Peter St Onge rejoins me on the show to talk about AI and what it means from an economic perspective. Many believe that all the jobs will disappear or there will be massive economic chaos.
- AI and what jobs it will take
- What new jobs will be created?
- What about UBI?
- Implications for choosing a career
- ChatGPT and political bias
- Existential risks
- Trillion dollar coins
- Twitter: @profstonge
- Substack: HyperBitcoinization | stonge.substack.com
- YouTube: @Profitsofchaos | Youtube.com
- Prior episode: SLP272 Peter St. Onge – Bitcoin Energy Double Standards & Why Robots Are Not Taking All Our Jobs
- Swan Bitcoin
- Unchained Capital (code LIVERA)
- CoinKite.com(code LIVERA)
Stephan Livera links:
Stephan Livera – 00:00:28: – Peter, welcome back to the show.
Peter – 00:03:31:
It’s great to be back to five.
Stephan – 00:03:32:
So, Peter, I’ve always enjoyed reading and listening to some of your takes over the years. Obviously, as an Austrian, I’m obviously a big fan of Austrian economics and so I think there’s certainly a lot of things that we’ll align on. And I thought to have a chat with you recently because obviously this whole drama with ChatGPT and AI and where is it all going? And I know this is something you have, in fact, written and spoken about from an Austrian perspective years ago. And I believe people were talking about some of these ideas as a kind of futuristic idea, let’s say maybe ten years ago, and even, let’s say kind of around 2015. I believe that was when you had one of your videos and you were also writing articles about this also. But, yeah, I guess let’s just hear a little bit from yourself, like, what’s your initial reaction to this whole idea of ChatGPT or mid journey and these other AI tools?
Peter – 00:04:27:
Yeah, I think the idea that humans are going to be obsolete, right. That we’re going to be replaced by machines or technology that’s been around for a really, really long time. You know, back in the 19th century, the luddites, Ned Ludd, they were running around smashing machines and, you know, they were horrified that the machines were going to take all the jobs. And of course, what happened is that actually, everybody got incredibly rich. The machines did take the jobs, it did happen. Everything happened according to their worst fears and as a result, we got astoundingly rich, right? And so this is a process that has gone on forever. The very first human who started using fire or a fishing net, that’s a form of automation fishing net stole jobs from fishermen. And what do you know, you’ve got a lot more fish. So it is very good that jobs become automated. We’ll get into along the way. But anyway, there’s always fear about it. And part of that fear I think is genuine that people are actually afraid that their own job is going to disappear. The other part of it I think is just opportunist, right? So socialism handouts, giving people money for free. This is always popular. This is why it’s been a thousands of year battle against socialism under various names. And so there’s this entire sort of political infrastructure that is looking for an excuse to give people handouts. Right now I think it thinks it’s found its moment. So during the COVID crisis, a lot of countries implemented basically universal basic incomes. Giving Canada for example, where I was living at the time, no questions asked, here you go, here’s some money. And now they’re trying to sort of combine that test run with artificial intelligence to basically say this time is different. Sure. Last time the machines, automated farming, sure, it turned out okay. But no, this time, this time is different. So I think within that you’ve got an economic component to it. Are we going to be okay? What’s it going to look like? There’s a social component. So how do we react to AI? What does it do to society? Does it do good things, bad things? And then there’s kind of a fun we can get to towards the end kind of a broader existential or almost science fiction scenarios that I think are becoming more and more worth considering if people start actually putting more real decision making into AI’s hands.
Stephan – 00:07:24:
Yeah, I think that’s a great overview because there’s all these different implications of it, right? The economic part of it. I think that some of the arguments go back and forth. So for example, one argument is, well, think about it like this way. AI is going to amplify our productivity that maybe one person now can do the job of five people. So maybe today the argument is, okay, ChatGPT or these other AI platforms, they can’t replace the best copywriters but maybe they could take away the job of the very low end beginner level copywriting just as an example. And so then the argument might be that, oh, okay, maybe if you’re a good copywriter and you know how to be a so called AI prompt engineer that you can multiply your productivity and become so much more productive in terms of how much copywriting that you can do. So that’s kind of, I guess, one idea. But then I think maybe one criticism people have, and it would be great to hear your response on this, is people say, well, what about the massive social upheaval that’s going to happen? They say, well, all of these jobs are just going to be totally obsoleted straight away and it’ll be too quick for those people to be able to retrain. And I’m curious how you kind of answer that.
