The New Pied Piper

Welcome to This Week’s Leyendecker View

We should never forget the Constitution wasn’t written to restrain citizens’ behavior. It was written to restrain the government’s behavior.
– Rand Paul

THINKING OUT LOUD

The New Pied Piper

What does it tell us that Sam Altman, the person leading the world into the artificial intelligence era, is a big proponent of psychedelics?   

What does it tell us when Sam Altman courts Washington to support an unprecedented investment in data centers that would exponentially boost AI capacity?

What does it tell us when OpenAI’s chief technology officer resigns?

What does it tell us when OpenAI seeks to move from a not-for-profit to for-profit model, which could catapult Sam Altman net worth to $150 billion?

Some VCs suggest that AI will soon significantly reduce the number of jobs and/or the amount of human work needed in jobs. If this shapes up to be the case, then where are people going to get the wages to spend on stuff that supports an AI-driven world?

The default answer these days is that we will need to create a universal basic income (UBI) worker safety net.

Is UBI going to provide the unemployed and underemployed with enough money to consume wants? The “basic income” in UBI does not suggest it will. So let’s call UBI what it really is: welfare.

Do our current welfare safety nets cover our wants, or are they supposed to just cover our needs? Today, Americans are more reliant than ever on government aid. Is this just the tip of the iceberg of our future social safety net needs?

How will Facebook and Google make as much money from advertising when a growing number of AI-displaced workers may only have money for basic needs consumption? How will Apple sell its lovely iDevices?

As I’ve asked before, where is this UBI going to come from, given our country’s current debt problem? And where are the efforts to set up such a fund? Aren’t all companies constantly trying to reduce their corporate taxes?

Where’s the voluntarily-funded cash stash from Sam Altman, Google, Facebook, Microsoft, Apple and all the other big tech companies for UBI payments? Where’s their commitment to allocating a portion of their profits to a UBI fund?

If there’s an AI-induced jobs cliff coming, then there’s also going to be an economic cliff. With fewer jobs and/or lower pay from less work, there will be less personal income for consumption. This suggests that, at some point, all this wonderful AI may have fewer customers to pay for it.

Is Sam Altman a modern day Pied Piper?

THE ECONOMIC VIEW

US jobless claims remain subdued
Hiring blows past expectations
Do we even need another rate cut?

Services economy grows faster than expected
The Fed is not in a rate cut hurry
At least not right now.

The US had avoided recession.
Now are all bets off?

INFLATION, DEFLATION, OR BOTH?

Expanded Mideast conflict drives oil higher
Can geopolitics cause inflation?

With the dock workers port strike
Freight rates are rising
The strike is off after a big pay raise
Will this show up in inflation?

The battle for inflation may be over.
But it doesn’t feel that way

THE LABOR VIEW

Amazon mandated 5 days in office.
73% of employees consider quitting

The C-suite is changing.
Soft skills are increasingly valued

Protecting jobs from automation
Is behind lots of union strikes

MEANWHILE IN EUROPE

French PM raises taxes and cuts costs
Here comes the austerity cycle.

The UK is now coal free
Are their priorities misaligned?
Good news for US LNG

Europe thinks it wants to rearm.
But they’re shoelaces are tied together
The European left faces extinction
Take note, US progressives.

THE GLOBAL GAME

7 unique global economy factoids
Compare them to our economy.

Mexico seeks to usurp Panama Canal
Mega project is already underway.

Cubans are fed up with their government
Cubans are still fighting in Ukraine

THE UKRAINE FIRE

Kremlin authorizes NATO cyberattacks
Is this now a world war?

Russia depends on the yuan for trade
But these days may be numbered.

Winter is coming for Ukraine.
It loses eastern stronghold
Can long-range missiles save it from Russia?
Ukraine decentralizing power generation
As Russia attacks that infrastructure.

THE GAZA FIRE

Iran hits Israel with missile barrage
This war keeps escalating.
Iran’s axis of evil is flailing

Israel goes after the Houthis
And sends troops into Lebanon
After many secret raids this past year
Can they defeat all Iranian proxies?
US forces prepare for Iran attack

THE SLIPPERY SLOPE

South Korea loading up on suicide drones
The slope toward war gets slipperier.

America’s adversaries are teaming up
What’s their plan to end US influence?

The rising risk of autocracies
What’s your play, Western world?

FINANCE

IPO market for PE companies is open
So suggests JPMorgan.

The next era of private credit
McKinsey’s view.

Why private equity is in a funk
Is it because easy money is over?

REAL ESTATE

Americans moved to disaster-prone areas
So now we have more disasters.
People are ready to leave the beachfront
Insurance costs are soaring!

Zillow to include climate risk in listings
This could be a game change for home values.

The coolest neighborhoods in the world
Don’t tell anyone, shhhh…

IS TECH A WRECK?

High-purity quartz is a semiconductor must.
Hurricane Helene flooded a vital source

Intel races to get Biden’s free $8.5B
Before it implodes or gets acquired.

