservative vaccine schedule.

And to me, it's going to create probably a variety of vaccine schedules. I have mixed feelings about that. I think that it's very likely you'll get errors in both directions. You'll have some people given too many vaccines you don't need, and there are some people omitting vaccines they do need.

At the same time, the pro of this is that it does kind of shatter this idea that there's a one-size-fits-all federal government vaccine solution that can be deployed to 400 million people, and it's going to be perfect. I think it creates sort of different opportunities to think about it.

There have been a number of measles outbreaks. Do you attribute that to sort of either a loosening of vaccine policy or just a general skepticism, rising skepticism toward vaccines?

I think it's difficult to attribute. People like to attribute it to what Bobby Kennedy has done, but surely, in order to have the outbreak now, people have to forgo measles vaccines in years prior. And it's also going on in Canada. So I don't know how he jumped across the border and did it.

I mean, the truth is there is a growing distrust of establishment medicine. It was precipitated by the pandemic, and it probably is also precipitated by, you know, fringe anti-vaccine voices, and they've shattered confidence in the measles vaccines. And so, you know, there's lower uptake of the measles vaccines. There's going to be measles outbreaks. To blame it on one person doesn't make sense to me.

I want to look at a specific example of a different way that you approach vaccines than your predecessors. Moderna came to the FDA with an application for an mRNA flu vaccine. You sent that back and said, "This is not good enough." What was wrong with that? This was like a billion-dollar study. So what was wrong with that study from your point of view?

Initially, the company asked for approval of the vaccine in anyone over the age of 50 and a regular approval, meaning there would be no further post-marketing efficacy commitment. That was what they asked because they did a randomized controlled trial of their new vaccine against an older vaccine in that age group.

Now, we issued a refuse-to-file because, for at least 10 years, that's not the standard of care for people over the age of 65. If you go to the vaccine experts right now, they're going to say you need a high-dose or adjuvanted flu vaccine if you're elderly, because these vaccines have beaten this older vaccine for 10 years. We've known about it for 10 years. You go to a pharmacy here, you go ask these vaccine experts, they'll say, "This vaccine doesn't cut it if you are 66, 67."

And yet they used that as the control arm of this study. This happens all the time in drug approval. The companies use a control arm that is not the best available American standard of care. In my opinion, that's unethical. The control arm participants are getting worse care than they would if they just walked into the MinuteClinic.

So yeah, your view then is that for this to proceed, it needs to outperform the best vaccine on the market.

The statutory language is that in order to file, you need an adequate and well-controlled study, and it is not well-controlled on the plain-English meaning of it because it is not the best available standard of care in America. In fact, it subjects the control arm to higher risk. They're getting a vaccine that's not as good as what they would get if they go to CVS or Walgreens or see me in clinic. So it's not the best available care. So that is a refuse-to-file.

Now then, we accepted a resubmission while I was there, but it split the application into two parts: a regular approval, 50 to 64, and an accelerated approval, 65 and up, which they ultimately got. People say that we've done a 180, but we've actually given a very different approval. They have a confirmatory efficacy study, 65 and up, and that study will answer the question whether or not their vaccine is as good or better or worse than the correct control arm.

OK, so the fact that the FDA has approved it for certain populations since your departure, you're generally supportive of that decision.

I guess I'm generally supportive of the fact that it's better than what came in the door in the first place. I think there are open questions which people should ask, which is: Would you rather get the shot or the flu? You can go look at the rate of grade 3 adverse events in the clinical study and compare it against the actual rate of influenza seen in the study.

So lots of questions that are—those are review questions. Those are questions about the review process. I wasn't part of it, so I don't know the file very deeply there. But the initial question was a question about what are they asking for, and is that something that's an acceptable thing to consider? And we changed that. I think that was the right call.

I think the media coverage of that topic is terrible. I don't know a single media story that draws the distinction between the resubmission and splitting the age group and the original submission. I don't know a single media story that asks: The control arm of that study, what evidence is there for a 67-year-old? You pull the control arm, you pull the package leaflet, and you'll see there are no efficacy data. It's an immunobridging agent, so it's antibody titers for these older groups. It is a very flimsy control arm.

The media want to portray it as, you know, "You're either pro-mRNA vaccines or you're against it." But again, like I say, it's just right drug, right place, right time, all wrong.

