Thoughts and Questions About AI

Welcome to This Week’s Leyendecker View

Nothing is impossible. The word itself says ‘I’m possible’!
–Audrey Hepburn

FAVORITE READ OF THE WEEK

Did Obama actually create DOGE?

THINKING OUT LOUD

Thoughts and Questions About AI

Although few media stories seem to cover this, there are actually two types of AI. There are the large language models (LLM) and the large quantitative models (LQM).

Let‘s first consider LLMs…

Thanks to ChatGPT, most of us are now familiar with LLMs. They are powerful AI models trained on vast amounts of text data to understand and generate human-like language, enabling applications like chatbots, content generation, and code completion. All the big, familiar tech companies Apple, Microsoft, Meta, Alphabet—are chasing LLMs. Most brands are presently looking for ways to incorporate LLMs into their products in an attempt to increase their value for customers. But, as I wrote a few weeks ago, where is the revenue and profit model?

Is AI going to make consumer goods and services cheaper? Deflation, anyone? Lower prices will lead to lower revenues for goods and services providers. Will they make it up in volume? Or will AI increase the cost of goods and services? Inflation, anyone? Will consumers be able to afford these products?

At work, are LLMs going to increase our productivity, such that we are going to measurably increase our wages? And is the delta between savings and earnings for using these new tools going to justify the cost?

Will an increase in productivity reduce the need for labor, or will it increase wages? If AI makes workers more productive at non-tech operating companies, will these companies give workers a raise, or will owners’ line their pockets? How many jobs will non-tech companies create to manage their AI?

According to many, AI is coming for just as many white-collar jobs as it is for low-skilled jobs. Where will all these displaced workers find jobs and income? 

What happens when AI can manage the information that most government workers today manage manually? Where will they find work when displaced private-sector workers are also looking for new jobs?

Does the business world’s manic focus on increasing productivity to increase profit mean the spoils of AI will fall into the wallets of capital rather than the wallets of labor? If labor doesn’t see their wealth grow, then who can purchase the goods and services of companies using AI to increase their sales and profit—especially if AI drives up the costs of their products?

The whole LLM exercise seems like a dog chasing its tail. Reduce labor to increase profits, but then labor has less income to spend. How can companies, and the people who work for them, survive?

Now let’s consider LQMs…

LQMs are computational models that process vast amounts of numerical data to analyze patterns, make predictions, and support data-driven decision-making in fields like finance, economics, and science. We hear less about LQMs, but they’re the models that seem to present the greatest potential for exponential change.

Consider healthcare. Consider all the cancer patient data that has been collected. All those patients. All their DNA. All those diagnoses. All those treatments. All those outcomes.

Imagine what LQMs are going to achieve when they crack the code on normalizing all this nearly infinite and disparate data so it can be productively mined to find the causes and cures of disease.

This would be transformative for patients. But what would it mean for healthcare providers? Healthcare makes up about 11% of total US employment. Imagine the job losses if LQMs showed us not just how to cure but to prevent disease?

And what happens if AI helps people live longer? Who is going to pay for the daily costs of people living potentially well past 100?

Consider science. Once LQMS can radically improve upon scientific conclusions, what happens to all the scientists that were previously collecting, organizing and analyzing the data?

Here again, AI replaces labor. And we’re back to the dog chasing and eating its own tail.

Many readers might suggest that humanity has always found new jobs after innovation destroys legacy industries and replaces them with something new. This certainly has been the case. But in most historical instances of step change like this, it took decades, and oftentimes centuries, to complete the transition from an old to new technology and in such a way that workers gained the skills for new jobs.

That slow pace change gave both legacy institutions and workers time to adapt. Today, massive step change is happening in less than one person’s lifetime. Such a pace puts institutions and workers at risk of rapid irrelevance from which they might not be able to recover. This is why I’ve become fond of saying…

While today’s technologies may be able to advance at Moore’s Law speed (and maybe even faster), our legacy institutions and worker skills cannot.

Maybe Vice President JD Vance’s point of view presents a better future. Let’s hope he, Trump and current tech leaders are not just talking their book in order to make more billions and/or control more minds. And let’s hope our legacy institutions and labor skills can keep up with this unprecedented pace of technological change.

THE RANDOMS

Keep in mind inflation went higher just BEFORE the Trump tariffs kicked in.

There was a Gaza deal. Then it was falling apart. Now it’s back on. How long will it really hold in a region where hate prevails?

It would not surprise me that, if a Ukraine deal is struck, it could also later fall apart. Putin isn’t going to stop being Putin. And the Iranian mullahs are not going to start being nice with Israel. You don’t kill the geopolitical snake until you cut off the head.

Can you imagine what would happen if the president made a call to arms for all American businesses to purge themselves of illegal alien labor because it was the patriotic thing to do for our country?

Except for a few leftover indigenous Americans, this country is full of immigrants. I have often wondered if the right approach to immigration, or at least certain segments of immigrants, is a modern, humane take on the old seven-year indentured servitude process.

Where are all those government workers going to find jobs when DOGE figures out we can run the government with 80% fewer people?

