The Podcast of the Lotus Eaters

00:00:00.080 Hello and welcome to Brokonomics. Now in this episode I wanted to talk about my new favourite thing which is Doge.

00:00:06.340 I'm not talking about the silly meme coin currency, cryptocurrency, I'm talking about the Department of Government Efficiency.

00:00:13.940 Now at the time of recording, you'll get this about a week late, it's very early days but I'm so keen to talk about it.

00:00:21.940 I can't wait. We're just going to dive in with what we know so far and more to the point we're going to talk about

00:00:27.200 some of the challenges that it's got up ahead of it because if you are trying to cut $2 trillion from the US government spending

00:00:36.600 you have to realise what an absolutely monstrous and Herculean task that is.

00:00:42.020 I mean to put it in perspective, the mandatory spending that the US has covers about $5 trillion

00:00:49.400 and then you've got US debt expense which covers about another trillion.

00:00:53.840 So even if you cut all of the discretionary spending, which includes the military, you still wouldn't actually get there.

00:01:03.520 So the task ahead of it to try and cut even $1 trillion of recurring cost from the US spending, let alone two, is monstrous.

00:01:13.860 And we're going to get into it and I'm going to tell you, well basically we talk about the structure of Doge,

00:01:19.380 how it's going to work, some of the challenges it has, then we get into the maths of basically how can they actually do these things

00:01:26.820 and I'll lead you down the path of believing why it is completely and utterly unachievable

00:01:33.220 and then we will have some clever thinking that will get us to a point where actually it might possibly be achievable.

00:01:41.300 Right, so without further ado, let's start off with the spending problem that the US has.

00:01:47.440 Now for this, you might want to play along at home.

00:01:49.340 If you open a tab and go to the usdebtclock.org, or if you just type usdebtclock into any search engine,

00:01:55.960 it will be the top link, you'll get the US debt clock.

00:01:59.700 Now this is a fantastic website that sort of gives you the, basically calculated to the second

00:02:05.260 of what's going on with US spending and debt and, you know, taxation and collection and all the rest of it.

00:02:11.840 Helpfully, you might notice they've added a Doge clock on here, so it will tell you how much they've saved so far.

00:02:17.940 So at the time of recording, it is up to 52.3 billion has been saved, which is a big number,

00:02:26.080 but it's chump change compared to what they actually need to do.

00:02:31.420 Nor is it ticking along at the rate that they need to achieve for their self-imposed time limits,

00:02:38.760 which we get on to now.

00:02:39.980 But anyway, I just wanted to quickly cover the state of the US.

00:02:43.540 So if my editor has thrown this up on screen or you're playing along at home,

00:02:47.280 that you will see US national debt up there at 36 trillion, which is bad.

00:02:53.100 But just under that, you'll see US federal spending.

00:02:56.920 Then you've got the official and the actual, and the US government is currently spending.

00:03:01.480 And bear in mind, this is just the US federal government.

00:03:03.940 This is not state and local.

00:03:05.600 This is just the federal bit.

00:03:07.200 They're spending 7.2 trillion a year.

00:03:11.120 Why is that a problem, you ask?

00:03:12.360 Well, if you look over to the right here, you might see the US federal tax revenue, which is 5 trillion.

00:03:19.160 So obviously there is quite a large gap of about 2 trillion or 2.2 if you go on the actual numbers.

00:03:28.120 So an enormous task, but it does need doing because this debt number is quite absurd and unsustainable for very long.

00:03:38.320 If this were to carry on, do you remember I did that episode a little while back, a couple of episodes ago, on the UK bond crisis?

00:03:46.720 Where basically the bond market looks at what Rachel Reeves is doing and says something along the lines of, 0.70

00:03:52.820 I don't believe you.

00:03:54.680 Therefore, if we are going to hold your, if we're going to buy your bonds, we're going to want a much higher rate of interest.

00:04:00.400 That has been happening everywhere across the Western world.

00:04:02.520 It's even been happening in the US, but if this initiative doesn't work, then that will happen more and more.

00:04:10.720 And the rate that the US has to, well, in fact, all Western countries, but we talk about the US,

00:04:15.700 the rate that the US has to pay on its debts will just keep going up and up and up because otherwise it won't find buyers.