So this is the same—in your view, this is the same phenomenon that we observed during COVID, where you're either for the vaccine or you're against it. You're either for this medicine or against it, and not sort of breaking it down by what age are you, how healthy are you, and so forth. Everything kind of has to be flattened or compressed.

One-size-fits-all public health, where the shoe doesn't fit the guy with the big foot or the person with the small foot. I mean, it's just completely—a completely wrong view of public health. And COVID is a great example. An 80-year-old who's never had COVID, who, you know—and we're talking about February of 2021—should they get a vaccine? Absolutely. A 7-year-old who's had COVID, and we're talking about 2022? No. That makes no—the healthy 7-year-old makes no sense.

So public health is, in this country, so broken, it cannot appreciate these distinctions. And I think the Moderna flu is another one.

One more point: Why do some people like the Moderna flu, despite the limits of it? They think the mRNA platform can change quicker than the older egg-based production platforms. That's a hypothesis you can actually test. You could run a study in a season where you compare the flu shot as it's conventionally manufactured against an mRNA flu shot that's made closer to the date of deployment. Presumably, by being closer, they can pick the antigens better than by starting production earlier.

We could ask that question, but there is no appetite for asking that question. People assume the very thing they set out to prove, which is it must be better because it can be adapted quicker, rather than testing that formally.

So yeah, this has been something you've been writing about for a long time, is the poor experimental design for drugs. And I assume that's something that you wanted to change when you came into FDA. Do you feel like you made any progress toward that goal?

I mean, I think in one year, we did more than, you know, what our predecessors have done in a decade. You can look at just the sheer number of announcements and policy changes we've made.

And we're talking a lot about one side of the coin, which is where the companies are not doing the right study to inform the American public. We're not talking about the other side of the coin, where FDA is asking them to do things that don't make any sense at all, that burden them, that cost money, and that are wasteful. We did a lot of work in that space too.

And so I think FDA makes both errors. I mean, of course, they also do a lot of things right. But they make both errors, and they can get better. And I guess I'm glad we did some of the things we did to change it.

A memo leaked during your tenure. It was from you informing your staff that FDA's vaccine safety evaluators have discovered at least 10 children have died after and because of receiving COVID-19 vaccination, and that the real number is higher. You wrote that a public report would be forthcoming, marking the first time that the U.S. FDA will acknowledge that COVID-19 vaccines have killed American children.

Five months later, there's no report and you were gone, and an FDA official report then came out a month after you left saying that zero childhood deaths were definitively linked to the vaccine. So what actually happened there?

Yeah, that's—that's the reading of that. OK. Well, I would say that that's part of that report. Ron Johnson got part of it. "Certainly linked." OK, so when we talk about attribution of what's the cause of death, there is certain, there's likely, there's probable, there's possible, there's uncertain. You know, the standard for certain is unattainable. Ok? You need to—for instance, if you give the MMR vaccine to kids, occasionally they get a granuloma, and you can biopsy it and you can find vaccine product in the granulomas. If you give the chikungunya vaccine and somebody dies from it, you can sample the CSF and you'll find the vaccine strain chikungunya in there. You're not going to find that with myocarditis.

OK, but absolutely, is it the case that kids died of myocarditis from the COVID-19 vaccine? Yes, absolutely, it is the case. And just because the death isn't coded as certain and is coded as probable or possible, that doesn't negate the fact that it is attributable. In fact, the standard across all of drug development is possible and probable are attributable, I would say—

Just to be very specific about that, then, yeah, it said there were zero childhood deaths definitively linked to the vaccine. Five deaths were classified as possible and two as probable. So that's still less than the 10 that originally—

They changed the report. I had a draft report with 10. They changed it after the media publicity of my letter.

Who changed it?

The people who did the report, the people who said that they had been looking into this issue for years. Let's make a few points. OK, I want to back up. I want to make one point.

Yeah.

If a million people trip on one stair, what's going to happen? A million people fall down just one stair. 999,000 just walk it off. A thousand people twist an ankle. Maybe 10 people fall and get a gash on the forehead. But one person is going to die. Just a million people fall off one stair, somebody's going to die, right? That's just the law of big numbers.

Myocarditis is a known side effect of mRNA COVID-19 vaccines, occurring at a frequency as high as one in 3,000, per the original Israeli report. And you're getting lots and lots of people to have it. We know that some of those people can actually get scarring of the heart. Some people require pressor support. They go into the ICU. Somebody's going to die. In fact, there are many case reports published globally. You can just look in the published literature of people who've died globally from this. There's a South Korean study that shows something like 20 deaths.

