From USAID to US Investment

From anti-democracy to techno-democracy.

USAID was DOGEd and their staff was twitterized, as people say today. But the US empire-building function of USAID will be very likely preserved at the State Department, as Mike Benz says.

If another development agency is spun-off, I think we will see something resembling VC investments in companies like Anduril and Palantir all around the world, supporting tech founders and startup society founders, and building special innovation zones, instead of the classic NGO support.

This will be a step function change in a decade-year long trend of private sector engagement in development cooperation.

Because civil society organizations are hard to scale and sustain, while tech startups are inherently scalable and have a goal not just to be profitable, but to dominate their industry verticals.

Even if state actors want to optimize for opacity, supporting businesses and doing commercial deals is preferable, due to FARA-like limitations in various countries. The USAID’s clandestine funding of ZunZuneo, as a twitter competitor in Cuba, often mentioned by Mike Benz, is just one example of a broader trend that even MAGA will lean into.

Mike Benz often says that “if something is too dirty for the CIA, they hand it over to USAID”. The reason is that USAID doesn’t require the approval of the US president for certain sensitive projects and activities that the blue tribe bureaucrats want to do but wouldn’t get past elected officials.

And these sensitive activities can be obfuscated by layers of plausible deniability and embedded in “humanitarian aid and development work”. Supporting companies in third countries, from tech startups to regular consultants, is the next logical step of going deeper and darker still. It solves for scalability, commercial sustainability, opacity and even prestige for the activists, at the same time.

True charity is investment, says Balaji Srinivasan. Very few people would give half of their net worth to a random person on the street to see him immediately become richer than them. But with venture capital investments this regularly happens. Peter Thiel invested in Mark Zuckerberg and both got richer, but the founder of Facebook got much richer than Peter Thiel. Venture capitalists figured out how to align incentives and solve the principal-agent dilemma through equity investments.

Equity investments create win-win or lose-lose outcomes for all shareholders, therefore they align founders with management and employees, as everyone has a skin in the game. Currently, equity investments are very underutilized in development cooperation.

Balaji says that skin in the game protects against evil (win-lose) actors but not against stupid (lose-lose) ones. This is true to an extent, because the point is to get stupid actors as quickly as possible out of the arena - and self-destruction does that. Therefore supporting tech startups is much more preferable and ethical than supporting NGOs (greetings to EcoHealth Alliance).

Some 15 years ago, at one foundation I worked on dozens of US-funded projects promoting “democracy and development abroad”, including in most of US adversaries. If something like a local FARA was a problem, and if the grant wouldn’t be registered or the funds withheld, we would do a commercial contract with a for-profit consultant instead of a grant. We would also develop an ecosystem of local companies that we would turn into local ESG leaders, as people call them today.

As with citizen journalism, you can disintermediate NGOs, by supporting individuals directly with something like convertible grants - that later turn into equity, if a milestone is reached and a tech startup is established. Think of it as a pre-seed funding in venture capital.

You can have a portfolio of portfolios approach and have a US sovereign wealth fund (SWF) providing investments to various managers and entities that would reinvest, but also “regrant and subgrant” - using convertible grants, that can lead to a commercial upside for the donor. And if they don’t, at least those actors that underperform are gone from the arena much quicker than NGOs that suffer from mission creep (again greetings to EcoHealth Alliance).

Convertible grants can be provided by some newly created entity like the Techno-Democracy Institute (TDI). Think IRI or NDI under NED, but for the grey tribe of techno-optimists. TDI would fund bottom-up and small experiments in techno-democracy - aligning aspiring community leaders with their constituents through free and open AI, Crypto and Social tech.

There is a paradox at the heart of the US empire. Europe is a protectorate of the US, while America is Europe’s last colony. NS2 blow-up and a prisoner exchange with Russia forced on Europeans during Biden’s administration are proof of the former. While the pressure from European mandarins, like Thierry Bretton and Vera Jourova, on free speech of US citizens like Elon Musk, not to platform a former US president Donald Trump on his own platform X, are proof of the latter.

The paradox of the US as an empire and the US as Europe’s colony can be explained by tribal lenses. USAID, the EU, OECD, NATO or even the UN can be viewed as apps running on a blue tribe’s operating system and serving the blue tribe’s Blob of unelected bureaucrats that have ruled the world through global harmonization of regulation and through soft power of blue institutions, from NYT and Hollywood to Harvard.

Blue tribe sees a European social democracy as the end of history - hence Fukuyama’s “getting to Denmark”. But things played out differently and the blue tribe is on the path of getting to Venezuela. Social and moral innovations in governance have happened elsewhere, first in Singapore under LKY’s vision “from third world to first”, then in China after Deng Xiaoping and in places like Dubai. And now in El Salvador and Argentina. We can call this trend of getting to Dubai, as opposed to getting to Denmark.

Tech is the opposite of woke, explains Balaji. To preserve free speech, in a broader sense of free AI, Crypto and Social tech, the new US administration needs to transform USAID into US Investment - building special innovation zones all around the world that will be under red and grey tribes’ jurisdictions. Think Building Man instead of Burning Man, as Balaji says.

Imagine a building competition in a HIMBY style that would create a startup village even faster and better than the Chinese can build infrastructure. And imagine this startup village would also serve as an “Olympic Village” for the Enhanced Games taking place there - connecting techno-optimists and longevity enthusiasts.

The opposite of leadership is receivership, says Balaji. The United States experienced receivership for a long time - under the blue oligarchy no leader was in charge, so petty monarchs like Fauci could proliferate and build their small kingdoms for decades. And the voters weren’t in charge for sure, while elected officials were very impotent and unpopular.

The trust in blue institutions cratered at the same time those institutions redefined democracy as a consensus of these same institutions, instead of the consensus of voters. Hence we lived through a decade of anti-democracy with half-measures in online censorship that tried to prop up the outdated half-soviet system in the West.

Instead of anti-democracy efforts abroad, the US could fund techno-democracy experiments. The continuation of Western ideals of liberty, equality and brotherhood with new tech tools and new frontiers.

Instead of (US)aid for the blue tribe, we could see US investment for moral and technological innovations of the red and grey tribes.