The Future of the American Dream

Marc Andreessen
If you're an average 22 year old today and you're kind of staring into the future and you're like, am I going to be able to, like, get married, have a family, have kids, own a home, send my kids to a good school, and then have good healthcare? Like, like, on the one hand, we're on a very bad track for that. On the other hand, in some ways, an easy problem to solve. The solution is right in front of us. The content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investor or potential investors in any a 16 z fund.

Please note that a 16 z and its affiliates may maintain investments in the companies discussed in this podcast. For more details, including a link to our investments, please see a 16 z.com disclosures. Welcome back, everybody. We have a new topic today, which is the american dream. And I should give a couple of disclaimers right up front.

So one is, this is a extremely large topic, and it's many, many, many subtopics branch off from it. And when we solicited questions on x for this, and people submitted questions in many interesting categories, and so we'll get to some of it today, but a lot of it we won't get to. So it's just, it's just, it's a big and sprawling topic. We're going to try to at least do an introductory discussion around it. Maybe we'll do follow ups if there's interest.

You know, the second thing is like, look like, you know, lots of people have lots of opinions about the shape of society and for sure the concept of the american dream. So, you know, we will, we will be attempting to kind of explore our way through it, you know, hopefully, maybe not making that many declaratory statements today, but at least trying to kind of outline the, outline some of the questions and issues. And then third, you know, as we say when we, whenever we touch on anything political, like there, there are inevitably political dimensions to a topic like this. And our goal today will not be to take partisan political positions in any direction, but rather kind of as best we can, to at least kind of frame, you know, frame, frame, you know, frame the discussions and provide context. So, so please don't infer things into what we're saying that we don't explicitly say because we're going to try genuinely to represent a pretty broad set of views.

So with that, Ben, I thought maybe if it's helpful to you, and Ben pointed out right before we started that, actually, Ben and I have actually not explicitly talked about this topic. So this is, this is one where we may, we may be learning something about each other's points of view, which after you, you know, 30 years of partnership slash marriage, you know, will be a new experience for us. So we will, we will see what, we will see what pops out. So maybe I thought maybe I could start by describing kind of what I think the american dream is, and then you could, you can respond and either agree or argue or provide your own. I think basically there's, there's two parts to it.

So I think part one is what you might call the material part or the sort of standard of living part or the sort of, you know, sort of the sort of nuts and bolts of what it means to live a, live a good, productive life. And basically, I think that that version of the american dream, I think, has hung on a bunch of things. But there's three big material things for sure. So one is to be able to own your own home, right? Which is, you know, which is, by the way, you know, a very old and primal concept, right?

Like, I own my home. I am rooted to the land. You know, I am not transient, right? I am. I mean, originally, you know, citizenry was based on land ownership.

Like I am a citizen. I own land. I am permanent. This is my place. The people around me are my people.

You know, they also own land. My family owns land. I can leave my land to my kids. You know, they will have the option to live in the same land as well. Their kids.

That's what their kids. And then, you know, my home is my castle. I, you know, nobody can take it away from me. I have protections inside it, you know, and this is why, you know, issues in american jurisprudence like, you know, unreasonable search and seizure, you know, in America, at least in theory, the cops can't just, like, barge into your home and do whatever they want. Like, there's very explicit protections.

So this sort of very fundamental, rooted kind of view of home and house, which is, of course, you know, deeply connected to family. So that's, that's one, you know, second is education. You know, especially in the last hundred years, you know, the idea that my kids are going to be able to, you know, be able to have an educational experience that's superior to mine, they're going to be able to learn more, have more advanced skills, you know, than I had. And then, you know, they'll be able to then live more prosperous lives, you know, and do kind of higher levels of work and, you know, sort of climb the economic ladder on the other side of that. And that's a big push that's more recent, I think.

And so that's a push that was really kicked in in the early 19 hundreds in the way that we think about education today. Before the 19 hundreds, education was a little bit more of an aristocratic concept, a little bit more of a rarefied elite concept, and it really got generalized out to all of american society in the early 19 hundreds. And so that's the sort of ethos that we have today. And then third is healthcare. And this maybe was not.

This is another one where its importance has sort of certainly risen dramatically even in the last 80 years. But the idea that look like I'm going to get sick, my kids are going to get sick, my spouse is going to get sick, my parents are going to get sick. And like, they're, they're going to, they're going to get taken care of, and there's going to be a healthcare system there that's able to bring the best of western medicine and science, science and technology to bear. And, you know, they're going to get the best possible care. They're, they're going to live as long as possible.

They're going to be as healthy, you know, for, you know, as long as possible. For how long they live. Ben, I know you've thought about this a fair amount, so we'll, I'm sure we'll come, we'll come back to that, you know, kind of that topic. But, you know, and again, in american dream, like, it really, if you look at the american medical system like it's distinguished by, you know, the amount of money that goes into care in the last year of life, which is not the case in many other societies. And I think that's there's something in there about healthcare being tied to the american dream where it's like you basically have the right, you should expect the fact that basically the medical system will do everything necessary to give you not just another ten years of life, but another year of life, another month of life, another day of life.

And that's sort of deeply embedded in the ethos. I think it's like those three. So how's home, education, healthcare? And then I think that there's, so that's the tangible part. And then I think there's an intangible part which you could use words like aspiration or self actualization or self realization or reaching one's full potential, which is basically achieving greatness, becoming more than you are.

What I think is interesting about that one is that one is scalable. It's all the way down to the level of the individual being able to become a better version of themselves and being in a country and in a place in a time where they're able to do that. But it's that, it's also for your family and for your kids to be able to do that. And then Edmund Burke had this famous concept called the Little Platoons, which is basically like the small scale communities, right. Small scale, small scale social organizations.

So I can also have an aspiration for my neighborhood. I can have an aspiration for my town. I can have an aspiration for my city. I can have an aspiration for my state. And then the full form of that is I can have an aspiration for my country and for America.

And that there's a sense of, we call it progress, but progress beyond just material progress, like moral progress, progress in purpose, progress in, maybe self actualization would be the modern term, but the progress in becoming something great. And that I'm going to be able to do that, but also I'm going to be part of larger efforts to do that at larger and larger levels of scale. And, of course, America has a long history of sort of community volunteerism. One of the things that really jumps out in american history is how many volunteer associations there have been along the way. And a lot of those have been small scale.