So, of course, if the answer was zero people died of COVID-19 vaccine-related myocarditis, that would be the controversial outcome. OK? So the media somehow want to defend the idea that zero people die. That's preposterous.

Somebody's got to die.

So what happened was they say they adjudicate all the deaths that come in in the VAERS system. This is a passively reported system. So a lot of people may have gotten the shot and died, but nobody decided to report it to the FDA. Or they started the report process, they never completed it. We have data that most people who start the process don't complete it. Of the reports that get completed, they get sent to the FDA, and then they start to look into them.

A contractor's supposed to pull the autopsy reports, but this contractor sometimes doesn't pull the autopsy. So we don't have autopsy reports on some of these deaths, which make it difficult to adjudicate and make them unlikely to say even possible for those deaths. So this is the process.

Tracy Beth Høeg, who was the CDER acting chief, she started to investigate these deaths. She thought she found some that were really kind of telling. Kid gets the vaccine and then is found dead with a heart with lymphocytes infiltrating, looks like myocarditis, rather plausible. The staff that's worked there for years are very concerned. It undermines what they're supposed to have been doing all these years, surely, because if you're supposed to be looking at safety and you never found it, now somebody new comes along and says, "You've got this problem," you're also, just like Fauci, a bit conflicted about whether or not you're the best person to investigate.

But having said that, I still tasked them with looking into it. They sent me a report with 10 deaths: possibles, probables, and likelies. And I wrote my memo saying that a lot has to change because how come this is the first time where we're talking about it? They downgraded the memo to seven.

The point still stands. Seven or 10, the vast majority of these deaths are probably not even reported into the system. It's a passive collection system. And I'm surprised it's provocative. It shouldn't be provocative that a vaccine with a known side effect of myocarditis—and myocarditis is bad, it can be very bad—that it would kill somebody. That's got to be not that—it would be more implausible that it killed zero people.

Do you believe the memo was downgraded for a political reason?

Political or professional reasons, that nobody wants to look like, you know, this problem is as bad.

Do you know who leaked the memo?

Who leaked the—Ron Johnson posted the memo. Like, it's not leaked. Ron Johnson has subpoena power, so Ron Johnson got the memo, and he has the final memo. There's an additional memo looking at another age group. Ron Johnson hasn't subpoenaed that. Maybe he doesn't even know that exists. But there's a few more deaths in that one. There's three more deaths in that one, so it'll be something like 10 deaths.

So what should the public take away from this information, given that even if this higher estimate is accurate, that's sad, but it's not a lot. And even COVID can kill children, even though that's also very rare. So what should people make of all that?

I think people should make of it: It was a really bad idea to vaccinate healthy kids for COVID and force them to do it, especially college kids. There are, on average—college kids did, in fact, probably were harmed on average by that policy, and we published on that before I got to the FDA.

I think public health has to take ownership of the fact that the one-size-fits-all COVID-19 policy and boosters was a bad thing for young people. It did damage. They won't—mean, if you can't admit what you got wrong, you know…

So I don't know what to take away from it. I think that it's disappointing that—why, I guess, to me what's disappointing is that there are people who say incorrect things about vaccines, that they have microchips, OK, or whatever, all sorts of crazy things. I hear a million crazy things, OK? They're crazy people.

So is the response to that to lie about the real safety concern? I don't think that makes sense. Just be honest about it, and then maybe don't mandate it in 20-year-old boys who are going to dorms, who just had COVID. Why do they do that? That's a Fauci policy. That makes no sense, you know? Like, so just admit we got that one wrong.

You clearly came in wanting to raise the bar for vaccine and gene therapy approvals. Was there tension with the Trump administration's deregulatory impulses, the desire to make it easier to access certain kinds of drugs?

I guess one thing I want to point out about "Right to Try", which is Trump's signature policy, is it's right to try, but it's not mandate to pay. You know, it's a big difference. Right to try means you should have the ability to try an investigational agent given to you either for free or at the manufacturing price. It doesn't say given to you for $4 million a pop and force Medicare to pay. And that's just what the bill says.

The next thing I'd say is I would draw a distinction between vaccine policy and gene therapy and rare diseases. In many ways, we were quite permissive with rare diseases. We created a pathway where you can approve a product that's individually made for babies with, say, enzymatic process deficiencies, the plausible mechanism pathway. We debuted that sort of pathway. That's a lot of flexibility. That's flexibility that didn't exist before.

