Half a million years ago, in southern Africa, a human ancestor fixed a sharpened stone to a wooden shaft, creating the world’s first weapons system: the composite spear. Warfare and technology have been siblings ever since. But technological superiority doesn’t guarantee victory. See: the Afghan Mujahideen against the Soviets, or the North Vietnamese and Viet Cong against the U.S. Throughout history, weaker forces have defeated stronger ones by eschewing conventional combat in favor of asymmetrical warfare. One famous term for it was coined by the Spanish irregulars who harassed Napoleon’s occupying army: guerrilla, or “little war.” Put another way, don’t fight on your enemy’s terms.

David vs. Goliath

This week, the Air Force withdrew a dozen B-1 bombers from a base in the U.K. after British authorities foiled an Iranian plot that threatened U.S. military operations. According to David Dunn, a professor of international politics at the University of Birmingham, the unprecedented withdrawal reveals the vulnerability of American military installations abroad and represents a setback for the U.S. in its war with Iran. “Fairford is normally the place during a crisis where America sends bombers to beef up America’s military capability,” Dunn told Time.

Rather than relying on bombers or other conventional means, Iran forced the withdrawal with a drone threat. Furthermore, Iranian operators aren’t even military, as the Islamic Revolutionary Guard Corps has become adept at deploying violence-as-a-service — an asymmetrical tactic that involves hiring untrained, on-demand combatants who, like gig workers, are cheap and disposable. Meanwhile, closer to the front, the asymmetrical drone war has depleted the high-tech U.S. interceptor arsenal, catalyzed a $95 billion multiyear munitions replenishment request from the Trump administration, and rendered an American victory a mathematical impossibility. “The interceptor math doesn’t even touch the strategic heart of the Iran War: Iran’s control over the global economic artery that is the Strait of Hormuz,” wrote national security journalist Spencer Ackerman. “The math merely shows how overwhelmingly far the U.S. is from being able to force the Strait of Hormuz open and keep it that way.” Math is a modern warrior’s most important skill, but I’m getting ahead of myself.

Second-Mover Advantage

Ukraine’s four-year war against Russia is a case study in asymmetrical warfare. Ukraine is now the world’s leading drone innovator, shifting the enemy casualty ratio from 2:1 at the war’s start to 8:1 in the first half of this year. Russian casualties are around 30,000 per month, exceeding the 27,000 recruits it takes in each month. A hard truth for Americans: In war, strength isn’t what you can afford to spend … but what you’re willing to lose.

Last week, I spoke with historian Timothy Snyder, who’d just returned from Ukraine. On the front lines, Ukraine is winning, he explained, but over its cities, Russia is exploiting an interceptor shortage (our fault) to extract a terrible price on Ukraine’s economy and society. “The Ukrainians innovate, the Russians copy,” Snyder told me. “Everything the Ukrainians do, the Russians are able to do a few months later — but at scale.” In business this is called the second-mover advantage. Netscape commercialized the web browser; Microsoft scaled it. Diners Club introduced the credit card; Visa turned it into a financial empire. MySpace pioneered social networking; Facebook perfected it. And Apple is the ultimate second mouse. Asymmetry gives an army a lead, not a moat. David wins round one with a new slingshot; but in the second, Goliath has a factory in Yelabuga manufacturing thousands of slingshots at a lower unit cost.

Ferguson’s Law

In his 1961 farewell address, President Dwight D. Eisenhower famously warned that the influence of America’s growing “military-industrial complex” endangered our liberties and democracy. He also highlighted the connection between debt and national security, although few Americans remember that part of the speech. “As we peer into society’s future, we — you and I, and our government — must avoid the impulse to live only for today, plundering, for our own ease and convenience, the precious resources of tomorrow,” Ike said. “We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage.” Spoiler alert: We didn’t listen.

In recent years, interest payments on the debt — the fastest-growing part of the federal budget — have exceeded defense spending. In a 2025 paper, historian Sir Niall Ferguson proposed “Ferguson’s Law,” named not for himself but Adam Ferguson, an 18th century Scottish philosopher. Ferguson’s Law states that any great power that spends more on debt service than defense risks ceasing to be a great power. “The debt burden draws scarce resources towards itself, reducing the amount available for national security, and leaving the power increasingly vulnerable to military challenge,” Niall Ferguson wrote. Sovereign debt crises have been the last chapter of empires from ancient Rome and the French monarchy to the Ottoman and British empires and the Soviet Union. America is exceptional, but it’s not exempt from history. Countries typically are not conquered; they go broke.

This isn’t news to Congress, or shouldn’t be. In 2010, Chairman of the Joint Chiefs of Staff Admiral Mike Mullen called the debt the “most significant threat to national security.” We tend to think of Social Security and Medicare as political third rails that can turn the mention of reform into an electoral wipeout. Defense cuts are another one, but not because voters are likely to punish elected officials. It’s worse — our leaders are afraid of looking unmanly. The performative stupidity of Defense Secretary Pete Hegseth has conflated math with weakness. Mullen, who commanded more warriors than Hegseth ever will, did the math. He argued that defense cuts “need to be on the table,” reminding us that the defense budget going back to the 1930s has gone up and down on a “fairly regular basis.” In short, we’ve forgotten how to make the hard tradeoffs, because, as Mullen put it, “we haven’t had to do the analysis” for far too long.

Cuts

The key national security metric isn’t the debt, it’s the fiscal gap — how much we need to raise taxes and/or cut spending every year, as a share of GDP, so the debt stops outpacing the economy and interest payments stop eating a growing share of the budget. The Treasury estimates the fiscal gap is 4.7% of GDP. Defense spending in fiscal year 2026 totaled approximately $1 trillion: $838 billion in defense appropriations and an additional $150 billion from the One Big Beautiful Bill. Closing the fiscal gap through spending cuts alone would mean permanently cutting every non-interest dollar the government spends (Social Security, Medicare, Medicaid, the Pentagon, etc.) by 21%. A responsible president would tell the Pentagon to find $200 billion a year in cuts. The current president asked Congress to boost Pentagon spending by 45%, to $1.5 trillion, more than the U.S. spent at the peak of World War II, adjusted for inflation.

Cutting $200 billion would mean doing three things simultaneously: killing programs that don’t work, shrinking the size of the military, and reducing operational scope. The good news? We’ve done it before. The Pentagon reduced defense spending by 30% between 1988 and 1997, because we were no longer fighting the Cold War. In 2024 the Congressional Budget Office mapped out options for cutting roughly $100 billion a year, including shrinking the active-duty force by 18%, retiring carriers and fighter squadrons, and asking allies to carry a greater share of the security burden. One budget watchdog’s list of cuts to underperforming weapons systems, many of which come in over budget, would trim about $40 billion a year from current spending. Anduril co-founder Palmer Luckey told CNBC in February that disrupting the cost-plus procurement model of defense contractors and adopting a product mindset could bring the total defense budget below “$500 billion while maintaining required capabilities, if efficiency improves.” The issue isn’t a scarcity of options but political will.

Also, in warfare, the enemy gets a vote. As Snyder told me, the relentless cycle of drone and interceptor innovation means “the Ukrainians and the Russians are creating the only two modern armed forces in the world.” Getting our fiscal house in order is the necessity; modernizing our military — replacing $90 million fighter jets with $30,000 drones — is the opportunity.

Saving Private Ryans

At least 22 U.S. servicemembers have died in the Iran war. Casualty figures are difficult to verify, partly because the Trump administration is allergic to the truth, and partly because the American public doesn’t have the stomach for it. Saving Private Ryan (great movie) fictionalized one man’s rescue, but the impulse behind it was real. After the five Sullivan brothers were killed in the Battle of Guadalcanal in 1942, the military began separating siblings and pulling surviving sons out of combat. Sergeant Fritz Niland, the real-life Ryan, was sent home from Normandy after the Army believed three of his brothers had been killed. Nobody had to storm a French village to get him. A chaplain filed the paperwork. Our ally, the Soviet Union, gave a mother who lost nine sons a medal. Our adversaries have a bias toward sacrificing the lives of their soldiers, whereas the trend for the U.S. military is a bias toward safety. Since 1980, accidents, suicide, and homicide have killed 7x as many active-duty troops as enemy fire.

We’ll sacrifice 800,000 Americans to opioids in the name of shareholder value, but sending a B-2 bomber and its two-person crew on a mission likely to result in their deaths is akin to playing baseball with a Fabergé egg. Put another way: Every president is capable of greenlighting a trillion-dollar weapons system, but no president wants to be LBJ, who presided over casualty counts exceeding 500 killed per week during the height of the Vietnam War.

Valuing life is a hallmark of a great society. But because we’ve combined that with regulatory capture by defense firms, the U.S. has built the most expensive glass jaw in history. The silver lining of these current conflicts? They present America with a historic opportunity: to build a more lethal fighting force while cutting defense spending by a trillion dollars. Embracing asymmetrical warfare with political will should result in a superweapon: a robust balance sheet.

Life is so rich,

P.S. This week I spoke about the state of free speech in America with Greg Lukianoff, president and CEO of the Foundation for Individual Rights and Expression. Prof G+ paid subscribers can catch the conversation here.

In my next life, I’m coming back as a Navy Seal, Broadway dancer, or chiropractor. However, in this life, I should have gone into insurance. Yeah … insurance. If you meet someone who has a middling IQ, exceptional EQ, and is making $600k/year, there’s a decent chance they’re in insurance. This industry thrives by tapping into an instinct: fear. We’ll gladly suffer a series of guaranteed losses to avoid the possibility of a catastrophic one. Nowhere is this more evident than with health insurance. Of the wealthy nations at this year’s World Cup, the U.S. is the only one that doesn’t guarantee healthcare.

In many industrialized nations, employers play a small role, via payroll deductions, in funding universal coverage, but only in America is employment tied directly to that coverage, meaning employers can shift rising healthcare costs to labor, while workers who lose their job also lose their coverage.

For people under 65, employer-sponsored plans are the leading source of health insurance, providing benefits to approximately 165 million American workers and their families. Without reducing benefits, premiums for employer-sponsored plans are projected to increase this year by an average of 11% YoY — the steepest rise in two decades and more than 3x the rate of inflation. (Prof G Media’s premiums are increasing 9% YoY. We’re seeing a slightly smaller jump thanks to the Professional Employer Organization that handles our payroll, taxes, etc., allowing a firm like ours with fewer than 50 employees to participate in a larger plan.) Meanwhile, many companies are shifting a greater share of their costs to their employees, with the average worker paying 8% more YoY to cover higher payroll deductions for premiums and out-of-pocket charges including deductibles and copays. If you’re getting the feeling that America’s private health insurance market is a drag on businesses and workers, trust your instincts.

Subsidizing Cost Increases

When a market fails, our tendency is to provide demand-side subsidies. If healthcare is unaffordable, the logic goes, we should subsidize access, helping more companies and people pay for it. The demand-side approach feels (morally) right, directing help toward those who need it. But because demand-side solutions do nothing to control costs, subsidies are akin to pouring fuel on a flame. Actually, it’s worse than that. Between 2011 and 2024, the average insurance premium increased by $3,143 (78%), while health spending per person rose by $2,844 (84%), according to an analysis by Yale economist Zack Cooper and University of Wisconsin Business School professor Stuart Craig. Over the same period, insurer markups — the portion of the premium that covers insurance companies’ administrative costs and profits — decreased from 19% to 15%. The growth in health spending accounted for 91% of the overall growth in average premiums. “We found that health insurance premiums increased nearly dollar-for-dollar with health spending,” Cooper said.

That’s Where the Money Is

Over a 40-year career, Willie Sutton robbed more than 100 banks, stealing an estimated $2 million (roughly $20 million in today’s dollars) by the last time he was apprehended, in 1952. According to legend, when a reporter asked him why he’d hit all those banks, Sutton said, “Because that’s where the money is.” If he were alive today, Sutton would likely have directed his talents toward the healthcare industry. Total U.S. healthcare spending makes up 18% of GDP, and that’s expected to rise to 20% by 2034. Healthcare is projected to account for 37% of all new jobs created through 2035, according to data from the Bureau of Labor Statistics. Not all growth is good growth, however. An aging population and the growing prevalence of chronic conditions — heart disease, cancer, diabetes — are the primary drivers.

Several trends are sending healthcare costs higher. AI, which many had hoped would lower administrative costs, is actually increasing reimbursements paid by private insurers. Providers are using AI to better document care, meaning the same healthcare interactions generate more billing codes and greater profits. Increased demand for GLP-1s is also a factor, fueling an 81% increase in pharmaceutical spending to treat obesity and a 13% increase in spending on diabetes treatments, according to a PwC report. Greater demand for mental health services is also raising costs, with utilization increasing 10% from 2023 to 2024 and surging 62% since 2018. Finally, the No Surprises Act, which was meant to protect patients from unexpected out-of-network bills, has inflated costs, because providers are using its arbitration provision to dispute reimbursements and winning 88% of the time. To save money, some employers are increasing employee premium contributions and/or reducing benefits, including coverage for GLP-1s. Meanwhile, the share of companies turning to Health Reimbursement Arrangements — essentially, stipends that let employees buy their own coverage on the open market — increased 53% YoY in 2026.

All of this is happening against the backdrop of industry consolidation. From 1998 to 2023, there were more than 2,000 hospital mergers. The share of hospitals operating independently declined from 90% to 31% from 1970 to 2024, and now 9 out of 10 U.S. hospital markets are classified as “highly concentrated.” Meanwhile, only 42% of physicians work in an independent physician-owned practice — down from 60% in 2012. A 2025 HHS analysis found that hospital mergers in concentrated markets can raise prices up to 65%. Willie Sutton needed a gun and a getaway car. Today’s health systems just need to merge their way toward a captive market.

Scarcity vs. Abundance

Every election cycle, candidates tell Americans their healthcare system is expensive and broken. We spend 2x what other OECD nations spend, and by that metric should be the healthiest nation on Earth, but instead we achieve worse results than our peers. “The U.S. continues to be in a class by itself in the underperformance of its healthcare sector,” researchers at the Commonwealth Fund wrote in a 2024 report. For those in the back, that’s the wrong kind of exceptionalism. As it turns out, we’re also exceptional when it comes to the scarcity of our healthcare supply. According to federal data, 92 million Americans live in an area where there’s a shortage of primary care. The U.S. produces just 8.6 new medical graduates per 100,000 people, well below the OECD average of 15.

Another sign of scarcity? We average 2.8 hospital beds per 1,000 people, compared to the OECD average of 4.3. Hospitals, clinics, and doctors’ offices account for 52% of total healthcare expenditures, compared to 8% for drug costs. Talking about drug prices wins elections, as patients typically pay for prescriptions out of pocket. Addressing provider costs by unblocking supply bottlenecks makes for a lousy stump speech, but good policy.

So what’s the fix? The Niskanen Center has a blueprint, and it comes down to one word: more. More doctors, more clinics, more competition. Start with the pipeline. Congress froze Medicare-funded residency slots at 1996 levels, so we’re training the same number of doctors for a country with 70 million more people. In 2023, Congress added 1,000 residency slots over a five-year period — a good start, but we need more doctors, and we need to steer them toward primary care, especially in underserved areas, where the shortage is worst. The best way to do that, as my friend Mark Cuban has argued, is to make medical school free while empowering universities to require students to work for a stint where shortages are most acute. Next, remove local barriers to practice so labor can freely move where demand is greatest. Only 30 states grant nurse practitioners full practice authority, while state licensing laws restrict the supply of primary care doctors by an estimated 27%. We should also welcome foreign-trained providers. This year nearly 12,000 foreign-trained doctors applied for U.S. residency. More than 5,000 didn’t get one, and without a U.S. residency, most states won’t let them practice. Perversely, some of those doctors attended American medical schools but were forced to return to their home country because they couldn’t get a visa. Meanwhile, an estimated 263,000 immigrants and refugees with undergraduate degrees in health-related fields — mostly nurses and physician assistants — are underutilized, due to licensing restrictions. This isn’t a labor shortage, it’s an oversupply of red tape.

We’re also driving up costs by restricting the supply of hospitals. Thirty-five states still have “certificate of need” laws, which let incumbent hospitals veto future competitors. Imagine Chipotle needing Taco Bell’s permission to open a store. The supply crunch is further compounded by healthcare costs that vary widely for the same services. Here’s how: Medicare pays a hospital-owned clinic nearly double what it pays an independent practice for identical care. So hospitals spent years buying up doctors’ offices, hanging a new sign on the door, and sending taxpayers a bigger bill … for the same service. Paying the same rate for the same service — i.e., site-neutral payments — removes one of the biggest incentives for consolidation. It would also save Medicare an estimated $170 billion over a decade.

Medicare for More

We often frame healthcare reform as a choice between public and private solutions. But that’s misleading. Employer-based plans, as well as plans purchased via the Obamacare exchanges, are both heavily regulated and heavily subsidized, making healthcare the most favored sector in the tax code. In 2025 taxpayers poured $512 billion into the healthcare industry through Obamacare premium tax credits and deductions for employer-based premiums, certain medical expenses, and health savings accounts designed to derisk individuals with high-deductible plans. As economist Paul Krugman wrote in August, “the government’s role is so large that U.S. healthcare is better described as partially privatized socialism than as anything resembling a free market.”

I’ve argued in favor of expanding Medicare slowly by lowering the eligibility age by two years every year for the next decade. That would reduce premiums for employers, since people ages 45 to 64 register 32% of healthcare spending, compared to 31% for those 44 and younger. It would also set free the 1 out of every 4 workers who say they’re “locked” into their job because of healthcare. With more enrollees and legal reforms, Medicare will have greater leverage to negotiate lower prices. Medicare is also more efficient, with just 1.3% of its spending going to administrative costs. Medicare Part D (prescription drugs) and Advantage plans, both of which engage private insurance companies to manage benefits, spend 8% and 17%, respectively, on administrative costs.

But as long as we keep subsidizing inefficient, wildly profitable private insurance, costs will keep climbing across the board. Expanding Medicare while propping up the private side is like flooring the gas with your other foot on the brake: There’s lots of noise, the smell of burning rubber, and you go nowhere. Insurance sells fear. American healthcare monetizes this fear, as we’ve built the only system in the developed world where losing your job is a medical emergency.

We need less insurance, and less fear. And the cheapest way to reduce fear is to stop manufacturing it: Let’s kill private insurance subsidies and embrace Medicare for More.

Life is so rich,

P.S. In the minds of many Americans, rising costs frequently reverse-engineer to private equity. Prof G+ paid subscribers can catch my Deep Dive on America’s favorite corporate villain here.

It’s more compelling, and lucrative, to be a catastrophist. History, however, is on the side of optimists. Any analyst/author/academic must adjust for history and ask “what could go right?” And optimism is a prerequisite for entrepreneurs. No business I’ve ever started, at the moment of inception, made any sense … until it did. Or didn’t. The only way to predict the future is to make it, i.e., summon the irrational optimism necessary to advance, despite the risks, into the unknown.

Macroeconomic conditions supply abundant reasons to catastrophize. What keeps me up at night? A: Tariffs, Iran, inflation, the national debt, Treasury yields, a stock market that’s seven companies, consumer sentiment, and the K-shaped economy. Despite all “this,” there is (always) cause for optimism. And wealth creation in the U.S. is a bright spot.

Everywhere Millionaires

The wealth flowing to Wall Street and Silicon Valley drives an inequality narrative, but that obscures American economic dynamism. For their new book, The Everywhere Millionaire, economists Owen Zidar and Eric Zwick analyzed IRS and Federal Reserve data, finding that more than half of the rise in income among the top 1%, since 1985, came via pass-through businesses. That’s IRS-speak for firms, most of them privately held, where the profits “pass through” to the owners, who pay taxes on those profits through their personal tax returns. The growth in so-called everywhere millionaires isn’t an accident, but the result of a policy choice. The 1986 Tax Reform Act lowered individual tax rates below the corporate rate, creating a loophole that allowed business owners to structure a business as a pass-through to pay the lower individual rate. In 2024, Treasury researchers estimated that S corporations (a popular pass-through structure) pay about 7 percentage points less in federal income tax than they would if organized as C corps.

Middle-Class Erosion

In news that won’t surprise anyone, the U.S. middle class is shrinking and falling behind relative to wealthier cohorts. Since 1970 the share of total U.S. household income held by the middle class fell from 62% to 43%. Over the same period, the median middle-class household income rose by 60%, compared to 78% for upper-income households. Here’s the counterintuitive part left out of stories about middle-class erosion: More middle-class families moved up than down in the past 50 years. America is a millionaire factory. We mint 40% of the world’s millionaires, more than the next 11 countries combined. There are currently 23.6 million of them in the country.