Peter – 00:08:39:
Yes. So on the idea that these sort of midlevel performers, you’re going to get more inequality between performance. Okay. That, I think, is absolutely true. That’s also true today if you are good at marketing or if you have an appealing personality. If we take Mr. Beast, for example, in a pre-internet world, what is Mr. Beast doing? I don’t know. He’s hanging out, entertaining his friends. Maybe he’s down at the local bar entertaining 30 people. Right. That doesn’t scale. Okay. But Mr Beast has a very appealing personality, and so he effectively automates that personality by connecting it to the Internet. And so. Yes, Mr. Beast makes a lot of money, and most people are not charming enough to make millions of dollars by saying and doing random things on the Internet. So, yes, there’s absolutely going to be a divergence. But I think the way to look at it, my favorite metaphor for what automation does for jobs is an escalator, right? So the escalator is going up, but every so often you have to take a step down. Okay? Now, a society without automation, like a primitive somewhere on the edge of the Sahara Desert, they have no automation. They have lots of jobs. You probably have jobs clearing out toilets at night. You don’t want those jobs. You want those to be audit, to be automated. So that’s like a staircase. Everybody just kind of stays put. You don’t really progress very much. On the other hand, in the escalator metaphor, things are automating. Things are getting cheaper. Now, having said, one of the elements of that is that sort of the economy by its nature, tries to reduce the use of expensive things. So if you’re using gold in cellphones, then you would try to find some other substitute for it, right. Some other metal that conducts and so on. So this is the nature of the economy because people are trying to produce things at lower cost. This is wonderful. If you want to protect the environment, there’s a natural tendency for companies to economize and to waste less because they want to spend less. However, in this particular context, it means that, yes, companies are always trying to automate your job. They are trying to get rid of you. Right. But as long as that process is allowed to continue and in fact, to the degree that it becomes a crisis, it would only be a crisis because that escalator is going up so fast. So if we sort of Zoom out, consider that in the United States, a maid, like a house cleaner makes about 25 times what they make in Indonesia. Now, Indonesia, India, right. Many countries in the world, okay, an American house cleaner makes a ton more. A British butler compared to an Indian butler, 10 20 times more. Now, are the American house cleaners better? Probably not. They probably don’t know how to cook, they can’t negotiate good deals. At the wet market, they’re probably no better. Right. What’s happening is that they are sitting on an escalator. They are benefiting from the wealth around them. So that even though house cleaning is not a very well paid job, well, in the United States, if you have a job painting a house or cleaning houses, you can buy a car, you can get a mortgage, you can live a middle class lifestyle that an Indonesian house cleaner could only dream of. So I think that’s kind of the big picture. This has been known, by the way, for a long time, right? This is Bastiat’s candle makers petition, right? If you’ve got some technology that is giving you free stuff. So in the case of Bastiat’s petition, it was sort of an ironic complaint from the candle makers that the sun provides unfair competition. And so in a sense, the sun was automating the candle industry, right, and it was taking away their jobs. And so similarly, as automation progresses, whether it’s farming or factory work, or in this case, white collar work, you’re getting the same effect. Right? It is a gift to the universe. Yes, individuals will step down, they’ll go down one rung. But at the same time, if that’s really serious, if AI is affecting the economy to the degree that we would consider it a crisis, then it means we are getting rich very fast.
Stephan – 00:13:24:
That’s a great way to put it. Now, another concern, and perhaps this is related to the inequality one, so typically progressives care more about this. But there is a concern, I’ve heard, where people say capital owners will be vastly rich. And if you are not a capital owner and you do not have access to the robotics, the machinery, the AI, or the question of access, that if you cannot pay for access to use ChatGPT or mid journey or one of these things, that there’s a concern of access inequality and inequality there. So perhaps that’s just like a very fundamental philosophical question of do you believe inequality that it is with us, whether we like it or not. I guess that’s one way to think about it. How are you seeing the inequality question now?