For kids who are suffering from, like, incurable and rare diseases, I think we did do a lot of flexible things. We didn't demand randomized studies. We gave full approval for uncontrolled studies.

The vaccines are a different thing. We're not talking about people who—there are some vaccines used only for people with rare diseases, but most of them are this one-size-fits-all for every healthy kid. And in that case, I think people in America want to know that they're safe and effective, including the president. You can see, reading between the lines of his executive order, he has a lot of concerns and doubts. He may not place them in exactly the right places, but he does have those concerns or doubts.

And so in the vaccine space, I do think the bar should be brought up higher. I think it is kept low for political reasons. It is the political preference of the left to have to just say every vaccine is great and to not acknowledge that there are some serious downsides and concerns to some vaccine products.

To not talk about—like, that Hep B debate, I think, was a great example. I mean, the coverage was that if you give an inch on Hep B at birth for mothers who test negative—and, by the way, there are new, some ultrasensitive antigen testing, so they're pretty confident they're negative—you're going to have an epidemic of liver failure as a result. And that's, come on, that's just not plausible.

How did working at the FDA affect your own confidence as a consumer in the regulatory system?

I guess it gives me a little bit of pause sometimes. I like to trust but verify. I particularly am cautious always with new therapies and particularly cautious that some safety information is being missed.

And I think it also makes me a bit more libertarian. I can imagine a system where we give people in America greater flexibility in what kind of products they can try. And maybe there are some third-party agencies, like Consumer Reports–style agencies, that give different levels of quality and seals of approval of different products. And people can choose what they want and maybe also have a little bit more skin in the game and use their own money.

And then the moment you start to use your own money, suddenly tiny changes in surrogate biomarkers and elevated liver enzymes take on greater importance in a way that might not exist if you're using commercial insurance to pay for it.

Is it just you saw something inherent to the process that creates problems or holes or gaps?

I guess that the fundamental idea that there's this one-size-fits-all balance where safety and efficacy is acceptable. I mean, what might be acceptable to you and acceptable to me might be different. I might want a little bit more efficacy information, a little more safety validation, and you might be willing to try more.

And the idea that a single monolithic government agency in the suburbs of D.C. can set that bar for every single person in America, that, to me, is a tougher pill to swallow now.

You mentioned there were two sides of this FDA reform. One was to raise the standards for things like vaccines. The other was acknowledging that, yeah, it's very expensive and cumbersome to get anything approved in the United States. What were the biggest barriers that you saw in the FDA from that side of the equation?

Well, so many. I think I would say that during my time at the FDA, I was often sympathetic to the people who work at companies who told me about sort of the hurdles they were forced to jump through.

And to me, a big set of hurdles are if, you know, FDA does two things. We regulate what's approved and can be marketed and sold on the U.S. market, but also what you can study. And imagine you're a researcher and you want to study something. We're not talking about approve it. You want to gather people together who may be interested in trying something new, have an informed consent, get them to volunteer, but they know that, you know, we don't know for sure it's going to work.

We do so many things in that space, regulating what you can study and how you can study it, that I think are sensible. Sure, you don't want to let people sign up for something that's going to blind them or maim them. But some things aren't sensible, that are overly burdensome, that are quality controls that don't make sense for small companies and super-rare diseases that don't have a huge budget to study these things.

So I think the regulation in this early side of research is tremendous in the United States. A lot of it well-intentioned, but not all of it fit for purpose.

There was a deregulatory impulse there. Makary talked about wanting to make more things over the counter.

And that still should happen.

RFK Jr. has pushed to make testosterone and peptides and so forth more available and accessible while being more skeptical of pharma more broadly. Yeah, you said you're supportive of those sorts of ideas, making—

Some of those ideas.

Well, OK, so making over-the-counter medication…

I think simvastatin is a great example. Do you really need to talk to a doctor about a statin these days? You can go get a calculator, and you can decide if you want to take a statin yourself. It's a great example of something that could be over the counter. There are so many drugs where the doctor or the MinuteClinic or these services, they're just a gatekeeper from consumers having access to these products.

The peptides, I think, are sort of a mixed bag. There are some peptides that I think have very limited efficacy. There are others that have maybe more efficacy. And some of that battle is not really about safety or efficacy; it's about profitability. You see right now that—maybe I shouldn't say the exact peptide—but there's one peptide that a lot of people are using. They're getting it through these compounding pharmacies, and the manufacturer that holds a patent on that, they do not like that. They're going to lose a lot of money, and so they want to kind of fight that off.

