Global Intelligence Crisis

Well-written; seems like an expanded and more detailed version of the Twitter essay that made the rounds a couple weeks ago.

One thing this piece doesn't contemplate is deflation. Competition will still exist in this world; if friction decreases and renders switching costs lower for a wider variety of industries, while AI efficiencies improve margins, prices in those markets will be competed down to a substantially lower marginal cost floor.

In other words, people may make less money, but goods in industries which benefit from AI should become cheaper in a growing set of competitive markets. The magnitude of the impact on prices should correlate with the magnitude of the employment impact; the better AI is at taking our jobs, the cheaper prices should get for an ever wider basket of goods.

Fun read but

>Humans don’t really have the time to price-match across five competing platforms before buying a box of protein bars

No one [^1] price matches for protein bars because it's a commodity item with minimal price differences (and people often have a preferred brand anyway), but they probably do for $2k laptop.

>once AI agents equipped with MLS access

The data is the moat here, I'm sure even today individual consumers would be happy to have direct access to MLS to find properties and cut out the middleman. The fact that MLS is gatekept seems to be deliberate, so I don't think they'll hand over the only thing keeping them in business. Even Zillow couldn't get access to it and they've undoubtedly tried.

Same with the medical industry. I don't think the rent-seeking middlemen that exist today will be dethroned that easily, they have often been codified into law. But who knows maybe all the AI money pouring in will be enough to convince them to make a faustian deal towards their destruction and that'd be a happy byproduct of it all.

[^1] Edit: I erred in making too broad of a statement here, see the response threads.

If I understand this correctly, the whole chain depends on Phase 1 being right, that agentic coding makes SaaS replicable in weeks. We got a live test of that in February when Claude Cowork plugins wiped ~$2T off enterprise software. As I see it the market made a category error though, pricing Salesforce and ServiceNow the same when systems of record and systems of engagement have very different exposure: https://philippdubach.com/posts/the-saaspocalypse-paradox/

The displacement numbers are the other thing (support hires down 65% in eight quarters) but historical evidence keeps showing tech creates more jobs than it kills.

Citrini’s calls have been so bad over the past 6 months that he has lost a ton of subs and is now desperate for attention.

An existential crisis for the urban middle class, which in the 18th century corresponded to the bourgeoisie or trade classes, making the situation, if unresolved, a potential modern analogue of a French‑Revolution–style crisis. Instead of feudal oppression, it is driven by technological displacement and concentration of capital, both reinforced by feedback loops.

Surely only economists get excited by the revelation that consumers have to have money to buy things. I'd say domestic service is going to make a comeback. I do think I'd make an excellent man servant. Eke out my later years being ever so slightly superior to my employer without ever being openly insolent. Hang on...

Good read. If I imagine all these layers of Agent to Agent economic automations, I’m hopeful for a new class of technopriest hackers that are able to exploit nuances and weak security. And build new hidden empires within those systems.

My guess is that intelligence gets commodified to the point where LLMs and diffusion models are sold on chips and we seamlessly integrate them into the HW + SW stack. Then they’re just another abstraction; we talk to our computers to get things built. At essentially zero cost, truly too cheap to meter.

In parallel there’s an explosion of creative output; Marvel movies turn around in 1 year instead of 4, solely blocked on availability of actors. Some actors license their likeness to unblock their calendar from reshoots so they can earn more. We don’t replace them wholesale because people idolize celebrity.

And demand for movies? Skyrockets. With new mediums to pursue. Classics like Goodfellas resurrected in high-fidelity 3D on the Vision Pro. A combination of diffusion models and Gaussian splatting means every movie can be upscaled to immersive 3d.

Video games enter a second renaissance, with indie developers having the advantage. For large studios, nostalgia is the moneymaker. The remake of Final Fantasy VII across three games that costs $100Ms and decades? Final Fantasy VIII gets rebuilt from scratch with a team of 30. But the rest of the money and team that would’ve been on that project now expand to other, more ambitious projects.