And then these kind of organized efforts that were much more common in the 20th century, but like Lions Club and elk Club, you know, these kind of local efforts. And then, you know, obviously larger scale volunteer efforts, you know, religious, religious institutions that seek to have an, you know, have a, you know, have a, you know, have a big charitable component to help people or, you know, other, other efforts to, you know, to kind of, kind of, you know, build bigger and better things within society and make society better in the, in the process. So, so let's call that the sort of aspirational psychological component to it. So let me stop there, and, Ben, see what you think and agree, disagree or have totally different views. So I think there's some incompleteness that let me talk about a little bit.

Ben Horowitz
So, well, I would say, interestingly, on the kind of economic side, housing is this very ancient idea goes back, and this is our land, all the way back to the promised land and so forth, which is causing issues now. But kind of, I would say healthcare and education are a lot a function of the industrial revolution, and I think that'll come into play a lot in our discussion in that the industrial revolution kind of created the need for everybody to have some kind of higher level of education, or there was some, like, outcome for being more educated because there were more things to do than just farming. And then similarly, you know, healthcare of a higher level was all of a sudden possible. And that was also an industrial revolution output. And interestingly, the industrial revolution also caused the creation of a much, much larger government, which in turn then regulated those fields and has kind of stalled out in some ways the american dream in those dimensions.

So that's just kind of a really interesting aspect that those things connected. The other thing that I think you left out is I always thought of there being a very specific cultural aspect to the american dream, and maybe this isn't the american dream, but I always thought there was this idea of God, family, work, which was very american in nature. And in that order, you have to first comes God, then comes family, then comes work. And that was kind of the ethical cultural backbone that kind of the whole thing wrote on. So those would be the things that I would add.

Marc Andreessen
Got it. Okay, let's touch on each of those. So you said housing agents, ideas. So talk a little bit about the promised land. It's more in your cultural background than mine.

So tell me about how you think about that and then how much of that kind of got transplanted into the american ethos over the centuries. Yeah, you know, I'm not sure. It's really interesting. So in Judaism, you know, God sort of promises Israel to the Jews. They're the chosen people, and they are promised this land.

Ben Horowitz
And in particular, you know, the kind of most famous story about it, of course, is when the Jews are slaves in Egypt. And then once they can free themselves, then eventually they're going to get to the promised land. They'll get back home. Home. And I think it's a very important kind of concept in the psyche of America, or it's translated into that, in that home and freedom are highly connected.

And then you could also overlay american slavery on top of that and see where that's been. Such a kind of core contradiction in America is that the whole thing about home is free. Those are inseparable to me. And I think that's very, very related to the kind of original jewish experience and kind of getting out of Egypt. And so, yeah, I mean, I think that's the big.

It's really a fundamental connection with those two concepts. So if I understand properly. So home is where you're free. Yeah. You are free at home.

And you have a right to that home. This is an inalienable right. The original inalienable right was to the pursuit of property, right. Not the pursuit of happiness. And that just sounded a little too capitalistic.

But I think property is more accurate because it's an expression of freedom. Like, this is going to be mine, like the whole society, whatever, but this part is mine. And I think that, you know, the promised land, this is what I'm on. This is my right. Yeah.

Marc Andreessen
Now, there's a little bit of a question here would be a little bit of, like, how much of this is pre modern? You know, how much of this is ancient and how much of this is new in the form of America or how we kind of think about rethink America over the years, over the decades. So, you know, this land is mine because God gave it to me. And specifically, they gave it to my religion, my ethnicity, my people, my tribe. Like, that's.

That's a pre modern. I think you'd agree that's a pre modern worldview. Oh, yeah. Like, that's. That's deep and primal.

Ben Horowitz
The, you know, the kind of Greece circa, I guess, you know, 1500 bc. You know, one of the first concepts of that society was the home and the fire. And so it's a pretty old idea. You know, once you kind of get into, like, where, you know, the land, I imagine, goes back to the beginning of agriculture when that concept must have emerged. Yeah, that's right.

Marc Andreessen
Yeah, that's a good point. So there were basically, in prehistory, there were basically two kinds of societies. There were hunter gatherer. They were sort of foraging or they were roaming societies, sort of hunter, classic hunter gatherer. And, you know, they did not.

Did not have a permanent attachment to any piece of land because they would be moving around in search of more food or better conditions or whatever. And so kind of, you know, land, you know, like tribal land boundaries were very porous and which would shift a lot if they even existed at all. Then there. And then there was agriculture. Societies was no, like, we're here and we're going to stay.

And then land ownership became very important because you're putting all the effort and resources into planting, you know, something that won't, you know, harvest out for another year. Right. Like, you better not have it taken. You better not move somewhere else, like, while that's happening. Yeah.

And so that was sort of the original creation of this sort of sense of rootedness is that. I mean, that I think that matches your kind of where you're coming from. Absolutely. And kind of, you know, and then that kind of went, you know, monotheism emerged after agriculture, but for sure that kind of monotheistic view. And I guess, actually the polytheistic view also, you know, God, you know, land is a God, granted.

Ben Horowitz
Right. You know, in ancient society. And I think that at least that feeling kind of went all the way through the Declaration of Independence, you know, for sure. And, you know, and it's still with us now. Now, as you said, there's a contradiction at the heart of America, though, which is, like, we have that concept, but obviously, like, that concept historically, like, on a timeless basis, historically, that concept was very tied to the concept of a tribe or an ethnicity or religion.

Yeah. And in fact, and most ancient people, most ancient peoples who had that point of view didn't even differentiate between, you know, religion, ethnicity, place, peoplehood. It was all a unified idea. Yeah. And look, it's a unified idea in the biggest conflict in the world right now with Israel and Palestine.

Right, right. This is the argument. Right, exactly. And it's a tricky one. Right.

Because, you know, who was there first and then. Yeah, yeah. And then, of course, the whole thing was colonized by the british empire and then re divided up. And, you know, the British are way out by now, but, you know, but. America, interesting thing, if you agree with this.