00:04:22.100 And then to counteract that problem, what they have to do is they just have to basically force everybody to buy their bonds.

00:04:28.700 It would be things like if you've got a 401k account or something, you've got to have 20% in US bonds, insurance companies, banks, all that sort of thing.

00:04:39.620 Anything that they can subject to regulatory oversight is going to be forced to buy more and more of these underperforming bonds that lose value year by year

00:04:49.440 because the money supply is being inflated away.

00:04:51.900 They have to do the inflation stuff as well.

00:04:54.000 They have to print money and, well, it will just trash the currency, which is not great.

00:05:00.540 It won't solve the problem and it will just be setting this up for, well, what it's doing is kicking the can down the road

00:05:05.840 and it's just storing up a bigger problem down the line.

00:05:08.820 So the Doge initiative is absolutely crucial if it works.

00:05:13.840 It's a bit challenging, but I think we can show that it's got some potential.

00:05:19.020 Right, so Doge itself, Department of Government Efficiency, it was established by an executive order

00:05:24.900 that we have a quick look at in a second, established by an executive order, I believe, on day one by Donald Trump

00:05:30.140 and it was basically its goal is to streamline government operations, cut spending, modernise government technology and stuff like that.

00:05:39.500 It was going to be Elon Musk and Vivek Ramaswamy, but Ramaswamy, well, he shit the bed, didn't he?

00:05:47.820 So there was this thing where the H-1B-1 visa thing came up and Elon went sort of full nuclear on it

00:05:57.640 and said that, you know, yes, we've got to get immigrants in, basically kind of meant Indian immigrants,

00:06:05.200 and Vivek was on board with this as well.

00:06:08.980 And, well, I'm sure you know the story, but just in case you don't, people started pointing out

00:06:14.680 that actually you can look up who's been coming in on these visas and what jobs they've been going for

00:06:21.720 and it's not the best and the brightest of the world going into incredibly difficult to recruit tech jobs.

00:06:28.200 It's basically all and sundry.

00:06:31.520 It's basically just a way to replace US natives with Indian natives. 0.98

00:06:36.900 So Musk backed down from that, but also Musk had a lot of goodwill built up

00:06:43.980 because, of course, he freed Twitter.

00:06:46.380 He changed the remit of public discourse.

00:06:50.620 You know, he kind of bought the election, which helped.

00:06:54.720 I mean, he's done an awful lot of, you know, terribly good things

00:06:57.520 and will continue to do terribly good things.

00:06:59.640 So even though everybody was a bit annoyed with him, we've all kind of forgiven Elon.

00:07:03.780 But Vivek, he put out a very uninformed tweet where he kind of basically suggested

00:07:08.980 that white Americans are lazy because they watch Saved by the Bell too much

00:07:13.140 and they didn't study hard enough and that's not really what the problem is.

00:07:18.460 The problem is that Indians tend to only hire other Indians 0.95

00:07:21.900 and that's why, you know, no matter how hard you study,

00:07:27.220 if you're a straight white male in America,

00:07:29.320 your prospects of going anywhere are somewhat limited.

00:07:33.160 So anyway, so it was going to be those two.

00:07:34.780 Vivek has basically been booted off.

00:07:37.260 You can tell this because he's given interviews on it subsequently

00:07:39.660 where he says, you know, there was a mutual conversation

00:07:44.020 and it was agreed that he would leave.

00:07:46.080 That's kind of code for, yes, I was fired.

00:07:48.380 So he's going to go off and I think run to be a senator in Ohio

00:07:51.700 or one of those middle ones anyway.

00:07:55.300 So he's gone off.

00:07:56.120 So he's now led by Elon Musk.

00:07:57.860 Elon Musk is exactly the person that you want running a cost-cutting initiative

00:08:01.420 because this is basically his whole focus at Tesla.

00:08:05.600 It's to try and reduce the unit cost as much as possible.

00:08:09.720 And, I mean, he's been enormously successful in it.

00:08:12.560 He can basically produce electric cars that are profitable,

00:08:16.040 whereas nobody else is able to do that.

00:08:18.000 I mean, all the other manufacturers, they produce electric cars,

00:08:20.220 but they kind of do it because they know that they kind of need to.