Your (Wealthy) Friends and Neighbors

Zidar and Zwick identified 3 million wealthy private U.S. business owners, excluding tech and finance, with a net worth greater than $5 million. They also excluded corporate executives (CEOs of public companies), high-earning W-2 employees, and individuals whose wealth is primarily tied up in passive investments. The average net worth of the everywhere millionaire cohort is $25 million. Unlike the oligarchs and broligarchs, who cluster in major coastal cities, everywhere millionaires live … everywhere. An hour north of Birmingham, in Walker County, Alabama (pop. 65,000), the average top-bracket filer with a private business reported $1.9 million in pass-through income in 2023, the highest of any county in the nation.

Some of these businesses are famous. In 1963, former Marine Dick Portillo opened a hot dog stand in a 12-foot trailer with $1,000 in savings and a small investment from his brother (about $11,000 in today’s dollars). By 2014 he’d grown Portillo’s to 38 locations in four states, generating $300 million in annual revenue and carrying no debt. That year, Portillo sold his business to Berkshire Partners for nearly $1 billion. In 2017 three friends pooled $900 and started frying Nashville-style hot chicken at a pop-up located in an East Hollywood parking lot. Eight years later, Dave’s Hot Chicken, with 390 locations worldwide, was acquired by a private equity firm for $1 billion.

Some are lawyers, doctors, or dentists, but fewer than half of the everywhere millionaires hold a graduate degree. Many of the businesses Zidar and Zwick identified began as blue-collar owner-operators, i.e., the same person provided capital and labor. Think: a repo man in Las Vegas, an HVAC contractor in Memphis, or a boat-cover maker in the Ozarks. Most fly under the radar. “You probably know an everywhere millionaire, even if you don’t realize it,” Zidar and Zwick write. “They’re hiding in plain sight, as ordinary people who run businesses woven into the fabric of everyday life.”

Businesses that sell, repair, move, or install everyday goods and services register nearly half of the $31 trillion in total private business equity in the U.S. Construction is a common path to everywhere millionaire status, as the barrier to entry is low enough for a skilled tradesman to bootstrap their way from labor to owner. Analyzing Dun & Bradstreet data, Zidar and Zwick found 33,752 contractors’ businesses earning at least $5 million per year and 6,525 that earned $25 million or more. Ninety-eight percent of U.S. counties have at least one contractor business with a payroll. Auto dealerships have a higher barrier to entry, but they’re more likely to generate wealth. Zidar and Zwick estimate that half of the 21,000 car dealerships in the U.S. generate at least $5 million in annual revenue, while another quarter bring in more than $25 million. The lesson? Boring is sexy, and oftentimes businesses considered to be low status register a high ROI. As I often tell young people, “follow your passion” is terrible advice frequently given by people who became rich in unglamorous fields. Instead, you should follow your talent — discover something you can be exceptional at, then target your skillset to a growing field with an employment rate above 90%.

Ladders Up

One of the most corrosive narratives aimed at young people is the lie that college is obsolete, unnecessary, or a scam. In fact, higher education is akin to a wonder drug that extends life, makes you happier, healthier, and wealthier, and strengthens your relationships. In a rational world, we’d scale access. Instead, we sequester it behind ivy-covered walls and tuitions so high they command a 90%+ gross margin. By treating college as a luxury good, we misunderstand its purpose as an engine for upward mobility and how that engine works. That said, while the typical everywhere millionaire is a college graduate, their path hasn’t necessarily run through an elite school. The top 10% of SAT scorers become founders at a rate of 1.3x the median. “If you want to achieve the American Dream by being a salaried worker at a big company, an elite school triples your chances,” Zwick told Michael Smerconish. “If you want to be an entrepreneur, going to an elite school doesn’t have much of an effect.” The homeowner paying you to install soapstone in their kitchen doesn’t care where you went to school.

If we want to manufacture more millionaires, the recipe is simple: Invest in unremarkable kids — make college a viable option for anyone who qualifies and wants to attend. This year, preliminary data shows that the University of California system accepted 78% of in-state applicants. Nationally, public four-year colleges registered a similar rate on average. Access is one challenge; affordability is another. According to the most recent College Board analysis of federal survey data, nearly one-third of full-time in-state students at public four-year colleges received enough grant aid to cover their full tuition and fees in the 2019-20 school year. That same year, 39% of bachelor’s degree recipients from public four-year schools graduated without student loans. Meanwhile, half of all students in the University of California system pay zero tuition, and 63% complete their degree without any debt. I’m biased — UCLA undergrad, Haas School of Business, and recently joined the UC Board of Regents — but the more that U.S. colleges follow the University of California’s example, the wider the pathway for young people to achieve the American Dream. If stupid is hurting other people while hurting yourself, smart is helping other people attend college so they’re able to start a firm, create jobs, build wealth, and pay taxes that fund the Navy, food stamps, and education for future generations.

Wealth Transfer

The oldest baby boomers are turning 80 this year. Despite medical advances, exercise, better nutrition, and an industry devoted to anti-aging, biology remains undefeated. Delusions aside, nobody is getting out of here alive or taking anything with them. History’s greatest generational wealth transfer — $110 trillion according to one estimate — is underway. That inheritance tsunami won’t be evenly distributed. The top 2% of American households are expected to pass $62 trillion to their heirs; but 4 in 5 Americans won’t inherit anything at all.

The inheritance story hiding in plain sight is what happens to the wealth built by America’s everywhere millionaires. Three-quarters of those founders didn’t inherit their firms. According to Zidar and Zwick, just 12% of children born to the top 1% stay there, while 40% fall out of the top-fifth wealth cohort. Turns out, rich kids make better yacht owners than boat builders. “When a family business slows down after a generational transfer, opportunities arise for those who would compete with or acquire that business,” Zidar and Zwick wrote in The Economist. Somewhere in America, a 78-year-old plumber has a dozen trucks with his name on the side and a son who’d rather be an influencer.

The Factory

America’s greatest export isn’t software, weapons, or entertainment. It’s the millionaire, and most of them are manufactured in a workshop with no Instagram presence: the public university. It’s a factory that takes in unremarkable kids and turns out small business owners who sponsor the Little League team. America’s secret sauce isn’t genius, but access. I was an unremarkable kid from a lower-middle-class home in 1970s California, and the state decided, for reasons that made no sense at the time, to bet on me anyway. Everything I have is the return on that bet. The most American thing we do isn’t crowning an elite class of billionaires, but manufacturing millions of unremarkable millionaires.

Life is so rich,

P.S. The typical everywhere millionaire is a college graduate, but broadly speaking, is a four-year degree still worth it? A: Yes, but with some caveats. Prof G+ paid subscribers can catch my Deep Dive on the value of a college degree here.

A 27-year-old resigns from a firm he spent four months at, triggers a global panic, drawing comments from a former president and calls from the leaders of frontier labs for a slow down. In 1946, would we have let Robert Oppenheimer raise money from Sequoia Capital and begin selling nukes to the UAE and Procter & Gamble? I’m going on Smerconish tomorrow, where I’ll be asked “What (the fuck) is going on?” The honest answer is I don’t know. What I am certain of: This is another example of a small number of players capturing staggering economic upside while outsourcing the downside risks/harms to the broader public.

Fork in the Road

In 2024, a year after Dr. Geoffrey Hinton, the “godfather” of AI, quit Google in order to speak freely about the risks of AI, he won the Nobel Prize in physics. In an interview for the Nobel website, Hinton described two kinds of AI risks. “There’s relatively short-term risks, which are very important and very urgent. They’re mainly to do with people misusing AI.” Examples include a job apocalypse (bullshit, in my opinion); productivity gains accelerating wealth inequality; deepfakes destabilizing democracy; cybercriminals picking up a dangerous new tool; bias getting embedded in criminal justice, healthcare, and hiring; and the proliferation of more powerful biological weapons that can be produced more easily by middle powers and non-state actors. “There’s also longer-term problems of these things taking over,” Hinton continued. “The question is what’s going to happen when we’ve created beings that are more intelligent than us? We’ve never been in that situation before. Anybody who says it’s all going to be fine is crazy. Anybody who says they’re inevitably going to take over, they’re crazy, too.”

Humanity is at a fork in the road. But the choice isn’t whether to develop AI superintelligence, it’s how to proceed in the face of a technology we cannot fully comprehend or control. One path is to regulate AI such that we mitigate the risks but reap the rewards. The other path is to continue full speed ahead, despite a widespread belief among researchers, including Hinton, that there’s a non-zero chance that AI superintelligence could present an extinction-level event for humanity in the near future. If the right thing seems obvious, remember that the right thing and the hard thing are usually … the same thing.

Pitchforks

Increasingly, the AI narrative resembles a Terminator reboot nobody asked for. We’ve gone from “AI will take your job” to “AI will spike your power bill and devour your water supply” to “AI will kill everyone.” Inspiring stuff … if you’re looking to inspire a mob with pitchforks. Technology writer Jasmine Sun described AI populism as a worldview that regards AI as a thing “manufactured by out-of-touch billionaires and pushed onto an unwilling public to achieve sinister aims like ‘capitalist efficiency’ (layoffs) and ‘population management’ (surveillance).” This year, voters in seven states will decide on at least 16 local ballot measures related to data centers. Senator Ted Cruz called for “substantially more regulation,” but stopped short of a moratorium, telling Politico, “If they’re going to be killer robots, I’d rather they be American killer robots than Chinese killer robots.” Senator Bernie Sanders has proposed a ban on superintelligence and threatened 20-year prison sentences for developers who violate it. Interestingly, Sanders and Steve Bannon both appeared at the “Pro-Human Assembly” this week — AI politics is manufacturing the strangest of bedfellows.

As populist anger bubbles up, Anthropic CEO Dario Amodei, who briefly held adult-in-the-room status, and other less-well-known AI founders, are becoming honorary members of the Algorithmic Oligarchy. They’re joining Sam Altman, who equated the resources needed to raise children to training AI, and Elon Musk, who slashed aid to the world’s most vulnerable people. That AI founders are suddenly concerned about the peril they’ve created, after vesting their way to billionaire status, is obnoxious and unhelpful — akin to Dr. Frankenstein begging us to rein in his monster, while creating new self-replicating monsters. The robber barons left behind libraries and concert halls. The Broligarchs will leave behind server farms, a bot infestation, and a conviction that we should have been more grateful for everything they did. We’re watching the fourth game in the “Fuck Around and Find Out” World Series.

AI for Good

Before we’re swept up in the populist moment, we should ask what’s going right with AI. A: Plenty. Recently, I interviewed journalist Josh Tyrangiel on my podcast. Researching his book, AI for Good, took Tyrangiel to the Cleveland Clinic, where doctors deployed an AI model to better detect sepsis. It’s the leading cause of death in hospitals, killing about 350,000 Americans each year. If caught early, it can be treated with antibiotics. The challenge is detection. “This is a perfect problem for AI and machine learning, because sepsis masks itself by looking like almost anything else,” Tyrangiel told me. The Cleveland Clinic AI helped reduce the hospital’s sepsis mortality rate by 41%. Deployed across American healthcare, that model could save more than 140,000 lives … every year.

Speaking of saving lives, AI is helping to design antibiotics to kill drug-resistant bacteria and accelerating the timeline for detecting pancreatic cancer by up to three years. Pancreatic cancer kills 52,000 Americans per year; 85% of patients receive a diagnosis after the disease has already spread, and the five-year survival rate remains below 15%. AI is also aiding in the early detection of wildfires, improving hurricane forecasting, and helping archeologists decipher previously unreadable ancient scrolls. Banning AI research or “slowing the pace of the frontier” — whatever that means — will spill over into areas where AI is rapidly improving our lives. That’s why in 2023 climate scientists opposed halting generative AI research, saying that might throttle the development of tools needed to “advance knowledge on complex problems with hidden interactions, such as climate change.” In other words, we risk throwing the baby out with the bathwater.

Democratizing Cybercrime

AI founders are alarmed by the non-zero possibility of extinction, but they’ve still lined up bankers for an IPO. I’m looking forward to the risks sections of the S-1s that cast risking an extinction event as the price for progress. Cybersecurity is also on the front line of the short-term risks. According to recent data from IBM, 1 in 4 data breaches so far this year were AI-enabled — a 56% increase YoY. When I spoke with cybersecurity expert Alex Stamos on my podcast, he likened AI’s democratizing impact on cybercrime to Premier League teams moving up a division. “All of the hacking teams are getting promoted up to the next level. Small countries now have the power of big countries. From a hacking perspective, you’re going to see people stand up capabilities that used to be the kind only intelligence agencies could do.” Sophos, a cybersecurity company, puts the average current cost to recover from a ransomware attack, excluding the ransom, at $1.7 million, up 11% YoY. In the aggregate, cyberattacks cost the global economy $10.5 trillion last year. If cybercrime were a country, it would be the world’s third-largest economy. Meanwhile, the cost of entry for mass harm has gone from a nation-state’s budget to a laptop and a grudge.

Regulators, Suit Up

One of the blind spots in Silicon Valley’s Milton Friedman mindset is the belief that all regulation exists in opposition to shareholder value. After Upton Sinclair’s The Jungle exposed unsanitary conditions in the meatpacking industry, regulatory compliance in the form of a USDA stamp certified quality. Likewise, SEC and FDIC regulations created in the aftermath of the 1929 crash restored investor and customer confidence. The absence of regulation makes AI so fragile that valuations soar on wild speculation and collapse under clickbait. That fragility extends to the whole market — since the Mag 7 stocks register one-third of the S&P 500’s value — and to the broader economy, as the AI build-out has driven a 32% increase in S&P earnings growth this year. Put simply, if AI sneezes, the market gets walking pneumonia, i.e., a recession. Regulation is the bulwark that keeps a tragedy from becoming a catastrophe.

Mark Zuckerberg, the poster boy for negative externalities run amok, says every AI lab has the “responsibility and incentive to move at the pace required to train its models safely.” We should trust Zuck, as social media is going great. Donald Trump believes a smart president is the only regulator AI needs. Unfortunately, we can’t wait until 2029. Altman, Amodei, and Musk aren’t clowns, like Trump, but their regulatory ideas — “employee-like” access to external evaluators and vague promises to welcome a federal safety framework — are reminiscent of Sheryl Sandberg’s calls for regulation: performative bullshit. It’s time for an international artificial intelligence agency (IAIA) modeled after the International Atomic Energy Agency.

We could start with a U.S. regulator similar to the Department of Energy that records incidents, approves new models, promulgates safety rules, and has subpoena powers. The key, as Fareed Zakaria wrote in June, is to combine private expertise with public authority. Ultimately, that regulator should share bilateral authority with a counterpart in China, where AI is already heavily regulated. As Alice Han, director at Greenmantle, told my Markets co-host Ed Elson, sentiment around AI is largely positive in China, but leaders there worry that the absence of a global AI governance authority could set us up for “potentially catastrophic” AI-related risks. The AI race isn’t a reason to delay regulation, it’s a reason to speed it up. That’s the lesson of the Cold War, when adversaries cooperated to build real safeguards that have limited weapons proliferation to nine countries even as they facilitated nuclear power plants in 31 countries. Mutually assured destruction worked because everyone was terrified.

A crisis is a terrible thing to waste, and we have one on our hands: People are terrified again. Every apocalypse needs a villain who insists he’s the hero. We have ours, and they believe they can sound the alarm while ringing the Nasdaq bell. History disagrees.

Life is so rich,

P.S.

The value of the average NFL franchise has increased 232% since 2019. Our head of research, Mia Silverio, looks at how sports franchises have transformed from vanity purchases into an alternative asset class that’s outperforming the market. Read Mia’s full analysis in this week’s Extra Credit.

I have worked out four times a week for the past 40 years, prioritize my sleep and (mostly) eat well. I do these things so I can regularly sleep too little and consume too much alcohol and dessert. Just the same, in June, I wrote that, at the end of their life, nobody says they wish they’d done a better job optimizing their V02 Max. I’m wary of reducing daily activities to numbers on a dashboard.

But as an investor, I’m bullish on companies that are able to tap into the wellness trend and capture a significant share of the health interface (SoHI). Case in point: I believe Oura, which has built a moat filled with 42 billion hours (and counting) of longitudinal first-party user data, will be well received when the firm goes public later this month. (Disclosure: I’m not an investor, and this isn’t investment advice, but I will likely be joining the Fellowship of the Ring and buying shares in the IPO.)

Shares of Health Interface

The world’s most valuable companies appeal to human instincts. Apple (No. 2) is a luxury brand, tapping into our desire to procreate by signaling wealth, status, and sex appeal. Google (aka Alphabet, No. 3) is so good at targeting our curiosity by answering questions such that it’s become synonymous with omniscience, i.e., a higher power. Amazon (No. 5) exploits our hunter-gatherer instincts by promising unlimited supplies and frictionless consumption. Meta (No. 10) capitalizes on our need for social connection and belonging. Each of these companies use real-time data receptors and artificial intelligence, making their products more valuable the more we use them. Finally, they turn first-party data into moats via vertical integration, controlling the entire customer experience and owning the relationship. Excluding Meta, they further lock in customers via recurring revenue bundles, i.e., rundles.

Oura offers one of the few ways for a retail investor to play the growing but highly fragmented $7 trillion health and wellness market. But what jumps out are the attributes the company shares with the Big Four above.

Rings are rich in symbolism, speaking volumes about the wearer and their social status. An Oura Ring sends a strong message to potential mates, signaling health and wealth, and taps into fears of mortality by promising its wearer longevity. As Oura investor and enthusiast Gwyneth Paltrow told Inc. in 2022, “I think we’re getting very smart as a species, and we understand that there are certain things that we have to do in order to have longevity.” One of those things on the longevity to-do list? Measure everything, everywhere, all at once.

Similar to the Apple Watch, the Oura Ring tracks 50+ health and fitness metrics. Unlike the watch, which a wearer often removes at night for charging, the ring goes more than a week on a single charge and is worn nearly continuously. According to the company’s S-1 filing, the median subscriber wears their ring 23 hours per day. By manufacturing the device, continuously collecting data, and adding a thick layer of technology and innovation, Oura may be collecting more real-time, first-party data on wellness than any business in the world. CEO Tom Hale positions the company’s product not as a wearable, but as a “health intelligence platform.”

The Big Four are in the health and wellness space, to varying degrees, but their SoHI is limited by their business models. Engagement time is a decent proxy for SoHI. Amazon and Meta track users on their respective platforms and, with permission, across the web, but their insights are derived from the content we consume and the things we purchase. Apple uses privacy as a wedge to decouple its brand from the data-harvesting practices of its competitors — a strong PR strategy that throttles what the company knows about its customers. Apple supplements its SoHI with iPhones and watches, but neither device has a 23-hour-per-day lock on the user. And AirPods outsell Apple Watches by more than 2:1, making the watch an also-ran wearable inside the company’s ecosystem. Meanwhile, a ring has greater proximity to blood flow than a wristwatch, making it the more accurate tool for measuring vitals. Google comes closest to Oura’s SoHI, as it tracks users online, on Android phones, and via their Fitbits (Google acquired the fitness tracker in 2021).

Mixed Revenue

Oura’s S-1 boasts something often missing from Silicon Valley IPOs: A profitable business. Let’s start by acknowledging that hardware is … hard. After Apple, which is rumored to be working on a ring, and Samsung, which released one two years ago, the drop-off is steep for Big Tech. Between 2017 and 2021, Amazon lost $25 billion developing its devices business. Over the past decade, Meta has spent $100 billion on VR and AR product development and acquisitions, with little to show for it beyond a mothballed Metaverse. (The company’s best effort in hardware has been its partnership with Ray-Ban, which tripled sales of Meta’s glasses to 7 million units last year.)

Oura’s hardware business is profitable, with a gross margin of 55% for the first nine months of FY26. There’s room for improvement, however, as that margin fell from 65% in FY24 to 52% in FY25 due to battery issues with some models. The firm claims those issues have been resolved. Meanwhile, there’s plenty of potential to increase market share, as Oura registered less than 2% of global wearable shipments last year. The hardware is the starting point of Oura’s flywheel, however, as 94% of activated rings convert to paid subscriptions at either $5.99 per month or $69.99 per year. The gross margin on subscriptions was 89% for the nine months that ended June 30, 2026 (Oura’s fiscal year ends September 30). The number of subscribers doubled YoY to 5 million, with a 12-month retention rate of 87% as of June 2025 — on par with Netflix and Spotify. Overall, company revenue grew by 74% YoY to $1.4 billion, and while the revenue mix is shifting toward subscriptions, Oura has two profitable, growing lines of business.