Data centers should provide their own power
Why should everyday citizens subsidize them?

THE CHAT ON AI

MIT economist an AI skeptic
A lot of money is being wasted.
OpenAI raises billions.
And asks investors not to invest in others

Microsoft upgrades AI Copilot
But where’s the revenue model?

Newsom won’t sign AI bill
Big AI wins again!

OUR GOOD FRIEND, FAILURE

As marijuana use grows
So do its harms.

Elite college students can’t read books
Who needs to read a book anymore?

Are psychiatric hospitals trapping patients
By prioritizing money over people?

THE NEXT NORMAL

Are we past peak obesity?
Do these drugs have long-term side effects?

The future of dentistry
Looks pretty cool.

CA bans legacy college preferences
A good policy out of California?

Young American men
Are falling further behind

THE WAR ON CARBON

Our climate obsession has ancient roots
We used to call it paganism.

We needed a low-carbon future.
But then AI showed up
Can nuclear energy save the day?
Grid operators are worried

Is carbon capture storage really viable?
John Kerry questions the industry.

THE ENERGY TRANSITION

Clean energy startup running out of cash
Do these companies have to make money?

Europe’s heat pump sales tumble
As subsidies dry up.

Cow burps will get cleaned up
Selective breeding may be a solution.

THE EV DREAM—OR DELUSION

EU to move ahead with tariffs on China’s EV
Will this ignite a trade war?

New cars are full of electronics.
Good targets for hackers

Countries back away from EV support
Too soon, or practical economics?

THE CHINA SYNDROME

China tries to stimulate its economy.
Can they crawl out of their hole?

Lower rates for mortgage refinancings
But consumers aren’t feeling better
Factory activity continues to decline
Hong Kong mansions going for 50% off
Housing glut is a problem
When you have a shrinking population

THE ELECTION DISTRACTION

America’s youngest voters
Are turning right

Trump promises quick end to Ukraine war
He does like to negotiate.

How Harris and Trump spend campaign money
Might we consider this distasteful?

MAKING A BETTER YOU

The power-building workout
Stay strong, live long.

The art of taking it slow
You’re not a Tour de France racer.

7 sleep myths
What is a good night’s sleep, actually?

HOW ABOUT A BREAK

The brain’s twilight zone
Neither awake nor asleep.

The world’s oldest cheese
Buy it off a mummy.

The Rose of Tralee
A beauty pageant like no other.

THE EXTRAORDINARY

There are more tigers in captivity
Than there are in the wild.

Are miracle drugs around the corner?
AI could get us there soon

AI helps archeologists
Discover 303 unknown glyphs

MUSIC BOX

“Loving Her Was Easier”
RIP, Kris Kristofferson

“After the Love Has Gone”
Amazing a capella, WOW!

“Never Gonna Give You Up”
Where is Rick Astley today?
Remember “rickrolling”?

CASTING AROUND THE PODS

Are men in crisis?
Prof G Pod with Scott Galloway digs in.

How to tell a story no one forgets
Shane Parrish interviews author Matthew Dicks.

VIDEOS OF THE WEEK

This is a tennis tournament commercial
Really, it is, I swear!

A day working with NYC’s Hot Dog King
Send your kids there for work experience.

Crafting a cello by hand
As beautiful as its music.

FROM THE HEADHUNTER’S KITCHEN

French onion soup pasta
Oh me, oh my!

Great apple recipes
That aren’t pie.

The pawpaw.
America’s best secret fruit

THE RANDOMS

Communication today funnels through a giant pipeline called the internet, which governments can control and manipulate. Is this why autocracies are on the rise around the world?

I’ve written in the past that the more complex any system gets, the more systemic risk builds.  Let’s apply this to the dock workers strike. Without dock workers, goods get stacked up at global manufacturers while local businesses and consumers go wanting. A kink in the process causes the whole supply chain to suffer.

Maybe another way to describe this situation: If one link in the bicycle chain breaks, the whole bicycle stops working.

It’s not a comfortable thing to contemplate, but the clean-up and reconstruction after Hurricane Helene will provide near-term economic stimulus. Accuweather estimates the cost of destruction could be as high as $160B. A good amount of money will soon transfer from private insurers and government entities to the reconstruction effort.

Hurricane destruction can be considered an example of broken window economics. There’s a short-term stimulus from the reconstruction, but it comes with opportunity costs and the law of unintended consequences. 

By the way, only 2% of homeowners in Helene’s path had flood insurance.

It seems naive and comical that so many in the West believe the path to peace with evil actors is achieved through diplomacy. Diplomatic efforts with evil actors do nothing but allow them to keep acting badly. The only way you deter and/or defeat a terrorist organization is by making them more scared of you than you are of them. You have to fight them and beat them at their own game. Evil knows nothing else.

IN CASE YOU MISSED IT

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September 27, 2024

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September 20, 204