00:08:23.180 And places like the EU have said, and California have said,

00:08:26.580 they're going to stop selling,

00:08:27.640 they're going to stop letting internal combustion engine cars be sold.

00:08:31.460 So they know that the future from a regulatory push alone

00:08:34.980 is going to be electric cars in the future.

00:08:37.760 And therefore, they need to make them, but they can't make them profitable.

00:08:41.040 They tend to lose money on each one they sell,

00:08:43.180 or at least if they do earn money, it's very little.

00:08:45.300 Whereas what Elon Musk has been able to do is keep lowering the selling price,

00:08:49.740 but he's also able to keep lowering the unit price to produce as well.

00:08:54.620 And basically, the difference between those two lines,

00:08:56.520 if you track them on a chart as they go down, is the profitability.

00:08:59.720 And, I mean, he looks at it on a very fundamental basis.

00:09:02.240 I mean, I'm a big shareholder in Tesla, so I follow this thing quite closely.

00:09:05.960 But, I mean, he will, whenever he has the opportunity,

00:09:09.180 rip out whole components from the car.

00:09:12.860 He always says the best part is no part.

00:09:15.360 So he's reducing the number of parts that are always in the car.

00:09:19.100 And, you know, he was talking about this on an earnings call the other day,

00:09:21.720 saying, look, if I've got 50,000 parts that go into my car

00:09:25.580 and each of them one costs a dollar,

00:09:26.860 well, that means my car costs $50,000 to produce,

00:09:30.200 I want to save at least 15% from that.

00:09:33.560 Therefore, I need to find a way of reducing,

00:09:35.600 saving 15p on every single component that goes into it.

00:09:38.920 You know, that is very hard.

00:09:40.060 But if I can just take some of those components out,

00:09:42.840 that's significantly easier.

00:09:44.480 So he's got a really good track record on cutting spending,

00:09:48.520 you know, efficiently and making it work.

00:09:51.140 Of course, when he went into Twitter as well,

00:09:52.520 he fired something like, was it 80% or 90% of the workforce?

00:09:55.760 Which is very, very encouraging.

00:09:58.180 So anyway, do we think they're going to succeed?

00:10:00.440 Let's start off with PolyMarket.

00:10:02.740 They've got a market here for how much spending

00:10:05.040 Elon and Doge will cut in the first six months.

00:10:07.640 Now, as I'll come on to there,

00:10:09.620 they've set themselves an 18-month time window.

00:10:12.100 And you kind of need to save,

00:10:14.420 well, $2 trillion would be really nice,

00:10:16.600 but $1 trillion is really what you need to save.

00:10:19.680 So you need to be saving,

00:10:21.360 if you're going for that lower target of $1 trillion,

00:10:23.620 you need to be saving, well, $333 billion

00:10:28.740 of recurring spend every six months.

00:10:33.800 And basically, this market is saying

00:10:35.280 that it's going to be below $250 billion.

00:10:38.080 Now, that wouldn't be awful

00:10:40.240 if it was actually at the $250 billion mark,

00:10:43.780 because maybe you might find that you get better at this

00:10:48.440 as you go along,

00:10:49.400 and therefore the second and third six-month block

00:10:53.520 are better.

00:10:54.920 But actually, it's probably the other way around.

00:10:57.160 You probably identify the easiest cutting areas

00:11:00.680 in the first six months.

00:11:04.160 So I think there's an argument for placing a bet.

00:11:07.060 I can place a bet on the $250 billion to $500 billion in saving.

00:11:11.520 But broadly, the point I'm making here

00:11:13.060 is the expectations are not especially high

00:11:16.460 because of the scale of the challenge

00:11:18.980 or what they've set themselves up.

00:11:21.980 Right.

00:11:22.480 So let's take a look at the Department of Doge itself.

00:11:25.580 So it was established by this executive order.

00:11:27.980 Let's take a quick look at that now.

00:11:30.340 So yeah, here we got establishing

00:11:31.640 and implementing the President's Department

00:11:33.520 of Government Efficiency.

00:11:35.340 Purpose established the Department

00:11:36.800 of Government Efficiency

00:11:37.400 to implement the President's Doge agenda

00:11:39.880 by modernising federal technology and software

00:11:42.260 to maximise government efficiency and productivity.