Growing Concern

Oura is reportedly seeking to raise $3 billion at a $16 billion valuation. Put another way, it’s asking investors to assign an 11x revenue multiple — appropriate for a high-margin subscription software business — to a company that gets 77% of its revenue from hardware. In mixed-revenue scenarios, markets typically find the inferior part of a business and assign that part’s lower multiple to the whole enterprise. But if we exclude the hardware business (2x revenue multiple at a $2 billion valuation), that means Oura thinks its subscription business is worth $14 billion. In order to justify a 43x multiple, Oura needs to continue doubling its paid subscriptions YoY until it reaches approximately 25 million subscribers.

The elephant in the room? Peloton. With a tighter gross margin, especially on hardware, the company needed hockey-stick subscriber growth to justify its $46 billion valuation at the peak of the pandemic. For a brief, quarantined moment, Peloton lived up to its narrative, increasing subscribers 6x from 2020 to 2022. Since then, subscriber growth has flatlined, reducing Peloton’s market cap to one-third of what it was at the IPO.

Demographics Are Destiny

The good news for Oura is that it has a strong organic growth engine, with 40% of new subscribers coming from word of mouth. Oura also benefits from being the first consumer health wearable to be approved as an HSA or FSA purchase — meaning an estimated 70 million Americans can pay for an Oura Ring or a subscription with pre-tax dollars. (To buy an Apple Watch with either an HSA or FSA, a consumer needs a doctor’s note.) The challenge for Oura is that it’ll have to broaden its customer base. Nearly three-quarters of its customers are women, and 73% of subscribers are under 45. Those demographics are likely driven by Oura’s most compelling use case to date: It’s fertility tracker is 3x more accurate than manual tracking via a calendar. Leaning in to sleep tracking, another Oura strength, opens the door to a wider pool of potential customers. Consider sleep apnea, a chronic condition that affects 84 million Americans, 59% of whom are men, and contributes to an estimated 38,000 cardiovascular-related deaths annually. A 2025 study determined that Oura Rings are comparable to medical sleep studies in detecting apnea.

Further positioning the ring as both a fitness and wellness AI adviser, as well as an early warning system for diseases that affect large numbers of people, is key to owning a greater SoHI. This is doable, but will require continued investments in R&D (up 105% YoY to $207 million, according to the S-1) to create new offerings, as well as sales and marketing (up 84% to $258 million) to acquire more customers. Oura didn’t say how it plans to deploy the $3 billion raised via IPO, but it did acknowledge a $924 million loss attributable to repaying early investors. Management will say it’s cleaning up the cap table, but that nearly $1 billion could have bought a lot of new customers outside the demographic groups where the company is already strong.

Anxiety

Every era picks proxies for its anxieties. In the 1980s, it was money. In the 2000s, followers were a proxy for the social terror that accompanied the disruption of communities and institutions. Today it’s wellness — a yogababble buzzword designed to cauterize the open wounds of a society where wealth flows from Earners (the young and poor) to Owners (the wealthy and old). Reversing those flows feels beyond our control, so we double down on the variables we can adjust. We’re building a multitrillion-dollar industry on the idea that if we just optimize hard enough, we can inoculate ourselves from suffering the consequences of collective failure. The great American export used to be optimism, wrapped in a package of shared sacrifice. Increasingly, it’s the belief that if you can’t fix the world around you, at least you can fix yourself. Maybe.

Life is so rich,

P.S.

Today marks the 25th anniversary of the 9/11 attacks. A quarter century later, many of us are still overcome with rage at the terrorists, love for our country, admiration for the first responders, appreciation for Canada’s unflinching support, and sorrow for the victims. I want to spotlight the wisdom of others, starting with my friend and colleague Jessica Tarlov’s remembrance of that day and the terrible toll it took on her family. Listen here.

We’ve been played, again.

Last week, 47 states and the District of Columbia settled with Meta, resolving claims that the company had designed addictive algorithms targeting minors, violated youth privacy, and endangered children. The company didn’t admit any wrongdoing, but it agreed to pay up to $17.1 billion in penalties and make changes to its products. (Texas settled separately on the same day for $1 billion and similar terms.) The markets shrugged off the settlements, however, with Meta’s shares rising 1% on the news. For those keeping score at home, a 1% increase in market cap on a $1.4 trillion company means the settlements — breaking the fever of uncertainty — paid for themselves.

I often call Meta the Big Tobacco of the attention economy. Tobacco destroys individual lungs and pollutes the immediate airspace; Meta’s cancer metastasizes across our entire society. The conventional wisdom says this settlement is Meta’s “Big Tobacco moment.” Finally, justice. Bullshit. This is the Meta knife, thrust a foot deep into the West’s corpus, pulled out a centimeter.

The Good, the Bad, and the Ugly

Let’s start on a positive note. A bipartisan group of state attorneys general took action against a harmful organization run by amoral people. Disgusted by the company’s scant regard for child safety — but evidencing some measure of self-awareness — one Meta employee acidly noted, “Targeting 11-year-olds feels like tobacco companies a couple decades ago.” Others likened their products to drugs and themselves to drug dealers. It’s great that state AGs acted. But that it fell to them shows just how feckless Washington is.

The settlement calls for changes to Meta products, though Meta began introducing some of those changes last year and simply agreed to follow its own roadmap. The changes include limiting teens to two hours of scrolling per day, unless their parents say otherwise; barring usage between midnight and 6 a.m; and turning off notifications during school hours. That’s telling your kids they can only light up after class and not between midnight and 6 am. Teens can also turn off “autoplay” and switch their settings from the “for you” style algorithmic feed to a chronological one. Meta promised to disable counting on the Like button and ban “extreme makeup filters,” which will supposedly throttle back teen anxiety, depression, and body image issues. Meta said it would strengthen protections against “unwanted contact from strangers” — a weird thing to have ever opposed, as the absence of such safeguards was a gift to child predators. Lastly, Meta promised to invest in age verification, though responsible corporate citizens already do this.

What the settlement doesn’t do is change Meta’s design priorities. As my friend and colleague Jonathan Haidt, an NYU social psychologist, noted, the settlement leaves many of the most harmful features untouched, including the algorithm: “Meta’s AI-powered recommendation engine is still running, engineered to maximize young people’s engagement even with content that harms them.”

The ugliest part of the settlement: It makes Meta stronger. First, the company can weaponize compliance, digging a moat against new entrants. Second, by conditioning additional safeguards and $5 billion of the fine on YouTube and TikTok agreeing to similar terms, Meta has turned its competitors into corporate shields. Maison Zuckerberg even launched an ad campaign to pressure YouTube and TikTok and position itself as the leader on child safety. If laddering is highlighting your brand’s strengths while de-positioning a competitor and illuminating their weaknesses — the way I use the term in my Brand Strategy course at Stern — Meta’s settlement is a roundhouse kick knocking the feet out from under its rivals. (Fun fact: Don Draper deployed laddering to weaponize government regulation to Lucky Strike’s advantage in the pilot episode of Mad Men.) Meta’s behavior is far worse and its reach far greater than those of its competitors … but sure, they’re all the same.

Speeding Ticket

Mark Zuckerberg coined the phrase “move fast and break things” in 2012 to describe the culture of innovation he built at Facebook (now Meta). More than a decade later, it’s clear that by things he meant us. Fines are supposed to be a financial deterrent against future breakage. Seventeen billion dollars is real money, but applied to an enterprise of Meta’s scale, it’s a speeding ticket.

Imagine if I told my Prof G Media team to create an addictive product that’s always in your ears, inspires five-plus hours a day of doomscrolling, leverages network effects and addictive design to lock in users, renders them depressed and anxious, and envelops society in a toxic fog of rage and polarization. Some Prof G Media employees would likely blow the whistle. But imagine if I responded by deploying publicists and lobbyists to smear them, conceal our culpability, promise to do better, and engineer legislative paralysis such that Prof G Media operated with impunity. How big would the fine have to be to deter my behavior? Prof G Media generates $20 million in annual revenue, with an operating margin of 60%. Meta’s 2025 revenue was $200 billion, with an operating margin of 41%. Its market cap is $1.4 trillion. A $17 billion fine, scaled down to Prof G Media and spread out over 10 years, would equal a $256,000 annual hit to our operating profit. That’s not a deterrent, but a green light to move faster and break more things.

Big Tobacco Moment?

The 1998 Tobacco Master Settlement Agreement levied a fine of $206 billion ($422 billion adjusted for inflation), payable over 25 years, against the four largest cigarette makers. Two of those companies, Philip Morris (now Altria) and R. J. Reynolds, are still selling cancer sticks. (The other two, Brown & Williamson and Lorillard, are now owned by R. J. Reynolds: Regulatory friction catalyzes consolidation.) Since 1998, federal taxes on cigarettes have increased fourfold, while state taxes, on average, have increased by 6x. Smoking rates among adults dropped 73% between 1965 and 2022, and rates for teens fell by 86% from 1997 to 2021. But the tobacco companies didn’t stand still, they innovated. In 2019, 1 in 3 American teens reported using e-cigarettes, which are taxed at lower rates than the analog version. The numbers have fallen, thanks to some states banning flavored e-cigs, but curbing the negative externalities of tobacco is a game of whack-a-mole. As Stanford historian Robert Proctor told The New York Times, “Today is not the beginning of the end for social media, any more than 1998 was the beginning of the end of Big Tobacco. Americans still smoke more than 170 billion cigarettes every year, and inhale tons of additional nicotine from ‘electronic’ variants.” The picture is even grimmer if you widen the lens. Globally, 1 out of every 5 adults is a customer, and 80% of them live in low- and middle-income countries. This is by design, as tobacco companies pivoted to developing nations, with a continued emphasis on targeting young customers. Big Tobacco is still … killing it (i.e., others).

Age-Gating

The media business is built on the back of an attention-to-profits arbitrage. But for centuries, the conversion technology was rudimentary, and its emissions were tolerable. Also, because distribution was physical, age-gating was practical. The U.S has a long history of age-gating harmful things that are otherwise legal for adults: guns, booze, porn, etc. This isn’t paternalism, it’s common sense. When we released ad-supported reticulated pythons into the online ecosystem, however, they became an invasive species and common sense died. Zuckerberg didn’t invent social media emissions, but Meta scaled them … to over half the planet. Despite the proliferation of content that would earn R, NC-17, and X ratings at the movies, we’ve treated social media as G-rated. An overwhelming majority of Americans support age restrictions. In fact, nine states have active age-verification laws, while another eight have passed laws that courts have subsequently blocked.

Teeth

If there’s a problem with age-gating, it’s that we have bought the free speech vs. child safety narrative (i.e., bullshit). Assuming it passes constitutional scrutiny, however, age-gating only restricts the flow of new customers, not the product. Reform with teeth will require changing the incentives. Here are three angles of attack.

First, reform Section 230, which protects platforms and websites from legal liability for the content their users post. The 1996 law was written for online bulletin boards, not trillion-dollar behavioral engineering machines. A better framework: Keep immunity for third-party speech, but impose liability for algorithmic amplification, just as we impose liability for physical products. If you elevate content, you’ve made an editorial decision, are a media company and should be held to the same standard(s) as every other media firm. Social media would change overnight — not because executives would grow a conscience, but because the Chief Legal Officer would have a bigger number (legal risk) than the Head of Growth (revenue upside). Incentives drive behavior, and the upside of continuing to harm kids is still greater than the downside.

Second, reboot antitrust. Technology isn’t neutral; its design is a function of the degree to which economic power is concentrated. “The great monopolists are not passive,” Columbia Law professor Tim Wu wrote in The Age of Extraction. “They actively defend their market position by acquiring threats/competitors.” See Meta’s acquisitions of Instagram and WhatsApp or Google’s acquisitions of YouTube and DeepMind. Going Teddy Roosevelt on information monopolists would benefit … everyone. The lessons of Standard Oil and AT&T are that breakups unlock shareholder value, ramp up innovation via competition, reduce rents on consumers, and provide workers with more bidders for their labor. The framing: Antitrust could be the biggest tax cut in history.

Finally, tax social media’s emissions. If the tech platforms are too big to regulate, shrink them by taxing revenue from sales of targeted digital ads. As economist Paul Romer wrote in 2019, companies seeking to avoid the tax play into our hands, as they’re likely to pursue an ad-free subscription model (e.g., Substack). Success for those companies would no longer hinge on surveillance and addiction, but a clear value exchange. Some platforms will continue with the targeted ad model, regardless, but a progressive tax, with higher rates for larger companies, would render Big Tech … tech.

Our “Big Tobacco moment” ended with Meta’s shareholders richer, competitors weaker, and its business model intact. We’ve been played, again.

Life is so rich,

P.S.

I’m speaking live with economist Noah Smith exclusively on Substack next Tuesday, September 8, at 2 p.m. ET. Paid subscribers only. RSVP here.

Most of us, including me, live inside a media bubble. Jessica Tarlov, my Raging Moderates co-host, works across media bubbles. To say I’m in awe of how Jessica, the lone liberal voice on The Five, engages with her conservative colleagues at Fox News is an understatement. She appears unafraid, but as she writes in her book, I DISAGREE, fear doesn’t go away. You just decide it’s not going to stop you. Wise words.

I asked Jessica to share the following excerpt from her book, as I believe she understands better than most of us, or at least me, how to metabolize rage without letting it curdle, as well as where to find calm without falling into complacency. Her answer, in short: get louder about your convictions, gentler with your people.

Life is so rich,

On Raging Moderates, I ask my guests the same closing question: What’s one thing that makes you rage, and one thing you think we should all calm down about?

Every week, I think about how I’d answer. Sometimes it’s a frivolous frustration, like the jockeying for overhead bin space on an airplane. Other times, I’m raging about something deeper — maybe American citizens being detained by ICE.

When I ask about what we should calm down about, it’s the same pattern. Sometimes it’s a minor frustration with my kids, and other times I’m considering something more meta.

Right now, the thing that makes me rage is fear, or more particularly, the feeling so many of us have that we can’t overcome our fears. When I started at The Five, facing four conservatives and millions of viewers who might not agree with me, I’d wake up with my stomach in knots and rehearse arguments in my head, terrified I’d say the wrong thing.

But eventually I learned the fear doesn’t go away. You just decide it’s not going to stop you. You learn to live with it. To feed off the energy and, hopefully, to find a way to express it that doesn’t sap your strength, but makes you stronger. When your fear is harnessed, no matter what it’s about, you become a more complete, self-aware person.

That’s what I want for you. Not to be unafraid — fear is a rational response to the challenges ahead. But to decide that you’re not going to let that fear keep you on the sidelines of whatever challenge is making you tense.

And what is the one thing we should all calm down about?

Each other.

I know that sounds simple. Maybe even naive. But good people have flaws. It can be hard to see the humanity in people whose politics feel so foreign to yours, or imagine bonding with those who excuse or, worse, endorse behavior that’s antithetical to yours. But those same people can be loving parents, generous neighbors, and devoted friends. The reverse is true as well. People with the “right” politics can have serious personal failings. If we demand perfection from everyone, we end up alone.

And loneliness? That’s what’s really killing us.

It’s also okay to listen to bad ideas. In the past decade on Fox, I’ve been exposed to a lot of conservative thinking that I can get on board with, or at least peacefully co-exist with. But I’ve also heard arguments that range from misguided to flat-out wrong. Conspiracy theories dressed up as facts. Policy positions held up by vibes alone. Being exposed to those arguments didn’t convert me. It didn’t shake my core principles or change my vote. Actually, it’s been the opposite. Listening to bad ideas has taught me what people fear, what they believe in, what they know and don’t know, and sometimes — just sometimes — how I might change their minds. The weakest arguments are the easiest to dismantle. The strongest are actually worth wrestling with.

But the biggest reason we need to calm down about each other is that the world is less scary when we’re together. I’m lucky to have people I can share my thoughts and beliefs with. Fewer and fewer Americans can say the same. Some loneliness is imposed on us — by work, distance from family, health, circumstance. But some of it is voluntary. We hide from one another when things get tense. We ghost friends, skip family dinners, mute people on social media.

Politics matters. Of course it does. But the most meaningful parts of life — love and loss, opportunity and disappointment, triumphs and mistakes — are rarely related to a new law or Truth Social post. That’s true even for me, and I live and breathe this stuff.

What all those meaningful moments have in common is that they’re shared with other people. My father squeezing my hand on my wedding day even though he could barely stand. My husband, Brian, making me laugh when I wanted to cry. My daughters’ faces when they figure out how to do something they thought was impossible. Random acts of kindness from Fox viewers who disagree with almost everything I say but still sent me those baby blankets when Cleo was born.

Remembering that calms me down more than anything.

So yes, rage when you need to. Fight for what you believe in. Use your voice. Show up prepared with facts and conviction.

But don’t forget that the person across from you — whether across the Thanksgiving table or across the cable news split screen — is a person. Flawed, complicated, sometimes infuriating, but still human.

That’s not weakness. That’s strength. And it’s the only way forward.

– Jessica Tarlov

P.S. You can pre-order I DISAGREE: Winning Arguments Without Losing Friends, and for those of you in the New York area, there are still a limited number of tickets available for my Conversation with Scott at 92NY on Wednesday September 16 at 7pm.

Entrepreneur is a synonym for salesperson, and salesperson is the pedestrian term for storyteller. We (entrepreneurs) are all impostors who must deploy a fiction (i.e., story) that captures imaginations and solicits capital to pull the future forward and turn rhyme into reason. No business I have started, at the moment of inception, made any sense … until it did. Or didn’t. However, every business I’ve ever started has been based on a compelling story. Prof G Media is no different, though stories are our product. Mia Silverio, our research lead, plays a key role in developing the stories we tell. This week, I asked her to write about the art and science of effective storytelling.

Editorial note: This post was originally published August 15, 2025. Some of the examples contain data that is out of date. (Things change.) Nevertheless, the examples remain excellent illustrations of the art and science behind great storytelling.

I’ve been on hundreds of Zoom calls with Scott (not an exaggeration). Over the past five years, I’ve learned how he crafts powerful presentations. This is how we think about business storytelling at Prof G Media.

Welcome to the Entertainment Industry

Scott will often stop me when we’re reviewing his decks to call for “more drama.” Infusing a narrative with drama and emotion separates an exceptional storyteller from a mediocre one.

A good storyteller is simply a good entertainer. Am I discounting the importance of the underlying content? Somewhat. But the unfortunate truth is that, even if you have revelatory information to share, it’s not going to have an impact if no one’s paying attention. As writer and podcaster Derek Thompson observed, “There’s something overlapping in the Venn diagram between what is demanded of standup comics and what is demanded from public intellectuals. And that is: Explain this shit to me — make me feel something.”

Research tells us that experiences that elicit emotions are more memorable than ones that don’t. Your story doesn’t need to make your audience cry or laugh, but it should inspire thoughtfulness or surprise, promote introspection or curiosity, or evoke longing or guilt. At the very least, you need to be self-aware enough to make a deprecating joke about a dull topic.

Two ways to inject emotion into your presentations:

No. 1: Lean into provocative, contrarian takes that surprise your audience or challenge their assumptions.

The first slide of Scott’s 2024 TED talk asked, “Do we love our children?” The question begs an obvious answer — yes. But it sets up the next slides, which show irrefutable evidence that young people today have been handed a sour deal.

If we’ve elected officials who have let the American dream and the promises of capitalism die in the service of older generations’ enrichment, Scott asked, how does that behavior square with really loving our children?

Powerful stories surprise us. Harry Potter running into a brick wall and not getting head trauma is so delightfully perplexing that it prepares you for the magical new world you’re about to enter.

Scott is well known for his surprising takes: “Young people need to drink more.” “The era of the brand is over.” “Tesla is dramatically overvalued.” Etc. But provocative statements only work when they’re anchored in evidence.

If you don’t have the evidence or creative leeway with your content, you can still deliver surprises through how you present. Hide half a chart in PowerPoint and reveal it at a key moment. Drop in a video or audio clip. Bring in a guest. Move — literally. Scott has worn wigs, lip-synched onstage, and jumped up and down shirtless at SXSW. No one expects these stunts, which is why they land. Surprise gets attention and draws your audience into the story.

