The Exchanges

Q off. We've discussed it on the show that it seems like it's harder to get an entry level job, uh, today than it ever has been. Uh, maybe outside of recessions, uh, like in a good economy, it seems like it's difficult. So do you ascribe any of that to the AI boom, or is that just something else that's happening and we're sort of conflating the correlation and causation?

A Um, I think, uh, we don't know. So, um, the answer is that we don't know what the hell's going on. You know, I've seen data on like entry-level jobs, you know, there, there has been a slowdown entry-level hiring, but there's a number of reasons this could be. So one reason is the macroeconomy. One reason is, um, two, there was over hiring of entry-level jobs during the, like, twenty-twenty-one during the bubble, and now people, like, glutted on entry-level jobs and are now cutting back for a while. Um, there's, you know, there's other stuff too, and there, there's, there's the glut of people who just all stampeded into the same few majors and career paths. And so, um, yeah, so, so there's all these things going on. Uh, and it's not, it's very much unclear as to what's going on. So there was a good economist article by someone who really doesn't believe this thesis, you know, claiming to debunk it all. And I, I don't think they completely debunked it, but they raised lots of other possible explanations that were pretty sufficient, I think, to explain it. We don't know which is which. It could still be AI. This could still be what's happening. Uh, but I think that we don't have enough evidence to conclude one way or another what's going on there.

AI assessment note: “the answer is that we don't know what the hell's going on”

Q ports, and others are like, well, you know, it's, uh, everything is back to normal, and, and Trump will, you know, everybody's anticipating that Trump will chicken out again, and you have the S&P, which, you know, the day we're recording is up nearly four percent on the year. It was down 15% on the year April eighth, so an unbelievable rebound, uh, from the S&P. So what's going on?

A So I do think that the reason why the financial markets are doing well is because people have decided that Trump's going to chicken out and that these pauses will be permanent. And then they'll announce quote unquote deals that allow us to cut all these tariffs. And that basically Trump's a bag of wind. I think traders are betting on that. It's pretty obvious. Um, and the reason why financial markets abruptly crashed when Trump announced the tariffs was because they thought this is for real. When they decided it wasn't for real, they bought and finite financial market prices, asset prices went back up. Um, however, do I think that that's really true? I think that there's some, there's some issues. There are some negative effects. That these tariffs are going to have that even if Trump does chicken out, there's uncertainty about what if Trump doesn't chicken out on this or that. Also, it's not like tariffs haven't gone up. They have gone up just like more, much more modestly than Trump was threatening. That will go up a bunch of things. How big an impact it's going to have is hard to say because currency movements adjust and other things adjust to like balance it out. But like, it's going to be, there's going to be some pain from that, especially in certain sectors. And, uh, Um, the threat of tariff-driven inflation will lead the Fed to keep interest rates higher a little longer…

AI assessment note: “the reason why the financial markets are doing well is because people have decided”

Q the The spiritual inheritor of the, uh, you know, Black Lives Matter protests, uh, and the, the woke left, uh, and yet it seems like the, uh, the minority groups within New York City are going towards his opponent while, um, white and Caucasian groups are, you know, going towards him. Asian, Asian, by the way, Asian voters, 58% towards Zoran and 16% to Cuomo. So what's your read there?

A Um, I think that you're seeing, partly this is education polarization. I think that white people are more likely to have, like, college degrees and stuff, you know, so, um, there's been, like, a lot of, sort of, lefty ideas have really caught on among the educated populace that have not caught on among the working class. Uh, Barbara Ehrenreich called this, uh, PMC socialism. She called it professional, professional managerial class socialism. Um, and a lot of people like infinite people have remarked on this, this tendency. I think it's the most important political tendency in America today, but then, uh, certainly, yeah, I think that, that you definitely see, um, uh, just lefty ideas appealing a lot to the, uh, educated professional class. So I think you have an educational, uh, divide there also. Among, this is a Democratic primary. So you have people who are registered as Democrats. And I think in general, there's two reasons you'd register as a Democrat. One is that you feel that, like, Republicans are against your group of people, and the other is that you're a liberal. Right? And so I think that with white people, you don't think, like, you don't think Republicans are against white people. So you'd be a Democrat if you're a liberal, but if you're black, if you're Hispanic, you might think, well, Republicans, you know, you might be a kind of conservative person who doesn't…

AI assessment note: “I think that you're seeing, partly this is education polarization.”

