I've just finished reading a 21st-century take on the French Revolution. Louis 16th comes over as a hapless, ill-equipped duffer similar to King Charles, the English monarch. But to his credit, for 10 years prior to the Terror, Louis pleaded with the aristocracy to pay some tax. They stared him down, and instead preferred to keep hunting and attending balls. Appropriately, many also lost their heads in the blood-letting that followed in 1792
Anti-AI sentiment seems to me to be American led (that’s not to say it’s not in Europe, but just less so). I think this is due to how existential losing your job is to an American. When Dario goes on the news and says we will replace X jobs by next year, people feel attacked. If you lose a job in America, and can’t get another one quick, you’re FUCKED. There’s no support. This is where people are getting their anger from, and then displaying it by using water or economics as their rallying point (even if a lot of that just isn’t true).
Correct. Plus these tools (which aren't the panacea everyone claims) will be rammed down workers throats and then used as an excuse to LOWER wages plus it will be used to spy on us and kill people. Workers will also be left picking up the pieces at work
Great piece. As you indicated, I expect the chaos and disarray in this country to become even worse, as we have reached the tipping point where we can no longer "fix ourselves".
What amazes me: we are clawing each others’ eyes out over immigration (okay, I get the frustration) and the job losses from “illegal aliens” while, at the exact same moment, we are spending trillions of dollars to actively build literal aliens 👽 to take every single job we have. The risk to American prosperity isn’t pouring across the Mexican border. It’s pouring across the Silicon Valley border.
Agreed. All those rough 'n tough MAGA men that are terrified of the tiny, poor, brown skinned people that pick all of our produce, clean our shitters, and cook our food 🙄
I get the loss of status frustration. I do. They aren’t wrong about that. But…BUT…at the same time we are facing the biggest potential threat to our prosperity and sovereignty in the history of our species. Let’s take that as seriously as we should.
You are actively advocating for human trafficking and indentured servitude, which has frequently been categorized as worse than slavery. If that sounds alarming, trust your gut. The people cleaning your shitters are worked to death for pennies to pay off debt. High School and College students should be doing those jobs on the books, under fair labor laws.
Great read! It makes me sad to think that there is a relatively simple solution to stop things from spiralling out of control, but nobody has the political will to do it. I fear we're on a path of no return.
Interesting that 52% of people with household incomes > 200K are positive about AI. Not sure all the 200K household incomes are not in jobs that would be affected negatively by AI as 2 incomes both in mid corporate level jobs could be eliminated. Be curious if you look at upper 1% income, they may be even more positive. Suspect stock ownership of AI companies is a big motivator!
Excellent piece. As economists on your show have pointed out, there are many ways to close tax loopholes on the wealthy and corporations and many ways to support labor, but NONE of our elected officials are doing anything and the U.S. is poorer for it and our trajectory is downward.
This is Hurricane Katrina a week from landfall while Bourbon Street parties on and Big Easy politicians smoke cigars and drink Sazeracs.
And we have the WORST, most divisive leadership in American history at exactly the moment we need a strong, uniting leader.
This is the moment to prepare for landfall. For political and redistribution vision and absorption. Instead, we have Trump.
But, to be clear (and fair) the state of California - Progressive and visionary, will get it first and worst. As Silicon Valley and Hollywood gut payrolls, watch housing markets collapse, 2007 style foreclosures, commercial real estate ghost buildings and seek a redistribution Robot Tax only to chase their rich citizens into the loving arms of Florida and Texas. California - the architect of this all - will become Detroit 2.0 - with hotter women and better beaches.
This is coming. And those left behind demanding the basics from a bankrupt safety net, fleeing capital base, and mass unemployment?
Wealth inequality in America has been compounding for over 40 years. It didn't arrive with ChatGPT and it won't be solved by regulating AI. These are two separate problems running on parallel tracks for very different reasons. Conflating them lets policymakers reach for the wrong lever and feel good about it. That's not progress, that's politics.
The inequality problem is real but it's a tax and redistribution conversation, not a technology regulation conversation.