I never thought I’d use the words “accounting” and “viral” in the same sentence, but a professor at the University of Oklahoma changed that. Instead of droning on about balance sheets, Jonathan Kern runs around his classroom singing about depreciation and leading chants about cash flow. Viral TikTok videos show lecture halls full of engaged students. He made the most boring subject in business school unforgettable by doing the exact opposite of what everyone expects from an accounting class.

No. 2: Use engaging data.

Be selective with your data. And by “selective,” I don’t mean stingy — any persuasive story should include quantitative evidence. What I mean is, select quantitative data that has an outsized qualitative impact.

Use the “wow” test. If a data point, sentence, or slide doesn’t challenge or surprise you, cut it. Dig for the good data, don’t settle for the bland stuff.

For example, Alphabet, Amazon, Meta, and Microsoft will together spend $364 billion on capital expenditures this year. I could leave it at that, or I could make that data dramatic (and meaningful) by telling you that for the same amount of money, you could build another International Space Station, reinvent the nuclear bomb, construct six nuclear submarines, dig the Channel Tunnel between England and France, run Japan’s military for an entire year … and still have enough left over to buy everyone in Manhattan and the Bronx an iPhone.

Note: this year, Big Tech will spend an estimated $800 billion — more than double what they spent last year. For that amount of money, they could (theoretically) buy Greenland.

I believe there’s “wow factor” data in every field, no matter how boring. Consider this dull data point: The U.S. tax code is roughly 75,000 pages long. To add drama, try this: All stacked up, the tax code would be taller than a two-story building.

OK, maybe that’s a bit too dramatic, but you get the idea.

Zoom Out

Good stories teach us something new. Good storytellers cultivate the ability to see what others don’t.

I call this “zooming out.” Most people analyze events as if they’re looking through a camera lens, seeing only what’s in focus. Skilled storytellers pull back to capture the wider landscape, revealing potential causes and effects that were invisible in the close-up shot. Put differently, zooming out requires moving from the what happened layer of understanding to the so what? what made it possible? what happens next? layers.

Zooming out is most helpful in the analysis and brainstorming stage, when you’re deciding what story to tell. That’s how I arrived at my 2024 prediction that GLP-1s will supercharge the medical aesthetics market. Most GLP-1 news covers how the drug will affect the food and beverage industry. That’s the obvious story. What’s a more interesting one? I zoomed out and asked, what exactly happens after a patient loses 50+ pounds?

Rapid weight loss can create beauty problems: excess skin and “Ozempic face” — the gaunt, aged look you get from losing facial fat too quickly, often “fixed” with filler. I wondered if this was already fueling demand in medical aesthetics. It is: 60% of plastic surgeons say weight-loss drugs are boosting their business.

The numbers are striking. Surgical lifts and tucks are up 20% to 40% since 2019. Facial fat grafting jumped 50% in the past year. The American Society of Plastic Surgeons found that 2 in 5 GLP-1 patients are considering surgery, and 1 in 5 already went under the knife. The stock of Galderma, a Swiss pharmaceutical and skincare company, is up 35% over the past year on surging demand for aesthetic treatments.

Now zoom out further: 72% of Americans are overweight or obese, but only 11% are taking GLP-1s. As adoption scales and insurance companies expand coverage, we’re looking at massive demand for cosmetic procedures to address the unwanted byproducts of weight loss.

Zooming out works in investing, too. In 1900 betting on the automobile probably seemed smart. But U.S. automakers delivered mediocre returns thanks to competition and consolidation. The real windfall came decades later from the ripple effects: Cars enabled suburbs, suburbs fueled demand for big-box retail, and Walmart stock returned 1,600x between 1980 and 2020 — roughly 70 times better than Ford over the same period. When everyone spots the primary trend, zoom out to spot the causes and effects.

Personalize and Contextualize

When Scott presents in a different country, I adapt his deck with region-specific data. Even small details get tailored. People pay more attention when content is personally relevant, so frame your message in a way that makes them care.

Great storytellers do this. Ruth Bader Ginsburg advanced gender equality by taking on cases where men, not women, were harmed by gendered laws — forcing male judges to confront bias in a way that felt personally relevant.

Personalization is only half the battle. The other half is context — framing numbers, concepts, or jargon so their meaning is instantly clear. When Elizabeth Warren protested Trump’s tax bill, she told Congress: “No baby should lose healthcare so Jeff Bezos can buy a third yacht.”

She could have cited the revenue loss in billions, but that wouldn’t land as hard. By putting the cost in human terms and tying it to a vivid image, she gave a dry budgetary trade-off context and made it impossible to ignore.

You can do the same with business data. “Nvidia is worth $4.5 trillion” is just a statistic. But saying “Nvidia is worth more as a percentage of global GDP than the U.K., France, and Germany’s stock markets” provides the context needed to understand the company’s scale, just like Warren’s yacht line made people feel the trade-off.

Context also makes complex topics accessible. Take this stat: Living next to a nuclear power plant for a year exposes you to 0.1 microsieverts of radiation. That sounds terrifying until you learn that eating two bananas gives you nearly twice that dose.

TikTok creator Becca Bloom nails this by explaining finance terminology using colloquial Gen Z language. She defines market cap as the total value of a company’s shares, aka “checking someone’s Hinge profile and instantly knowing if they’re high effort or still figuring life out.”

Visualize

You can supercharge the power of context through visualization. Data visualization is a defining feature of our work and core to the Prof G Media brand. It also leverages a basic fact about comprehension: The human brain processes images 60,000 times faster than text. Scott’s presentations reflect this: His AI Optimist talk features 13 text-based slides and 104 filled with charts, images, and videos.

Here’s an example. I could tell you that AI data centers are major CO₂ contributors. Or I could show you this:

This chart works because it pairs visualization with baseline context. Without showing that the aviation industry accounts for 2.5% of global carbon emissions, how would you know 3.4% is really huge?

Back in 2021, when everyone was losing their minds over the metaverse, Scott was famously bearish. (“Headsets are nothing more than wearable sex repellent.”) I was putting together slides to back up his position, so I pulled Google search data for “metaverse.” The chart looked OK in isolation — a big spike, followed by a higher baseline.

But here’s why context is so important. For fun, I compared searches for the metaverse to something random: Crocs. Those ugly foam shoes consistently outpaced metaverse searches, even at its peak hype moment. If more people were googling Crocs than the supposed future of human interaction, maybe the metaverse wasn’t as inevitable as everyone claimed.

I started calling this the “Crocs Test.” It’s held up surprisingly well. The Crocs Test correctly predicted the collapse of Quibi, NFTs, and Virgin Galactic.

SaaS (Storytelling as a Service)

Stories exist to be shared. We tell them to entertain, teach, connect, and move other people. Storytelling is a service — a way of charting a path, yes, but also a mechanism for generating the hope needed to sustain us on our journey.

A well-told story creates a bridge between storyteller and audience, unlocking emotions in all directions. Scott, who the New York Times likened to Howard Stern — always sharp, sometimes crass — gets surprisingly emotional onstage during his presentations. He almost cried while giving his TED Talk, and I almost cried reading the comments on YouTube, not because we were receiving praise, but because we’d given hope:

Good stories help us recognize feelings we couldn’t name, experiences we believed no one else shared, and insights we knew but couldn’t articulate. As Walt Disney said of storytellers, “we instill hope again and again.”

-Mia Silverio

P.S. I interviewed 200 teachers about what AI is doing to their classrooms. The answers were bleak. Read it here, and find more of my work on Substack or follow me on Linkedin.

P.S.S. Prof G Producer Jenn Sanchez and I are hosting a livestream on how we tell stories through podcasting. Join us Aug 20 at 2:00pm ET.

I often make predictions that turn out to be incorrect. While the narrative around AI disrupting the labor market has shifted since last summer, the rest of this post, sadly, is proving prescient. As I wrote last year, Donald Trump is building an American secret police. Recent killings at the hands of ICE agents, revelations of inhumane conditions at detention centers (i.e., concentration camps), and leaders who fund, rather than reign in, this administration’s lawless mass deportation campaign confirm that we’re not teetering on a slippery slope, but plunging down a vertical drop. There is a silver lining: Many Americans are standing up. If you’re one of them, thank you, and keep going.

Editorial note: This post was originally published on July 11, 2025.

President Trump is no longer fighting inflation, China, or AI. Instead, he’s declared war on a manufactured threat: the “enemy within” — immigrants, journalists, and professors. Our biggest threat, apparently, isn’t Russian aggression or economic inequality; it’s your Uber driver or anthropology professor. This is not only cruel (and depraved) but stupid, as the chill being cast across the agriculture, services, and construction sectors will likely be more inflationary than the tariffs (more stupidity). Trump’s goal is to deport 4 million undocumented people over four years — that’s about 3% of the U.S. workforce; 10% to 15% in several sectors dependent on immigrant labor.

The “Big, Beautiful Bill” signed into law on July 4 isn’t about border security. It’s a blueprint for mass detention and deportation, a $75 billion axe in search of a scapegoat. Under the law, ICE gets funding that rivals the military budgets of Italy or Israel to build sites like the facility in the Everglades nicknamed Alligator Alcatraz. The goal? Fear.

This isn’t law enforcement. It’s authoritarian cosplay designed to scare the electorate and silence dissent. Trump’s war doesn’t punish behavior but identity, as immigrants from certain countries and ethnicities are targeted. Federal agents in full tactical gear swept through a park in Latino-heavy L.A. this week, just to make a point. The mayor said: “It’s the way a city looks before a coup.” Q. What do storm troopers, the KKK, and ICE have in common? A mask.

Modern-Day Secret Police

ICE has become Trump’s personal Praetorian Guard. Minnesota Governor Tim Walz, Vice President Harris’s running mate, was excoriated for comparing ICE to the gestapo. But spare us the bullshit indignation: Masked agents in fatigues raiding churches and schools separating families is not modern America but 1930s Europe. Or is it?

In the 2026 fiscal year, ICE will receive over $11 billion, a 10% increase from current funding. The new law will more than double that. It authorizes the hiring of 10,000 agents, bringing ICE’s force to nearly 30,000. In 1944, Nazi Germany had 32,000 gestapo officers and $2b (inflation adjusted) in funding. They were fighting a world war. Trump is fighting home health aides and sous chefs.

Criminals? Not Really

ICE claims it’s targeting “the worst of the worst.” But fewer than one-third of the record 59,000 immigrant detainees have been convicted of any crime. The rest? A: Immigrants who didn’t look like the typical Iowa voter.

Trump’s reach even extends to his political rivals. He publicly questioned the citizenship of NYC mayoral candidate Zohran Mamdani and his former First Friend (Elon). Mamdani has been a U.S. citizen since 2018. Doesn’t matter. “Criminal” now also means “not for Trump.”

Jobs and Lies

The argument that immigrants are stealing jobs is a lie told by people who’ve never built a business or managed a P&L. Immigrants create jobs. They work jobs native-born Americans won’t touch. They pay into Social Security but rarely collect. Deporting them is an economic own goal. The Cato Institute estimates the cost of mass deportations could eventually exceed $1 trillion. The Peterson Institute projects a 1.2% drop in GDP if 1.3 million people are deported, growing to 7% if deportations hit 8 million. That’s not policy, but (see above) stupidity: hurting others while hurting yourself.

The Real Invasion: AI

Instead of militarizing immigration enforcement, we should be investing against the real challenge: AI. The World Economic Forum says 9 million jobs globally may be displaced in the next five years. Anthropic’s CEO warns AI could eliminate half of all entry-level white-collar jobs. Imagine the population of Greece storming the shores of America and taking jobs (even jobs Americans actually want), as they’re willing to work 24/7 for free. You’ve already met them. Their names are GPT, Claude, and Gemini.

Want to protect American workers? Train, don’t terrorize.

Media and Academia in the Crosshairs

Trump’s war on domestic enemies doesn’t stop with ICE. He’s coming for the press and the academy. Disney, Meta, and Paramount have all settled nuisance lawsuits with Trump, for a combined total of about $60 million. All the funds go to his presidential library — where truth will go to be laundered, not learned. Newsrooms are folding or playing defense. Breaking with a long-standing tradition, the White House is handpicking press pool participants.

Harvard, once America’s aircraft carrier strike force of soft power, is now a MAGA speed bag. Autocrats always come for universities, which train people to ask questions. The White House is threatening to defund billions in research, choke off international student visas, and criminalize campus dissent. Nearly 300 top researchers have applied for “scientific asylum” — in France. In the thirties and forties, some of the world’s premier academics fled Europe for America. They brought quantum theory, chemotherapy, modern computing, and other breakthroughs with them. Oh, including the bomb. The rivers of elite human capital are now flowing in reverse, and we’re sending the scholars back. How can we be this fucking stupid?

Warriors vs. Whiners

This isn’t a slippery slope, but a vertical drop. Trump has Congress kneeling, courts folding, and corporations cashing in. What’s left is us. This was never just about immigrants, professors, or journalists. It’s about unchecked power that, unchallenged, is metastasizing.

Democracy doesn’t defend itself. We won’t fight this with hashtags, but with votes, lawsuits, and courage. This is the moment we decide: Are we citizens of a republic, or spectators at its collapse?

Life is so rich,

P.S. Greatness is in the agency of others, and behind me, there’s a talented research team with their own newsletter, Extra Credit. If you’re a student or an educator, get 50% off Prof G’s annual and monthly plans: Matriculate here or forward this to your favorite student.

I took my son to see The Odyssey last night. We enjoyed it, but this isn’t a review. The film is the shared creation of one of this era’s best directors (Christopher Nolan), his crew, and uber- talented cast. Their success, however, owes a debt to Homer, one of history’s greatest storytellers, who in turn owes a debt to an even older oral tradition practiced by storytellers whose names are lost. Sir Isaac Newton put it best when he wrote, “If I have seen further, it is by standing on the shoulders of giants.”

The same logic holds re my own success. Last week, Governor Gavin Newsom appointed me to the University of California Board of Regents. This is the only board I have ever wanted to serve on. Let me be clear, I am not a humble person. However, as you get older, unless you are an asshole cosplaying an innovator (i.e., big tech bro), you recognize success is not an individual sport. And mine reverse-engineers to things that aren’t my fault. Parents who, in their twenties, left family and everything they knew to cross the Atlantic to pursue a better life … A mother, who raised me on her own on a secretary’s salary, irrationally passionate about my well-being. The unearned advantage of being born straight, white, and male during the largest economic expansion in history. And taxpayers who invested in the unremarkable. … In other words, standing on the shoulders of giants.

Self-Made (story)

Americans love a self-made success story. The operative word, however, is … story. In his book Born on Third Base, Chuck Collins analyzed the economic backgrounds of the people on the Forbes 400 list. He concluded that, while media accounts labeled 70% of the wealthiest Americans “self-made,” in reality only about one-third came from a poor, working-class, or middle-class family with no significant family capital. Two-thirds of the people on the list stood on the shoulders of a giant named generational wealth.

Obnoxious

In an interview with the Economist last week, Elon Musk claimed that zero people had died as a result of his decision to eviscerate foreign aid while running DOGE. In fact, a conservative estimate puts the death toll after one year at more than 750,000 people, two-thirds of them children. The ugly cruelty of the world’s wealthiest man slashing aid to its most vulnerable people marks the worst attribute of this age: misplaced self-credit that immolates empathy. Musk, who came to the U.S. on a student visa, is the poster boy for tech bros who shit-post public spending … unless they’re the beneficiaries. Musk is the welfare queen Reagan complained about. Tesla was built with $2.5 billion of U.S. government support. NASA is SpaceX’s No. 1 customer, accounting for 20% of the company’s revenue.

Venture capitalist and SPAC-enthusiast Chamath Palihapitiya recently told CNBC he’d “gladly give away 95%” of his money to taxes, but he believes starting a company would be more helpful to society, as government policies are a “joke.” The punch line? Government investments in scientific research led directly to the internet technologies Palihapitiya leveraged to create a company and build his fortune and created a hysteria for SPACs– remember those? Marc Andreessen, who coded Mosaic, the first consumer-friendly graphical web browser, while attending the (publicly-funded) University of Illinois and working at the (federally-funded) National Center for Supercomputing Applications, has said he’s “pro-gridlock,” because “when the government does things, it usually doesn’t end well.” Evidently, government actions that benefit him are the exceptions. Peter Thiel reaps the benefits of America’s free markets, rule of law, and democracy, but in a 2009 essay argued that the expansion of the welfare state and extension of the franchise to women had “rendered the notion of ‘capitalist democracy’ into an oxymoron.” The dishonesty — re the giant shoulders these jerks stand on — is obnoxious and extends beyond Silicon Valley.

Born in Georgia during Jim Crow, Justice Clarence Thomas benefited from the Voting Rights Act, but in a decision that gutted the law and helped to disenfranchise millions of Black Americans, he called that line of jurisprudence a “disastrous misadventure.” By many accounts, Senator Lindsey Graham was gay, but during three decades in Congress he consistently voted against LGBTQ rights. Then there’s Ayn Rand, the fairy godmother for those selling the “pull yourself up by your bootstraps” myth. Despite railing against what she believed was the welfare state’s immoral redistribution of wealth, Rand received $11,000 in social security benefits over the last eight years of her life. These people aren’t success stories, they’re cautionary tales about how success distorts reality and erodes empathy.

Psychologists have researched wealth’s distortion field. In one study, Berkeley professors Paul Piff and Dacher Keltner primed participants to feel either upper or lower class by having them compare themselves to people with more or less money, education, and status, then left them alone with a jar of candy ostensibly meant for children. Participants primed to feel upper class took 2x more candy than those primed to feel lower class. In two other studies, they observed that drivers of luxury cars were more likely to cut off other motorists and pedestrians. In 2012, Piff and Keltner wrote in the New York Times, “Wealth gives rise to a me-first mentality, and the ideology of unbridled self-interest serves as its lofty justification.” Inside wealth’s distortion field and operating with reduced empathy, incumbents weaponize the tax code to favor capital vs. labor, corporations vs. people, and old vs. young.

Falling Back in Love With the Unremarkable

I believe when you reach a certain point in life you have an obligation to reverse-engineer the parts of your success that weren’t your fault. For me, those roads run through public education, specifically Los Angeles public schools and the University of California system. In Garrison Keillor’s fictional town of Lake Wobegon, all the children are above average; in reality, most children are unremarkable. I was unremarkable — I lost four out of four student council elections at Uni High, got cut from the baseball and basketball teams, didn’t attend my prom because four girls declined my invitation, graduated with a 3.2 GPA and 1130 SAT, was rejected by UCLA, then admitted on appeal. California’s public schools gave me a good education, free lunch, and daily lessons in resilience.

At UCLA, I benefited from an admission policy designed to give unremarkable kids remarkable opportunities. When I applied, the acceptance rate was 76%; today it’s 9%. It’s gotten nearly 8x more difficult to become a Bruin. In college, I was put on academic probation four times, made subject to dismissal twice, became president of the Interfraternity Council (weak flex, but an early leadership signal), and graduated with a 2.27 GPA. I also made lifelong friends and rowed crew, where I learned that human limits are far beyond what people think. None of that would’ve been possible if I hadn’t received Pell Grants, i.e., educational investments I didn’t have to repay. I was eligible not because of merit (see unremarkable), but because my mom couldn’t afford to send me to college. Family income isn’t a proxy for inequality, it is inequality. Americans support class-based preferences by 2 to 1. And they work: Without looking at race, UCLA and Berkeley consistently admit the highest percentage of students receiving federal Pell Grants. Unfortunately, the Pell Grant program faces a $104 billion to $132 billion shortfall over the next decade — significantly less than the $152 billion allocated to fund the American masked police mass deportation campaign. Meanwhile, Pell Grant awards haven’t kept pace with the average cost of attending a public four-year college.

One way to reinvest in the unremarkable: a Marshall Plan to increase enrollment at 4-year public colleges by 40% and junior colleges and trade schools by 80% over the next 10 years. This would be funded by taxing endowments above $1 billion of universities not expanding freshman seats at 1.5x population growth. Any institution with tens of billions on its balance sheet that isn’t increasing admissions is not a public good, but a hedge fund offering classes. We should also tax K-12 private schools and reinvest the proceeds in public schools. We are barreling toward a caste system, sequestering kids by income, which cuts at a key ingredient in capitalism: empathy. These investments aren’t charity, but infrastructure for upward mobility. And while students don’t repay Pell Grants directly, one study estimated that recipients earn more money and therefore repay the initial grant via additional taxes within 10 years. But perhaps the best reason to fall back in love with the unremarkable is that doing so reboots the American Dream, or what Alexis de Tocqueville called “the charm of anticipated success.”