00:11:45.740 It was thought that this was going to be

00:11:47.780 a brand new department

00:11:49.240 that wouldn't have time to get established

00:11:52.680 via Congress,

00:11:54.180 and therefore it'd be kind of this advisory thing only.

00:11:56.900 And it still kind of is an advisory thing only.

00:11:59.820 But basically what they've done

00:12:00.860 is they've gone in

00:12:01.560 and they've replaced the U.S. digital services.

00:12:06.200 And that's quite clever, actually,

00:12:07.440 because the U.S. digital services

00:12:08.840 is embedded across the length and breadth

00:12:11.860 of the government,

00:12:13.320 meaning that, well,

00:12:14.260 by taking over an existing organisation,

00:12:16.480 you've already got offices,

00:12:18.440 you've got the support staff,

00:12:19.480 because yes, you want to put your own people

00:12:20.900 in for the actual cutting elements,

00:12:22.540 but, well, you still want things like payroll

00:12:25.180 and stationary ordering and cleaners done.

00:12:28.160 You don't want to waste time setting that up.

00:12:29.520 So they've already got offices and the support staff

00:12:32.480 so they can get extra people in.

00:12:34.280 Because it's the U.S. digital service,

00:12:35.960 they've already got people

00:12:36.860 who understand how to pull data

00:12:39.500 out of these various departments

00:12:42.140 as we go through them,

00:12:43.120 which will be crucial for when we talk

00:12:44.280 about the structure of how it works.

00:12:45.900 And it's got this executive order behind it,

00:12:48.560 but it doesn't have statutory backing.

00:12:51.560 So it doesn't have permission from Congress

00:12:54.400 to do what it's doing.

00:12:56.360 So it's going to be an advisory body

00:12:59.080 and it's going to route them through,

00:13:02.520 I'll come to a minute,

00:13:03.400 but there's a sort of treasury department

00:13:05.800 that it's going to route its recommendations to

00:13:08.080 and then that can actually act on it.

00:13:10.160 However, given that it's Trump peoples

00:13:12.300 embedded through,

00:13:13.460 I can't see that any of those recommendations

00:13:16.840 are going to be held up even slightly.

00:13:18.840 So if a recommendation come through,

00:13:20.160 it's probably going to be acted on.

00:13:21.140 So technically, it doesn't have statutory authority

00:13:24.300 of its own to do what it's doing.

00:13:25.780 But in practice, I think that's a mute point

00:13:27.960 because it will just instantly refer them

00:13:29.740 to somebody who instantly accepts them.

00:13:31.940 And there you go, you get your cut through.

00:13:36.300 Right, so they've structured it as a series of teams.

00:13:40.200 The team thinking is quite clever.

00:13:43.200 And because it's invested in these digital services,

00:13:46.360 they're going to have a big emphasis

00:13:48.360 on interoperability, data integration,

00:13:51.920 you know, all up.

00:13:53.140 This is all within the ballpark of a tech bro like Elon.

00:13:57.520 Synchronize, what do they call it?

00:14:00.020 Synchronosity, which is a silly word,

00:14:02.380 but you know, that's what they're going for.

00:14:04.460 Okay, oh yes, I remember now.

00:14:05.660 It was Office of Management and Budget.

00:14:07.780 That's it.

00:14:08.340 So the Office and Management of Budget

00:14:10.060 is the body that can actually make the cuts.

00:14:13.600 And so they're going to be sending their recommendations

00:14:17.160 straight over to the OMB,

00:14:19.700 the Office of Management and Budgets.

00:14:22.260 So presumably they'll be getting some extra personal in there

00:14:24.520 and I'm sure they'll just be implementing whatever it is.

00:14:26.780 Okay, right, so how do they structure it?

00:14:28.640 How does it work?

00:14:29.660 So it's a series of four-man teams

00:14:31.680 that can be embedded basically everywhere

00:14:33.880 across the US government.

00:14:35.640 And the structure is a leader,

00:14:38.060 a data engineer,

00:14:39.560 a HR specialist,

00:14:41.200 and a lawyer and attorney.

00:14:43.800 So basically the leader is,

00:14:46.220 he's going to be the ideas man.