Marc Andreessen
So America inherited that idea and put it in the founding documents. But at the same time, of course, the sort of, you know, I think the definition of America and the american dream is it's not a specific ethnicity, it's not a specific religion. You do not have to be. You do not have to be Anglo Saxon. You do not have to be Protestant Christian.

You do not have to be this. You don't have to be that. You can become american aspirationally, and you can become an american citizen, and you can become an american landowner, and you can vote in America without any of those historical, tribal, religious, ethnic buyings. And in fact, you are expected to do so when you become american. You are expected to leave those other historical affiliations behind, and then you become a full fledged citizen.

You can be a landowner, you can be a voter, and you can be everything else that comes with this sense of deep rootedness. And as you said, the execution on this was obviously not perfect, as shown by the fact that we inherited a lot of european aristocratic social orders and structures and land ownership at the very beginning. And then there was obviously the long struggle for black freedom, and then ultimately being able to actually deliver on that, on the dream that was in the founding documents. Yeah. And, of course, there are arguments raging today as to whether we've reached that.

But any event, like, we're a lot closer to that than we were 200 years ago, and we're a lot closer to that than I think any other society has been. So, anyway. Yeah, how do you. Yeah. Maybe talk a little bit about that.

Ben Horowitz
So I actually think that, you know, in some ways, that's probably the unique part. You know, like, so if you look at humanity as a whole, like, there's a lot of pieces that you could get anywhere. But the thing that had been, you know, up to very recently or had been very unique and kind of what was achieved here in America is that anybody and everybody could participate in the dream. We often talk about this, you know, anybody can become an American. Like, not anybody can become Chinese, not anybody can become Swedish, not anybody can become French.

And that's been a huge, powerful thing. And what that's meant is kind of, you have a first class right to the american dream. And, look, I do think. I think you're right. You know, that it's extended to everyone, including immigrants, including people who are descendants of slaves.

And that's, you know, kind of is remarkable just in terms of humanity. Like, maybe not in terms of, you know, some ideal, platonic ideal of fairness, but, like, it's, America is definitely ahead on that, in my experience. And actually, interestingly, you know, I was just, I'm very good friends with Quincy Jones's son, QD three, and he grew up in Sweden, and he's a world traveler, and he had just got back from Sweden, and I said, what was it like? And so forth? He said, the biggest thing was, when I got back to America, even with all our problems, it was shocking how much more equal and first class it was across race than it was in anywhere that I've been.

And I think, I really agree with that. And I think it's kind of one of the nastier parts about the kind of new idea that we need to redivide into our tribes and our races and, you know, announce your race at meetings, you know, along with your gender and your pronouns and everything else. So, so I do think that's an important, you know, maybe. Maybe the most american aspect of it. Yeah.

Marc Andreessen
You know, the out of, you probably have this experience if you have friends who come from other places and they move here and then they become. They go through the citizenship process. Yeah. Our friend Adam Newman just went through it. Yeah, yeah, yeah.

And they probably had the same experience I have, which is people who come through that, come out the other side, just like, I don't even know how to express it. Like, like they've had, like, they've had us. They've had like an almost genuine religious experience. Yeah, absolutely. As part of joining the american community.

Ben Horowitz
Well, because, you know, and I think it's because it's like, oh, I really am an american. Right. That really happened, you know, and then I'm experiencing it that way. Yeah, yeah. You can't convert to another nationality in the same way, I don't think.

I mean, it is, well, it's interesting. I mean, Singapore, that would, that was also Lee Kuan Yew's dream. It was to kind of replicate that idea in Singapore. And I think they've done, like, a reasonably good job, although I don't know enough about singaporean culture to know for sure. But it's certainly invented in America, this concept.

Marc Andreessen
Yeah, yeah, that's right. Okay. And then related to that is your point on the cultural aspect. And so, as you said, sort of God, family, work. There's a couple things, a couple things that we could talk about about that.

So one is just like God, family, work. Like, there's a fair amount of protestant work ethic in there. So we could talk about. Or maybe protestant, I think. Let's talk about that.

Ben Horowitz
Yeah. The whole protestant thing is, I think, very, very central to the american dream in many ways. Well, in how America has worked. It's really sad, and it's very much on my mind because my, and let me make a disclaimer. First, I'm not responsible for my father.

So anybody wants to attack me over anything he wrote or said, please refrain, because I am not responsible. But, you know, he just wrote a book on this topic, and it's a. Very, just describe quickly who your father is and then what the book is. Yeah, so my father is a, I was just calling a kind of political pundit, rabble rouser on the right. Prior was very much on the left.

So he's kind of crossed the political spectrum over many, many years. But anyhow, he wrote a book called America betrayed. And the basic concept of it, I think, is relevant because it kind of intersects with the whole idea of the american dream, which is the concept of the book is it starts with Martin Luther, of course, the kind of the great Protestant. And he argues that Martin Luther, what he rebelled against was the Catholic Church had, the leaders of the catholic church had put themselves above God. So it was no longer God family or God family work.

It was church, God family, etcetera. And one of the most stark ways they did this was this thing called the indulgences. And for those of you who don't know what that was, it was this very interesting tax where you could break the laws of God as long as you paid the church a fee. So, you know, you could have sex with prostitutes or steal or, you know, just do, like, get drunk, all these kinds of things, and you just pay the church, and it was all fine. So, you know, he thought that was horrible because, you know, here these guys are, you know, man should not be above God.

This kind of lutheran ethic kind of was part of the creation of America in that, you know, we say, you know, we hold these rights. We hold these truths to be self evident. What does that mean? Well, it means they came from God, right? Like, these are not our roles.

These are not man's roles. These are God's roles. And so when we say we're a nation of laws and we have rule of law, what we mean is, like, there are certain rights and certain things that are above man and that apply to everybody. And everybody has this right, and it's given by God, and all men are created equal and all this kind of thing. And so that, I think, is a huge part of the american dream is that when I'm in America, I have my God given rights.

Like, that's a very american concept. And I think it's one of the things that, at least, like you and I worry, is eroding now. But that's definitely a protestant idea, that no man is above God, no man is above the law, I think, in our context. Right? And then that, famously, we should describe also.