Pay Back / Forward

UCLA and Berkeley were transformative for so many of us. I’ve given approximately $20 million to the University of California, and I still owe, as I didn’t climb, but was lifted. My success isn’t proof I deserved it; it’s proof Americans used to be willing to invest in young people before we’d done anything to earn it. I am not self-made, but American-made. My job now — as a citizen, alumnus, donor, and Regent — is to build ladders for future generations of unremarkable kids.

I’m walking the “back nine” now, and it’s wonderful. My mom, America, California taxpayers, and the Regents of UC have all been next to me the whole time. You can’t see them, but they’ve been there… always.

Life is so rich,

P.S.

Today is the last day to receive 10% off an annual Prof G+ paid subscription. Get access to ad-free pods and Prof G+ exclusives, including breaking livestreams, Deep Dives, and presentations from Prof G staff. Buy it for yourself, your team, or an unremarkable kid. Click here.

Ten years ago this month, I began writing No Mercy / No Malice (NM2) every Friday. My firm at the time, L2, was a reincarnation of my first business, Prophet, but I wanted to get it (more) right this time. Prophet was/is a good firm, but it was trapped in a transactional/service model, vs. a recurring revenue model. This created a more fragile revenue stream with a greater cost of sales, as there were only so many weekends I could play golf.

We conceived L2 around a membership model (annual fee), and we tracked touch points — how many times the client interacted with our product, which predicted renewal. Note: This strategy paid off (twice) — I sold Prophet for 2.8x revenue and L2 for 8x. Before I sold L2, we’d launched a series of media products to create more engagement. Winners & Losers was a video series exploring innovation in the consumer sector, and NM2 was meant to be a newsletter exploring, well, whatever was on my mind that week. In addition, I enjoy writing — I pen a book every 18 months — believing it’s effectively exercise for the brain. I’ve convinced myself that I’m less prone to early-onset dementia when I’m struggling to fix that last sentence. NM2 was too salty for Gartner (the acquiring company), and they said it could not be affiliated with the firm, but I could have the IP. A decade later, we have 430k subscribers, and the newsletter is the center of the flywheel for ProfG Media. The tone/aim of NM2 is simple: provide insight and be fearless.

Time Capsule

The oldest surviving No Mercy / No Malice post dates to November 18, 2016. It’s only 288 words — roughly 20% of a typical post these days. A few things stand out. The post, “Warby Snarker,” was about Snap’s new camera-equipped glasses, known as Spectacles. A decade later, Snap CEO Evan Spiegel continues to pursue his wearable white whale, despite erasing more than 90% of the company’s market cap over the past five years. The 2016 post contains an early example of Prof G Media’s visual storytelling — in this case, a chart comparing Nike’s performance on Instagram’s (new at the time) Stories feature to its performance on Snapchat. Also, there’s a prediction from L2 co-founder Maureen Mullen. It proved to be correct, highlighting an NM2 commitment to making bold calls that catalyze conversations. Finally, the post links to my message about the 2016 election. As I noted at the time, every CEO and founder felt compelled to say something to their troops about the political earthquake that was sending (and continues, to this day, to send) shockwaves through our society and the world.

In the subsequent decade, however, most of those leaders have gone silent. I’ve grown louder, consistently writing about the topics I believe matter most. Hint: I believe Trump Inc. is a criminal enterprise and a stain on the American experience. Another hint: Accusing me of TDS has no effect.

On Writing

Whenever I’m in public, I can tell which media channel is the catalyst for someone approaching me. If someone says, “The Dawg!” or uses a similar bro-pener, they likely recognize me from our videos. If the approach is more familiar, like we’re old friends, they’re a podcast listener. My favorite thing about podcasting is the friends you don’t know — it’s a parasocial medium. But if they want to discuss losing a parent or the tension between making a living and being a present dad, I know they’re a reader … of my newsletter and/or books. The written word is a bunker buster, reaching emotions we think are safely buried.

We believe storytelling is the most valuable skill — a superpower you’d grant your children, if possible. The arc of evolution bends toward good storytellers, as storytelling = the efficient transmission of survival-relevant information. Business runs on the same code. Entrepreneurs, aka storytellers, deploy a narrative that captures imaginations and capital to pull the future forward. Regardless of the medium, however, I believe storytelling begins with writing. Joan Didion put it best: “I write entirely to find out what I’m thinking, what I’m looking at, what I see, and what it means.”

In other words, when we write we’re learning and teaching. In a widely cited 1977 paper, composition scholar Janet Emig concluded that “writing involves the fullest possible functioning of the brain, which entails the active participation in the process of both the left and the right hemispheres.” According to Emig, writing simultaneously engages three cognitive processing styles: enactive (learning by doing/the physical act of writing), iconic (scanning and depicting text with the eyes), and symbolic (restating thoughts into structured words). Translation: Writing is a full-body cognitive workout.

Talent matters, but reps matter more. It’s a practice. As Stephen King explained in On Writing: A Memoir of the Craft, “Amateurs sit and wait for inspiration, the rest of us just get up and go to work.” My advice: Commit to a certain amount of time to write on a regular basis and have deadlines (or some other form of accountability). As the Nike ads famously say, “Just do it.” The first 100 newsletters were written by me, late Thursday night, after I came home from drinking. It pains me to say this, but some are better when I’m a bit fucked up — I’m less guarded — as the “white space” the better missives tap into is straight men who aren’t in touch with their emotions. It’s a big market.

Writing isn’t just a personal discipline, however — it confers a competitive advantage, and the best-run organizations treat it that way. Jeff Bezos said the smartest thing they ever did at Amazon was to ban PowerPoints in favor of “six-page narratively structured memos.” His reasoning: Decks hide flaws in logic, functioning as sales tools meant to persuade, whereas memos expose weak arguments, force deep thinking, and compel clarity. The U.S. military adheres to a strict “Bottom Line Up Front” writing style that puts the most important information at the top of the document — if they bury the point it might cost lives. Reporters at the Associated Press, a journalistic institution dating to the 1846 Mexican-American War, deploy a similar “inverted pyramid” to communicate information in descending order of importance. AP Style is the operating system for news. The common thread: Good writing reduces storytelling to first principles. I’m going on Bill Maher next Friday. When the producer calls to review topics, I will write about the one that resonates most as prep.

Flywheel

Last month, I wrote about metrics maxxing, specifically how a growing obsession with health and fitness data is obscuring life’s purpose and meaning. Many of the themes apply to NM2. Our team tracks the usual digital media metrics — open rates, views, etc. — but that data has zero influence on editorial decisions. I use NM2 as an incubator for new ideas and catharsis — things I’m thinking about but haven’t been able to express. The good ideas (usually) survive our editorial meetings and become posts. The best ideas, i.e., those that resonate deeply, turn into chapters in books. We want to be fearless and spark a conversation by wading into dangerous waters — the struggles of young men, college admissions, antisemitism, tech valuations, Trump. A by-product of my writing is criticism — a win, as I believe that criticism is the receipt for actually saying something. Also, often, I just plain get it wrong.

Creative Differentiation

We sold L2 for 8x revenue, in part, because we manufactured scarcity (saying no to potential clients) and had a good subscription model. Our competitive advantage in a crowded marketplace, however, wasn’t a function of our proprietary data and analysis, but our commitment to investing in creative differentiation. As my business partner and the Chief Creative Officer at L2, Katherine Dillon, often reminds me, we hired our third animator before hiring our first salesperson. We also spent thousands of dollars licensing Getty Images photos, because we viewed our reports not as dry white papers, but as magazines that pull our clients deeper into the story.

As Katherine said in a recent presentation on design as a differentiator, “There are a lot of wonderful storytellers, Scott among them, but I think the visuals associated with No Mercy / No Malice separate it from the pack.” Katherine is biased, and correct. One frequently asked question from readers: Do you draw those charts yourself? A: No, but the woman who created the visual style for NM2 deployed hand-drawn, grayscale illustrations to communicate a personal/professorial tone that lets readers feel like they’re inside an idea incubator. In other words, Katherine and the designer nailed it.

Vulnerable

One of the joys of podcasting is meeting your listeners IRL and discovering that (most) people are … lovely. Newsletters, sadly, don’t go on tour. On the internet, spam, bots, and bad-faith actors conspire to reduce our expectations for humanity. As I’ve previously written, most people, including me, are lesser versions of themselves online. Vulnerable writing is a full-contact sport that exposes you to injury. It’s also incredibly powerful. One of the most popular posts I’ve ever published was about putting down our dog Zoe. “Love Persevering” doesn’t fit in a newsletter about business, technology, and the forces shaping society, yet it sits in the archive sandwiched between a post about the attention economy and another about individualism vs. institutions. Five years on, my tribute to Zoe is a reminder that, while fear permeates our culture, action — in this case, writing — absorbs anxiety. Also, for an economic animal ruthlessly focused on maximizing my career/financial trajectory, a post about trading my arrested-adolescence lifestyle (SoHo loft, apartment in South Beach) for marriage, kids, and dogs proves that the key to happiness is investing in deep, meaningful relationships. The theme that rests at the center of NM2 is the only observation I’m near certain is true: Happiness is love, full stop.

The End

I write a lot about … the end — death. Believing that I’ll go first and that someday I’ll look into my sons’ eyes and know our relationship is coming to an end. This has been an unlock. All the fear of shaming, worrying what other people think, and reticence to tell people I love them melts as the light at the end of the tunnel draws nearer. My boys have little interest in my work; I doubt they’ve ever read a post. But they will. It will transport them back to this era, the good and bad, and cement what they feel but may not know — how much I think about and love them. And, how much I’m going to miss them. That’s the real mission here, that NM2 will be read by my sons years from now and remind them how much they miss me. If you want to live forever, start writing.

Life is (still) so rich,

P.S. Forgive yourself, forgive others.

Jamie Dimon once defined a financial crisis as “something that happens every five to seven years.” Well, it’s been 18 years since the last crisis. As you age, cycles become more visible: You’ve seen this movie before and begin to recognize the moment as a point on a curved line. Slowly … then suddenly, the line changes direction — for better or worse. Recently, echoes of 1999, i.e., peak dot-com, have been growing louder. I believe we’re witnessing the initial stages of the unraveling of the AI bubble … but unlike in 1999, we could be in for a twist ending.

Tipping Point

If you were raising capital in 1999, the hero wasn’t a profitable business model, but a suffix: dot-com. The defining philosophy of the era was “get big fast.” Entrepreneurs and investors believed the internet represented a once-in-a-generation opportunity to capture margin and market share. By 1999, 39% of all venture capital investments were being deployed into internet companies. My firm, Red Envelope, raised $30m at a valuation of $120m on revenues of $30m (EV/Revenues of 4x) losing $20m. Most profitable specialty retailers were trading between .8x and 1.2x revenues. Spoiler alert, the markets did eventually show up and inform me this made no sense. That same year, 80% of U.S. IPOs were related to internet companies. Pets.com, the poster child of the dot-com bubble, had the correct thesis — consumers would buy pet food and supplies online — but the company was a decade early. (See Chewy, founded in 2011.) Like many B2C internet startups, Pets.com incurred net operating losses, but spent heavily on advertising in the run-up to its IPO. In 1999 the Pets.com sock puppet mascot was so popular it was a balloon in the Macy’s Thanksgiving Day parade. A few months later, Pets.com was one of 17 internet companies to buy Super Bowl ads, up from two in 1998. The following month the company went public, raising $82.5 million. In less than a year, however, Pets.com declared bankruptcy and shuttered operations. Similar fates befell Webvan (an early iteration of online grocery delivery), eToys.com (once considered a brick-and-mortar-toy-store killer), and hundreds of other B2C startups.

Domino.com

The first dominoes to fall were B2C firms, as their business models relied on consumers ready to buy dog food via dial-up modem. The fallout took longer to reach B2Bs, as enterprise companies have longer sales cycles and stickier customers. Sun Microsystems, whose tagline was “we’re the dot in dot-com,” powered B2C startups. At its 2000 peak, Sun was valued at $205 billion — nearly as much as General Electric at the time. But as its internet clients went bankrupt, the business collapsed. Sun reported net income of $1.85 billion in 2000, but that number halved to $927 million in 2001. Sun lost $628 million in 2002 and $2.4 billion the following year. From peak to trough, the company shed 96% of its market cap; it was eventually acquired by Oracle for $7.4 billion in 2009. Along similar lines, DoubleClick was the advertising company of the era, with a $12 billion valuation. But as dot-com startups stopped advertising, its valuation dropped to $800 million, and it was soon taken private. In 2007, Google acquired DoubleClick for $3 billion, demonstrating that (some) technology developed during Web 1.0 was sound, even if the dot-com business models weren’t.

Eventually, the falling dominoes hit the infrastructure layer, causing a separate, but related, telecom crash in 2001. At its peak, Nortel Networks carried 75% of North America’s internet traffic. In the summer of 2000, just as the dot-com bubble was bursting, Nortel was valued at $230 billion. A year later more than 90% of its value had been erased. Along with Global Crossing and Lucent Technologies, Nortel had extended vendor financing to the same dot-coms that were now bankrupt. None of the three survived the crash. In retrospect, their downfalls seem obvious, but at the market peak, just as the falling dominoes were moving from B2Cs to B2Bs, 74% of stocks had buy recommendations, up from 60% four years earlier. Hype cycles aren’t just entrepreneurs, i.e., storytellers, getting out over their skis; they’re business models that incentivize consensual hallucination. In unrelated news, Goldman Sachs and Morgan Stanley (lead underwriters for SpaceX) have buy recommendations on the company with price targets of $205 and $300, respectively.

Echoes

The echoes of the dot-com and telecom implosions are deafening. OpenAI’s leaked financials reveal the company lost $21 billion in 2025. A C-suite exodus, the lawsuit from Apple, and reports that OpenAI is considering delaying its IPO until 2027 all feel very 1999. The company’s financials aren’t sustainable — for every dollar subscribers spend on ChatGPT, OpenAI spends nearly three. Its business model resembles an LLM hallucination. Case in point: OpenAI is projecting $100 billion in advertising revenue by 2030, but the company’s ad business is on pace to fall short of its own forecast by 90%, according to eMarketer. The biggest red flag, however, is Sam Altman’s request for a bailout cosplaying an investment opportunity — offering U.S. taxpayers a 5% stake in OpenAI. As my Markets co-host Ed Elson wrote last week, “The idea is to provide every citizen a share in the profits of AI. But here’s the rub: AI has no profits.” A key component of capitalism vs. socialism is citizens get to make up their own minds re which stocks they buy … or don’t. Even Senator Bernie Sanders is floating a sovereign wealth fund financed by a one-time 50% tax on AI equities. When the far left and far right agree on something, it’s almost always a terrible idea (e.g., anti-vaccine sentiment, isolationism, antisemitism, etc.). Forcing the American taxpayer to invest in a well-connected private firm isn’t socialism, it’s cronyism in the form of an SOS signal. It’s also a testament to the power of marketing, as OpenAI’s advertising spend in 2025 alone would’ve been enough to buy every Super Bowl ad spot for the past seven years.

Domino.ai

Last year I observed that circular financing deals were common toward the end of the dot-com bubble, and in retrospect, a strong signal of fragility, as one falling domino triggers a chain reaction. The circular financing deals connecting B2C and B2B AI companies with companies building AI infrastructure are easy to look past as long as customers, especially enterprise users, continue spending. According to the Economist, corporate spending on AI increased 13x from 2025 to 2026. But recently that narrative has hit a speed bump.

In May, Axios reported that an anonymous company spent $500 million in a single month after failing to put usage limits on Claude licenses for employees. Uber blew through its entire AI budget for 2026 in just four months. DoorDash, Meta, Microsoft, and Salesforce are now pivoting from “tokenmaxxing” to sobriety, i.e., limiting it to proven use cases. (FYI: Tokens are what the LLMs call chunks of data; a token equals about four characters.) To date, the best use case for AI is coding, but the dominant tech trade of 2026 — sell software stocks to buy chips — is showing signs of falling apart, suggesting that investors overestimated the scale and timeline of the AI disruption.

Meanwhile, Palo Alto Networks CEO Nikesh Arora told CNBC that widespread adoption depends on token costs coming down 20% this year and 90% next year. Meta CTO Andrew Bosworth summed up the about-face in an April memo to employees. “Nobody should be using AI tools just for the sake of using them. All motion is not progress, and token usage alone is not a measure of impact of any kind.” Good point. Except that runaway enterprise spending is what’s driving Anthropic’s $47 billion in annual recurring revenue and justifying the company’s $965 billion valuation. The pivot to measuring productivity is a good thing, but in the short term it benefits cheaper open-source models (i.e., China) that deliver 80% of the frontier model’s bang for 20% of the bucks.

Take a pause, and look (again) at the above graph. This is the grim reaper knocking at the door of every VC who has gone all-in (in ‘25 and ‘26) on AI. Zooming out, AI could end up being similar to electricity — a foundational technology that distributes value to end users. In that scenario, “the real jumps in productivity and job displacement come from new companies and processes rather than incumbents grafting new technology onto existing workflows,” John Burn-Murdoch wrote in the Financial Times. “The fact that incumbent software and knowledge work companies are finding only modest productivity gains by incorporating AI into existing workflows and organizational structures, while usage, revenue and productivity explode at Anthropic and OpenAI — companies built around AI, with products written and reviewed by it — is perhaps early evidence of the same dynamic playing out here, only much faster.”

Boom

I’m as bullish on AI as I was on the internet in 1999, but with hindsight and scars, I know not to conflate valuations with value, as transformative technologies take longer to deploy than the carnival barkers claim. The danger with the AI bubble isn’t that the technology is overhyped and still in search of use cases, it’s that the speculation is so concentrated that the 10 most valuable companies in the S&P 500 account for 43% of the index’s total market cap. In other words, when AI sneezes, the U.S. economy’s lungs may begin to fill with fluid.

Every bubble creates extraordinary wealth. The question is who keeps it. I suspect AI will create enormous value — but unlike search, social, or e-commerce, much of that value will leak past shareholders and into the hands of customers (think jet transportation, vaccines, and the PC). The biggest winners won’t be shareholders in AI companies, but the people who use the technology. In sum, we may have passed a wealth tax, just not the one AOC envisioned.

Life is so rich,

P.S.

Speaking of Silicon Valley’s hyperbolic tendencies, our head of research, Mia Silverio, breaks down tech’s obsession with humanoid robots. To read Mia’s analysis in our Extra Credit newsletter, click here.

ChatGTP says, “If I were ranking TED Talks since 2020,” they’d come out like this:

1. Scott Galloway – How the U.S. is destroying young people’s future

2. Sam Altman – AI interview

3. Bill Gates – Covid response

4. Adam Grant – leadership/work

5. Elon Musk – TED interview

More illuminating than the list is my pathetic need for affirmation. It’s a hole I can’t seem to fill ... but I digress.

This post was originally published April 19, 2024. Editorial note: After years of legal limbo, the Biden student loan relief plan is officially dead. Since this piece was published, 20 states have enacted laws restricting social media use for minors.

This week I spoke at TED2024, the iconic program’s 40th anniversary event. I joined RuPaul, Kesha, and two different astrophysicists on the stage in Vancouver. I was given 15 minutes, and took 17, to riffle through 47 slides articulating what I believe is the greatest challenge facing the U.S. It’s not inequality, climate change, or war in the Middle East, but an issue that threads these threats together: America’s war on the young. A war of mutually assured destruction.

A decent proxy for the success of a society is how it treats children. Not how individuals parent, but the success of the structures, incentives, and leadership charged with preventing a tragedy of the commons. In sum, can we answer a simple question: Do we love our children? In 2024 America, the rejoinder is disheartening.

Breach of Contract

We’ve broken the social contract that binds America: Work hard, play by the rules, and you’ll be better off than your parents were. For the first time in our nation’s history, this is no longer true. Today’s 25-year-olds make less than their parents and grandparents did at the same age, yet they carry student debt loads unimaginable to earlier generations. Neither the minimum nor median wage has kept pace with inflation or productivity gains, while housing costs have outpaced them. The statistics on children’s and young adults’ well-being are staggering.

