The New Intelligence Meritocracy
The smart get smarter. The stupid get in line.
I have fairly much concluded that the logic behind the AI revolution is scientific. A smart cohort of scientists have been working on the products that are amazing us for many years, and the progress is clear. They make mistakes, they learn from their mistakes. Their machines make mistakes, their machines learn from their mistakes. People are so excited by the probabilities of the rapid expansion and adoption of this technology that talk about trillions of dollars is for real. What could go wrong?
What can go wrong has already gone wrong, and we all have to accept that the rollout of these new things is going to bring a new concentration of new kinds of progress and weirdness. So the fundamental questions about weirdness and progress are what I’m thinking about in terms of shifting balances about the economic dislocations in our society.
Sheila Bair & Paul Volcker
Two of the smartest and most capable individuals to ever work on behalf of keeping our economy useful and fluid for American families and individuals are those two heroes of mine. There’s 250k of dollars you can never lose from American bank failures, even in systemic collapse because of their work. It used to be a fraction of that for my entire life at the FDIC. When we lost Lehman, 20 trillions and our minds in 2008, one of the reasons was because the business of finance in America became self-serving. These two geniuses understood that. In reading Bair’s book she made the profound statement that the percentage of GDP of America centered on banking and finance was outsized. Therefore the country suffered that much more when that sector of the economy screwed the pooch.
Now let’s think about that in practical terms. Imagine you have a fixed size of economy more or less, but the brainiest and hardest working people follow the most lucrative and influential paths. Well why wouldn’t they? That’s the very premise of meritocracy. Three genius students follow three paths. One goes to Wall Street. The second other goes to Silicon Valley. The third goes to Benton Harbor, Michigan. Now you could probably guess what majors the first two had, finance and computer science. Well the third is an industrial designer and mechanical engineer. He’s not working at Google or Goldman, but at Amana. Long story short, the first guy builds a financial insurance instrument that the sales guy at Best Buy sells you when you buy a new refrigerator. The third guy builds a refrigerator that you expect to last for 10 years. The second guy builds all of the software logistics that gets the machine parts, trucks and service people coordinated to get the goods from Michigan to your local store. Oh by the way they get kickbacks on the ads that come with knowing the digital facts that you own that particular refrigerator and live in the particular neighborhood that you do. After all, you did sign the contract to buy it. Three different revenue streams from refrigerator sales.
It used to be you just bought a refrigerator, but these two additional revenue streams cost you money. So much so that now refrigerators that last 10 years are effectively too expensive for most people. Now I want you to think about how much money you could save if everything you bought was like groceries. You just get the thing itself, no service contracts, no built in intelligence, no marketing tracking, no replacement insurance.
If you have a flat screen TV and have replaced it since the days when arguments were about plasma vs LED, you know what I know. There has been progress. Brighter displays use less energy and cost less. There has also been enshittification. TVs are no longer repairable and they don’t last 10 years like they used to. So the change in manufacturing standards (because nobody makes money selling TV spare parts) have shifted the economic balance. My old TV repairman told me, when he could no longer replace the capacitors in my old Samsung, that I should by another one plus the five year insurance policy and replace it after 4 1/2 years. Now my TV tells me when my washing machine is finished with my clothes. I didn’t ask for that. My TV periodically downloads software updates. Why?
I pay for Apple Care. I’m not sure why I do. Is that money going to Apple or AT&T or the guy who monetized that insurance business on Wall Street? I think you get my point. This is why we can’t have excellent manufactured goods. An entire class of manufactured goods have been insured into shoddiness. An entire class of healthy foods and exercise have been health-insured into pills and supplements. An entire class of consumer products are now just leased.
The Pareto Principle
I’ll be brief. You know Bad Bunny because he did something at the Super Bowl. He increased his famousity to the permanent level for American markets. Like Joey Buttafuoco, it doesn’t matter who he was before or after. He had that thing. When a person or product reaches that level of memory in society, society will always retain that. This is the Pareto Effect. That which gets popular, stays popular. It doesn’t have to be great, it merely has to go viral. This is what we are stuck with. It’s not only like traumatic human memory but it’s also an economic fact. If you would like to give yourself a quick lesson, try Wikipedia. My favorite Pareto prediction is that 150 years from now people will still listen to John Williams’ music for Star Wars, especially Darth Vader’s Imperial March.