Marc Andreessen
So then there was this idea that protestant work ethic, and this was sort of the Max Weber, sort of one of the early sociologists, basically articulated this. And he basically said, there's something. There's something in Protestantism that basically leads to, I mean, let's stereotype it. It leads to an extreme deferral of gratification. It leads to an extreme, what they call, I think it's called very high time preference.

It leads to an enormous focus on investing and saving and producing and working hard today for an economic payoff that may come years or decades in the future, or actually, you may never experience it. Maybe your children or grandchildren that experience it. There's a version of it that's extreme and self denying, you know, as you get kind of closer to, like, outright Calvinism, you know, where just, you know, you were just like, nobody's supposed to have any fun. And everybody's supposed to work all the time. But there's also just this general idea of like, you know, it's sort of also like, you know, self improvement, you know, self betterment.

You know, I'm going to just, you know, pour enormous amounts of effort into becoming a better version of myself to. And then, by the way, to, you know, gather material resources for myself and my family and my community. And that, that got, I bring that up because as you said, sort of God, family, work, like the, you know, the word work in there. Like that. That's not, yeah, that's not an accident.

Yeah, like, that's not what I just described is not the norm for in terms of historical societies like that. That in the form that we understand it today is relatively new. Yeah. And it's not the norm. You know, across the world today, it's concentrated much more in some countries than others.

And so. Yeah. Would you also connect that idea to the, to the arc that you were describing? Yeah, no, definitely. I think so.

Ben Horowitz
And, you know, like a lot of it came from because it derived from this kind of rebellion against the catholic church. And the catholic church had been become kind of all the things that weren't, that it wasn't about God. It was corrupt. It was just stealing the money from the people who were working. And, you know, and then of course, the family part, you don't really have to care about your family as long as you pay the tax.

And so it was all those things. And it's like, well, you guys are not only like wrecking society, you know, you're wrecking the kind of fabric, the culture, what's true, what's right. And so I think with Protestantism, you kind of rebuilt all those things and you said, no, no, like God's on top and then family. And you take that seriously because God told you to. And then, you know, and then the only thing else is work, you know, like you're contributing, you're not taking.

And look, I think that, and the reason I brought it up is I think it's so much the culture of the american dream. Like the right was this right to freedom and getting all this good stuff, but the responsibility was God, family, work. That's what you were asked of. And I think that. And the reason I wanted to put it in is because when you start to say, well, like, what's happened to all the goodies that we're not getting anymore?

Like, well, what happened to you doing your job? And a lot of that is like the culture has moved away from that, obviously, it's moved away from religion in general. Right. Right. So then let's.

Marc Andreessen
Let's contrast that and we'll close out this section. Let's contrast that to sort of the more kind of the more historical tribal mentality, which dominated, again, most of history. And then it still is very common throughout the rest of the rest of the world, which sort of encapsulated by the Bedouin expression, me against my brother, my brother. Me and my brother against my cousin. Me, my brother and my cousin against the world.

Ben Horowitz
Yeah. That, I think is consistent across tribalism, by the way, and kin based culture is, you know, as it's referred to in the weirdest people in the world, which is a great book, which we haven't talked about in a while, but worth reading for everyone. But that is really a cultural consistency in tribalism. Right. And so it's this tribal societies, it's a series of concentric circles working their way out, out from the individual to the family to the extended family to the tribe, and then out to, you know, the people and then at war with, you know, either figuratively or literally at war with other.

Marc Andreessen
Other peoples. So you. And would you, would you like, would you. Would you contrast and compare, like, how would you contrast and compare that traditional model of tribalism with. With the God, family, work hierarchy?

Ben Horowitz
Well, I think they're not quite the opposite, but they couldn't be more different. And I think that, you know, and let me go back to. So there's this outstanding book called the weirdest people in the world that actually goes through and studies the differences between this monogamous marriage, you know, God, family, work, protestant ethic, sort of society that grew up in the west with the kind of general, more natural, more kind of, you know, original man tribalism, kin based culture, polygamy, cousin marriage, all that kind of thing. Right. Like, those are the kind of two core, I think, societal constructs.

Marc Andreessen
If I could. I think. I think it's the case that a lot of people in societies like ours really have a hard time appreciating what cousin marriage means because we don't experience it. But in more traditional societies, it is the norm, and it leads to very different social organization. Right, right.

Ben Horowitz
Yeah. It wasn't just cousin marriage was allowed. That's generally what you did. You married. Married your cousin because.

Because of what you said. Right. Like you're only trusting the family and so naturally you're going to marry your cousin. And, you know, that has other issues which, you know, but. But the really interesting thing is when you have those two different cultures, the actual personal psychology of every individual turns out to be very, very different, depending on whether you're in this kind of, you know, God, family, work, culture, or if you're in a tribal culture.

And, you know, in particular, there's not inalienable rights in tribal culture. It depends on who you are very much. If you're my brother and you murder somebody, that's fine, as long as it's not in the family. And it really is fine. You know, like, you know, we can judge it, however, but like, for them, it's fine.

You know, in, in a kind of our society, like, that's murder. Like, what are you talking about that you kill somebody? You kill somebody. Like, that's not okay. And so this is, and I think, you know, you can kind of see some of that tribalism coming back in America where people like, well, you know, it's kind of a race.

Well, we see it a lot right now in the Israel palestinian conflict where I think there's a certain set of people that say, oh, October 7 was a horrible event, and da da da da. And then there's another set of people saying, no, no, it doesn't count because they weren't killing oppressed people, they were killing oppressors. So, like, that's fine, murder is fine, rape is fine, all that kind of thing. And that kind of hearkens back to this kin based culture versus western culture idea. Right.

Marc Andreessen
Okay, so then let's talk about, let's talk about what's gone wrong. So what are the pressures on this historical concept of the american dream? And again, this is something where a lot of people have a lot of thoughts, provide Ben an outline for what I think has gone wrong. And again, you can kind of respond to it. So let me go back to my part, one of my two part thing, which is the material component, the sort of standard living component.

And so there's a slide. I'm not going to throw it up while we're talking, but in the edit for the podcast, we'll put it up so people will see it. There's a graph that I'll be referring to. This is sometimes called the most important chart in the world by Mark Perry, who tracks it. And then I think that may actually be true.