So, like so many things, there's nuance there. There are some peptides that probably would be good for consumers to have a little bit more flexibility in getting through a compounding pharmacy, but not all.

Did you ever feel, sort of, that you were pushing against that? That if there was a deregulatory impulse, but you, in a sense, wanted to make things stricter in certain domains, did you feel a tension working within that system?

I guess I'm always a case-by-case person. So I'm always—you want to talk to me about a specific drug product, specific application, I'll get to the bottom of it, and I'll give you a presentation.

And what I found was that, to the credit of Robert F. Kennedy Jr., he listens to when you make the case, you know? And sometimes I make the case to him that wasn't his initial instinct. But I often think that the way the media do a disservice to him is they say his instinct is always wrong.

One of his instincts is that, you know, for-profit companies sometimes manipulate data to get people to use something to make a lot of money. There's a kernel of truth in that instinct, isn't there? And, you know, there's a kernel of truth in that instinct. So take that kernel and think about where it applies, but also think about where it doesn't apply, because for-profit companies also make a lot of terrific products that do good. And that's what I tried to do.

Well, yeah, I wanted to ask about a specific example that was one of the more controversial flash points in your tenure there, which was The Wall Street Journal ran a scathing op-ed whose writer called you a "one-man death panel" because you pushed—you pulled access to some of these experimental treatments, including a gene therapy for a form of muscular dystrophy, following some patient deaths.

Following people dying of it. Yeah, we did restrict that, yeah.

The point that that writer was making is that, again, these are people who have a terminal illness. They want access to this drug, and you, Vinay Prasad, are gatekeeping it from them. What's your response to that?

Oh my goodness. I guess I'd say nothing could be further from the truth. That drug remains on the market, and anyone can get it for an off-label use. They want the indication so they can force the insurance company to pay the multimillion dollars for it, or whatever it costs.

Certainly, I have a few thoughts. One is the editorial board of The Wall Street Journal, they know nothing about medicine. OK so they make mistakes in both directions too. They want things approved that are harmful and toxic and don't work, and they're missing things that are reforms that actually would help the businesses. So I think The Wall Street Journal editorial board, they're making the same two kinds of mistakes.

I think you're alluding to the first time I left the agency in the summer of 2025. I mean, you have a drug product that came to the U.S. market where there's only one person I'm aware of at the FDA who wanted that product on the U.S. market. And that was the person who filed an override memo to approve it against the wishes of all the staff below. Hundreds and hundreds of people with expertise in the disease don't want to approve it because they think it doesn't work and has harms. But one person at the top thinks it does work.

Who was that?

That was Peter Marks. That was a Peter Marks override memo on that product. So, famously, blundered everything about the COVID boosters too. OK, so—but I'm happy to let sleeping dogs lie. I mean, it's been approved, but I can't go back and revisit every decision.

But then you get deaths. You get people who are getting the product who are dying. Well, what should the agency do about that? A product that has documented memos from review staff believing that they don't think it's helping. And now you have people dying.

I think if you're going to say, "What's the purpose of the FDA?" And, you know, many libertarians might think, "We don't need an FDA." And I'm actually—

We're going to get to that.

OK, well, I'm kind of sympathetic a little bit.

I have it right here.

I'm like, I can see your point. So I can see that point of view, and I appreciate that point of view. But if it's going to do anything, surely the one thing it's got to do is prevent people from taking something that you don't think helps at all and that can kill them. If it's going to do anything, surely it's got to do that.

And so I think that that's a very reasonable change to the label that occurred in that case, where it was a group of patients—and there's a group of people that are younger, with lower body weight, who are walking, and the drug remains on the market for those people. And there's an older group of people with higher body weight—the drug is dosed based on body weight—that aren't walking, and that's where the deaths occurred. And it no longer remains on the market for that group of people. But they could still get it off-label, technically.

Part of the backlash to that—and this was the moment that precipitated your first departure from the agency—was Laura Loomer, the MAGA influencer, was blasting you on social media. She called you a "progressive left saboteur of the MAGA agenda." You didn't respond to Loomer at the time, but for understandable reasons, now that you're out, are you a far-left MAGA saboteur?

MAGA saboteur or MAHA saboteur?