None of this is lost on young people, and the shattering of the social contract has left them feeling rage and shame. Half of Americans older than 55 say they are “extremely proud” to be American; that number drops to 18% among 18- to 34-year-olds. This weakens the country’s immunity system, allowing minor cuts to U.S. society to bring on deadly opportunistic infections. Just as when someone in your life blows up at you, it is about the issue at hand … and it isn’t. American youth’s warranted concern about social justice issues, despite remarkable progress on all these issues, turns seamlessly into rage.

Hoarders

We don’t lack the resources to level up young people and present the opportunities afforded my generation. But the cohorts who benefited most from the extraordinary postwar economic boom of the 20th century have pulled the ladder up behind them. In 1989 adults under 40 held 12% of the country’s household wealth, while those over 70 held 19%. Today those under 40 command just 7% of household wealth, while those over 70 control 30%.

Higher education is the most effective means of closing the generation gap. But the incumbents have artificially constrained access, sequestering opportunity largely to wealthy households, peppered with a few freakishly remarkable kids from the lower 90% to smear vaseline over the caste(ing) of higher ed. Elite schools tout their financial aid, emphasizing that students with median household incomes pay little or no tuition, but it’s a head fake. Being more generous with a select few low-income students only wallpapers over exclusivity, when the goal should be to eliminate it. We have simply reshuffled the elites.

Harvard’s undergraduate class size has been static at 1,600 for almost half a century, while its endowment has grown nearly 500% — after inflation. When your asset base is up sixfold but you purposefully do not increase production, you are no longer a public servant but a Chanel bag. Single-digit admissions rates are the ultimate vanity metric, something deans and donors brag about at cocktail parties, when they should be a mark of shame. As I’ve proposed before, we should offer higher ed a grand bargain: Redirect the money earmarked for bailing out the one-third of America that has attended college to increasing freshman seats and reducing costs. The Biden administration’s proposed student loan bailouts shrink the tumor, but don’t address the underlying cancer — declining affordability and accessibility.

Capital vs. Sweat

We have elevated capital over sweat (i.e., labor). The public is numb to this mythology, benefitting the incumbents who’ve created it. Back in 2008, when the market crashed, young(ish) people like me, coming into our prime income-earning years, were able to buy growth stocks at low valuations. The foundation of my economic security was buying Amazon at $7 ($179 today) and Apple at $7 ($167 today) and Netflix at $12 ($611 today). Ever since, however, we’ve inflated asset prices by pumping them full of steroids and stimulus using low corporate tax rates and bailouts that are financed on the backs of young people. “Keep me rich, on your credit card,” said every American over the age of 50 to citizens younger than them. In sum: Real median income from labor is up 40% since 1974, while the S&P 500 is up 4,000%.

We’ve protected the wealth created by ownership at the expense of income earned by labor through the tax code, which favors gains from investments. Gains from stock sales are taxed at lower capital gains rates. Real estate holdings can appreciate tax free, and, once sold, the gains can be rolled into another investment. Again, a series of transfers of wealth from earners (youth) to owners (seniors).

Representative?

And what taxes are collected are increasingly redistributed to the generation who needs them least. In 1985 the federal government spent three times more per capita on seniors than it did on kids. By 2019 that ratio had risen to eight times. We’ve cut senior poverty from 17% in the 1970s to 9% today, which is admirable. But child poverty has risen over that same period, from 16% to 19%.

The “demo” in democratic is failing us, as seniors vote seniors into office who then vote themselves more money. With neither age limits nor term limits, and incumbent reelection rates over 90%, congressional seats have become lifetime appointments. Nancy Pelosi may be the sharpest 83-year-old in Congress, but her time has passed: She has a daughter who was born during the Johnson administration, when less than one-third of homes had a color TV. Does our leadership really relate to the challenges facing a 15-year-old girl being sent messages on extreme dieting by Meta, or the budding addiction crisis among young men on phone-based gambling apps? We need churn to recalibrate and transfer wealth, but it’s been dampened with retardants that cost trillions. D.C. has become a cross between The Walking Dead and The Golden Girls — its denizens see the living (young) as nutrition, vs. the future.

Minotaurs

To appease King Minos of Crete, ancient Athens sacrificed seven young men and seven young women to the Minotaur he kept under his palace. Then Theseus slew the Minotaur. Today in America, we’re offering an entire generation to the Minotaurs of Big Tech, and our Theseus, Congress, can only stand by and make speeches. Teen depression and self-harm, bullying, loneliness, and obesity have shot up since social media began haunting them 24/7. Since 2017, Congress has held 40 hearings on children and social media and passed nothing to address the problem. Democrats and Republicans have introduced legislation, including to age-gate social and to reform Section 230 (which immunizes internet platforms from most litigation), but nothing gets done. At the last dramatic reading of what ails us, Senator Dick Durbin admitted to failure: “The tech industry alone is not to blame for the situation we’re in. Those of us in Congress need to look in the mirror.” We need to make tech platforms liable for the harms they cause; we should eliminate Section 230’s liability shield for algorithmically elevated content — freedom of speech isn’t free.

Buck Stops

The U.S. is the 10th-happiest country in the world for people over 60, and the 62nd-happiest for people under 30. Young people are economically disadvantaged, threatened by climate change, and voiceless thanks to our dysfunctional politics. And they’ve been manipulated from childhood by a toxic cocktail of paleolithic instincts, medieval institutions, and godlike technology. We have broken the social contract, and younger generations aren’t going to fulfill their end of it. In 1993, 60% of 30- to 34-year-olds had at least one child. Today that number is 27%. Young people aren’t meeting or mating, and the consequences will be dire. Young people’s labor powers the economy, and their taxes pay for the services consumed by old people. Without robust youth employment, Social Security will go bankrupt, debt service will consume the federal budget, and the commonwealth will collapse. We’ve created a future so unappealing, youth is opting out.

Fixable

The incumbents will throw their arms up like an 8-year-old who refuses to take responsibility. The plea of complexity is an illusion — every problem we have levied on young people can be addressed. We have the hard part figured out: how to grow the economy at a sustained rate to pay for programs that might turn things around. Here are just a few programs and fixes we could try.

I had my first child at 42, and it changed my life. I became more responsible, focused, concerned about the future, and empathetic. In sum, I became a better American. Children make us better. We care for our kids, but do we love children? Somewhere along the way, we lost the script as a society. If we have the resources to address these issues — and we do: Nvidia added a quarter of a trillion to the economy in 5 minutes post-earnings — but continue to look the other way, then we have to ask: Is America worth investing in? And do we really love our children?

Life is so rich,

P.S.

For those in the back: Work from home, not AI, is killing entry-level jobs. Prof G+ paid subscribers can watch our latest deep dive here. For access to these deep dives and other exclusive content, upgrade here.

I’ve seen more men embrace during the past two weeks than in the past two years. The beautiful game (football) generates a beautiful by-product … togetherness. The World Cup isn’t an anomaly. The biggest trend of 2026 isn’t AI chatbots, it’s IRL experiences.

Experience Economy

In a 1998 Harvard Business Review article, Joseph Pine and James Gilmore coined the term “experience economy.” Their thesis: Economies progress from extracting commodities to manufacturing goods to delivering services and, ultimately, to staging experiences. With each evolution, value becomes more personalized, immersive, and emotionally resonant. As they wrote, “Commodities are fungible, goods tangible, services intangible, and experiences memorable.” Since 1960, U.S. consumers have increased their share of discretionary spending devoted to experiences by 60%, while the share devoted to goods has fallen by 35%.

Pendulum

Writing the same year Google was founded, Pine and Gilmore couldn’t have anticipated a society atomized by smartphones and social media. Digital technologies, supercharged by pandemic-era social distancing measures, rendered in-person experiences scarce, i.e., more valuable. In 2021, as the world began to lift Covid restrictions, consumers embraced “revenge travel.” The following year, a spokesperson for the American Society of Travel Advisors told CNN, “It’s another way of saying, ‘Life is short. I want to explore the world and seek experiences that make me feel alive.’” The YOLO attitude persists, especially among young people. A 2026 American Express report found that 74% of millennials and Zoomers consider travel nonnegotiable, while two-thirds said they would take a job with fewer benefits if it gave them more flexibility to travel. That says a lot about the value young people place on experiences, but it also suggests that young people are spending money on what they can (experiences), as opposed to saving for purchases that are increasingly out of reach (homes).

It took significantly longer for the pendulum to swing in the other direction with respect to digital technology. Only in recent years have schools begun restricting smartphone use. In 2025, Australia became the first country to ban social media for anyone under 16; this year, another 13 countries are taking similar steps. The side effects of the digital revolution act as an accelerant to the trend Pine and Gilmore first identified in the 1990s. According to a 2026 Mastercard survey of 27,000 European consumers, 60% prioritize offline experiences to “balance out” time spent online. According to a 2026 McKinsey report, consumers are prioritizing experiences that make them feel connected, relaxed, or excited, and those feelings often “translate to a desire to splurge.” But in a K-shaped economy, splurging is relative. The same McKinsey report found that the “prolonged cost-of-living squeeze” has led more than three-quarters of consumers to engage in trade-down behavior. This has significant consequences for the loneliness epidemic, as live experiences tap into the hardwiring that drives us to seek out and sustain relationships. Digital experiences are low-cost, low-friction. By comparison, IRL experiences are high-friction, but to the extent that they’re also high-cost, the antidote for loneliness is sequestered to those who can afford it.

Theaters and Live Entertainment

In January, after investing in a live events company that produces themed music shows, Mark Cuban said, “It’s time we all got off our asses, left the house, and had fun. In an AI world, what you do is far more important than what you prompt.” Hard agreement. Also, the amount of time you spend at home is inversely correlated to your success, professionally and romantically. As it happens, out-of-home entertainment is booming. “Real-world experiences are the hottest premium on Wall Street right now,” Axios media correspondent Sara Fischer recently told me. “Streaming is plateauing — that’s why we’re seeing bundling and price hikes. Where’s the growth? It’s in live experiences.”

Case in point: It’s turning out to be a strong summer at the movies, with this year’s domestic box office on pace to earn $10 billion — the highest total since the pandemic, and only 10% off the pre-pandemic peak. Inflation is one factor, but the bigger driver is increased attendance: The average ticket price rose 3% YoY, while total ticket sales rose 7% YoY. It helps that Hollywood has produced a strong slate, including two acclaimed low-budget horror films — Backrooms and Obsession — directed by YouTubers. According to a Fandango report, young people view moviegoing as an affordable social experience. In 2025, Zoomers and millennials saw an average of seven movies in theaters — more than any other generational cohort. For young people the “social experience really outweighs the movie itself,” an AMC executive told CNBC, adding that Zoomers are becoming the most important audience segment for exhibitors.

It’s a similar story for the live concert business, albeit with a monopolistic twist. Live Nation and its Ticketmaster subsidiary reported an 11% YoY increase in ticket sales. The combined entity, which a jury found guilty of violating federal antitrust laws in April, controls 70% to 80% of ticketing for major U.S. concert venues. As a 2025 Goldman Sachs report cautioned, demand for live music is expected to grow by 7% annually until 2030, but the 76% rise in ticket revenue between 2019 and 2024 was largely fueled by a 50% rise in the average ticket price over the same period. Translation: Fans at the low end of the market are being priced out.

Pricing Goals

An estimated 6 billion people are watching the World Cup, in one form or another, making this year’s tournament FIFA’s most popular and economically impactful to date. According to Bloomberg Intelligence, the tournament could drive $9 billion in revenue for FIFA and another $80 billion in global sales across tourism, hospitality, retail, advertising, and consumer goods. As New Jersey Governor Phil Murphy put it in 2023 while bidding to host the final match, each World Cup game is equivalent to a Super Bowl. But, like the Super Bowl, where the average ticket price last year was $8,200, seeing a World Cup game in person is an experience the overwhelming majority of fans can’t access. As a Scotland fan told the Wall Street Journal, “FIFA’s taken it away from the ordinary fan, and are selling it to the highest bidder.” For its part, the Wall Street Journal wrote that FIFA’s dynamic pricing model and service fee on ticket resales has “unleashed a summer of price gouging.”

United Nations of Fun

Soccer has been the sport of the future since the 1970s, but in America that future never arrived. My (casual) fandom is a function of my sons’ passion for the game, and the value I take from it is the experience we share. My team is Scotland — that’s a nod to my father, who was born in Glasgow. I can afford tickets, but I don’t want my sons to conflate access to the experience with membership in a community. Hint: The latter is orders of magnitude more valuable. As my Markets co-host Ed Elson, a diehard football fan, wrote, “Many of my greatest football memories have happened in front of a screen — sometimes at the pub, other times in a living room, but always in the company of other fans, aka a community.”

What’s unique about the World Cup is that, more than any other sport, it does what the UN can’t — unify people and nations around a common pursuit. Coming in, there was real concern that America would export its political dysfunction. To a degree it has — fans and support staff from 11 of the 48 countries that qualified for the World Cup have encountered visa refusal rates above 40%. Zooming out, the story improves, as the matches feature fans coming together to transcend the politics of division.

My World Cup highlight reel:

• Norway supporters doing the ‘ro,’ a coordinated Viking-style rowing movement set to a beating drum.

• Japanese fans going viral cleaning the stadium after their team defeated Tunisia. The practice, known as gomi hiroi, reflects an emphasis on taking responsibility for shared spaces; for a world that lives the tragedy of the commons daily, online and IRL, there’s a lesson there.

• And, of course, Scotland’s Tartan Army, which has drained Boston of beer, won over the locals by cheering on the Red Sox at Fenway, and raised $30,000 for local charities in Rhode Island, where many are staying. In the words of my (father’s) people: No Scotland, no party.

Meanwhile, fans from all over the world are going viral for posting videos that — wait for it — celebrate America. People who have good reason to be angry with America are instead embracing Americans. Finally, there’s Iran’s national team. After playing two games at SoFi Stadium in Los Angeles, they left a thank you note in the locker room. “We came to Los Angeles with pride, competed with honor, and leave with ​dignity. Thank you, Los Angeles, for your hospitality.”

Mascul-unity

In the U.S., soccer skews young and male — 56% of fans are under 34 and two-thirds are men. Participating in or watching sports plays an outsized role in male friendships.

The prevailing (dark) definition of masculinity in America involves dominance, cruelty, and an inability to show emotions other than rage. Soccer isn’t our game, but it offers an alternative view of masculinity, where players demonstrate strength, service, cooperation, emotion, and devotion to one another, their country, and the game. What I want my sons to take from the beautiful game isn’t a love of Scotland — it’s permission. Permission to feel emotions, hug friends, and find common ground with people they may not have much in common with. The men we’ve watched the past two weeks aren’t exceptions to Western masculinity. They’re the correction.

And … go Scotland!

Update: Go England! ;-)

Life is so rich,

P.S.

At the start of every year, I make predictions. This year, I’m doing a mid-year check-in and adding some new prognostications for the rest of 2026. Join me live on Substack on Tuesday, June 30, at 3 p.m. ET. The livestream is exclusive to paid subscribers. Register here. And if you aren’t a paid subscriber, but want in, upgrade here.

After roaming the Earth for 35 years, my conclusion is the U.S. is the best place to make money and Europe is the best place to spend it. Though Europe does have dynamic countries that the shit-posting narrative re structural decline ignores. Living in the U.K. for the past four years, and traveling around the continent, I’ve observed two versions of Europe: a stagnant welfare state limping toward insolvency (exaggerated, but true in places), and a dynamic fusion of capitalism — full-body-contact violence in the market that unleashes innovation and opportunity — with a meaningful social safety net (real, but overlooked by Americans). Let’s discard the fiction and talk about the Europe I’ve encountered IRL.

Sweden

Last week, Elon Musk became the world’s first trillionaire. His wealth is greater than the combined fortunes of the next three men on the Bloomberg Billionaires Index: Larry Page, Sergey Brin, and Jeff Bezos. Of the 500 people on the list, 180 are Americans or reside in the U.S. Their combined wealth is equivalent to that of the bottom 54% of U.S. households. In American politics, the interests of the few are framed in opposition to the interests of the many. We can have billionaires, we’re told, or we can have universal healthcare, but we can’t have both. That’s a false choice. Sweden (among other countries) settles the argument: Billionaires and universal healthcare can coexist. It’s not capitalism vs. socialism. Capitalism actually works better when built on a foundation of empathy and equity.

Sweden is a contradiction — an F1 engine running inside a Volvo station wagon. On the one hand, Senator Bernie Sanders praises its universal healthcare system — 11% of GDP spent on healthcare, life expectancy of 82.7 years, and outcomes on par with, or better than, those of other advanced economies. On the other hand, while the EU stagnates, Sweden is projecting 2% GDP growth. A recent analysis from Boston Consulting Group found that 30% of Swedish firms ranked in the top quartile of performance for their sectors, nearly double the performance of the best-performing EU nation, the Netherlands. The report cited three drivers of Swedish exceptionalism: a culture of risk-taking encouraged by worker mobility, paired with strong unemployment benefits, sustained government investment in R&D, and deep capital markets. As the Economist wrote last year, “Stockholm is the new capital of capital.”

Crucially, participation in Sweden’s capital markets is widespread. Thanks to the creation of ISK investment accounts, which simplify trading and eliminate capital gains taxes in favor of an annual standardized income tax, Swedish households invest over half their savings in equities — more than twice the European average. Although it has the population of North Carolina, Sweden has produced more than 30 unicorns, including Erickson, King, Klarna, and Spotify. With only 2% of the EU’s population and 3% of its GDP, nearly 1 out of every 5 of Europe’s best-performing companies are Swedish.

The Netherlands

Taiwan, which manufactures 97% of the world’s high-end chips and controls 72% of the global foundry market, is the chokepoint for AI and the digital economy, but the island nation is downstream of the Netherlands. Nvidia designs the most advanced chips, and TSMC manufactures them, but both companies, along with the rest of the industry, depend on a single company — ASML — for the machines that make any of it possible. ASML is the world’s only producer of the extreme ultraviolet lithography machines used to manufacture the most advanced chips, and it commands 90% of the broader lithography market. This month, ASML became Europe’s most valuable company, making the picks and shovels of AI.

Dutch economic leverage isn’t an accident, but the result of government policies. Its infrastructure and R&D investments, highly skilled English-speaking labor pool, strong legal and regulatory frameworks, and favorable tax regime make the Netherlands a digital economy hub as well as the gateway to Europe. In terms of moving atoms, Rotterdam is Europe’s busiest port, handling 438 million tons of cargo annually — nearly double the capacity of Antwerp, Europe’s second-largest port. Advances in vertical farming, seed technology, and robotics have allowed the Netherlands in recent decades to halve the resources that go into food production while doubling the output. Last year, the country — the size of Maryland — was the second-largest agricultural exporter in the world by value, behind the U.S.

In terms of moving bits, the Netherlands is one of Europe’s key connection points for global information technology infrastructure. The country ranks second worldwide for online connectivity, with 98% of the population connected to high-speed internet, 20 points above the EU average of 78%. A 2025 report from London’s Centre for Economics and Business Research that looked at education, STEM employment, and overall innovation across 35 countries ranked the Netherlands 10th in global tech competitiveness, ahead of every G7 nation, and one spot behind Sweden. The Dutch focus on digital infrastructure has put the country at ground zero for AI — outside of the U.S., the Netherlands has the most data centers per capita — while also making Amsterdam the go-to EMEA headquarters for transnational companies, including Cisco, Netflix, Nike, PepsiCo, TikTok, and Uber, to name just a few.

None of what makes the Netherlands great comes at the expense of its commitment to empathy and equity. The Dutch poverty rate is 5%, half the rate in the U.S. Unlike most EU nations, the Netherlands leverages a heavily regulated private insurance sector to cover its citizens. Using a “managed competition” model, the Netherlands ranks third in healthcare globally based on public surveys evaluating medical quality, infrastructure, staff, wait times, and costs. The takeaway: If we followed the Netherlands, we might cut our per capita healthcare spending in half, improve outcomes, and keep private insurance.

Trust Deficit

No system is perfect. Immigration, a housing crisis, and political volatility are among the issues facing the Netherlands. Sweden is trading its German-style fiscal discipline for deficit spending in order to ramp up defense. It also faces a potential housing bubble linked to high levels of private debt, and has struggled to integrate immigrants. Nevertheless, the Swedes and Dutch remain committed to capitalism built on a foundation of empathy and equity, whereas Americans are divided on fundamental questions. In the U.S., the right is cheering on crony capitalism and the hollowing out of the social safety net, the left is embracing socialism, and, as Joan Didion famously wrote, “the center will not hold.” This isn’t a matter of policy, but the scarcity of one of society’s most important assets: trust. Then-Senator Barack Obama made this point in a 2006 speech at the University of Nairobi, delivered as Kenya was in the throes of a constitutional crisis. “If the people cannot trust their government to do the job for which it exists,” he said, “all else is lost.”