Ben Horowitz
It's certainly your favorite chart. It is certainly my favorite chart. And it routinely blows people's minds when they see it because they experience it in their daily lives. But they really don't understand the impact of what's happening on the trajectory of it all if they don't see it in short form. And so basically, what happens is you can basically break the sort of modern western economy like the US, into basically two categories of things that people buy.

Marc Andreessen
Sometimes they call these the fast categories and the slow categories. And the fast categories basically are the ones that are characterized by extremely rapid technological innovation. And then they're characterized by falling prices. And basically, this is sort of everything that you buy that gets cheaper and better every year. And this is actually a lot of what people buy.

And I'm not, obviously, inflation. People have experienced rising prices, generally inflation, last three years. I'm going to just. I'm going to set that aside for the moment. Assume that's not a permanent state of affairs now, but generally, over the last 40 years, most of the things in the bottom half of this chart are things where the prices have fallen.

And look, this is very easy examples of this. This is automobiles. This is consumer electronics. Tv sets is made. The thing that, where you see this the most vividly, which is you can just buy an incredibly large, incredibly high resolution tv set today for a fraction of the cost from ten years ago.

Many areas of technology, software, toys, games, many forms of media. Music costs a fraction of what it used to. Movies cost a fraction of what they used to. For $10 a month on Netflix, you're getting access to 20,000 movies like that. That's a pricing model that was just inconceivable 20 years ago.

Basically, you have these sectors, rapid technological change, falling prices. And then one other thing I'll come back to in a second, which is relatively unregulated. So the government is not that involved in those sectors. They're almost entirely private sector based. And then you've got sectors that show the opposite thing happening that turn out to be the american dream sectors.

And the three big sectors that have the opposite, I sometimes call the slow sectors. These are the sectors with rapidly rising prices and with relatively low or even possibly negative technological development, and then heavy government involvement, which I'll talk about. Basically, it's the three sectors, the american dream. So it's housing, it's education, and it's healthcare. And specifically in the form of buying houses or renting.

On the one hand, education, sending your kids to school. And of course, if you send your kids to government k through twelve, you pay for that as a taxpayer. You see the rising prices as a taxpayer. But the minute you go to college, you see it in terms of tuition or private schools, you see it in tuition and then in healthcare, obviously, everybody experiences just this massive inflation of healthcare prices. It's always one of the main political issues these days.

And basically what the chart shows is that housing, education, healthcare, as sectors are rising much faster than the rate of inflation. And again, the minute people see this chart, they're just like, oh, of course, that's what's happening. I cannot believe how much I have to pay for a house in a good location. I can't believe how much I have to pay to send my kid to school. And I cannot believe the medical bills.

This is getting extreme. There are houses, tear down houses in the most attractive places in the country. Like tear down houses are like three to $5 million. I mean, this is like really extreme. And on that side, and then on the, on the, on the, on the, on the healthcare side, you know, healthcare is like a 6th of the american economy on its way to a fifth, on its way to a half.

Ben Horowitz
Yep. Yeah. Well, and it's so scary that, you know, if you don't have insurance, like forget about it, or, you know, like, you wouldn't even, you wouldn't do any procedure if you had to pay for it for immediately. Yeah. Your pocketbook would vaporize on impact with the system.

Marc Andreessen
You just get like completely obliterated on the first day. You just get your savings obliterated. So anyway, so basically the economy is bifurcated between these two categories and they're just gapping way apart. And then the trends that are causing them to gap apart are getting worse, not better. There's basically no motion underway to try, to try to crack for any of this.

And in fact, what's happening is why are the prices showing so much dispersion? It's basically a political phenomenon, which is you as an american taxpayer citizen, experience these rapidly rising prices of the three components, the american dream, housing, education, health care. You as an american voter are very upset by this. And so politicians, to get your vote, they promise to subsidize, and so they promise mortgage subsidies or rental subsidies or rent control. Right.

Ben Horowitz
Forgiveness, student loans. So first they give you student loans at below market prices, and then the second thing they do is forgive them. Right? And then, and then obviously the, you know, various forms of government health insurance, everything from Medicare, Medicaid, Obamacare and all the other medical programs. And so they're all characterized by massive government subsidy and then specifically massive government subsidy into highly regulated.

Marc Andreessen
All three of these are highly regulated industries. And the consequence of the high regulation, among other things, is restricted supply. And so why does a tear down house in Palo alto cost three to $5 million is because you cannot get legal approval to build a new, to allocate land that's not already zoned for housing. You can't. To build more house.

You cannot do it. Yes, it's a small economic lesson for our listeners. Massively subsidized demand, restricted supply, guarantees, high. Prices, guarantees price guarantees, prices to the moon. Like guarantee, guarantee.

If you, if you subsidize to your point, if you subsidize prices indefinitely and if you restrict demand and if you subsidize demand indefinitely and you restrict supply indefinitely, prices can go to infinity. Right? Like there's no upper bound. And they are, and they are exactly. They 100% are.

And we'll just take college as an example, just because it's been in the press so much recently. You know, look, a four year degree at a private college in America, you know, the tuition, you know, the tuition, room and board cost now is pressing up against $400,000. You know, if current trends continue, which I expect they will, that's going to cross a million dollars and not that far, not that many years in the future. You know, these, these are like compounding at like 15% a year. And so you're going to be able to buy a college education for your kids for a million dollars and a flat screen tv that covers the entire wall of your house for $100.

That's really bad. That's a really, really bad. One is just the divergence is really bad. But the other is, look, if you were king and designing this, you'd want to be the other way around, which is more important, education of the tv set. You'd want to go the other way around.

And we are headed, we are, prices for the three components in american dream are headed to the moon. And there's a term sometimes it gets used as the doom loop, which is like, why is this just going to continue? It's a doom loop, which is, well, the more prices rise, the more politicians are going to subsidize demand, which is going to cause prices to rise, which is going to cause politicians to subsidize more demand. Yeah. Well, this is the horrible, hilarious thing about education right now is, well, why did tuition go out of the stratosphere?