I think in many ways, I would say, I don't know if I'm a MAGA proponent or saboteur, but MAHA—I think the idea that, to Make America Healthy Again, I think there are lots of kernels of truth in that. There are lots of things that Bobby Kennedy is right about in the food supply, dyes in food, pesticides, toxins, and drug reforms, and vaccine reform. I think that there's lots of kernels of truth in that movement, and health care is kind of my predominant thing.

Laura Loomer is a new type of lobbyist, but I think people shouldn't forget that we've always had lobbyists. There are lobbyists at the FDA for decades and decades. They don't always come across as a Laura Loomer, but they're there, and they have influence. So anyone who thinks it's a system that cannot be lobbied—I hear some people say, like, Laura Loomer is the first to lobby. She's not the first. She won't be the last.

To be clear, is this what caused you to be pushed out the first time?

It was interesting timing. I can leave it at that.

OK. You know, you said that your time within the FDA made you somewhat skeptical or maybe more sympathetic to the libertarian critiques of FDA. What about that experience?

I guess I'm really sympathetic in one way, which is, like, the core sympathy is the following: We tax people a lot of money to pay for health care in America. I mean, trillions of dollars. We're taking trillions from people's paychecks, from taxation, and we're taking it for this thing that we think is a benefit to people, which is we're going to offer a service that is maybe a human right, a societal good.

And surely the service we offer—we do have some of that stuff in there. Like, if you have a heart attack, you go to the doctor here, with or without insurance, they're going to open up that blockage, like, right now. That's a great thing.

But along with that package deal, we're going to insert a few things that may or may not work that cost a lot of money. And all that's doing is taking lots of money from taxpayers and redistributing it to the shareholders of those companies. It's a huge financial system with the rare adverse event of helping someone's health.

And the libertarian comes along and says, "I'd rather not pay the tax, have more skin in the game, decide what's right for me, and I'm the best person to decide how to use my own money." And I guess I do feel a sympathy to that point of view because this system has so many places where it can be taken advantage of, where people get something that doesn't help that much, that only may kill without any possibility of benefit, and you take a lot of other people's money to pay for that.

Yeah. I mean, one of the specific libertarian proposals—and this was something that was floated by Jim O'Neill, who was the deputy at HHS, another example of maybe the sor

As the cofounder of the massively influential Spy magazine in the 1980s, Kurt Andersen was among the first journalists to recognize Donald Trump as a significant figure in American culture. (Spy famously called the future president "a short-fingered vulgarian," a description that still irks the billionaire). Over the past 40 years, Andersen emerged as one of the leading cultural critics of America, hosting the massively popular Studio 360 radio program for 20 years and writing a shelf of novels and nonfiction books.

His new novel, The Breakup, is set in 2045 and chronicles a married couple contemplating divorce as the United States reorganizes itself after a short but violent civil war. Like the best fiction, the characters in The Breakup are complicated and ambivalent as they deal with fast-evolving technology, generational strife, and the lingering effects of identity politics.

Andersen and Nick Gillespie talk about polarization, the baby boom's senescence, and whether markets have failed today's younger generations. They revisit and debate Andersen's critique of Milton Friedman in Evil Geniuses: The Unmaking of America ("he gave people in business the green light to be entirely selfish"), civil libertarianism vs. economic libertarianism, inequality and mobility, and whether politics can ever return to what used to be called normal.

0:00—Summary of The Breakup

6:06—Could America have another civil war?

10:02—The 2024 Presidential election

12:45—Identity politics

15:52—Economic populism

17:23—Andersen's Nebraskan roots

22:05—The Harvard Lampoon

28:43—MAD magazine's cultural influence

30:20—Spy magazine and Donald Trump

36:09—Trump's enduring appeal

41:50—Generational conflict

50:05—Milton Friedman

The post Can America Survive Its Political Divide? appeared first on Reason Magazine.

Today's guest is Jason Silva, author of The Ecstatic States of America: A Manifesto for a New Country of the Mind, which fuses AI and psychedelics into a techno-optimistic update of themes and ideas that once fueled publications like Whole Earth Catalog and the early years of Wired magazine. The former host of National Geographic's Brain Games who reaches millions of viewers through his Shots of Awe viral videos, Silva talks with Nick Gillespie about why he is optimistic in an age of intense anxiety, what it was like to grow up in Venezuela as Hugo Chávez's socialist regime came to power, and why he loves the life, liberty, and pursuit of happiness offered by America at its best.