00:14:47.660 I mean, what a great job.

00:14:49.080 What a wonderful job.

00:14:49.960 Anyway, so he's the guy who goes in

00:14:52.040 and has the meetings,

00:14:54.660 figures out what needs to be cut,

00:14:56.380 says, okay, we need to get this done.

00:14:58.380 The data engineer,

00:14:59.640 this is a clever bit.

00:15:01.240 So the data engineer

00:15:02.260 is going to be looking for efficiencies,

00:15:04.580 but can also do other things.

00:15:05.640 Like he can,

00:15:06.380 so let's say you're thinking about

00:15:08.240 which headcount to cut,

00:15:10.860 going back to Elon's thing

00:15:12.040 about where he cut whatever it was,

00:15:13.640 80, 90%.

00:15:14.220 I think it was 90% of the Twitter workforce.

00:15:16.620 So the data engineer

00:15:17.740 can log into the system

00:15:19.320 and see, okay,

00:15:20.240 who's actually doing work?

00:15:22.600 You know,

00:15:22.720 who's actually sending emails

00:15:25.120 or, you know,

00:15:26.580 booking meetings

00:15:27.280 or however it is that you,

00:15:29.380 not that meetings are work.

00:15:31.980 In fact, no,

00:15:32.620 I strike that

00:15:33.500 because people have meetings

00:15:34.640 to avoid work.

00:15:36.540 But anyway,

00:15:37.220 the point is

00:15:37.800 the data engineer

00:15:38.500 can go in

00:15:39.220 and see who is actually active

00:15:40.900 because almost certainly

00:15:42.580 what you're going to find

00:15:43.400 is with a lot of this,

00:15:45.440 especially the extent

00:15:46.620 of the work from home

00:15:48.020 that US government employees

00:15:50.060 have been doing,

00:15:52.220 an awful lot of them,

00:15:53.220 and this is something

00:15:53.620 Trump has talked about recently,

00:15:54.840 an awful lot of them

00:15:55.360 are going to have second jobs.

00:15:57.000 So they're employed

00:15:57.440 by the US government,

00:15:58.340 but they're required

00:15:58.980 to do so little work

00:16:00.400 that actually they're just

00:16:01.980 collecting a paycheck

00:16:02.720 from the US government

00:16:03.420 and then going and working

00:16:04.780 somewhere else,

00:16:05.640 doing something

00:16:06.160 actually productive.

00:16:07.380 So the data engineer

00:16:08.280 will be able to spot

00:16:09.160 a lot of that.

00:16:09.960 People are interacting

00:16:11.320 through the data stream

00:16:12.460 as whatever

00:16:13.500 and get those done.

00:16:15.180 So having identified,

00:16:16.260 and you can tell

00:16:16.760 that they're a big focus

00:16:18.160 on this is going

00:16:18.720 to be getting rid of people,

00:16:20.620 which is a good idea

00:16:21.480 because people

00:16:22.820 are actually expensive,

00:16:23.840 especially you've got

00:16:24.320 a lot of them.

00:16:25.000 So you've got the HR specialist

00:16:26.200 who wants the leader

00:16:27.120 who said,

00:16:27.480 okay, well,

00:16:27.760 we need to chop

00:16:28.400 all of those people.

00:16:30.000 The HR person

00:16:31.940 can then basically do it,

00:16:34.460 get that going.

00:16:35.440 Who knows the pitfalls,

00:16:36.820 who understands

00:16:37.620 basically how to implement

00:16:39.380 that in a way

00:16:40.160 that doesn't instantly

00:16:41.340 get you dragged

00:16:42.200 through the courts

00:16:42.860 or wrongful dismissal

00:16:44.060 or whatever it is.

00:16:45.660 And of course,

00:16:46.280 the attorney,

00:16:46.880 because there is

00:16:47.720 a vast myriad

00:16:48.660 of, well,

00:16:50.580 a vast legal web

00:16:52.300 that makes it difficult

00:16:54.120 in all sorts of area,

00:16:55.380 especially if it's going

00:16:56.680 to be going

00:16:57.180 into regulatory demands.