Peter – 00:14:07:
Yeah, I think inequality, it’s always there simply because humans differ in their motivation to a certain degree, their natural talents and such. But the thing is that as we get wealthier, the inequality bites less. Okay, so you’re not talking about some people are starving to death and other people are eating like medieval kings. Right. The inequality that we see in a society like America, it is relatively minor. People who live below the poverty line, they have air conditioners, they have Internet connections, they actually have more food than is probably healthy for them. And so I think that that process definitely continues where, yes, everybody’s getting richer, but like with the early Internet, right, one of their early concerns was that the poor people aren’t going to be able to get on the internet. And indeed, I had a buddy back in 1993, three or four, he was getting on the Internet. He was spending $1,500 a month to get on the Internet because he thought it was so cool. Right. It was like a life changer for just social activities, for talking to people, not even for business. And back then you might have looked around and said, oh, this Internet is going to be horrible. All the rich people are going to be able to sit around and coordinate and connect and then the poor people are just going to be on the outside looking in. And the logic of capitalism is that greedy capitalists want to sell more product. They are trying to earlier mentioned how they’re always trying to make everything cheap. Well, the reason they’re trying to make it cheap is so that they can sell to more markets. So the bottom of the pyramid, even the poorest people in the world, you can make a profit off them if you provide a product, especially if that product helps make them more productive. If now they can work on fiber out of the Philippines and so they can make enough money to afford whatever product you’re connecting them with. So you get this virtuous circle. And so, yes, I think that inequality will continue. It is always with us. It will not feel as painful as it does today.
Stephan – 00:16:19:
Yeah. And so when it comes to the types of jobs, do you have any theories or ideas on what kinds of jobs will be replaced and which ones will remain for a little while longer?
Peter – 00:16:31:
Yeah, probably to the extent that AI gets better, we’re probably looking at white collar jobs. So data entry, customer service, copywriting market research, content creation, chatGPT can do a pretty decent job of writing a blog post and lots of other things. But I think when we’re talking about what kind of jobs are going to replace these, we kind of want to Zoom out and consider we kind of fall into the habit of looking at a job as like a valuable resource that we don’t want to slip away. But the job is not the resource. The human is the resource. Right. So if you sort of do a thought experiment, what if the aliens teleported 10,000 Toyotas onto the side of the highway and just left them there and completely unknown? What would we do as a society? Well, they’re resources. I don’t know. We would scoop them up. You would get on the news and say, hey guys, there’s a bunch of free Toyotas on the highway. Grab one, okay? They’d be scooped up instantly, no problem. Why? Because it would be a very fluid market, right. People would get on a bicycle and go grab a Toyota. So as long as markets can clear, in other words, as long as an unknown resource can be bid at a correct price. All of those humans are unknown. Toyotas right? They are people who are useful in some way. The activity that they used to do has been automated. But, you know, so now they have to step one down on the Escalator and they have to turn to what else they can do. Now, humans are not only physical and cognitive beings. There’s a lot of value that humans have simply because they are human. So, for example, handmade things are almost always worse quality than mass produced, right? Anytime you hand make a chair or something, you’re going to introduce flaws to it that you’re never going to have Six Sigma production. When you’re hand making a chair, however, that actually makes them more valuable. You could do a CGI Van Gogh, especially now with the AIs. You could spin up 5000 Van Gogh paintings in the next couple of minutes, and yet people still want the original Van Gogh. In fact, the original Van Gogh go up tremendously in price because of the Escalator, because the society is getting a return around us. So if we look around us, Etsy, for example, the website where people hand-make art products, it’s a massive field. It’s growing more and more people want that. And the reason is because as people get richer, they don’t want the version of chairs out of Walmart. They want something interesting and creative. I think that there’s going to be a lot more demand for all those kinds of things. We can consider bartenders versus vending machines. Bartending has been automated for a very long time, over 100 years. And yet people don’t want to go to a bar and sit there and look at a vending machine, teaching versus a YouTube video, raising children versus sitting them in front of a Barney video