Being thorough and accurate might make you a lot of money in the stock market, but it's not a good way to get any media presence, because that demands being in front of people quite often, and basically nobody can be insightful and well researched in all topics of the day. Once you become a pundit, whether on politics or tech, and rely on eyeballs to feed you, you are going to be throwing stinkers. And at that point, you might as well just align with an audience and not care too much about whether you are predicting anything accurately.
We have people telling us the next recession being imminent all the time. Others told us that NFTs were key to the future of art. That's the pundit way. If you want accuracy, you become like Charlie Munger, have maybe 2, 3 really good insights througout your career, and hope do to well using the insights yourself, not by being a pundit
This is exactly right. Now, that does mean something about Zitron: he’s a pundit, not an expert or a forecasting genius. You could point to any number of analogous booster types. Twitter/X somehow loves pushing these people onto my recommended feed. I remember reading breathless threads about how o3 was going to single-handedly end white collar work. There are just more of that sort of person, so none of them in particular gets the same amount of attention as Zitron, who seems to be the only person willing to go on the record against AI. Maybe his overall worldview is sound, and maybe it isn’t. But he’s not really making confident, specific predictions about the future.
Which leads me to a criticism of the piece: several assertions are described as “Wrong,” with no explanation or citation, which are not obviously wrong to my mind. For example, the assertion that “DeepSeek has commoditized the [LLM]” is at least debatable. It is a prospect that the major labs seem to have at least considered.
In my experience, people who make fun of AI's ability to eliminate white-collar work are exactly the same people who are white-knuckling it, hoping they can make another $300k next year to buy that Rivian.
People who don't need a salary look at the situation more objectively and, in general, can see that a lot of white-collar work is in peril.
I think that is tied to the general trend that people see themselves as far less replaceable than others. And I’m not sure that people who don’t need a salary are exactly objective about it - unless you mean people who live off the state or something, those are people who need their capital reserves to continue to appreciate in order to sustain their lifestyles, and are thus relying on the destruction of white collar work to justify the valuations of the technology companies which are underpinning the strength of the markets. It’s like saying in the 19th century that only the propertied classes should be allowed to make decisions about labor policy, because the laborers themselves have their judgment clouded by their position.
But I take your point, and I only brought up the o3 example to emphasize that people on both sides of the booster/doubter debate can be prisoners of the moment. There are boosters eternally convinced that the utopia (or armageddon, for the doomer-inclined) is either already here or imminent, and there are doubters eternally convinced that we have reached the peak. One of them will eventually be right, but neither has been yet. You can’t fault one of them for calling their shot if you’re not willing to see it happening on the other side.
The flip side of that is that at least half of all white-collar work was already useless before AI. If it hasn't already been eliminated, there's no reason to assume a-priori that AI can eliminate it.
Not completely. It just means you can have an AI do the useless busywork instead of a human. Something can be economically useful but still have proponents in a firm.
Call your project Gas Town, write a blog about it, and investors will be swarming all over it thinking managing agents is even more impressive than managing people.
>In my experience, people who make fun of AI's ability to eliminate white-collar work are exactly the same people who are white-knuckling it, hoping they can make another $300k next year to buy that Rivian.
In my experience, people who believe that some white collar industry can easily be automated with AI usually don't work that same role or even that industry, and suffer from Dunning-Kruger bias. In my line of work, I'm desperate for Claude to actually do a better job at not producing a big mess, and it's failing terribly.
I don't work in law, but I feel like I barely need a lawyer if I can ask an LLM to interpret a contract for me. I don't work as a physician, but why can't I just cut and paste an MRI report and ask Claude what to do. I'm no plumber, but it I take a picture of some fixtures I am thinking about replacing, Claude will give me some items to add to the shopping cart from a plumbing supply store.
In all cases Claude was super confident and it wrote what felt really rational.
But in my experience it gets things right, in some amazing ways, but it gets things wrong, in shocking ways.
Everyone thinks it's someone else's job that it'll automate.
Sure. They’re in the same category of wrongness as Zitron. If someone said they follow the newsletter of a guy who claims we’ll never have a recession again, I’d quietly note that.