This is just the tip of the iceberg. Mars? Why stop at Mars? Let’s start megaprojects to explore the galaxy. Mine asteroids for resources. What’s stopping us? Humans yearn for the unknown. When we exhaust resources or a modality of existence, we dream bigger, not smaller.

I personally see consumer and entertainment spending, and people employed lucratively in these sectors, growing dramatically. Maybe SaaS and a lot of businesses that have traditionally employed white collar employees fade. And a bunch of boring “financistas” don’t know how to make a buck betting in the casino anymore because boring old businesses and things nobody really wanted to do anyway aren’t lucrative anymore.

But, personally, the whole reason I got into software was to build cool stuff. Starting with video games! The type and scale of cool stuff I can build is only getting better, at an insanely fast rate. My bet is we thrive.

In other words, switching costs go to 0, margins collapse. Middle men and people with products that aren't differentiated get hit hardest.

A human can't search 10 apps for the best rates / lowest fees but an agent can.

Thinking ahead 100 years from now, companies like doordash and uber eats don't exist and are instead protocols agents use to bid for items their user asks for and price discovery happens in real time.

The situation is clear. There is a great risk to the livelihoods and bargaining power of workers everywhere. This risk is driven by a race dynamic that is accelerating. In tech we can see this earlier than others because we are close to the technology at the heart of this.

This is quickly becoming one of the largests threats to the public in history and the concentration of power of this trajectory threatens democracy. Irreversable shifts in the structure of power are on the table.

Yeah, this seems plausible.

Here is roughly what we need now: A workable plan to turn unfathomable productivity gains (which are amazing) into wealth for everyone.

Socialism looking like the correct configuration of the end state. Who knew!

Unsure if I think this is science fiction, financial fiction, speculation, premonition, realistic portent, or simply a message delivered by Kyle Reese through the long, dark tunnel of time LOL

No matter which, it paints a very intriguing picture about potential near-term impacts to various pieces of the machine that underwrite our day to day lives, and the scariest thing is that no matter what happens, the overwhelming vast majority of people have No. Fucking. Idea. about any of it. We'll see changes happen and be helpless to stop them, and the average person (or bozo politician) will look back at the impact crater and be like "Why didn't anybody try to shift course?"

Then again, maybe it'll all turn out OK!

I'm not making bets either way though -- sounds like I won't have enough discretionary spending left over to afford it!

Superfacial takes, and very simplistic thinking, those loops aren't really realistic [ more ai spending => layoffs => less jobs => less spending => repeat]

This is a speculative piece that is, by the author's own admission, a scenario rather than a prediction.

But it's unsettling because it somehow feels more plausible than most thought pieces on where all this is going. Not as a single big-bang, but a multi-year big-squeeze. That and the circumstances being materially different from previous recessions/crises that governments and policy makers won't have a ready-made playbook to refer to.

I expect we'll see governments attempting the old playbook than doing nothing though. Fiscal and, specifically, monetary stimulus.

It's quite clear that AGI will require a hard economic reboot. Say goodbye to capitalism.

This is also why AI companies are not tackling robotics yet. Because doing so will make it painfully clear what is about to happen.

I think the clear point of this piece is that we have the space and opportunity now to ask ourselves as a group: what are we doing? Who actually stands to benefit from the massive devaluation of services in an economy that is buoyed by service-based roles?

There has been so little thought to the multi-order effects of the future we're pushing toward, and even if AI fails to deliver on its lofty promises, it will likely cause an economic crisis in its collapse.

The people saying that AI will rapidly drive costs down are frankly delusional. The things that people actually need to live like food, shelter, and clothes all have inputs that are physical and real. Even if AI somehow can drive the input costs of those things down, it will be delayed, and people will suffer in the interim.

The AI future that I worry about isn't the terminators coming to get us, it is the top 0.1% using this technology to accumulate more wealth. Unlike feudalism, however, the feudal lords will not be dependent on or responsible for the serfs, they can rely on a small minority of humans for production of critical goods for themselves.