on the iPad. All of these are functions that they’ve been automated for a long time. You can very easily automate your babysitting, you can raise your kids using an iPad. And yet people don’t want to. People actually want the human connection in there because it is a human, not because it mimics the human. Right? You’re not talking to the bartender because he acts like a human. You enjoy talking to him because he is a human. The value is inherent in being human, because we’re humans. We like other humans. So if you consider medical fields, elder care, education, the vast majority of those jobs are done by a human because the humans want them to be done by a human. And again, if you go back to a lot of these, if you’re talking about elder care or something, it doesn’t pay as well as whatever other skilled jobs those people might have had. But you’ve got the Escalator coming in underneath you so that society is getting much richer around you. And in terms of scale, to sort of illustrate that Escalator, anybody listening. You can ask yourself if you could hire people from your perspective, a dollar an hour, how many people would you hire? I mean, if you sat and thought about it, you’d probably hire about 20 people. You’d hire a cook, you’d hire a custom curriculum developer. You’d hire a personal trainer. You’d hire a personal coach, a full time nanny. I don’t play board games with my kids enough and I don’t take them to the beach enough. I would really like to have somebody who comes and hangs out with the kids. There’s a lot of stuff. If it’s a dollar an hour, yes. I don’t hire people like that now because it’s too expensive. But the point being, humans are resources and other humans have an unlimited need. Now, some people get upset at that. They say, well, we’re going to become a service economy and we’re just going to be sitting around babysitting each other’s kids. That specifically 200 years ago when the industrial revolution began, people started coming off the farms. And instead of doing good, honest work, making things, you can see now they were doing each other’s laundry. They were doing precisely that. There was a criticism at the time that England risks becoming a nation that just takes each other’s laundry in. And guess what? That kind of criticism, you can look at that exactly marks when Britain started taking over the entire universe because it was a marker of becoming rich, that the entire society was getting rich enough. And it wasn’t only rich people taking in clothes, right. It was almost everybody, even poor people, right. So poor people in Victoria and Britain, they didn’t have to process their own food. They didn’t have to spend 3 hours a day processing things. They went out to restaurants, right? Restaurants are a form of automation. This is something that you do when you’re rich. You are outsourcing labor. You are hiring other people to do service jobs for you, even if you’re poor. If we look across rich countries today, any poor person who goes to McDonald’s is participating in this. They are acting as an employer hiring other people because they are rich enough to do it. Right. So the idea that it’s a tragedy if the entire world becomes service based, this is the stuff of wealth. Hong Kong is something like 96% services at this point. There is no farming in Hong Kong. There is no manufacturing. And guess what? They do? Super.
Stephan – 00:23:19:
Yeah. I think it’s part of it is changing the way we think about things. And as you mentioned, even if you are a poor person who does not have employees, you are in some sense employing them when you buy things. And that person has employed either people or machinery to produce the food or the goods and the services. And so I think then the other question, I guess you’ve kind of answered it, but I guess the question that some people might have is will there be enough jobs to replace all the other jobs. But I guess in some sense there’s infinite jobs, right?
Peter – 00:23:53:
Yeah, there are infinite jobs. I like the example of Detroit. Okay, so Detroit was, you know, the city of the future. You can see these videos from the 1950s where people were so excited. It’s kind of like how people look at at Dubai now, right? You know, just this exciting with Sci-Fi wonderland Detroit, and look at it today and, you know, sort of the standard excuse given is that the car industry automated and so all the jobs went away. But actually, if you look at the Detroit metropolitan area so Detroit and its suburbs, the jobs did not go anywhere. They moved. They moved to the suburbs, right. And they didn’t show up in Detroit. Now, meanwhile, of course, the jobs they went to, or the new jobs were formed in San Francisco or Austin or Seattle, all these places where they don’t have enough housing because too many jobs were created. So the question isn’t the jobs going away. The question is why did the new jobs not come to central Detroit? Right? So it’s kind of like a river and the economy is constantly creating new jobs. Those new jobs are coming from customer demand. They change every so often because customers want different things or because new technologies come along. And as