Which brings me to the Sacks critique. The deliberate choice to avoid premature AI regulation isn't negligence, it's arguably the most important call a policymaker could make at this stage of the technology's development.
History is clear on this: America's greatest periods of innovation happened in low-regulation environments. The internet wasn't regulated into existence. Neither was the smartphone ecosystem. Heavy-handed early regulation consistently locks in incumbents, stifles competition, and ends up solving yesterday's problems with tomorrow's rules.
Sacks kept government out of the way of a technology that is still being understood. That's not a bug. That's the job.
I do not understand how you can have the awareness to see these attacks as a predictable, nearly inevitable outcome of the economic system we're in and then say they're wrong. Is it wrong when a group of buffalo kill a lion who has come to eat them or for a group of meerkats to mob a snake? This is a historical process that's no more morally wrong than than a storm that destroys a house.
You can’t compare wealth inequality of French Revolution to modern day US. The former was a monarchy taking from its subjects. The US is a free enterprise economy and not zero sum. Musk being a trillionaire does not take from you. I’ve received far more benefit from Jeff Bezos via Amazon than they’ve earned from me in their profit margins.
Poverty is not solved with taxation. It is part of the human condition. There will always be poverty. The best you can do is alleviate the material discomfort of poverty (we do this already at great expense) and provide off-ramps for those who have the unfortunate circumstance of being born into poverty that otherwise have the mindset, agency and discipline to not be poor. Education is the answer. Not redistribution.
Free childcare and more entitlements is not the role of government. There will never be enough money to give everyone everything they need (or want). The role of government is to keep us safe, protect its citizens, provide for the truly indigent and create a level playing field for its citizens to prosper on their own. We have moved from gratitude for being in the most free country in the world to being resentful and entitled. No mandatory civil or military service and we expect the government to take care of all our needs. It’s juvenile.
If you want a European style welfare state then you must tax like a European welfare state. That means 50%+ tax rates for the middle class compared to 10% in the US and 20% sales tax rates (VAT taxes) on all purchases. For everyone. There just isn't enough money to simply tax the rich and everyone gets their wish list. Tax the rich is a political conceit based on envy.
You are now using AI as the scare tactic for more taxation otherwise the torches and pitchforks are coming. The person who attacked Altman’s home is a nut job and should be prosecuted accordingly. Using it to justify your preconceived desire for more redistribution is a logical fallacy (Argumentum ad Baculum).
AI is going to bring about a lot of changes. Schools should be training for AI. Unemployment insurance should provide AI or vocational training for continued benefits. Simply giving people money isn’t good for the human condition and there will always be some type of disruptive change that requires adaptation not dependence.
The manner in which the powerful choose to steal from the rest of us, whether that's divine monarchy or the US and other governments refusing to enforce antitrust regulation and shifting the taxation burden away from the rich, is just fashion. The net result is the same: the bulk of humanity being pushed into misery until the inevitable explosion.
Please elaborate on how 'the rich' have stolen from you. Have you ever enjoyed the convenience of ordering something from Amazon and getting the benefit of competitive prices and fast delivery? The US has the most progressive tax code in the world. The top 1% pays 45% of the tax burden, earn 20% of the income and have an average tax rate of 26%. The bottom 50% pay 3% of the tax, earn 12% of income and have a 3% tax rate. In Europe they would pay 50% tax rate and 20% VAT on everything they buy. How have you been pushed into misery? Did the rich or the government prevent you from starting your own businesses and finding your own success? Being materially poor in a 3rd world country would be misery. Being materially poor in the US is better than how the "rich' lived less than a century ago.
Every dollar in new productivity that has gone to the rich, disproportionately, since the mid 70s through their capture of the state is theft from every working person. Had the wealth created after WW2 gone to the rich in the same proportion as it does now and has for the last 45-50 years, we'd have never had a modern middle class. Their primary means of existence in recent decades has been to steal the value that we create and to extract rents from us. For every "plucky entrepreneur" you can point to who became a billionaire, 90+% of them have family wealth and connections behind that story. They are becoming an inherited aristocracy as true economic mobility between quintiles in this country has mostly ceased to exist. The vast majority of people born in this country now will never rise above the socioeconomic quintile into which they are born. This is probably all wasted on you, though, since your comments sound like they come from someone who still believes in trickle down economics and is infected with the "libertarian mind virus" he writes about.