This is what will make for a further imbalance in the American society and economy. There’s just too much money going into the AI industry for any other aspect of our current monetizations to resist it. The more hard work and intelligence we put into AI products and services, the greater share of GDP it will amass. The big guys are going great guns. Fine if you get your income from from Silicon Valley, not so fine if you have to add more intelligence into you fruits and vegetables, and other consumer goods to pay for those trillions of investments.
This society is going to change in many different ways, but they will be subtle just like the decline in quality of TV screens. The decline in quality of TV shows. The decline in the quality of public knowledge, the increase in dysfunction that gets normalized and consistently monetized. In other words, the kudzu of cultural slop.
Populist Truth
Let’s talk about reality TV shows. I don’t think one should underestimate the failing of intellectual discernment that shows up in this chart. Fewer and fewer people are watching scripted television. Is that because watching the personal dramas of ordinary peasants is more fascinating, or simply because it costs less to do and takes less intellectual work of scriptwriting, consequently quality is being starved out?
I like to think it’s one more pound of evidence that people are getting more and more stupid and less and less intellectually discerning. Yeah I guess I care about that.
The Ratchet of Doom
So what do we have altogether here? Populist shite gets more popular. Virality trumps discernment. Various sectors of the economy steal revenue with their add-ons to basic manufactured, durable commercial goods, and AI is the coming wave.
I think it means that people of discerning taste are going to have to try harder to stand among friends in the coming society and economy. What’s common knowledge and decency will not be so common. The problem is it probably won’t be intelligence that’s going to make our critical distinctions, especially among us peasants. I know that the AI moguls know that, but they expect it to be offset by gains in biological science, etc. So I’m actually pretty glad that George RR Martin and JRR Tolkien still have space in some of our imaginations. More on them later.
The immediate thing to look out for is the extent to which Millennials, our largest population cohort and drivers of the future economy pull a huge Tomagotchi preference switch. That is to say when do they start getting disgusted with each other and prefer to spend more social time with digital pets and partners. You’ve seen the movies from Her to Moon to Surrogates to Ex Machina. Sooner or later we’re going to get that movie where the social apocalypse feels so real and a sensitive caring human being feels so alienated that they must escape to that paradise without people. Idiocracy was a parody. This will be a tragedy.
We already have enough Florida Men, Karens, Groypers, SJWs and scores of other readily identifiable & socially objectionable people to avoid. I know them when I avoid them, or their loud trucks, or green hair, or mirror shades. It’s not just the 1%. The enemy is us, and the nihilistic shitty products we consume and defend as our lifestyles, or our work environments. I see this kind of stuff on Glassdoor all the time.
Stoic Observations, The Book Club
I do like piña coladas and getting caught in the rain. But I have not yet planned my escape. In my pursuit of focus and beauty for this year, I have found a kind of discovery and exposition that works well for me. Until the day I can truly retire in relative comfort, I’m going to have to ride the AI wave with my near focus. And I cannot honestly guarantee that it might be pointed in the direction of human well-being. The market prospects are currently dim for me personally, after all I have all the appearances of the sort of Wall Street + Silicon Valley cohort that I thought were the leaders of the whole pack when I started my career in the 80s. I never expected open source to get this good, nor that we would have literally millions of hackers worldwide. The pace is even more torrid than ever.
We’ll all survive the swamp. It has been worse before. Remember that salacious TV show called Match Game? I watched as a teen wondering if this is what adults were like in the real world, or this is their level of intellect.
The only clown that ever frightened me was Charles Nelson Reilly. The point is that any 12 year old with an AI can come up with an equally simplistic game show with its titillating premise. The AI will write all of the jokes. All the integrity of the process that kept the game show universe intact in the persons of Mark Goodson and Bill Todman can be loosed in the next generation of agentic consumer entertainment products, even cheaper than reality shows. As cheap as TikTok, but more addicting and more grabby of your attention and demographics.
So it’s time to join the book club now, because there’s a lot of buried treasure in the principled imagination of the West, even as it runs so many of its inhabitants off the rails. The chaos infiltrated Harvard University. What makes you think you’re immune? Today our entire variegated social morality and convention is a-splatter, but it is more easily navigable today than it will be when more intelligence is available for every Tom, Dick and Harrybot. That’s why I’m curating beauty and putting copies deep into the infrastructure of the beast’s data centers, and in my anonymous garage. It’s still here to be found. Don’t despair. I don’t. I can’t. I keep finding treasure amongst the ruins.
Are we staring down the old order? I don’t know, but I think there’s a new kind of lion coming to take its share. Be prepared.