00:17:00.420 You know,

00:17:00.720 if there are statutes

00:17:03.180 that say this thing

00:17:04.040 must be done,

00:17:05.040 then if you get rid

00:17:06.220 of the people

00:17:06.780 and the function,

00:17:08.260 well,

00:17:08.580 then you're kind

00:17:09.640 of breaking the law.

00:17:10.880 So actually,

00:17:11.760 the attorney,

00:17:12.400 as much as anything,

00:17:14.460 their role will be

00:17:15.440 to identify

00:17:16.380 if the leader

00:17:18.620 and the data person

00:17:19.440 say, okay,

00:17:19.900 well,

00:17:20.040 we need to get rid

00:17:20.540 of all of these people

00:17:21.340 and look,

00:17:22.180 let's say there's a statute,

00:17:24.500 a regulation that says,

00:17:25.960 oh,

00:17:26.860 whatever it is,

00:17:27.520 you know,

00:17:27.700 this thing needs to be done

00:17:29.040 and the data engineer,

00:17:31.460 the leader,

00:17:31.780 can confirm

00:17:32.480 that actually that thing

00:17:33.580 that apparently needs to be done

00:17:34.800 just isn't being done.

00:17:36.800 Either it isn't important

00:17:37.980 or nobody's working on it anyway

00:17:40.120 and therefore it's

00:17:40.820 a redundant thing.

00:17:42.160 The attorney can identify,

00:17:43.980 well,

00:17:44.020 yes,

00:17:44.340 that is a statutory function,

00:17:45.780 but they can also identify

00:17:47.380 that if that thing

00:17:48.800 isn't being done anyway,

00:17:50.800 well,

00:17:51.080 we need to pass it up

00:17:52.060 to chain to say,

00:17:53.020 okay,

00:17:53.140 this regulation

00:17:54.340 needs to be repealed.

00:17:55.960 Now,

00:17:56.180 the other thing

00:17:56.500 you want to bear in mind

00:17:57.260 is that actually

00:17:58.460 a lot of the regulatory mass

00:18:01.720 which is weighing down the US

00:18:03.020 is not actually regulations

00:18:05.460 that Congress has enacted

00:18:08.700 the way it should be done.

00:18:10.280 A lot of these regulations

00:18:11.480 have actually been created

00:18:13.080 by the regulatory agency themselves.

00:18:15.780 Now,

00:18:16.120 there was a very important

00:18:17.880 Supreme Court case,

00:18:20.520 which I'm temporarily forgetting,

00:18:22.400 somebody in the comments

00:18:23.080 will remember this,

00:18:23.720 but there was a very important

00:18:24.880 Supreme Court case

00:18:25.920 not that long ago

00:18:26.960 that,

00:18:28.060 was it Chevron?

00:18:29.500 Yes,

00:18:29.700 I think it was Chevron,

00:18:30.620 that basically overturned

00:18:32.720 the ability

00:18:34.580 for regulatory agencies

00:18:35.980 to make their own regulations

00:18:37.980 and therefore,

00:18:39.820 actually,

00:18:40.260 most of the regulations

00:18:41.460 that were in place

00:18:42.320 can simply be repealed.

00:18:46.320 They can just be struck.

00:18:47.540 In fact,

00:18:48.960 after the Supreme Court case,

00:18:50.600 they don't have legal weight anymore.

00:18:54.240 So it doesn't mean

00:18:54.600 the regulatory agency is,

00:18:56.380 in fact,

00:18:56.660 I think it might be

00:18:57.160 something like 80%.

00:18:58.340 80% of what

00:18:59.600 the average regulatory agency

00:19:01.500 enforces

00:19:02.240 is their own regulations.

00:19:04.520 So if you were to just

00:19:05.460 chop all of those

00:19:06.440 and the attorney

00:19:06.940 can go through

00:19:08.140 and identify them

00:19:08.920 and say,

00:19:09.220 okay,

00:19:09.360 look,

00:19:09.500 all of these need to go,

00:19:10.920 then of course,

00:19:11.380 all of the people

00:19:12.800 working on those things

00:19:14.560 as well,

00:19:15.940 they can all go.