When I visited Stockholm last week, I spoke with the founder and leadership team at Spotify. They’d all lived in Silicon Valley, but each had returned. None of them shit-post about higher tax bills. They told me they don’t mind paying more, as they trust their government to spend the money wisely. I witnessed a similar attitude in the Netherlands. Among the 38 OECD nations, Sweden ranks 8th when it comes to trust in the government, the Netherlands ranks 19th, and the U.S. is third from the bottom, ahead of Colombia and Slovakia. Meanwhile, when it comes to its citizens trusting one another, Sweden ranks 5th, the Netherlands 8th, and the U.S. 19th, sandwiched between Northern Ireland and Hong Kong. America has the parts to build a car that combines capitalism’s horsepower with a welfare state’s seatbelts and air bags. We just don’t trust each other enough to ride in it together.

Warning

After Stockholm, I visited Amsterdam for the wedding of my childhood best friend’s son — I’m now “that” age. I arrived early and stayed late. Amsterdam is a singular city — prosperous, beautiful, weird — where tolerance is the connective tissue between personal freedom and social order. It’s also a city that reminds residents and visitors, with every step they take, that democracy is fragile. Hundreds of brass-plated “stumbling stones” mark the homes of Amsterdam’s Holocaust victims. The Netherlands wasn’t especially antisemetic, but after the Nazi occupation it became a kill zone for Jews; 75% of Dutch Jews were murdered during World War II — nearly double the rate in Belgium and triple the rate in France. The takeaway: If it can happen here, it can happen anywhere.

Whenever I return to America, I get Weimar Republic vibes. The demonization of immigrants and hollowing out of institutions; the demagogue vilifying Americans as the enemy within with rhetoric inspiring violence, while decent people refuse to condemn it; the weaponization of the legal system; the K-shaped economy where incumbents always win and everyone else, especially young people, falls behind. The question isn’t why trust in America is eroding, but where the absence of trust is leading us. A: Somewhere dark. Trust is infrastructure — invisible until it fails, causing a catastrophe. Sweden and the Netherlands keep reinforcing theirs; we ignore the cracks, believing our exceptionalism exempts us from history’s stumbling stones.

I don’t drink wine or buy art, as it feels disingenuous — trying to be something I’m not. I do, however, have a photograph I spent real money on. It’s a photo of Otto Frank returning to the Amsterdam attic where he and his family hid until they were betrayed, his wife and daughters ultimately murdered. It hangs outside my bedroom door, so it’s the first/last thing I see each day. It reminds me that I have inconveniences but no real problems. I worry that Americans’ declining empathy for one another will turn inconveniences into real problems.

Life is so rich,

P.S.

At the start of every year, I make predictions. This year, I’m holding myself (extra) accountable by doing a mid-year check-in. Join me live on Substack on Tuesday, June 30, at 3 p.m. ET. The livestream is exclusive to paid subscribers. Register here. And if you aren’t a paid subscriber, but want in, upgrade here.

God, I’m sick of talking about SpaceX. More impressive than the Falcon Heavy rocket, and it is impressive, is Elon Inc.’s ability to manufacture scarcity. Getting the Nasdaq to waive requirements applied to every company until now, so he can force index funds to purchase shares, aims a demand cannon of $75B at a business with a small float. The result is a price that in no way reflects the underlying value. But I digress. This isn’t an investment, but a trade. So … where to “invest”?

The technology with the greater asymmetric upside, as well as the clearest path to transforming the economy and the well-being of more than 200 million Americans, isn’t Falcon 9 boosters or GPT-5, but GLP-1s.

IED

U.S. obesity rates have tripled over the last 60 years. Our instincts, developed over hundreds of thousands of years when food was scarce, haven’t kept pace with industrial production, so we gorge. Obesity is a comorbidity for 200-plus chronic diseases, the central node in a network of poor health outcomes. The total bill for national health expenditures, including public and private spending, is $5.3 trillion. By 2033, 1 out of every 5 dollars in the economy will go to healthcare. This is the IED at the center of the U.S. economy.

Silver Bullets

Five years ago, when Ozempic and Wegovy were first approved for weight loss, GLP-1s looked like a silver bullet for obesity. Today, they’re a fully loaded magazine of silver bullets aimed at obesity, addiction, cancer, sleep apnea, and a growing list of other diseases and chronic conditions. The velocity of innovation is remarkable. “Usually when a new medicine happens, we have time to learn how to use it,” Dr. Melanie Jay, director of the NYU Langone Comprehensive Program on Obesity, told the New York Times. But with GLP-1s, “everyone is kind of iterating in real time.”

Some recent iterations: Last month, Eli Lilly announced that its phase 3 trial for retatrutide — a triple agonist dubbed “Godzilla” that activates GLP-1, GIP, and glucagon receptors — appears to exceed the performance of other weight-loss medications. On average, patients on Zepbound or Wegovy lose between 14% and 20% of their initial body weight over 72 weeks. Patients in the retatrutide trial taking 4mg, 9mg, and 12mg doses lost an average of 19%, 26%, and 29% of their starting weight, respectively.

But the most promising drug is Foundayo, a daily pill from Eli Lilly the FDA approved for weight loss in April. In clinical trials it resulted in 12% weight loss over 72 weeks — less effective than shots, but a good alternative for the 66 million Americans who are afraid of needles. The pills also show promise as a maintenance tool. As Nicholas Florko wrote in the Atlantic, “America has a new GLP-1 playbook,” with a shot to lose weight and a pill to keep it off. In the U.S., 1 in 8 adults currently take a GLP-1, with prescriptions for weight loss doubling from 2024 to 2025. It’s working. A year after the drugs were approved for weight loss, the U.S. obesity rate peaked at 40%, but it has since begun to decline. Sadly, GLP-1s haven’t had the same impact on their initial target: diabetes.

Distribution

William Gibson famously said, “The future is already here — it’s just not evenly distributed.” He could’ve been describing GLP-1s. A recent Cleveland Clinic study found that cost is by far the primary reason people quit, with 47% of those who discontinued the drugs citing insurance denial, expiration of a discount coupon, or unaffordable out-of-pocket expenses. Side effects were the second-most-common reason, cited by 14% of respondents, while less than 2% quit due to unsatisfactory weight loss. In other words, GLP-1s can change society … if we distribute them to everyone who needs them, regardless of their ability to pay.

The good news: Beginning July 1, Medicare Part D will cover certain GLP-1 treatments with a $50 monthly co-pay for seniors. The bad news: Private insurance plans, which provide pharmaceutical benefits for two-thirds of Americans, are scaling back GLP-1 coverage, if they even offered it to begin with. According to the Wall Street Journal, 11% of employers have dropped or are planning to drop GLP-1 coverage for weight loss altogether, and more than a quarter of big companies are adding hurdles, such as requiring multiple weigh-ins a month, meal-tracking on apps, or mandatory health coaching. The U.S. is simultaneously hitting the gas while pumping the brakes on the best tool we have for combating obesity.

Subscribe and Lose?

With a few exceptions, the 17 companies valued at $1 trillion or more are all technology companies heavily invested in AI. The only drugmaker on the list is Eli Lilly, whose shares have registered a 418% increase since GLP-1s were first approved for weight loss in 2021. Novo Nordisk, Eli Lilly’s chief competitor and the maker of Ozempic and Wegovy, is up just 2% over the same period. The discrepancy points to something unusual about the dynamics of GLP-1 pricing. Typically, drug prices are inelastic; i.e., consumers aren’t very responsive to price changes, unless a generic option is available. But as one industry analyst explained, the obesity market has turned traditional pharma economics upside down. Eli Lilly’s products have a perceived efficacy edge, but the company also beat Novo Nordisk to the direct-to-consumer market. On my podcast, Eli Lilly Chair and CEO David Ricks told me, “In the GLP-1 category, we observe prices are elastic. The more we lower the price, the more users we get. That’s the path we’re on.”

GLP-1s may be the rare pharmaceutical case where capitalism is on the consumer’s side. But Ricks also told me GLP-1s are unique insofar as nearly everyone who takes them loses weight. Unlike drugs for other chronic conditions, “people like being on GLP-1s,” because they notice results in their appearance, rather than intangible health benefits and side effects. The fine print: Many people may never stop taking GLP-1s, creating an enduring subscription business. Think Netflix, but with monthly prices ranging from $149 to $499, and instead of market competition, a duopoly. GLP-1s may not be an off-ramp from the industrial food-medical-pharma complex, but the ultimate physiological lock-in.

2nd Order

Victoria’s Secret shares surged 47% last week after the company reported 15% YoY revenue growth and raised full-year sales guidance to $7.1 billion. Meanwhile, fast food chains are shrinking their footprint, with Jack in the Box, Pizza Hut, and Wendy’s among the brands closing hundreds of stores nationwide. That’s yet another bad sign for an industry that’s registered more than 500 franchisee bankruptcies this year. U.S. alcohol sales are also down, with Diageo and Pernod Ricard reporting a 15% decline YoY, while Constellation Brands saw a 10% drop.

CEOs have blamed tariffs, affordability, and in the case of alcohol, Gen Z, but GLP-1s are a more likely explanation for the shift in consumer behavior. More signals: The share of apparel exchanges where shoppers “size down” has risen for three consecutive years, hitting a 14% high among online retailers. Adults who use GLP-1s consume 21% fewer calories and spend nearly a third less on groceries on average. Meanwhile, 59% of Americans say they’d be more likely to visit restaurants that serve “flexible, customizable, or innovative portion size options” — and that goes up to 73% among GLP-1 users. The same report noted that 13% of restaurant operators have listed items that appeal to GLP-1 users — higher protein and/or fiber — and 42% say they’re considering such additions.

There will be downstream effects. A significant decline in fast food revenue will accelerate closures across the industry’s 200,000-plus U.S. locations — destabilizing commercial real estate markets and threatening the livelihoods of the 4 million people who work in the sector. Apparel brands that built supply chains around stable sizes and predictable returns will have to adjust to hit a moving target: America’s shrinking waistline.

Hope

The AI narrative has turned negative. Energy costs are up, jobs are (supposedly) going away, relationships are going virtual, and, if the technology advances as promised, it presents a threat to humanity. The GLP-1 story offers something Silicon Valley used to produce in abundance: a hopeful vision of the future. Every American knows people who struggle with their weight. We all know someone who has a chance to live longer, do more, and feel better about themselves because of GLP-1s. A nation’s greatness isn’t measured in GDP, but in the quality of life its citizens enjoy. For the first time in decades, American innovation is adding years to lives, not just zeros to valuations. The question isn’t whether GLP-1s will change the U.S. They already have. The question is whether we’ll be stupid enough to ration the change.

Life is so rich,

P.S.

Historian Heather Cox Richardson and I will mark our nation’s semiquincentennial (real word) with a collaboration — America at 250: What Comes Next? Join us live on Substack on Tuesday, June 16, at 12:15 p.m. ET. The event is free to everyone, register here.

P.P.S.

Prof G Media now has official merch. Buy t-shirts, hoodies, and sweatpants now, look cool forever. Supplies are limited, so don’t wait to visit our online store.

“What gets measured gets managed” is often misattributed to Peter Drucker, the father of modern management theory. The full quote, from business journalist Simon Caulkin, is a warning not a promise. “What gets measured gets managed — even when it’s pointless to measure and manage it, and even if it harms the purpose of the organization to do so.” In other words, our mania for measurement can obscure what matters most. Consider the popularity of health and fitness apps and the personal-optimization trend those technologies enable. To a point, the more data we collect on ourselves, the better able we may be to improve our lives. But metrics aren’t the arbiters of living well, nor is optimization life’s end-goal. I believe this trend isn’t about optimizing life; it reflects a growing obsession that’s consuming life’s purpose and meaning.

Perfection Maxxing

The digital economy has created a winner-take-most ecosystem. Life/America is exceptional for the top tier, and increasingly anxious for everyone else. This K-shaped life offering awesome or anxiety fuels a “maxxing” culture: How do we look? How much protein do we consume? How well do we sleep? How many books do we read, etc.? The optimization and gamification of life has created a Hunger Games we’re all playing, all the time. As journalist Nitsuh Abebe wrote in the New York Times in October, the concept of maxxing comes from 1940s academic game theory, but it’s been repurposed by online communities to describe a strategy for “relentless optimization” where balance goes to die. “The language that comes from this layer of the internet has a mechanistic, gamelike aura, as if life were mostly just a web of tactics and hacks and mutual manipulation.”

According to clinical psychologist Catherine Houlihan, the “optimization mindset has many of the hallmarks of perfectionism.” Some commonalities: constantly pursuing high standards such that falling short of a goal is seen as failure; being preoccupied with results to the point of worry or rumination; constantly measuring performance to an obsessive degree; avoiding tasks if we fear we won’t be perfect; slipping into binary thinking, e.g., your diet is either “healthy” (perfect/optimal), or “unhealthy” (imperfect/suboptimal). “We don’t yet have much research about how adopting an optimization mindset might affect mental health and well-being,” Houlihan wrote. “But the negative effects of perfectionism are well established.” A 2023 meta-analysis of 121 studies found that when perfectionism takes the form of obsessive fear of failure — replaying mistakes, tying self-worth to performance, etc. — it correlates meaningfully with anxiety, OCD, and depression in young people.

80:20

In economic terms, optimization means getting the greatest return on your investment. Investors, however, aren’t perfectionists. They’re pragmatists who operate with an understanding of the Pareto Principle, which states that, for many outcomes, roughly 80% of the results come from 20% of the effort. When applied to the personal investments we make in our own fitness, health, and longevity, the lesson is that we make the biggest gains going from zero to one, but there’s a point, likely around 80%, where the efficiency frontier begins to collapse. If you don’t exercise at all, getting moving 4x/week will confer significant benefits. If you’re a gym rat, however, working out every day vs. 4x/week yields diminishing returns.

Value Capture

Bryan Johnson, an entrepreneur whose philosophy is “don’t die,” spends $2 million a year optimizing for longevity. Each day, he tracks hundreds of biomarkers, adheres to a strict vegan diet where every calorie that enters his body “must fight for its life,” uses shockwave and red-light therapies, and hangs out in his home sauna and hyperbaric chamber. He ingests a stack of prescription drugs and dozens of supplements, and exercises up to 90 minutes a day — without rest days. Bedtime is 8:30 p.m., sleep temperature is strictly regulated at 65° to 68°F, and he wakes up between 4:30 a.m. and 5:00 a.m. without an alarm. My Pivot co-host Kara Swisher, who interviewed Johnson for her CNN series, Kara Swisher Wants to Live Forever, observed that Johnson has an “obsession with measurement.” I’d add he has an aversion to “l-i-v-i-n,” as Matthew McConaughey famously put it in Dazed and Confused.

Our obsession with metrics, says journalist Derek Thompson, is akin to a modern religion that’s making us miserable. “Modern life is awash in statistics,” Thompson wrote in March. “Often, the quantification of modern life makes us play the games we can easily measure rather than the games we deeply value.” When we do this, we’re succumbing to “value capture,” according to University of Utah philosophy professor C. Thi Nguyen. “Value capture occurs when an agent’s values are rich and subtle,” Nguyen wrote in 2024. “They enter a social environment that presents simplified — typically quantified — versions of those values; and those simplified articulations come to dominate their practical reasoning.”

Some examples: We adhere to dietary guidelines to improve our health, but fixate on BMI such that the metric replaces the original goal; we pursue education to learn, but chase GPA at the expense of knowledge; we use social media to connect, but we come to value likes and other parasocial metrics over meaningful relationships. “Metrics are useful because they compress information, [and] they are dangerous because they compress information,” Nguyen told Thompson. “[It’s] not that these metrics aren’t measuring something real and that they aren’t objectively tracking something that we want to know about; it’s that they speak so loudly that they threaten to drown out other nearby qualities that are also incredibly valuable but are harder to measure.”

Enjoy Every Sandwich

In October 2002, with only months to live, frequent guest Warren Zevon appeared on David Letterman’s show for the final time. The musician retained his dark wit, joking that not visiting a doctor for more than two decades was “one of those phobias that really didn’t pay off.” In a more serious moment, Letterman asked Zevon if he had any insights about life to share. “I really always enjoyed myself,” Zevon said. “But it’s more valuable now. You’re reminded to enjoy every sandwich and every minute of it, playing with the guys and being with the kids and everything.” Zevon’s answer is memorable — Enjoy Every Sandwich became the title of a posthumous tribute album — because he articulated his life’s purpose, rather than the metrics he’d registered along the way.

I frequently encounter people who ask about my diet and fitness routine. It’s simple: I eat a diet that, mostly, hits my targets for calories and macros, try to get a good night’s sleep, and exercise regularly. As someone who’s obsessed with data, I code as an optimizer. I am not. I work out harder so I can drink … more. The first thing I do when I arrive in Los Angeles — if you know you know — is go to In-N-Out Burger. I often order (gasp) dessert, especially if I’m with my boys. I regularly stay up too late talking to friends back in the states. Two nights ago, after interviewing Secretary Clinton for a live pod in NYC, I came home, ingested edibles, binge-watched Season 3 of Euphoria and washed down chocolate-covered almonds, lifted from the mini-bar at the Faena hotel earlier this week, with two Peronis.

A. Great. Night.

Pattern Recognition

If there’s a pattern, it’s this: I’m health conscious 80% of the time, so I can devour the other 20%, and create a whole that is greater than the sum of its parts. The question isn’t will I live longer, but will I live better? A: Yes. Research supports this. Dieters who adhere to rigid meal plans are more likely to experience mood disturbances than those who don’t; flexible dieters are less moody and more likely to reduce their BMI. Harvard happiness researcher Shawn Achor tested multiple variables — background, income, activities, and sleep — and found that social connection was the strongest predictor of happiness, suggesting that a late night with friends is better for your health than a perfect sleep score. Consuming alcohol in moderation is associated with higher death rates, but a large-scale study of 1.5 million people found that moderate drinkers report higher life satisfaction than abstainers. Then there’s the work of Bronnie Ware, a palliative-care nurse who collected the regrets of her dying patients. They shared about not living their truth, wishing they’d worked less, expressed their feelings, kept in touch with friends, and been happier. Nobody said they wish they’d done a better job “optimizing.”

The Little Prince

I gave my oldest son a ring that he wears as a necklace. The inscription comes from Antoine de Saint-Exupéry’s The Little Prince, a 1943 novella about friendship, loneliness, loss, and love. “What is essential is invisible to the eye.”

My work and life are narrowing, distilling to a few goals: one of them is to prepare my sons for others. Many things I do don’t advance that goal, and some things undermine it. I’m a work in progress, i.e., suboptimal. When I’m gone, if I’ve accomplished this goal, my sons will have, among other things, receipts in the form of grief — proof that they loved deeply, as Nicole Avant, former U.S. ambassador and film producer, wrote in her memoir, Think You’ll Be Happy. The boys won’t remember my VO2 max. They won’t know my sleep score or my macro splits. What they’ll carry with them is … me, the man who showed up, imperfectly, at the dinner table, at their games, and in countless fleeting moments that didn’t register on any dashboard. The metrics were never the point. The sandwiches we shared were.

Life is so rich,

The Markets tour ended this week in New York, where I got to share the stage with one of my heroes, former Secretary of State Hillary Rodham Clinton. Total badass. The full, unedited show is available exclusively for Prof G+ paid subscribers by clicking here.

Hemingway famously said bankruptcy happens slowly then suddenly. The collapse of his former home, Cuba, appears to be in the suddenly phase.

Tourism, which generated 8% of Cuba’s $30 billion GDP in better times and brought in hard currency, has fallen 48% year over year. Inflation is 15%. Two weeks ago, Cuba’s minister of energy and mines said the country had run out of fuel, because of the U.S. oil embargo, adding that Havana is frequently without power for up to 22 hours a day. The last oil shipment arrived in April, and a Russian tanker that had been headed for Cuba carrying 300,000 barrels — enough for three days — abruptly changed course. On social media, there are reports of sporadic protests breaking out in and around the capital. Safe drinking water is in short supply. Food has been scarce for months. The country’s healthcare system is breaking down. In sum, the U.S. is asphyxiating the Cuban people. As Cuban American historian Ada Ferrer told CNN’s Christiane Amanpour, “Survival is an open question.” But to paraphrase Cuban interventionist President John F. Kennedy, we shouldn’t be asking what additional pressure we can apply to Cuba, but what help we can provide its people?