0:00—What are the Ecstatic States of America?

5:26—Technological pessimism

11:36—Psychedelics and the world of drugs

25:42—Artificial intelligence

33:02—Robots and the human experience

41:19—Community frameworks

46:43—Silva's experience growing up in Venezuela

56:26—Celebrating progress

The post What if the Future Is Actually Good? appeared first on Reason Magazine.

Before Evan Barker split with the Democratic Party in 2024, she says she raised $50 million for its candidates, especially those on the progressive fringe. In her new memoir Nothing Left, the 35-year-old political operative who was raised working-class in the Midwest says she got so tired of the classism and identity politics of party elites that she ended up voting for Donald Trump over Kamala Harris.

Barker, who suffers from serious congenital medical conditions, talks about being activated into politics by Barack Obama and the Affordable Care Act, staging the first event where Bernie Sanders met Alexandria Ocasio-Cortez, and walking out of the 2024 Democratic National Convention feeling politically homeless. She tells Nick Gillespie about the insatiable, bipartisan grind for more and more money at every level of politics, the lack of interest in and understanding of working-class people, and where she thinks left- and right-wing populism is headed next.

0:00—What was the appeal of Bernie Sanders?

4:14—What's wrong with the Democratic establishment?

8:39—The realities of political fundraising

13:40—Campaign finance reform

18:36—Did Bernie Sanders fold to the Democratic establishment?

22:06—Elizabeth Warren

23:37—Why did Democrats lose the working-class voter?

28:42—Trump's 2024 campaign messaging

31:01—Has Trump delivered?

35:17—How much of today's political battles are generational?

36:43—Will populism vs. libertarianism become the next political battle?

The post How a Top Democratic Operative Lost Faith in Her Party appeared first on Reason Magazine.

This week, guest host Billy Binion is joined by Pamela Colloff, a reporter at ProPublica and a staff writer at The New York Times Magazine, as well as the author of the new book Catch the Devil. The book tells the story of Paul Skalnik, a prolific jailhouse informant whose testimony helped send dozens of men to prison, including one man who remains on death row despite serious questions about his conviction.

Colloff explains how Skalnik repeatedly traded supposed jailhouse confessions for leniency, why police and prosecutors continued to rely on him despite his long history of deception, and how the incentives built into the criminal justice system can reward unreliable testimony. She and Binion also discuss why wrongful convictions are so difficult to overturn, how courts can compound errors long after new evidence emerges, and what Skalnik's extraordinary story reveals about the dangers of trusting the state to correct its own mistakes.

0:00—How a con artist became a star witness

10:56—A 1985 Florida murder case

20:29—Procedural hurdles to overturning convictions

27:21—Colloff's meetings with Skalnik

32:21—Colloff's experience with Skalnik's victims

37:51—Why did law enforcement trust Skalnik?

43:05—Media coverage

46:18—Research for Catch the Devil

50:21—How did Colloff start her career?

53:45—The evolution of magazine journalism

1:00:25—The true crime genre

The post How Jailhouse Snitches Send Innocent People to Death Row appeared first on Reason Magazine.

Zion Lights is a former spokesperson for the radical environmental group Extinction Rebellion, whose members are known for causing mass transportation stoppages and gluing themselves to planes to call attention to what they say is a "climate and ecological emergency." She has gone from protesting nuclear power plants to aggressively campaigning for their expansion as a way of helping the global poor raise their living standards.

Raised in Great Britain by working-class immigrants from rural Punjab, her new book is Energy Is Life: Why Environmentalism Went Nuclear. She talks with Nick Gillespie about how she came to reject the ubiquitous arguments against nuclear energy she encountered as a child, how guilt-ridden countries such as Germany are increasing pollution by shutting down nuclear power, and why oil-rich Gulf States are betting on renewable and clean energy sources.

0:00—The significance of a saucepan

5:15—Thesis of Energy is Life

9:07—Prosperity and guilt

17:38—Extinction Rebellion

21:36—Hostility toward nuclear energy

27:35—The safety of nuclear energy

31:10—France and Germany

36:56—Zion's revelation on nuclear energy

43:57—The nuclear energy industry

50:50—China and the United Arab Emirates

53:16—Energy policy

56:42—Taking technology for granted

The post We've Been Wrong About Nuclear Power appeared first on Reason Magazine.