00:19:17.360 So actually,

00:19:18.500 from a regulatory agency's

00:19:20.120 point of view,

00:19:20.860 you're going to have

00:19:21.560 what is going to be

00:19:22.880 a target-rich environment

00:19:23.940 for making cuts,

00:19:25.400 which you might think,

00:19:26.240 okay,

00:19:26.480 well,

00:19:26.780 you might start to think,

00:19:28.000 okay,

00:19:28.300 well,

00:19:28.460 Doge is easy.

00:19:29.160 Actually,

00:19:29.440 it's not,

00:19:30.020 as we come on to.

00:19:31.060 But anyway,

00:19:31.720 that's the structure

00:19:32.660 of what it is

00:19:33.700 they're going to try and do.

00:19:35.620 So that's the team level

00:19:37.220 and as you can see,

00:19:38.180 that is primarily

00:19:38.880 going after people,

00:19:40.880 functions,

00:19:42.280 out-of-date regulatory requirements

00:19:44.260 that can be chopped

00:19:45.060 and all that kind of stuff.

00:19:46.000 The other part of it,

00:19:47.600 the sort of more

00:19:48.060 top-down element

00:19:48.800 going into this,

00:19:49.740 is the US Digital Service,

00:19:51.580 which is now,

00:19:52.200 which is now the US Doge,

00:19:54.160 is going to be focusing

00:19:55.040 on government-wide software,

00:19:58.120 network,

00:19:59.040 infrastructure,

00:19:59.860 IT systems,

00:20:01.320 data,

00:20:02.020 interoperability,

00:20:02.860 all that kind of stuff.

00:20:04.020 Because Trump managed

00:20:05.720 to build so much

00:20:06.780 tech bro support,

00:20:08.600 he's got access

00:20:09.360 to a lot of people

00:20:10.240 who can go in

00:20:11.220 and start changing

00:20:12.440 these systems,

00:20:13.380 modernising systems.

00:20:14.860 Government is normally

00:20:15.980 at the back of the queue

00:20:16.920 for software efficiency.

00:20:19.480 Normally it goes,

00:20:20.600 well,

00:20:20.760 the geek get it first,

00:20:22.980 the early adopters,

00:20:24.100 then business,

00:20:24.980 and then the general population,

00:20:26.380 then finally government gets it.

00:20:27.920 They might be able

00:20:28.500 to speed up

00:20:29.260 that process a lot more.

00:20:31.880 And also,

00:20:32.220 these teams are localised,

00:20:33.760 so they're going to be

00:20:34.440 embedded within each agency,

00:20:37.180 so they can understand

00:20:37.880 the culture of the agency.

00:20:40.220 If possible,

00:20:41.080 I think they're going to draw

00:20:41.880 some of the people

00:20:42.620 from that agency

00:20:43.700 if they can identify

00:20:44.820 individuals of the right mindset.

00:20:47.160 You need to be careful

00:20:47.860 that you haven't got somebody

00:20:49.320 who's institutionalised

00:20:50.560 and captured by it,

00:20:51.580 but somebody who knows

00:20:52.440 enough about the agency,

00:20:54.620 maybe somebody

00:20:55.320 who's relatively new to it,

00:20:57.380 somebody who's not a lifer.

00:20:59.600 If you're embedded in it,

00:21:01.220 and especially if the attorney

00:21:02.460 truly understands

00:21:04.460 the legal requirements

00:21:06.640 that that agency works under,

00:21:08.540 then you can act a lot faster.

00:21:11.460 The other thing I really like

00:21:12.240 about this structure

00:21:12.880 is that it's very small teams,

00:21:15.620 and actually a team of four people

00:21:17.260 is actually about right

00:21:19.080 for the optimum speed

00:21:22.760 for getting stuff done.

00:21:25.420 I mean, the most optimal team ever

00:21:27.140 is a single individual,

00:21:28.880 because you don't have to spend

00:21:30.360 any time communicating,

00:21:32.720 but it's very quick

00:21:35.560 and you can overwhelm people.

00:21:36.740 But I think four is about optimum,

00:21:39.140 and this has been my experience as well.

00:21:40.640 Four is about the optimum number of people

00:21:42.220 that you want to assign

00:21:43.380 to a difficult problem,

00:21:44.920 because it's enough

00:21:46.080 that there's enough of them

00:21:47.420 to split up the job

00:21:48.460 and get it done,

00:21:49.200 but it's also nimble enough

00:21:50.360 and fast enough

00:21:51.100 and quick enough.