They haven’t allowed a recession to happen since ~2009 when they massively inflated their way out of the worst of the last one. Learned to have the cake and eat it too.
The only problem is after a few rounds of this the currency becomes worthless, and we’re well on our way. Inflation is a major component of those numbers rising.
And that's when we pay off the national debt for pennies on the worthless dollar. The pro move would be to stop lending the US money, but that's not going to happen.
The US doesn't require that you lend it money, it possesses the global reserve currency. It'll take it from you via currency debasement. That's a world problem whether the world likes it or not. There is still no viable (realistic) alternative, and that includes the Euro, Yen, Yuan, gold, Bitcoin.
There are no lenders outside or inside of the US for $20 trillion in new debt over the next decade. Monetization is the only path. If you mean lend the US money in regards to holding or using USD (while it's being debased as it is now), then sure.
And if the world tries to shake off the USD, well, Iran & Venezuela (oil transactions assist USD dominance) would like a word. I'm not suggesting defending the USD reserve position via military action is moral, I'm suggesting it's certain to occur.
The US possesses the global reserve currency because everyone lends it money. If they didn't, it wouldn't. The USD is the global reserve currency because it's the one with all the lending!
while im not necessarily a doomsayer about a recession, im not sure any of these are adequate buttresses against one
the s&p doesnt tend to go down until a recession is either imminent or happening, and modern economic policy may even prevent that due to the vastly expanded wealth disparity
the unemployment rate isn't really the tool it once was--if you include two groups that count as "employed" by the US unemployment rate--people seeking full time jobs but working only 1-34 hours a week, and people earning below the poverty line (under 26k pre-tax anually), the functional unemployment rate climbs to 24.9%--higher even than any month in the post-covid period of 2022-2024 (inclusive).
yes, more small businesses than ever, but growth last year was almost non-existent. and it generally proxies vs able-bodied adults, which would have seen an increase larger than the businesses.
gdp is high but much of that is ai company shuffle and debt-to-gdp ratio is rising once again--now the highest it's been since the 2020 massive covid bump
birth rates are broadly down as well, likely stemming from cost of living, and birth rates do tend to predict recessions.
it's fine to point at numbers but they don't really mean anything in isolation
> First, the favorable impact of the artificial intelligence investment boom on economic activity and earnings will likely diminish significantly in 2027. That’s because what’s relevant for growth is how much investment is increasing, not its level. The increase in investment in 2026 will almost certainly be the peak. There aren’t sufficient resources — construction workers, electrical generation capacity, or chip manufacturing capacity - to increase investment by the same magnitude in 2027. Nor are the dominant hyperscalers likely to have the free cash flow and balance sheet capacity to sustain a bigger increase in investment in 2027 compared with 2026.
> Second, as the growth of investment spending slows, the growth in earnings of hyperscaler suppliers will falter, profit expectations will diminish and price-earnings ratios will shrink. The “picks and shovels” providers will suffer a double whammy - slower demand growth and profit margin compression. On the way up, higher demand leads to wider profit margins that sustain equity market valuations. On the way down, the outlook for earnings deteriorates quickly as the shortfall of demand relative to expectations is exacerbated by a collapse in profit margins.
> Third, as the investment cycle matures, the focus will shift to the returns that the hyperscalers are expected to earn on their massive investments. I suspect it will be difficult for the AI hyperscalers to generate sufficient revenue ($2 trillion or more per year) to generate the returns needed to justify an AI capital base that is likely to reach $5 trillion.
(I'd encourage you to read the entire piece, it was written by Bill Dudley, a former president of the Federal Reserve Bank of New York, and is too much to quote in its entirety)
I mean I wish you a lot of fun playing this discussion game online, but I kinda fail to see the point of it.
Someone could now of course say "hey, but are your sure that these are really the metrics we should be looking at?", which could then be countered with a "well of course! This is how one measures a recession, no?"
And that could go on forever, achieving absolutely nothing.