Ben Horowitz
Well, because we guaranteed everybody a student loan. And so immediately the universities, which are an oligopoly, said, oh, we can raise prices as much as we want because they're going to get the money. And then we have the student loan crisis. And so what do we do? Do we solve the problem that education is not worth the money.

No, we just subsidize it more by forgiving student loans. Which. Well, what will that do? Well, that will further subsidize demand and encourage the universities to raise prices even more. And what are they spending the money on?

Well, one administrator per student, like literally in the age of AI when you probably don't need any administrators. So it's that ridiculous. It's systemic. Incentives are causing the issue. You know, kind of.

Marc Andreessen
In short, I'd even, I'd even say, I'd even add one thing that's maybe even going to make it even worse. Which is? Which are the loans that get. Now they're doing student loan forgiveness, which are the loans that get forgiven. It's for the degrees that pay off.

It's for the degrees that pay off less. Right. So the degrees that are most worthless. Right. The most worthless.

But if those are the ones getting subsidized, guess is what's going to guess what's going to happen. The demand side. Right. It's going to drive, you know, everybody. Wants to go to art school, right?

Exactly. Because it's, because it's, because it's going to be free, right. Because they're going to, they're going to forget everything. So, so, so we're on a treadmill and then of course, who pays? The taxpayer pay.

Ultimately, you as consumers kind of eat it when you have to buy a house. But for education, healthcare, it's then kind of saturated across the tax base. And if you make any money, if you have a paycheck of any kind, you just get a bigger and bigger chunk taken out of it. And so there's this sort of giant collective action problem that's kind of embedded in it. But anyway, the result of this is basically the prices of the three key material components in american dream are headed, they're basically unattainable.

Like if you're an average 22 year old today and you're kind of staring into the future and you're like, am I going to be able to like get married, have a family, have kids, own a home, send my kids to a good school and then have good healthcare? Like, like, we're not, we're not on. A good, on the one hand, we're on a very bad track for that. On, on the other hand, it's in some ways an easy problem to solve because, you know, the, the solution is right in front of us. Okay, let's talk.

What's the solution? Stop subsidizing demand and deregulate supply and I think that you'd see, I mean for sure in education if you deregulated supply, costs would go way down I think because you know, particularly this is one where technology really could change things incredibly fast because you know, you've got like, you have AI tutors, instructors, et cetera, that are going to be unbelievable, better than kind of any teacher and then you have, you know, kind of remote capability so you don't have to live, you know, on campus in a fancy place and this and that. Like maybe you can do that or maybe you can do it in a more kind of structured way and get people together on occasion or so forth. So you could look, you could offer a higher quality education than Harvard, no doubt, you know, a technologically enabled education for, you know, a few thousand dollars a year. I think.

Ben Horowitz
I think that's eminently possible. I mean the, you know, in terms of what it actually costs to deliver such a thing. And then, you know, and all you'd have to do to get that would be to, you know, not have the current accreditation process for universities. And I think that's, you know, kind of true in k through twelve as well. And then look, you wouldn't have to have these massive loans for these schools if there was an alternative.

Marc Andreessen
Well let me describe, let me describe the accreditation process because you mentioned it and it's really critical to how the current system works. So the way the way the current system works is basically colleges and universities in the US have to be accredited. I'll describe why in a moment. Accredited means they need like basically government, you know, government basic government approval, government sign off, except it's not really government sign off. It turns out it's something else.

And so what happens is the US Department of Education, which is a federal agency, uh, they accredit accreditation agencies. And so if you go on their website there's a long list of all these accreditation agencies that are these like separate basically like nonprofit or things, these like ngo things that are basically, you know, they have some name like the whatever, the north, you know, the Northeastern University Accreditation Council or something like that. They've always got some name like that and there's some office in DC somewhere and there's like two people sitting in it and you know, who knows? But like it's this thing. And then, and then basically they accredit those accreditation agencies.

Those accreditation agencies accredit the colleges and universities. Guess who for those accreditation agencies, guess what they are composed of? They are composed of the incumbents. So the Northeast, you know, college, whatever, accreditation council is like, literally, it's, its board of trustees is all of the top northeastern, you know, colleges, universities in that area, and they decide whether a new college or university in that area gets accredited or not. And here's the kicker.

If it doesn't get accredited, it has no access to federal funding. It has, which means it has no access to federal student loans. It has no access to federal anything. Well, and I think kind of even more importantly than that, you know, it's not accredited. So the kind of, the reason people go to school is so that they can get a job.

Ben Horowitz
And, you know, they, these, if you have a school that's not accredited, it, you know, it's likely not recognized by employers so that, you know, that's a huge feature. Right. Or even, you know, horror of horrors, it may be a for profit, you know, which is, of course, the ultimate, the ultimate way that, you know, you can't trust an education out if it's one of these dreaded for profit colleges universities. Right, right. Yeah, exactly.

Marc Andreessen
So that's sort of the, but I mean, I just want, I want to go through that because I wanted to press on your, on your point, which is like, okay, if you're, if you're going to launch into a new, like, if you're going to try to do your thing, okay, we're going to do a better education than Harvard. We're going to do it at, you know, $5,000 a year instead of, you know, $80,000 a year. Okay? Like, if you can't get accredited, which you probably can't, then, like, at that point is the, is the, then the students are out of pocket or their parents are out of pocket. And so you have to really, or you have to really make sure that there's some way, you know, then you have a direct, then you actually have, like, direct consumer pay, which is not how the current system works.

And so it has to, it has to, the bar is high that it actually has to be cheap enough. It has to be, well, number one, it either has to be cheap enough where you can actually have students and their parents pay for it out of pocket, or it has to be, I don't know, so overwhelmingly valuable that people would figure out a way to maybe go into debt, you know, separately to be able to pay for it because the jobs they get on the other end would be so fantastic or something like that. Yeah, no, I think that's right. But look, I actually think that's, that's possible as long as what would likely happen the way things work now is the oligopoly would go to the government and say, shut that thing down if it started to work. And that would be the danger.

Yeah. So anyway, this is when we had our previous podcast series and universities, but there is a very deep conversation to be had here on this front to Ben's point. And then same thing on healthcare and then same thing on housing. By the way, housing is an interesting one, where everything I just described for education basically is driven by top down government policy. It's the federal government that's doing the accreditation and the funding.