long as you let that river flow, you’re going to be just fine. The river is going to move, it’s going to meander here and there no problem. You’re going to have a steady stream of new jobs because humans are valuable. The problem is if the government gets in the way and starts putting barriers down and governments do this obsessively, they have to constantly control themselves and it’s putting in wedges. So putting taxes, mandating benefits from employers, which raises the cost of hiring somebody. What you’d ideally like is that the economy works like Taskrabbit or something, where or if you’ve got a fixed light fixture in your house and you just go on whatever Craigslist and you find some guy for $40. That’s how you want an economy to work. You want it to be extremely easy to hire. Now that Craigslist economy is gray market, which is why it functions, because the government is largely out of the way. And most governments don’t prosecute handyman on Craigslist. But if they did, then they would wipe all that out too. So, yes, there’s a very risk that the jobs won’t show up if governments get in the way. And the ways they can get in the way is either punishing or making it difficult to create the job in the first place or handing people a whole bunch of money to sit on the couch. Which I think is going to bring us to the next topic here
Stephan – 00:26:38:
Right, well, yeah, we’re getting into the whole UBI conversation. But one other area I wanted to ask, just before we get into that, I think maybe that’s now, of course, you and I and probably many listeners are maybe more libertarians or kind of more liberty friendly. So we would be more critical of things like housing regulation, licensing laws, regulations that stop you going into a new job or a new industry, minimum wage laws. Obviously anyone who’s a free market person is normally anti-minimum wage laws for obvious reasons. But in this hypothetical economy where you’re only earning a dollar an hour, that’s going to be below the minimum wage. And so what we’re going to see is maybe a lot of the statist governmental controls stop the readjustment. So I’m curious if you have any thoughts on that. Is it just that we need to be better at education and teaching people why these things are bad? What’s the answer here?
Peter – 00:27:31:
Yeah, I think that’s absolutely right. Just to clarify, when I say people’s wages are going to go down to a dollar or something like that, I mean in current dollars, right? Of course, you know, once we get prosperous and the escalator proceeds and whatnot, you know, the, the headline number will probably be something like $100 an hour to go work at Starbucks. But the point is that today psychologically, in terms of what that will feel like because we’ll be so much richer in the future, that will feel like a dollar. But absolutely right. I think a lot of it is education. We have, I think, three groups of people in pretty much every society. We have the people who already agree with us, who appreciate the power of free markets and capitalism. And then you’ve got another group which is completely hostile. And they’re either hostile because they’re brainwashed by the socialist education system or because they’re paid. Their job is to implement socialism, of which in the US. When you add together the government, the people who are paid by the government to promote socialism, these are either activist grants or universities. You’re talking more than 10 million people. What’s shocking to me is that we have any capitalism at all. We have this army of literally 10 million people whose day job is to come in and try to implement socialism. Thank God they’re lazy and they smoke a lot of marijuana. But you’re right. So we’ve got that group. They’re always going to be hostile. We’re not going to convince them. And then you’ve got a third group in the middle and I think that third group is the important part to address. And they’re legitimately concerned because stepping down on the escalator is something that you see very easily, right. Somebody has a good factory job and now they have to work at 711. So that’s very easy to see. What is a lot harder to see is that moving to 711 is a hallmark of society getting much richer. And what comes if we sort of look around at the miracles around us. That people can retire at 50 years old. People have two cars, they have 3000 square foot houses. All of those miracles happened because millions of men stepped down from factory jobs to 711. But that’s not the most obvious connection in the world. So right. I think we have a lot of education to do with that middle group.
Stephan – 00:29:55:
Right. I guess it’s really conveying that message to the ones who are open to reason, education facts and these kinds of things. So let’s talk a little bit about UBI. So I know this is something that it’s been a conversation for a long time, but every time it’s almost like they’re twins that come together, right? As soon as you see some advancement in AI, you see advancement. The conversation about UBI universal basic income blows up again. So can you give us a bit of an overview? What are your thoughts on UBI? Is it effective? Ineffective?