While your points are well taken, it seems that AI's amazing resources are so fragmented — especially beyond ChatGPT and Claude — that the story of how they can be used for good is getting lost. For example, I'm amazed to learn that many of my highly educated friends still don't know about NotebookLM, a free Google resource. This single tool is such a powerful learning resource that spreading the word about it could improve AI's overall public relations.
Ed, Have you explored balancing income inequality against contribution inequality in any of your works? If so, I’d love to read.
Your closing reference to past conclusions that taxation is the fix overlooks the significant contribution inequality that accompanies the income inequality you center your narrative on.
Our tax and welfare structure traps half of Americans in government-incentivized poverty or near-poverty while the top 20% serve as the state's primary "tax crop."
Consider:
National Federal Income Tax:
- Top 1%: 40%
- Top 20%: 72%
- Top 50%: 97%
- Bottom 50%: 3%
New York State Income Tax:
- Top 1%: 46%
- Top 20%: 80%
- Top 50%: 99.8%
- Bottom 50%: 0.2%!
NYS is the highest taxed state in the US and the contribution of the bottom 50% in NYS is 93% LOWER than the national average.
Punishing success though excessive taxation has no basis in history or economics.
We must incentivize the bottom 50% to participate actively rather than remain disengaged.
Tax policy is one important piece of the toolbox. Have you not heard of the USA between the 1940s and 1970s? Tax policy, labor rights, and a growing social safety net created our modern notion of the American middle class through one of the most equitable distributions of wealth in human history.
I've just finished reading a 21st-century take on the French Revolution. Louis 16th comes over as a hapless, ill-equipped duffer similar to King Charles, the English monarch. But to his credit, for 10 years prior to the Terror, Louis pleaded with the aristocracy to pay some tax. They stared him down, and instead preferred to keep hunting and attending balls. Appropriately, many also lost their heads in the blood-letting that followed in 1792
What was the book?
Anti-AI sentiment seems to me to be American led (that’s not to say it’s not in Europe, but just less so). I think this is due to how existential losing your job is to an American. When Dario goes on the news and says we will replace X jobs by next year, people feel attacked. If you lose a job in America, and can’t get another one quick, you’re FUCKED. There’s no support. This is where people are getting their anger from, and then displaying it by using water or economics as their rallying point (even if a lot of that just isn’t true).
Correct. Plus these tools (which aren't the panacea everyone claims) will be rammed down workers throats and then used as an excuse to LOWER wages plus it will be used to spy on us and kill people. Workers will also be left picking up the pieces at work
I love your newsletter! They are all so good, especially this one.
Great piece. As you indicated, I expect the chaos and disarray in this country to become even worse, as we have reached the tipping point where we can no longer "fix ourselves".
What amazes me: we are clawing each others’ eyes out over immigration (okay, I get the frustration) and the job losses from “illegal aliens” while, at the exact same moment, we are spending trillions of dollars to actively build literal aliens 👽 to take every single job we have. The risk to American prosperity isn’t pouring across the Mexican border. It’s pouring across the Silicon Valley border.
Agreed. All those rough 'n tough MAGA men that are terrified of the tiny, poor, brown skinned people that pick all of our produce, clean our shitters, and cook our food 🙄
I get the loss of status frustration. I do. They aren’t wrong about that. But…BUT…at the same time we are facing the biggest potential threat to our prosperity and sovereignty in the history of our species. Let’s take that as seriously as we should.
You are actively advocating for human trafficking and indentured servitude, which has frequently been categorized as worse than slavery. If that sounds alarming, trust your gut. The people cleaning your shitters are worked to death for pennies to pay off debt. High School and College students should be doing those jobs on the books, under fair labor laws.
Wow....good job missing the point! 😂
Enlighten me.
I've got a better idea - increase your reading comprehension skills 😁
The Libertarian Mind Virus...love it.