Housing, actually, weirdly, has the same problem, but from an opposite government standpoint, which is it's local towns and cities that basically prohibit building. Yeah, right. And in fact, people have proposed, the YIMBYs have proposed, in some cases, you actually need the larger government entities like the states or the country as a whole, to actually step in and actually prevent, like, local municipalities from restricting, from having such restricted zoning. Yep. Yeah.

Ben Horowitz
Well, no, for sure. And then there's also, I think there are some state level things. I don't know who requires the environmental study, but the environmental study turns out to be a real corruption in the sense that whether or not they're doing the study, whether or not they find anything, they're going to kind of slow down the project and potentially charge you a massive fee for whatever you're doing. And that's at least my understanding from builders. That's why a lot of things don't get built.

Marc Andreessen
Yeah, yeah, yeah. And some of that is federal, for sure. NEPA is a federal federal law. So a lot of that's federal. Okay.

And then I would say part two, if you kind of extrapolate from that, it's like, okay, then, you know, if those are, like, the economic explanations for what's happening to the american dream, then you go into part two, which is the aspirational part. And I think there's just like a straight up, you know, part is just like, there's just a straight up, like, can you aspire? Is it actually practical as a, as a kid, you know, coming out of high school or college right now to actually aspire to the american dream? Is it like, actually economically practical? I think is one big question.

But I think there's also another thing that's happening that's related to it, which is if you, if you can't articulate and show people and have it be actually substantive, that there is a path to be able to realize american dream, then the politics in the country naturally have to go from positive sum growth orientation. We're all in this together. We're all building something great. The sort of aspirational component that I talked about earlier, they kind of necessarily have to go to a zero sum mentality. Divide up the fixed pie.

Yeah, divide up the fixed pie. And then I think that's where, and I think this is something I'm convinced of at this point. I think that's where the sort of populism of our day on both the left and the right are actually coming from. I think that's actually the foundation for it. And the foundation for it is basically people saying, like, look, it's just not, this is not, we are not on a good path.

There is not enough growth. There's not enough opportunity. And so as a consequence, if I'm on the right, I need to think hard about everything from who should be a citizen and who shouldn't and so forth and so on. If I'm on the left, I need to become very focused on things like racial and ethnic divisions and which tribe and group that I'm in in terms of apportioning resources. And so you get this.

And both of those are basically variations on zero sum thinking. They're very focused on who gets denied in order that I can benefit. And so if you wanted to generate pernicious zero sum politics, you would do what we're doing economically. Yeah. Yep.

Ben Horowitz
Oh, that's a happy idea. Yeah. Yeah. Well, you know, one of the things that I think that I've been thinking about kind of with respect to that is, you know, a lot of, other than housing, the rest of the kind of material components of the american dream were a function of industrialization. And industrialization ran its course partly for technological reasons, but partly for regulatory reasons, where you couldn't start.

It's much more difficult to start a new kind of industrial company than it was to start the Ford Motor company, which was, you know, when you read it, it's remarkable how easy it was to start a car company in those days. Just like phenomenal. And we are kind of on the dawn of a new technological era, the information age. And we're kind of hitting the information age is kind of hitting the same stride that I think the industrial revolution hit in the kind of twenties and thirties. You know, it was a long growth period into that.

The technology was kind of available long before that, but that's when it started to really get to everybody. And, and of course, also the regulation is just starting on it and so forth, and we'll see how that goes. But, you know, I wonder if another, you know, if another kind of dream opens up and, like, we're just, like, on the verge of it. And because it hasn't happened yet, we're like, it's never going to happen. But one could certainly imagine just such radical changes in what's possible, kind of reigniting growth, aspiration, all these things.

And I think you mentioned the other day that Gen Z is making more than millennials, which is very interesting because that hasn't, that's a reversal of trend. And, you know, for the kids that grow up with, you know, the Gen Z that grew up with smartphones and mobile computing and all that, the next generation is going to grow up with full AI, are their imaginations not going to want to reinvent everything about society given that you have this abundance of intelligence running around? And will that not lead to more opportunity and so forth? And that's, you know, I think it's an open question, but I wouldn't paint it quite as black, and I don't mean black in a racial sense, of course, in a, quite as dark as you did. Yeah.

Marc Andreessen
So, okay, well, let's talk about that. And actually, this is one of the questions we have, actually, from Aaron. What will the american dream look like in the next hundred years? And so, Ben. Yeah.

Maybe give a longer articulation of, like, what you would. What does an information age american dream or an AI era american dream look like? Yeah, so I think that, you know, education, everybody has access to amazing education. Look, I'm getting educated right now using, you know, tools like meta AI and chat GPT and so forth. Like, anytime I want to learn something, I literally just ask AI a question.

Ben Horowitz
You know, the other day, my friend babyface was asking me about, like, the value of music catalogs, and I just asked, you know, AI to do a discounted cash flow analysis on the various catalogs and so forth. I didn't remember how to do that kind of thing, and I was just like, oh, like, okay, if it's throwing off this much cash a year and assume it does for 30 years with terminal value of $50 million, but it, like, and boom, like, so I'm old and I'm still, like, you know, able to use it to great effect, which is quite amazing, you know, like, it's frickin awesome. And, you know, imagine every child is growing up with this. They know they can just ask the machine anything and they'll get the answer. So anything you want to learn about, anything that you can dream of, anything that your imagine lets you.

Imagination lets you. You're going to be able to learn. You'll be able to learn anything. And look, that wasn't, I mean, you know, for you and me, we didn't have the Internet. Like, we had to go to school.

I don't know why you have to go to school to learn anything. You know, in 2030, like, that's not going to be true. So, like, I think education is going to reemerge much better than it's ever been, much better than it ever was with a university system, you know, and without, like, you know, getting drinking yourself to death or the other kinds of things that go on at college. And so that's kind of, you know, one aspect. And then I think on healthcare, similarly, there's a real opportunity to completely change healthcare with a combination of just amazing diagnostic capabilities that can be done by yourself remotely and so forth.