Yet with all what? AI stock pushing indexes high and US stock market being cheap because dollar lost 30% of volume in last few years so the whole world is trying to profit from short ride? Record low unemployment because gas and groceries are so expensive most people work 2 or 3 jobs just not to end up homeless? Democrats are going to retake because ballroom and gold arch does not affect gas or grocery price. They will retake because Republicans proved they are extremely soft on corruption. Not only they allow POTUS & Fam. steal billions from taxpayers, they are not stopping it and some even profit themselves. Dems will retake because we have a dangerous version of plutocracy mixed with socialism, where one person on the top (POTUS) unilaterally decides that US Government will take a free chunk out of Intel, or that 20 billion of taxpayers money will go to help Argentina or Brazil or Japan. That's why.
I feel like I've been in a recession economy since the day I entered the workforce 14 years ago. The movement of the stock market has had no effect on my reality. It's like two different universes inhabited by two different sets of people.
IMO, all the narratives we were exposed to around privilege before and after COVID were a cover up of this fact that we have a two-class system which is explicitly creating this condition. The issue is at the system design level and goes far beyond "technology putting people out of a job". The privilege narrative was classic communist-style "accuse your enemy of what you're doing yourself." It was literally the privileged few preemptively accusing the unprivileged masses of being unfairly privileged in order to take control that narrative before it was used on them.
> We have people telling us the next recession being imminent all the time. Others told us that NFTs were key to the future of art.
That's quite the conflation, and a very subtle way to tie a claim that's still unresolved to one that is to try and make the first one seem wrong with no evidence. Recessions are almost guaranteed in our system, they're a part of a cycle. Unless you think that the Great Recession was the last one in history, saying the next one is 'imminent' would be correct for any other viewpoint. We just don't know when it'll officially start.
...get any media presence, because that demands being in front of people quite often, and basically nobody can be insightful and well researched in all topics of the day
What? Zitron is getting a lot of media attention by repeating the same takes hundreds of times. He's not a general pundit.
The wonders of American healthcare really mean that it's all more expensive, and at the same time, more is consumed, because so much of what is paid is done past deductible. If you look at so many standard of care situations vs, say, Spain, the American system will do a whole lot more. Even for preventive care: For instance America wants colonoscopies every 10 years from 45. Spain will give you a non invasive fecal test every 2 years, and only consider colonoscopies after the test is positive. Every time I send my american prescribed intervention list, given my symptoms, to my family members working in the Spanish public caresystem, they look at it with their hair on fire. Very different standards. You might think US insurance is restrictive regarding what needs to be done, but most public care system are significantly more restrictive than that. It'll be for better reasons, instead of defaulting to no on everything, but ultimately still far more cautious regarding their spending.
So we fail both ways at the same time: We avoid interacting with the medical system, but when we do, far more is done, at far higher price per intervention, so we end up with more interventions for the same outcome, even though we avoid doctors more!
No system that saves money can pass in congress: that's the real problem that we cannot actually avoid. Forget pressure from large companies: So many of US costs come from very high salaries, and a lot of bureaucratic positions that don't exist elsewhere. Every dollar we pay goes to someone, and it's not just some random mogul here or there that will be OK anyway. Reform that really lowers prices means loss of jobs, which them will be blamed on the politicians who signed the bill into law.
Most of the problems of the US system aren't really a matter of who pays, but the fact that so much is paid for services, at every level. Any really significant savings, cutting bureaucracy and pressuring providers to make costs resemble those of other developed countries, are taking money out of someone's pocket. Many hundreds of thousands of them, if not millions. This makes any significant reform very difficult, as those people vote, and will know exactly who made them worse off, even if the country in general was made much better off.
Read The Logic of Collective Action by Mancur Olsen. It wasn't written thinking of healthcare. but anyone looking at the US healthcare system will see that what is going on is stacks upon stacks of collective action beating overall societal efficiency, over and over and over again, in such a way that it's basically in none of the decision makers best interest to actually increase overall efficiency.
It’s also geographically distributed. Substantially all congressional districts count a healthcare system as a top-5 employer. Those 70k/yr butts-in-seats admin jobs are occupied by voters, making them difficult to eliminate nationally. You’d have to go down to the state level at least to get anything done.