00:21:52.140 As soon as you start getting,

00:21:54.000 especially over six or something,

00:21:55.440 there's always somebody missing

00:21:56.560 scheduling times to get together

00:21:58.880 and the information gets lost,

00:22:00.380 but four, that can really work.

00:22:03.000 And actually, the other thing

00:22:03.720 I should mention before we press on

00:22:05.900 is that the big win

00:22:07.960 in all of this

00:22:09.340 is going to be embedding

00:22:10.560 a different cultural ethos.

00:22:14.320 And it's going to be moving

00:22:15.380 from basically a culture

00:22:16.980 where these people

00:22:18.260 have never met spending,

00:22:20.700 new spending that they don't like,

00:22:22.880 to one that the thought process

00:22:25.420 becomes, okay,

00:22:26.380 not only have we got to cut

00:22:27.900 existing spending,

00:22:28.880 but we've got to seriously challenge

00:22:31.180 any new spending,

00:22:32.200 and we've got to continuously

00:22:33.660 find ways to strip spending

00:22:35.960 out of the process.

00:22:37.880 Absolute bread and butter

00:22:39.380 for a private business,

00:22:41.180 a monumental mind shift

00:22:42.620 for government.

00:22:44.880 But if that is successful,

00:22:46.520 game changing,

00:22:47.420 absolutely game changing.

00:22:48.780 Okay, so the goal.

00:22:49.900 As we talked about,

00:22:50.620 they've got to try and find

00:22:52.160 two trillion of annual spending,

00:22:54.360 which is ludicrously optimistic,

00:22:56.760 as we will come to soon.

00:22:59.740 And there's going to be

00:23:00.600 enormous hurdles.

00:23:01.840 Hurdles are going to be legal,

00:23:03.100 political,

00:23:04.040 short term,

00:23:04.620 it's going to be operational

00:23:05.420 because these structures

00:23:07.240 are set up in a certain way.

00:23:08.400 If you just start chopping

00:23:09.780 large chunks of them out,

00:23:11.340 then entire functions

00:23:12.720 need to disappear.

00:23:13.720 And actually,

00:23:14.220 that is absolutely

00:23:15.220 how it needs to go.

00:23:17.000 And a lot of it,

00:23:18.860 as we get to the more difficult stuff,

00:23:20.880 is going to require

00:23:22.160 congressional support.

00:23:23.620 And the difficulty

00:23:24.580 that you've got there

00:23:25.640 is that you're going to...

00:23:27.420 So the way that Congress

00:23:28.460 has worked for many decades

00:23:29.540 is that the congressman

00:23:30.900 is a lobbyist,

00:23:33.040 effectively,

00:23:34.480 to get more federal spending

00:23:36.820 directed to their district.

00:23:38.400 And that's how they measure support.

00:23:40.000 And in fact,

00:23:40.500 some of the early anecdotes

00:23:41.700 I've heard coming out of this

00:23:43.120 is Congress is very supportive

00:23:45.060 of cutting

00:23:45.940 all spending initiatives

00:23:47.940 from every program

00:23:50.100 that doesn't affect

00:23:50.900 their individual district.

00:23:52.560 And they are very focused

00:23:54.580 on protecting

00:23:55.300 anything

00:23:56.460 within their

00:23:57.640 particular district.

00:24:00.180 So it's going to be

00:24:01.600 a real issue

00:24:02.360 getting congressional support

00:24:03.720 over the line

00:24:04.400 when it kind of

00:24:06.140 180s

00:24:06.960 their entire

00:24:08.120 remit.

00:24:08.980 I mean,

00:24:09.520 just how they've operated

00:24:10.600 for decades.

00:24:11.320 That's all they do.

00:24:12.880 Basically,

00:24:13.360 all congressmen do

00:24:14.000 is they try and get

00:24:14.460 spending directed.

00:24:15.960 US federal spending

00:24:17.160 keeps going up.

00:24:18.180 How can I get more

00:24:19.240 and more of it

00:24:19.740 directed to my district?

00:24:20.980 So that's going to be

00:24:21.920 a fundamental challenge.

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PREVIEW： Brokenomics ｜ DOGE

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