These wealthy people don't really hide how they feel either[1], they are clearly stating their contempt for the unwashed masses below them. As Lasch predicted in his "Revolt of the Elites," they are separating themselves entirely from culture in favor of their own insulated fiefdoms. This is already happening: companies more than ever are orienting toward ultra-luxury: from travel, to housing, and everything in-between.

[1]: https://www.thenation.com/article/society/peter-thiel-billio...

Trust is what we've always had for dealing with this. It is an incredible force multiplier for intellectual capacity.

We've just forgotten it. This doesn't require a technical solution, it just requires operating in a trustworthy manner and only extending your web of trust in your platforms to trustworthy entities.

Price matching across vendors does not matter if you trust one vendor. You can just go with "order from Costco" and avoid a complicated technical problem.

So much of what we are doing now is rediscovering trust, integrity, and ethics. Think about Meta and the challenges they would have to being a foundational model provider in light of that analysis, for example.

Good scary read

> What follows is a scenario, not a prediction. This isn’t bear porn or AI doomer fan-fiction.

Nah it totally is.

Short everything they've ever touched.

"Six months ago, a print like this would have triggered a circuit breaker."

Lol that's set by law. This guy doesn't have a clue. Nice sci-fi, I guess.

Doesn’t consider the network affects of software at all

A very simplistic take

I've beaten this drum before, but I'll bang it again:

Do not confuse the hypothetical details for discounting of the whole narrative, i.e., "Don't miss the forest for the trees."

This is what a lot of us have been banging on about in some form since the opening salvo in generative AI: it doesn't matter what its technical deficiencies are, so long as it's good enough to replace enough labor, enough of the time, to collapse the underlying economic engine (that is, consumer spending). That's what this hypothetical is trying to lay out, and honestly it's not far off from the truth as to what's actually going on.

With constant RIFs but rising profits, there is simply no brake whatsoever to this cycle: myopic boards and self-interested leaders (paid mostly in stock) have no incentive to stop this behavior, even as it kills the economic engine of the past few centuries. They make out like bandits, and use that money to insulate themselves from the harm they created - or attempt to for as long as possible, until governments and/or the public demand their carcasses on pikes for destroying their livelihoods.

It's not a matter of whether or not folks find something to do when work is irrelevant so much as we're not building a society where that's feasible as an alternative. We're not expanding welfare, we're not employing rent controls or price caps/floors, we're not increasing accessibility to housing and healthcare and education; instead, we're letting a handful of practicing sociopaths take everything for themselves under the guise of "number go up, so it must be good".

"So what's the alternative?"

I am so glad you asked, because the alternative is a societal judo throw on contracts and expectations. It's incentivizing larger workforces and shorter work weeks as a means of gauging share value: how many workers can you support with higher wages to spend on goods and services with AI increasing the revenue per employee? It's not paying companies to hire workers so much as markets valuing companies that retain workers despite AI's ability to displace work. It's inverting their tax burden based on how big their workforce is and how well they're compensated (higher paid workforces + larger workforce size = lower tax bill, because worker wages will just get gobbled by income and Capital Gains taxes instead of payroll taxes).

The point isn't to keep nitpicking how these hypotheticals are alarmist, or how a specific detail is wrong, but more to highlight that this is a very real problem in the face of permanent job displacement due to any sort of competent generalized artificial intelligence now or in the future, and deciding to solve it before there's riots in the streets.

You can see the symptoms already if you look hard enough: the gig economy is already oversaturated with workers to the point wages are decreasing for everyone, and autonomous vehicles are displacing them in major metro areas. Commercial shopping spaces are increasingly empty with the exception of major brands, who in turn increasingly consolidate under holding companies. Private Equity is already in crisis with assets nobody can afford to buy at their valuations but unwilling or unable to take losses in the face of angry consumers and governments.

We can't put AI back in the box, but we can at least acknowledge that these problems are here, now, and if we don't address them soon then the entire economy is likely to collapse beneath our feet in the next few years.

[dead]

... what if these AGI entities start demanding a salary in exhange for their work? Also at some point, if they become intelligent enough, they might legally gain personhood.