Frankly even the idea that we could be in a simulation stretches the whole idea of what a simulation is to the breaking point---a simulation by definition isn't real, and yet here we are with actual conscious beings, and he's claiming we're simulated.
But we don't have privileged, direct access to the real world anyway; everything you experience now, is, in a certain sense, a "simulation" constructed by your brain. (If you don't like the word simulation, you're welcome to choose another.) When you look at a red book, the reason you think there's a red book out there in the real world is because light reflecting off the book is being absorbed by your eyes and translated into sensory data that is sent to your brain. If we replaced your eyes with some as-yet-science-fictional camera that supplied the exact same data to your optic nerve, you might not notice; you don't have any reason to care whether the information from which your visual field is constructed was gathered by a "real" eye or a merely artificial camera. But then if we put a shutter cap on the camera and started supplying your optic nerve with data that was generated by a computer program rather than by means of measuring light, you again have no particular reason to notice or care. The hypothesis "I'm experiencing the real world" and the hypothesis "I'm being supplied with real-world-like sensory data despite being implemented in some other way" make the same predictions. We might have any number of good reasons to reject the latter hypothesis, but "simulations aren't real by definition" isn't one of them.
his whole equation relies on the ridiculous assumption that the number of individuals in a simulation is equal to the number of individuals in a real universe (he calls both H)
One would imagine that assumption was made only to simplify the presentation; it doesn't affect the core ideas. For example, see Robin Hanson's "I'm a Sim, or You Aren't" for a variation that makes different assumptions about the size of simulations.
Like any educated denizen of the 21st century, you may have heard of World War II. You may remember that Hitler and the Nazis planned to carry forward a romanticized process of evolution, to breed a new master race, supermen, stronger and smarter than anything that had existed before.
Actually this is a common misconception. Hitler believed that the Aryan superman had previously existed—the Nordic stereotype, the blond blue-eyed beast of prey—but had been polluted by mingling with impure races. There had been a racial Fall from Grace.
It says something about the degree to which the concept of progress permeates Western civilization, that the one is told about Nazi eugenics and hears "They tried to breed a superhuman." You, dear reader—if you failed hard enough to endorse coercive eugenics, you would try to create a superhuman. Because you locate your ideals in your future, not in your past. Because you are creative. The thought of breeding back to some Nordic archetype from a thousand years earlier would not even occur to you as a possibility—what, just the Vikings? That's all? If you failed hard enough to kill, you would damn well try to reach heights never before reached, or what a waste it would all be, eh? Well, that's one reason you're not a Nazi, dear reader.
It says something about how difficult it is for the relatively healthy to envision themselves in the shoes of the relatively sick, that we are told of the Nazis, and distort the tale to make them defective transhumanists.
It's the Communists who were the defective transhumanists. "New Soviet Man" and all that. The Nazis were quite definitely the bioconservatives of the tale.