I think it’s because Americans been taught that were democracy, not a federal system, but that’s exactly where we expect to do these kinds of reforms. The federal government could reasonably set certain regulatory requirements. The states would need to make sure that any provider within it conforms to the federal levels, you know like auto manufacturing and exhaust emissions. Seems doable. Unfortunately we’re gonna have to wait for the boomers to die because they’re the ones that have gotten theirs and they’ve screw everyone else. Also, unfortunately, the millennials are gonna have to take it on the chin like we have for so much else and realize there is going to be some lost jobs.
It's not about the minor offenses of uninteresting people, but what happens because a change in political orientation makes you suddenly interesting. Even more so when AI automates this: Dear computer, we just got some ruling to remove citizenship of people that were not born in the country if they commit event the stupidest offenses: Go look them up.
It makes no sense for the authoritarian to anger everyone at once, but if you just convince people that complaining is bad for them, or expressing negative affect against the government, they can ge much done with little, and it doesn't take that much surveillance. We are already seeing governments that pursue their enemies to the fullest extent of the law for things that are, at best, dubious. Automation just makes this easier to do.
I mean, I also get obsessed with their horror when, after coming from abroad, I am back at my American suburb. All this mandatory front yard and setbacks that must be lawn, even though nobody in the entire subdivision seems to use said front lawn, ever. It's not the grass itself, but the utter waste of space, pushing any chance of walkability away, as it's ultimately increasing the distances to anywhere. It's not so different from the typical giant parking lot that is never half full.
When you prefer a better environment, but said better environment means having to at least leave the state... yeah, strong feelings seem warranted to me.
Is there a state that has absolutely no high-density areas? I’d think every city over 200K people would have such sections, and probably most that were over 100K.
On one end we have Coase's theory of the firm, but then we have the realities of the modern tech megacap company, which is 20+ companies in a trench coat, and where it's clear the alignment between the best interest of a middle manager, the company as a whole, and of the consumer have absolutely nothing to do with each other. But pointing at one working thing in an investor call seems quite valuable, so we aren't seeing investors actually demanding to spin off companies with minimal actual synergy.
So we end up with companies acting in ways that don't help themselves or the consumer, but which have no reasonable mechanisms to correct any of this. So we end up with the two best entrants in the AI space being independent companies, all while we know that, in case of significant cuts, it's the companies that are attached to other huge, unrelated sources of revenue that will have easier time surviving. Gemini can mess up all they want as long as management still has Ads and youtube sitting there subsidizing them.
What they are often talking about there is countries where the official exchange rate is very different from a real world exchange rate: This happened in Argentina quite often. That led to special black market stores where people would give you local currency for dollars at better rates, and often also had some crypto support. You are then going past the legal market either way.
Possibly? Yes. But for every Argentina, there's 10 other countries where you'd loose (far more than) 40% to social security, taxes, and middleman that will handle all the paperwork for for you, particularly if we are talking about "real, productive swe jobs [that] earn enough to support not only themselves, but everyone around them as well making the place they live in a tiny bit better."
I basically have one such job, living in a stable but bottom of the table EU economy, and 40% is exactly the ballpark.
Far fewer than you'd think: The vast majority of Europe is in the same boat as the US.
Whenever there's value in agglomeration (ie, all the time), the value of well placed properties just skyrockets, because growth is only going to make that land better. That's why a common recommendation is to up the tax of land as to make speculation with valuable property a bad investment: It's already price like an auction, so higher taxes cannot increase rent prices. The problem is political, as countries with housing problems have a whole lot of individuals have a big percentage of their net worth in housing. Big tax increases would make their property values drop, and they'd be quite upset. So it solves the problem while losing elections.
Instead, governments are happy providing tax advantages to existing residents, in practice making prices go up even faster.
We have people telling us the next recession being imminent all the time. Others told us that NFTs were key to the future of art. That's the pundit way. If you want accuracy, you become like Charlie Munger, have maybe 2, 3 really good insights througout your career, and hope do to well using the insights yourself, not by being a pundit