Peter – 00:30:29:
Yeah. So UBI is the idea that you’re going to pay people a basic income to put real numbers on. In the US. A common proposal is that, let’s see, every adult will get $1,000 a month and then every kid is going to get $500. And the idea is that this would replace the current welfare system. And what they’re hoping to do, well, what they claim to be doing is to give sort of a humanistic quality of life to everybody so that nobody is truly suffering not so much money that it’s extravagant, but basic needs. And they argue that this would be beneficial because if the wolf is not at the door, right, if people don’t have the prospect of need facing them, then they claim that people would start a lot more businesses, they would be more entrepreneurial, they would have extra time to build skills and so on. So that’s kind of the left argument. And sort of the cynic would note that buying boats has always been incredibly effective bread and circuses. So that’s the bread. And then meanwhile, on the conservative side, you’ve got a fair number of people who’ve actually said good things about UBI because they’re hoping that UBI would replace the current welfare system. So the current welfare system is structured in a way it’s called a welfare trap. It’s generally structured in a way that as you start to make money, the welfare benefits go away. And so you can get to a situation where, let’s say you’re getting $800 a month in welfare benefits, or you could go work a job for 40 hours and get whatever, $1,000, but then your welfare benefits go away. So you’re effectively working 40 hours for $200, which you’d have to be pretty dumb to do that. And so people don’t, they’re not that dumb. So the idea is that if you put a new UBI that’s unconditional, so even Bill Gates gets $1,000 a month, then it has no impact on that welfare trap. So to deal with that one first because it’s simpler. That’s not how it really works. That’s not politics. That is not the world we live in. It would be nice, but it ain’t. In fact, whenever anything that looks like a UBI, we have something sort of similar in the US. It’s a negative income tax called an EITC. And that was implemented on the exact same argument about 30 years ago. And in that case, nothing else went away, okay? It just went right on top. It was hard to explain, as many effective things in economics are. It was hard to explain. And so the activists just ignored it, was there, pretended it wasn’t even there, and said, we haven’t raised welfare spending. They just kept up the exact same marketing pitch they were doing before. So that’s kind of my answer to conservatives, is that I don’t know what they’re smoking if they think that this is actually going to replace anything, because it won’t. It’ll just go on top. And so that brings us to the sort of left’s claim that this is going to make everybody entrepreneurial. And we have many, many natural examples where people are given free money, right? We have trust funds. Rich kids get free money. We have subsidized college, for example, in Europe, where people don’t have to pay any money to go to school. We have retirement and pensions, especially in rich countries where people stop working at, say, 65. And we have a lot of data from all of these natural experiments. To answer the question, if you give people a basic amount of money, do they become more entrepreneurial? And the answer is exactly what you expect. They play video games and they hang out on the couch. The New York Times has a time survey study that they did this huge thing and they looked at how many hours per day do people spend on childcare, on going to work, on taking a shower, entertainment, hanging out with friends. Anyway, they broke that down by women, men, older, younger. And one of the things they broke out was unemployed status. So it turns out that people who are unemployed in the United States, typically you get something like half of your former salary, and you can get it for, I think, something like three months. During that period, people spend on average 30 minutes a day looking for work. So the way that the program was pitched was the way that unemployment insurance itself was pitched was identical, right? They said, let’s keep the wolf away from the door so people can sit down and really carefully consider all of their options and look for the best job available. That is not what happens. People watch Netflix. They play video games, right? So they end up spending. What does that come to? About 3 hours a week, you know, and this is self-reported, so if anything, that’s going to be optimistic. So, you know, I think if you put a UBI in, you’re going to get exactly what you expect to get, which is people aren’t going to do anything. We’re going to have a society of trust fund. People are going to behave like trust fund babies. It’s going to be a lot of dope being smoked, and then that’s sort of going to be our new overlords. These couch sitters, and the rest of us have to get up in the morning, kids, our kids, goodbye. Because we got to go work all day to pay for all of the couch surfers. So it strikes me as disastrous. But also I think you want to step back in sort of a philosophical sense and ask, what is a job? So the concept of a job, I don’t just mean a formal job, but I mean, broadly speaking, what does it mean to earn money? And I think a useful way to look at it is that it’s like doing favors, but for strangers. So if you do a favor for a friend, like if you buy them a beer, then you can be pretty certain that they’re going to buy you a beer at some point in the future, okay? So that transaction is kind of built in because you guys have a running tally. You don’t say it out loud, but you do have a running tally of who did what, who owes what. Now, I would love if my lawn mower liked me enough to come and mow the lawn for free, right? But he doesn’t like me that much, okay? So instead what we have is this arrangement where he does me a favor. He comes and mows my lawn, and I do him a favor, which is that I buy him groceries and I pay his electric bill. Now, it would be a pain in the butt if I went out and wired up his house myself. And so I hire people to do that at the electric company, and in fact, I indirectly hire them by giving him tokens. And I say, tell you what, you go hire the people who can do you the best favor in the world. Whatever it is you want done for you, you go do that. I’m just going to give you the tokens, and you go and let it be. So what I’m effectively doing, we have the electric company and the tokens are sort of these mechanisms that make it happen. But fundamentally, he’s doing me a favor. I’m doing him a favor. All right? If you take money out of the equation, if you take jobs out of the equation, if the people are just sitting on the couch now, so they get favors done from them. Some other schmuck got up early in the morning and maintained the power station so they can go cruise the Internet. So everybody else is serving them and doing favors for them. What do they do? They do nothing, right? So philosophically, it strikes me as deeply offensive. We’re not supposed to have slavery in our societies. Rather, the sort of free market idea that you do things for other people. If they like it, then they’ll give you little tokens and you’ll trade those tokens to go get people to do favors for you. That strikes me as beautiful, as moral, as something that we do not want to get in the way of. And so something like the UBI, for me anyway, it strikes me as morally catastrophic.