So you can always be checking on your health. You can get real time. Very intelligent. Like, machines are far better at medical diagnosis already than humans. And so, you know, like, something that used to be very, very complicated and expensive could get very, very good very fast for people.

And, you know, like, yes, the latest medicines might be expensive, but, you know, you won't need them as much because you'll be like, you'll at least have the opportunity to keep yourself in great health. And then, you know, housing, like, we would have to certainly fix the government corruption. But look, we've seen technologically the ability to 3d print the most gorgeous buildings in the world, and that'll be in full effect. So at least the construction costs have the potential to fall dramatically. And so all of a sudden, one might be able to aspire to an amazing life with not that much, of course, to benefit from these things you have to put in effort, you have to regain your work ethic and all these kinds of things.

But I think culturally that would be very good. People would have more fulfilling lives. So I think there's at least there's an opportunity, despite what we've done to ourselves, to go back to an abundance mentality and get out of this kind of crazy, zero sum politics that we're in now. But, you know, like, yes, I do agree that the reason it's Trump versus Biden is because we're completely zero sum at this point. Right?

Marc Andreessen
There's another technological revolution, of course, that's in the, in the makings at least, which is along the lines of what you're describing, which is robotics. And like, if, if general purpose robotics tips, which it looks like it might. There's, you know, looks promising right now. So one way to think about this is like, you know, look, a lot of like, daily life is just like dealing with all the stuff that you have to deal with in the house and, you know, everything. Everything.

It's, you know, cleaning clothes and cooking and washing dish. It's like all the. All the stuff. And there's this famous expat lifestyle where people live in a much place with a much lower per capita GDP. And all of a sudden you have all these household employees, maids and cooks and everything that you can't afford.

And there's digital vagabond people who have software jobs from Thailand or something where they just have a totally different lifestyle. And then, of course, rich people in the US have that lifestyle just by paying a lot of money to have domestic employees. But if everybody has robotics, it may be that you have that experience. Basically, you get to a point where everybody basically has mechanical. And then you assume these things get on sort of a Moore's law price curve.

Everybody basically has the material necessities of life basically taken care of by robotics. And the dystopian view of that is the Wally view, which is, okay, then I can just sit in my lounge chair and slurp on soda and watch being VR and zone out the whole day. Or it could be like, no, I actually have another 3 hours a day to be productive. Right? And then all of a sudden it means I have another 15 hours a day to be able to succeed in my career or, you know, per week.

And then I can. I can actually self actualize at a higher level because I actually have a lot more. A lot more freedom of time, you know, to be. To be able to actually go do things. And the long arc of technology in the household has been that arc, you know?

You know, for example, the rise of women. The rise of women in the workplace over the last 80 years, which has been. Yeah, the washing machine. Yeah, yeah, the washing machine. Like, you know, one of the reasons.

One of the reasons why the women. Women in the workplace were much lower, you know, in decades and centuries past, is because just like maintaining a house just sucked down, all sucked on all their time. And now it's just much more feasible to be able to have a job. Because doing laundry was almost like doing laundry by hand is merely a full time job. And then if you add to that cooking and cleaning and all these kinds of things, that is a full time job, even for one family.

Yeah. And so, like, we look, we may be on the verge of a robotics revolution such that the, you know, the house that the, you know, sort of the common person's house in ten years, you know, or certainly 2030 years, you know, I mean, you know, it's the Jetsons, right? Like, we might be on the verge of that. And on the one hand, it's like, that's kind of prosaic, which is like, okay, great, you've got, like, better, you know, you've got a better washing machine or whatever. But, you know, on the other side of that is, no, you actually, now everybody becomes liberated and free to be able to spend their time doing useful and productive things, or at least having, having the opportunity to spend their time doing useful and productive things.

Ben Horowitz
Yeah, yeah, yeah, I think that's right. And by the way, you know, like, we do have, one of the things I've been kind of thinking about and kind of working on as part of my job is, you know, America and most countries are that the governments are using industrial revolution technology. Right. You know, you know, these, these paper forums, the, you know, the, the way we vote, the way we kind of fund things. Like, it's all very in the Stone Age and, or in the industrial age.

And, you know, if governments were replatformed onto information technology, and we've seen some governments around the world do this, Estonia and so forth are kind of moving along, it does change the nature of government, the kind of size of government required and their ability to kind of get to conclusions on things fast. And we have a company, do notpay.com, that kind of helps citizens work around. Like, it has the AI just deal with the bureaucracy for you. But if you AI the entire bureaucracy, then, you know, maybe some of these things would start to resolve as well. You know, like, like it gets, you know, when it's just a ton of humans doing stuff.

Like it's naturally corrupt, you know, oh, you want to build a house? Well, guess what? I'm in charge of the permit, you know, and I, you know, I need to eat, too. You know, of course that's going to happen. But, you know, if these things become automated, then maybe things free up a bit.

Marc Andreessen
Yeah. So, yeah, so where we're coming out is, yeah, sort of the opportunity, if you can punch through a lot of the historical technological limitations and a lot of the historical societal constructs that were built around the technological limitations of the industrial era, then all of a sudden you have the opportunity to kind of an opportunity to kind of reformulate the idea of what the dream is, but also reformulate, like each aspect of how to deliver it. Yeah. Yeah. No, I think that's the hopeful view as opposed to the continuing death spiral that we seem to be in.

Good. Well, tell you what. We're at an hour, I feel like we've covered a lot of ground. We have a thousand, a thousand questions that go into more detail on every aspect of this. But since we reached an optimistic note, maybe we tie this one off here.

Ben Horowitz
Yeah. I think that intro. Yeah. And then if we get it, if we get a good reaction to this, we will, we can, we can do subsequent episodes, and we can dive into the individual components of this in more detail and go in more, more of the questions. Sound good?

Perfect. Sounds perfect. It. Okay. Sounds great.

Marc Andreessen
Sounds great.

The Future of the American Dream

Primary Topic

Episode Summary

Main Takeaways

Episode Chapters

1: Defining the American Dream

2: Challenges and Changes

3: Technological Opportunities

Actionable Advice

About This Episode

People

Companies

Books

Guest Name(s):

Content Warnings:

Transcript