Great read! It makes me sad to think that there is a relatively simple solution to stop things from spiralling out of control, but nobody has the political will to do it. I fear we're on a path of no return.
Interesting that 52% of people with household incomes > 200K are positive about AI. Not sure all the 200K household incomes are not in jobs that would be affected negatively by AI as 2 incomes both in mid corporate level jobs could be eliminated. Be curious if you look at upper 1% income, they may be even more positive. Suspect stock ownership of AI companies is a big motivator!
Excellent piece. As economists on your show have pointed out, there are many ways to close tax loopholes on the wealthy and corporations and many ways to support labor, but NONE of our elected officials are doing anything and the U.S. is poorer for it and our trajectory is downward.
Education and training will open opportunities and raise the income level.
Kids can’t read, write or do math. We’re dooming them to a life of misery and poverty.
Sorry but more taxation and regulation won’t fix that.
Bingo. We must incentivize participation from the bottom 50%. 54% of U.S. adults ages 17-74, roughly 130m people, read below a 6th grade level!!
This is Hurricane Katrina a week from landfall while Bourbon Street parties on and Big Easy politicians smoke cigars and drink Sazeracs.
And we have the WORST, most divisive leadership in American history at exactly the moment we need a strong, uniting leader.
This is the moment to prepare for landfall. For political and redistribution vision and absorption. Instead, we have Trump.
But, to be clear (and fair) the state of California - Progressive and visionary, will get it first and worst. As Silicon Valley and Hollywood gut payrolls, watch housing markets collapse, 2007 style foreclosures, commercial real estate ghost buildings and seek a redistribution Robot Tax only to chase their rich citizens into the loving arms of Florida and Texas. California - the architect of this all - will become Detroit 2.0 - with hotter women and better beaches.
This is coming. And those left behind demanding the basics from a bankrupt safety net, fleeing capital base, and mass unemployment?
Wealth inequality in America has been compounding for over 40 years. It didn't arrive with ChatGPT and it won't be solved by regulating AI. These are two separate problems running on parallel tracks for very different reasons. Conflating them lets policymakers reach for the wrong lever and feel good about it. That's not progress, that's politics.
The inequality problem is real but it's a tax and redistribution conversation, not a technology regulation conversation.
Which brings me to the Sacks critique. The deliberate choice to avoid premature AI regulation isn't negligence, it's arguably the most important call a policymaker could make at this stage of the technology's development.
History is clear on this: America's greatest periods of innovation happened in low-regulation environments. The internet wasn't regulated into existence. Neither was the smartphone ecosystem. Heavy-handed early regulation consistently locks in incumbents, stifles competition, and ends up solving yesterday's problems with tomorrow's rules.
Sacks kept government out of the way of a technology that is still being understood. That's not a bug. That's the job.
I do not understand how you can have the awareness to see these attacks as a predictable, nearly inevitable outcome of the economic system we're in and then say they're wrong. Is it wrong when a group of buffalo kill a lion who has come to eat them or for a group of meerkats to mob a snake? This is a historical process that's no more morally wrong than than a storm that destroys a house.
You can’t compare wealth inequality of French Revolution to modern day US. The former was a monarchy taking from its subjects. The US is a free enterprise economy and not zero sum. Musk being a trillionaire does not take from you. I’ve received far more benefit from Jeff Bezos via Amazon than they’ve earned from me in their profit margins.
Poverty is not solved with taxation. It is part of the human condition. There will always be poverty. The best you can do is alleviate the material discomfort of poverty (we do this already at great expense) and provide off-ramps for those who have the unfortunate circumstance of being born into poverty that otherwise have the mindset, agency and discipline to not be poor. Education is the answer. Not redistribution.
Free childcare and more entitlements is not the role of government. There will never be enough money to give everyone everything they need (or want). The role of government is to keep us safe, protect its citizens, provide for the truly indigent and create a level playing field for its citizens to prosper on their own. We have moved from gratitude for being in the most free country in the world to being resentful and entitled. No mandatory civil or military service and we expect the government to take care of all our needs. It’s juvenile.