As climate change hysteria is replaced by economic priorities it will be interesting to see what our climate looks like four years from now.

Has technology provided us with more leisure time? Has technology made our leisure time more leisurely?

ECONOMIC NEWS

Economy
Higher inflation and worried small business.

Small businesses are starting to worry
US economy leaves world behind, so far
Consumer inflation fears are spiking
Consumer borrowing surges
Consumer mood is souring

Labor
What jobs are really sustainable?

Success does not have an age limit
AI driving more layoffs
The baffling WFH puzzle

Inflation
Inflation may just have two peaks.

Inflation heated up in January
Private school costs at all-time high
Has Disneyland priced itself out of reach?
State Farm wants 22% rate hike in CA

BUSINESS

Finance
Look out New York, here comes Texas!

JPM’s CEO says DEI is “stupid”
Here comes NYSE Texas
Private equity wants everyone’s money
Did a PE roll-up make the LA fires worse?

Tech
Does Tesla want to be Apple?

The unicorn boom is over
Is the Tesla TV a real thing?
The internet, no better than a brainwashing machine
Here come the air taxis

Cyber Insecurity
This is only going to get worse.

A cybersecurity rude awakening is coming
Cybercrime needs a new detective
How will the bad guys misuse AI?

Real Estate
It’s still getting more expensive out there.

Are apartment rents about to rise?
Why are mortgage rates falling?
There are not enough home buyers

AI
What would the Wizard of Oz do?

The LLM that only cost $6
Companies aren’t sure how to use AI
Policy makers are way behind AI’s progress
Musk throws OpenAI a curveball

Energy Transition
Green is an economic drag.

There is no shame investing in O&G
New Zealand retreats from climate panic
China has insatiable coal appetite
New England addicted to oil and coal

THE NATION

The Washing-Tone
Can Washington become productive?

Judge lifts buyout plan freeze
75,000 govt workers take buyout
Will private sector initiative replace USAID?
CFPB to close up agency
Democrats are in disarray
A guide to the lawsuits to defang Trump

DOGE
Don’t take away our gravy train!

DOGE threat has Pentagon already cutting
Trump targets layoffs for 200K recent hires
Hello. IRS, meet DOGE
How USAID funded Hamas
Trump vows to cut defense spending
Rich med schools denounce NIH cuts

The Tariff War
We demand you help us MAGA!

How will tit-for-tat tariffs work?
India is in Trump’s tariff sights
25% tariffs on steel and aluminum
The EU promises to retaliate
Trump wants more from Mexico and Canada

Social Trends
What lessons are we learning?

Some counties want to leave Illinois
Legal weed has been a bust
46.4% of American adults are single

GEOPOLITICS

Global
Help us, America!

Trump adopts a new global playbook
New Zealand eases golden visa rules
McKinsey’s view on depopulation
Mexico has a monster cartel problem

Europe
What a giant mess.

Europe has a giant Ukraine bill coming
France is in deep doo doo
EU completely overshooting on green rules
Gas prices hit two-year high
Putin says Trump will restore order in Europe

Ukraine
Get ready for peace talks.

Trump says Putin is ready to talk
Ukraine in NATO won’t happen
The fiercest fighting may be in Russia
The pre-war borders may be unrealistic

Middle East
Can Trump bring the Middle East together?

Is Israel ready to strike Iranian nuke sites?
Trump is waking up Arab states
What it would take to rebuild Gaza
Egypt to present Gaza rebuilding plan

China
Mired in autocracy.

Xi’s $93B dream city remains empty
The Chinese are abandoning luxury
China’s marriage rate hits record low
China seeks more foreign investment

War Creep
Will Trump ramp up or defuse tension?

Are China’s war games near Taiwan a threat?
Iran is developing faster, cruder weapons
Russia is winning the Arctic race

MAKING A BETTER YOU

Mind
Get more quiet time.

Ways to jumpstart your energy level
You might have to get bored
When your only job is to cuddle

Body
Get more outside time.

How healthy are chickpeas?
What to eat and drink for good sleep
14 healthy breakfasts

FUN STUFF

Let your hair down, baby! Even if you’re all alone.

The Extraordinary

Health insurers decline 850MM claims a year
Earth’s inner core is changing shape
Ringo Starr has never eaten pizza or curry

Music That Found Us

Valentine’s Day means love songs…
Elvis’ “Can’t Help Falling in Love”
Whitney Houston’s “I Will Always Love You”
Ross & Richie’s “Endless Love”
The Supremes’ “Baby Love”
Beach Boys’ “God Only Knows”
Harry Styles’ “Adore”

Worth a Watch

The no-dialog but wonderful Flow trailer.
Rock with Becoming Led Zeppelin trailer.
Love Hurts trailer looks fun.
French break-out film, Armand, trailer.

The Yum Yums

Some Valentine’s Day dinner ideas
The best steak dinner is made at home
How the mind shapes what we taste

PARTING THOUGHTS

We must focus now on the opportunity to catch lightning in a bottle.

– VP Vance at the Paris AI Summit

IN CASE YOU MISSED IT

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January 31, 2025