Regime Change

In a rare direct message to the Cuban people, U.S. Secretary of State Marco Rubio offered a lifeline … with strings attached. “The only thing standing in the way of a better future are those who control your country,” Rubio said, predicating $100 million in aid on regime change. His message was timed to coincide with the announcement that the aircraft carrier Nimitz is heading toward the island, as well as the Justice Department’s decision to indict Raúl Castro, the country’s 94-year-old former president and de facto leader. The endgame script is similar to one the U.S. deployed against Venezuelan strongman Nicolás Maduro. But just in case there’s any ambiguity about the goal, President Trump has been saying the quiet part out loud since March. “I built this great military. I said, ‘You’ll never have to use it.’ ​But sometimes you have to use it. And Cuba is ​next, by the way.’” We’ve seen this movie before, and it doesn’t end well.

Soft Power

In his famous 16th century treatise The Prince, Niccolò Machiavelli asked whether it’s better for a leader to be loved or feared. “One should wish to be both,” he wrote, “but because it is difficult to unite them in one person, it is much safer to be feared than loved.” Today, “Machiavellian” is used to describe a ruthless style of politics where fear is the most valuable currency. But as Jeffrey Sonnenfeld, the senior associate dean for leadership studies at Yale’s School of Management, observed, many of today’s leaders miss the operative part of the diplomat’s famous quote. “What Machiavelli actually advised was that it is best to be both loved and feared,” Sonnenfeld wrote. “Only when that ideal is not possible … did Machiavelli suggest fear is a more reliable way to inspire discipline than bonds of love.” One of the many failings of the Trump administration is the false belief that America is incapable of inspiring fear and love simultaneously. Trump’s preference for instilling fear in other nations and his disdain for inspiring their love misses what makes America so great.

In 1990, just after the end of the Cold War, political scientist Joseph Nye popularized the term “soft power” to describe how state actors achieve their goals without using force, making threats, or paying bribes. According to Nye, a nation’s soft power resides in its culture and political values, plus its foreign policy to the extent that its peers see it as legitimate and having moral authority. “A country may obtain the outcomes it wants in world politics because other countries — admiring its values, emulating its example, aspiring to its level of prosperity and openness — want to follow it,” Nye wrote. “This soft power — getting others to want the outcomes that you want — co-opts people rather than coerces them.”

Nye’s concept explains the pincer move the U.S. successfully deployed against the Soviets during the Cold War. Our “hard power” included a nuclear arsenal with a rapid response capability measured in minutes, a military that peaked at 3.5 million people in uniform, and the willingness to engage in bloody proxy wars in Asia, Latin America, and the Middle East. Our soft power included foreign aid, Hollywood movies, rock & roll, Levi’s jeans, and middle-class prosperity. (See Nixon’s “Kitchen Debate” with Soviet Premier Nikita Khrushchev.) As Nye said in 2019, “The Berlin Wall collapsed not under an artillery barrage, but from hammers and bulldozers wielded by people whose minds had been affected by ideas that had penetrated the Iron Curtain over the preceding decades.”

The Alpha of Magnanimity

Our willingness and capacity to deliver violence against our enemies anywhere in the world is a significant asset, but American magnanimity is what makes the country unique among history’s greatest powers. During World War II, the U.S. sustained 400,000 dead and another 670,000 wounded. In the immediate aftermath of the war, the country provided emergency aid to its former enemies in Austria, Germany, and Japan. Then, in 1948, Congress passed legislation to fund the Marshall Plan — a $13.3 billion aid package ($180 billion adjusted for inflation) to rebuild 17 European nations, including West Germany. Separate from the Marshall Plan, the U.S. spent an estimated $2 billion ($25 billion adjusted for inflation) between 1946 and 1951 to rebuild Japan. We offered similar support to the Soviet Union and Eastern bloc, but were rebuffed. Regardless, America wrote checks when other victors would’ve demanded reparations.

In hindsight, it’s easy to discount U.S. magnanimity as Cold War pragmatism, but that misses the contribution of the American spirit and our capacity to forgive. Had American voters been consumed by hatred and xenophobia — understandable sentiments after years of war and sacrifice — the isolationism of the pre-war years might’ve returned. Instead, seven months after signing the Marshall Plan into law, Truman won reelection, suggesting that a significant number of American voters found space in their hearts and wallets for people who had been their enemies just three years prior. That selflessness helped install a global operating system financed by American capital, secured by the U.S. military, and held together by American generosity and kindness. Eight decades later, one of our most underrated assets remains our talent for turning enemies into allies. Similar to many relationships and brand equity, the current administration has taken a blow-torch of performative masculinity and stupidity to these assets.

Bridge to Cuba

Despite six decades of hostility, the infrastructure of American empathy and generosity to Cuba already exists. After the Obama administration loosened travel restrictions in 2016, 1.2 million Americans visited Cuba over two years, outstripping tourists from every other country. Of the 3 million Cubans in the U.S., 57% are immigrants with firsthand ties to their homeland. Cuban Americans are believed to send between $2 billion and $4 billion per year to their relatives back home, though exact numbers are difficult to come by because of U.S. restrictions on commerce with the island. Writing in Mother Jones about how her mom regularly sends care packages and money to relatives in Cuba, Laura Morel observed that exiled Cubans are keeping the nation alive. Formal channels also exist. The U.S. resumed aid to Cuba in 1990 after a 30-year Cold War hiatus, though the Trump administration effectively turned off the flow of economic support last year. The stockpile of U.S. bombs and threats is running low, but they aren’t needed for the island nation 90 miles off the coast of Florida. We’ve already established the lifeline. What we need to do is summon our soft power — the empathy and generosity that makes America uniquely American.

Open Hand

I don’t believe the U.S. will invade Cuba. One quagmire at a time is enough. In addition, Trump doesn’t see himself as a liberator, but as a dealmaker. That’s fine, but the best deals are win-win, not zero sum. Trump and Rubio have made their intentions clear: The deal they seek has to include regime change. Less clear is what regime change looks like in practice. As Brian Finucane, a senior adviser with the International Crisis Group and a former State Department lawyer, told PBS, Venezuela isn’t a good template for Cuba, as there isn’t an obvious successor to make a deal with.

Strangling Cuba until it collapses into chaos, or launching a cinematic special-ops mission to rendition a 94-year-old autocrat, isn’t a strategy. It’s a weapon of mass distraction from Epstein, ICE, inflation, Iran, the J6 terrorist immunization fund … The real move is magnanimity. America’s greatest returns on investment haven’t come from the barrel of a gun, but from the extension of an open hand. Imagine what $100 million in unconditional aid to the Cuban people could buy. Not regime change. Something better: goodwill, gratitude, and eventually a generation of Cubans who love America and associate it with their own prosperity, rather than an embargo. Empathy isn’t a sign of weakness. It’s the most ruthlessly effective weapon in the American arsenal.

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P.S.

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In Davos, Canadian Prime Minister Mark Carney had a warning for nations that have relied on the U.S.-led world order that provided (relative) peace and prosperity for eight decades. “If we’re not at the table,” he said, “we’re on the menu.” Heading home after last week’s summit with Chinese President Xi Jinping, President Trump made clear that whether Taiwan was at the table or on the menu was entirely his call. “I don’t talk about those things,” Trump said, referring to a private conversation in which Xi asked whether the U.S. would use military force to defend Taiwan. “There’s only one person that knows that — you know who it is? Me. I’m the only person.” But the question isn’t whether Trump will stand by the U.S. commitment to an independent Taiwan — breaking faith with our allies is a feature of his administration, not a bug — it’s how much he needs to be given to look the other way. A: Significantly less than Xi was previously prepared to pay.

Quid Pro Quo

The conventional wisdom was that China was preparing to invade Taiwan in the next few years, but that’s shifted. The most recent U.S. intelligence assessment, in March, concluded, “Chinese leaders do not currently plan to execute an invasion of Taiwan in 2027, nor do they have a fixed timeline for achieving unification.” Seeing Iran and Ukraine deploy asymmetric warfare against opponents with superior firepower may have given China’s hawks pause. Also, not a single member of the Chinese military has combat experience.

Meanwhile, the Tracking People’s Daily newsletter, analyzing 7,000 official Chinese statements since 2021, noted that Beijing had softened its rhetoric from Biden to Trump, despite the trade war. Biden was seen as a systemic threat who was determined to “encircle and suppress” China, according to Tracking People’s Daily, while Beijing views “Trump’s transactionalism [as] something [it] understands and can work with.” I believe Xi made a deal with Trump: Look the other way on Taiwan, and in exchange Beijing will purchase enough Trump meme coins to make him wealthier than the CEOs who accompanied him at the summit. One sign of a deal: Trump said he would withhold a $14 billion arms package from Taiwan, without receiving any concessions.

If Xi bribing Trump sounds implausible, consider the record. Trump has enriched himself and his family by $4 billion in his first year back in office. Citizens for Responsibility and Ethics in Washington, a corruption watchdog, flagged examples of Trump conflating personal business with U.S. interests in Brazil, Indonesia, Serbia, Syria, and Vietnam. Several months after Qatar gifted Trump a $400 million plane to replace Air Force One, Trump issued an executive order to provide Qatar a U.S. security guarantee with conditions similar to NATO’s Article 5. Probably just a coincidence. But wait … there’s more. Justin Sun dodged an SEC lawsuit alleging securities fraud after announcing he’d purchased $75 million worth of the Trump family’s World Liberty Financial coins. According to Bloomberg, 19 of the top 25 wallets that purchased Trump meme coins to secure a dinner date with the president were owned by foreign nationals. And for those with the means to erase their criminal record, Trump reportedly commands low-seven figures for a pardon.

But all of that is nothing compared to the shakedown he perpetrated on American taxpayers with a $10 billion lawsuit alleging the IRS had failed to keep private the tax returns Trump once promised to release. This week the DOJ announced a settlement in the form of a $1.776 billion fund to compensate Trump allies, including January 6 insurrectionists.

The Real Money

Of course, the real money is in market manipulation, from suspicious puts placed just before tariff announcements to oil bets made minutes before Trump announced a ceasefire with Iran. Trading on inside information is a bipartisan tradition, but Trump’s transgressions are orders of magnitude more brazen and profitable than anything we’ve seen. It took Nancy Pelosi four decades in Congress to amass $130 million in the stock market. Trump recently disclosed 3,700 stock trades from the first quarter of this year valued somewhere between $220 million and $750 million. We need investigations and prosecutions. However, the Supreme Court immunized the president, and he promised to grant preemptive pardons to everyone “within 200 feet of the Oval Office.” Besides, there isn’t anyone to bring the case, as Trump has gutted the DOJ, SEC, IRS and other agencies responsible for rooting out financial corruption.

Repatriation

China doesn’t need to fire a shot to repatriate Taiwan. According to a Bloomberg analysis, a conflict over Taiwan would cost the world economy an estimated $10.6 trillion, roughly 10% of global GDP, in the first year alone. By comparison, the OECD predicts the Iran war will slow global GDP growth from 2.9% to 2.6% in 2026 and from 3.0% to 2.5% in 2027. Taiwan is the digital economy’s carotid artery, but, more important if you’re Xi, it has deep economic ties to China. An estimated 80% of Taiwan’s businesses are linked to China. Despite Taiwan’s recent efforts to disconnect from the mainland, China remains its second-largest trading partner, behind only the U.S., with exports accounting for 20% to 25% of GDP. Meanwhile, China has a history of deploying economic coercion. Between 2010 and 2022 the Mercator Institute for China Studies documented 123 instances of economic coercion from the PRC. It has also executed a multidecade campaign to isolate Taiwan in diplomatic terms, reducing the number of countries that officially recognize the island nation to 12. Add on cyberattacks, espionage, and disinformation, and Xi doesn’t need a D-Day-style assault. China’s “soft invasion” has already made inroads and will continue to advance until Taiwan capitulates.

Checkmate

Taiwan’s most valuable company, TSMC, controls 72% of the global foundry market, producing chips for AMD, Apple, Nvidia, and Qualcomm. The company also produces 90% of the world’s most advanced chips. Taiwan’s dominance isn’t an accident, but the result of a state policy to leverage chipmaking for national security purposes. In 2001, journalist Craig Addison coined the term “Silicon Shield” to describe how Taiwan’s chipmaking monopoly resulted in a de facto U.S. defense commitment, even though we dropped our recognition of Taiwan in 1979 in order to normalize relations with China. Two decades later, there’s a crack in the Silicon Shield. “The single biggest threat to the world economy, the single biggest point of single failure, is that 97% [sic] of the high-end chips are made in Taiwan,” Treasury Secretary Scott Bessent said in January at Davos. “If that island were blockaded [or] that capacity were destroyed, it would be an economic apocalypse.” Another way of putting that: If push comes to shove, the U.S. and the rest of the world would likely choose stability over Taiwan’s sovereignty.

Actually, we might not have a choice, considering how drones have disrupted warfare. China produced 2.5x the number of drones we produced in 2025, but as Noah Smith observed this week, “Drones use lithium-ion batteries and rare earth electric motors, both of which are almost entirely manufactured in China.” Currently, China controls 60% to 70% of rare earth mining and 90% of the global processing capacity. As Deng Xiaoping famously said in 1992, “The Middle East has oil, China has rare earths.” Adding chipmaking to its economic arsenal would give China unilateral power to tax the global economy, as well as leverage over other nations that far exceeds the $1 trillion it deployed to fund infrastructure projects around the world via its Belt and Road initiative.

Thucydides Trap

In his 2017 book, Destined for War, former U.S. Assistant Secretary of Defense Graham Allison wrote, “When a rising power threatens to displace a ruling power, alarm bells should sound: danger ahead. As a rapidly ascending China challenges America’s accustomed predominance, these two nations risk falling into a deadly trap first identified by the ancient Greek historian Thucydides.” At their summit, Xi asked Trump whether the two nations could avoid the Thucydides trap and “forge a new paradigm for major-power relations?” Trump registered the insult — the implication of U.S. decline — but blamed Biden and insisted that the U.S. is the “hottest nation anywhere in the world.”

Future historians will likely have trouble gauging Xi’s skill. On the one hand, he’s a serious statesman. On the other hand, his opposite number is Donald Trump. Regardless, the Chinese see blood in the water, even if American leadership won’t acknowledge we appear to be committing superpower suicide. In January, a Beijing think tank published a report called “Thank Trump,” which concluded that tariffs, attacks on allies, anti-immigration policies, and the president’s war against American institutions have strengthened China while weakening the U.S. Citing polarization, government dysfunction, and “Latin American-style instability,” the report’s authors labeled Trump an “accelerator of American political decay.” A decade ago, our priority was to manage the Thucydides trap such that we maintained our leadership of the rules-based world order, avoided conflict, and increased global prosperity. Today, we’re riding shotgun with a president who never met an American interest he didn’t seek to monetize. Superpowers don’t die when adversaries breach the gates. They die when the people inside start auctioning off the gates.

Memorial Day

I write often about what we’re losing by dismantling the rules-based order, less often about the cost of building it in the first place. It’s Memorial Day weekend in the U.S. — a holiday meant to honor those who died serving our country, though most Americans observe it by barbecuing, drinking, and shopping. Pulling down the U.S.-led order robs our children of their future, but it also demeans the memory of American sons and daughters who gave what Lincoln called the last full measure of devotion. Shame on Trump. Shame on his enablers. And shame on us if we fail to pull the country off of Trump’s auction block.

Life is so rich,

P.S.

My Prof G Markets co-host Ed Elson was live on Substack this week sharing “The New Normal,” his presentation about the forces shaping the global economy. Ed’s talk is available exclusively to Prof G + members for one week and one week only. Say no to FOMO by saying yes to a Prof G + membership. Upgrade here.

One of Trump’s many weaknesses is believing he’s playing three-dimensional chess when he’s eating the pieces. Things are different now. In 2017, Trump visited a China still playing catch-up, calling itself a “developing country,” needing America more than America needed it. That country no longer exists. China’s GDP is 54% larger. Its navy — 370 battle force ships to America’s 296 — is now the world’s largest. China added 78 warships between 2015 and 2023; the U.S. added 20. A single Chinese shipbuilder last year produced more tonnage than the entire U.S. shipbuilding industry has delivered since World War II. Meanwhile, DeepSeek shredded the assumption that chip controls could contain China’s AI ambitions. And Xi, who in 2017 was merely consolidating power, has since abolished term limits and purged his own generals. The man across the table isn’t asking for market access, he dominates many key markets. For example, in renewables, China produces 70% to 80% of the world’s EVs, solar panels, and batteries. Xi has built an AI ecosystem closing in fast on the frontier of artificial general intelligence and processes 90% of the world’s rare earth minerals. Trump is not negotiating from the same position he was in 2017. And neither is Xi.

For more context, here’s an excerpt from the most recent companion newsletter for China Decode:

The Super Bowl for U.S.-China Watchers Is Over — Questions Remain

Alice’s Take: This is the Super Bowl for followers of China-U.S. relations. There was a lot of analysis on the road leading up to the event, with commentary about who has the upper hand going into overdrive this week. I see the playing field as roughly even. My take on China’s priorities, having just spent a month in the country, boils down to three crucial issues. One is tariffs. China will want a modest reduction in the effective tariff rate. Secondly, they will likely push for more clarity on export controls. And the last point centers around the “Board of Investment” strategy. China is pressing for companies such as BYD and CATL to be able to set up plants in the U.S., either wholly owned or through joint ventures.

But there’s a second tier of issues important to China. Those include a resolution to the conflict in the Middle East — even though China would prefer to remain in the background — and, of course, Taiwan. Finally, there could be an attempt to connect North Korea and Washington, which could lead to a conversation between Trump and “Rocket Man” Kim Jong Un.

On the U.S. side, Trump needs a win. Behind him in Beijing is an entourage of American CEOs, including a surprise last-minute addition to the list: Nvidia’s Jensen Huang. Among names such as Tim Cook and Elon Musk are Boeing’s Kelly Ortberg and Cargill’s Brian Sikes. The White House has signaled it would like to see more agriculture and aviation purchases. You can also expect discussion about reducing the trade deficit, although the stats show bilateral trade volume in 2025 dropped by the most since 1979, the year when the U.S. and China officially established diplomatic relations. The U.S. share of Chinese exports to the world has fallen sharply since Trump last visited China in 2017. The conversation, meanwhile, is shifting more to dual-use technologies, which have both civilian and military applications.

James’s Take: I’d argue that this is the first U.S.-China summit in history where the Chinese leader sits down with the stronger hand. I’ll also go back to the 1970s. When Richard Nixon visited China in 1972, U.S. GDP was roughly 11 times China’s. When Trump headed to China in 2017, the U.S. was unambiguously the more powerful of the two. In nominal terms, the U.S. economy remains larger. But adjusted for purchasing power parity, China has eclipsed the U.S. In manufacturing, China accounts for roughly a third of global output, compared with about a sixth for the U.S. And when the Liberation Day tariffs hit 145%, China’s threat to restrict critical mineral exports was enough to bring those tariffs down to around 47%. That episode showed who blinks first. Today, Trump’s hand is relatively weaker, and Xi’s is relatively stronger.

Both sides see each other as an implacable adversary, and suspicion runs deep. But the rhetoric in public will be positive. The U.S. and China need each other. Each side seeks stability. The U.S. realizes China can play a critical role in resolving the conflict in Iran and unblocking the Strait of Hormuz. China is focusing on Taiwan. What Xi wants exactly remains unclear, but he will push for something more concrete. China is playing for big stakes.

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Scott’s Take

History doesn’t repeat, it rhymes. Nixon went to China in 1972 from a position of strength, and it changed the world. Trump went to China in 2026 needing a win, trailing an entourage of American executives auditioning for access to 1.4 billion consumers. The world is changing again — just not in the direction we expected. And here’s the tell: The U.S. brought its CEOs. China brought its demands. When you need the other side’s market more than they need yours, you’re not negotiating — you’re applying.

Life is so rich,

P.S. For those in the back, the China Decode team is doing a live debrief of the summit on Substack this morning at 10 a.m. ET. Join the conversation here. And if you can’t make it, the recording will be available immediately following.