If you want a European style welfare state then you must tax like a European welfare state. That means 50%+ tax rates for the middle class compared to 10% in the US and 20% sales tax rates (VAT taxes) on all purchases. For everyone. There just isn't enough money to simply tax the rich and everyone gets their wish list. Tax the rich is a political conceit based on envy.
You are now using AI as the scare tactic for more taxation otherwise the torches and pitchforks are coming. The person who attacked Altman’s home is a nut job and should be prosecuted accordingly. Using it to justify your preconceived desire for more redistribution is a logical fallacy (Argumentum ad Baculum).
AI is going to bring about a lot of changes. Schools should be training for AI. Unemployment insurance should provide AI or vocational training for continued benefits. Simply giving people money isn’t good for the human condition and there will always be some type of disruptive change that requires adaptation not dependence.
The manner in which the powerful choose to steal from the rest of us, whether that's divine monarchy or the US and other governments refusing to enforce antitrust regulation and shifting the taxation burden away from the rich, is just fashion. The net result is the same: the bulk of humanity being pushed into misery until the inevitable explosion.
Please elaborate on how 'the rich' have stolen from you. Have you ever enjoyed the convenience of ordering something from Amazon and getting the benefit of competitive prices and fast delivery? The US has the most progressive tax code in the world. The top 1% pays 45% of the tax burden, earn 20% of the income and have an average tax rate of 26%. The bottom 50% pay 3% of the tax, earn 12% of income and have a 3% tax rate. In Europe they would pay 50% tax rate and 20% VAT on everything they buy. How have you been pushed into misery? Did the rich or the government prevent you from starting your own businesses and finding your own success? Being materially poor in a 3rd world country would be misery. Being materially poor in the US is better than how the "rich' lived less than a century ago.
Every dollar in new productivity that has gone to the rich, disproportionately, since the mid 70s through their capture of the state is theft from every working person. Had the wealth created after WW2 gone to the rich in the same proportion as it does now and has for the last 45-50 years, we'd have never had a modern middle class. Their primary means of existence in recent decades has been to steal the value that we create and to extract rents from us. For every "plucky entrepreneur" you can point to who became a billionaire, 90+% of them have family wealth and connections behind that story. They are becoming an inherited aristocracy as true economic mobility between quintiles in this country has mostly ceased to exist. The vast majority of people born in this country now will never rise above the socioeconomic quintile into which they are born. This is probably all wasted on you, though, since your comments sound like they come from someone who still believes in trickle down economics and is infected with the "libertarian mind virus" he writes about.
While your points are well taken, it seems that AI's amazing resources are so fragmented — especially beyond ChatGPT and Claude — that the story of how they can be used for good is getting lost. For example, I'm amazed to learn that many of my highly educated friends still don't know about NotebookLM, a free Google resource. This single tool is such a powerful learning resource that spreading the word about it could improve AI's overall public relations.
Ed, Have you explored balancing income inequality against contribution inequality in any of your works? If so, I’d love to read.
Your closing reference to past conclusions that taxation is the fix overlooks the significant contribution inequality that accompanies the income inequality you center your narrative on.
Our tax and welfare structure traps half of Americans in government-incentivized poverty or near-poverty while the top 20% serve as the state's primary "tax crop."
Consider:
National Federal Income Tax:
- Top 1%: 40%
- Top 20%: 72%
- Top 50%: 97%
- Bottom 50%: 3%
New York State Income Tax:
- Top 1%: 46%
- Top 20%: 80%
- Top 50%: 99.8%
- Bottom 50%: 0.2%!
NYS is the highest taxed state in the US and the contribution of the bottom 50% in NYS is 93% LOWER than the national average.
Punishing success though excessive taxation has no basis in history or economics.
We must incentivize the bottom 50% to participate actively rather than remain disengaged.
Tax policy is one important piece of the toolbox. Have you not heard of the USA between the 1940s and 1970s? Tax policy, labor rights, and a growing social safety net created our modern notion of the American middle class through one of the most equitable distributions of wealth in human history.