Q I mean, this is a dumb question, but how do you establish deterrence against a country that's building a hundred nuclear weapons a year?

A Well, I mean, like you said, if you have a sufficient number of nukes, you don't need to build a hundred a year. You have enough to deter them. Um, but then also you, you build up a large army and you get a bunch of allies. We need allies. And Trump doesn't realize this enough. And Trump administrations really under emphasize this. You get a gang together. There's a big guy on the block and big, tough guy. You get a gang, you roll deep. You know what I'm saying? And so we need to ally with India. We need to ally with Japan. We need to ally. I mean, we're already allied with Japan. We need to ally with, but we need to strengthen that alliance and get Japan to like remilitarize Korea, obviously. Um, uh, Vietnam, we should be focusing on, uh, Indonesia maybe could possibly be helpful to us in some way. Um, Australia, obviously small, but they're around, uh, Europe, you know, um, Europe needs to handle Russia, which fortunately they may now do. Um, and so there, so there's all these countries that we need to ally more with, and Trump has been tearing up, not just tearing up our alliances, but like also tariffing people and just being a general asshole to everybody we like. This is going in the wrong direction. It's not establishing deterrence, but then Democrats, you know, tend to cut military budgets, which is also not great. And so like, we need to build up our own army and get t…

AI assessment note: “if you have a sufficient number of nukes, you don't need to build a hundred”

Q economic message that I think has really started to work in the US. Is it, I mean, is it also the fact that, like, it's kind of this, like, FOMO culture where we are gonna, we're, you know, we see all, all the activities of the super rich all the time because it's on, you know, TikTok and Instagram, or is there something, is there something else that I'm missing?

A Um, yeah, no, I think, uh, that is, that is basically, you know, what's going on. Here's the thing. A lot of the, the conflicts that people immediately had were racial conflicts or things like that, you know, uh, certainly during the first decade of and a half of Twitter, first decade of Twitter, let's say racial conflicts. I mean, there were some gender conflicts too, but I think racial conflicts dominated. So obviously Black Lives Matter was about that, but you saw conflicts over representation and wokeness and white supremacy and all this stuff, right? You saw, uh, there was like, um, You know, years of, of racially centered conflict in America, people probably get tired of it, and people probably want to fight about something else. Economic conflicts never really got addressed, never really got resolved.

AI assessment note: “years of, of racially centered conflict in America, people probably get tired of it”

Q had a McKinsey report come across the big technology discord that I found interesting, where the consulting firm finds that nearly eight in 10 companies have deployed generative AI in some form, but roughly the same percentage report no material impact on earnings. They call it the generative AI paradox. I mean, it's not that companies aren't trying, it's just they aren't seeing success. What do you think about that?

A Um, so I think that, uh, here's a story from the, uh, this is one of the economists' favorite stories about technology, and it's the story of how electricity was incorporated into factories. So originally you had steam powered factories, which would essentially had a large boiler, and the boiler would turn a belt or a crankshaft or something like that, and then, uh, everything would turn at the same rate, and then people would have to like slap stuff together at the same rate, and you were limited by your rate limiting step, your slowest step, right? And so that, that happened. And then, um, people, um, that, that's how factories worked, and if you see old, like, Mickey Mouse cartoons, he's, like, on this conveyor belt that's, like, everything, like, stamping something at a, at a uniform interval. That's because that's steam powered. You couldn't slow down. And so when they, when electricity got invented, factory owners were like, okay, how are we going to do this? Um, let's rip out our steam boiler and put in an electric dynamo. You know, it's, uh, electricity instead of, um, You know, you just, just run a electrical cord and power your, your crankshaft or your belt that way. It turned out that electricity released, uh, much less power than steam did. And so it was just a lot weaker. So you had to pay a lot more for the same power. It's like trying to heat your home with like …

AI assessment note: “this is one of the economists' favorite stories about technology”