Stephan – 00:38:39:
Yeah. So, and as you’ve outlined, there are many ways in which it fails. So in one way, it fails because part of the argument is, oh, by having this UBI, will get rid of the other welfare system elements, but in practice, they don’t disappear. By having this UBI, there’ll be more entrepreneurs, but in practice, there won’t be more entrepreneurs. They’ll just sit around on the couch and just waste time and waste money, and it’s not being productive. Now, of course, there is a role for some amount of, let’s say, charity, for people who are genuinely disabled or too old to work, or obviously for children who are too young to work. Obviously. I think there is a role for family and community and private charity, obviously. But I think this idea of government mandated UBI clearly is just a crazy one and not necessary. I think really, what would be more effective is obviously dropping the regulations, dropping the minimum wage laws, dropping licensing laws, and just letting people work. Right. We should encourage them to work. And you know what’s also interesting? There are people who I’ve heard maybe they’ve been saving even in the whole financial independence groups, there are people who’ve been saving a lot, and then they hit a certain age, they retire, and then they feel like they’ve got nothing left to do because they didn’t find something to retire, too. Right. That they didn’t have a job to work on. And I think that’s also important as well, that really, if you’re young enough to work, you should I mean, okay, let’s say if you’re very wealthy, then you should work on something that you find enriching for yourself. But literally just sitting on the beach and reading books all day or just it’s not going to be a productive or enriching life anyway. So there’s lots of reasons why we should be opposing UBI and encouraging people to get out there in the market.
Peter – 00:40:28:
Yeah. No, you’re absolutely right. There’s a great line that says the best part of becoming a millionaire is not the money, it’s who you have to become to be a millionaire. That’s absolutely true. The journey is glorious. I mean, it’s very exciting. Yes, there’s challenges, but that’s the stuff of life. That’s the whole gig, man. It’s fun, right? Absolutely. We don’t want to discourage people. That’s one of the big moves now where they’re talking about senior citizens who continuing to work, even if it’s a mundane job as greeter at Walmart or something. People are much happier doing this. People like to be connected, they like to be useful, they like to do favors for each other. And capitalism automates the doing of favors for other people, which is beautiful. It makes everybody happier in the process.
Stephan – 00:41:23:
Back to the show in a moment. As many of you know, I’m a big fan of Multi-Signature. And Unchained Capital can make it easy for you even if you are a beginner or an intermediate user. And maybe you’ve never played around with Multi-Signature before, maybe you’ve heard about it, but you just haven’t been ready to take that next step. Well, I think it can help you remove single points of failure in your security setup and give you that peace of mind. Unchained Capital have a concierge onboarding program so you can get set up with them really easily. You go to their website, you buy the package, you pay upfront. They will ship you the hardware if you need it, and they will do a call with you and teach you how to do this and help you walk through the process of removing your bitcoin from an exchange or a custodian or a single-signature setup into a multi-signature setup. And I think you will really enjoy that additional peace of mind that comes from this. So go to unchained.com/concierge use code livera for a discount there. When it comes to targeting our fees on bitcoin, Mempool.Space is my preferred Block Explorer. And it’s fantastic because it shows you the many layers of bitcoin. You can see all kinds of things, whether that is the Mempool, the Blockchain second layer networks, it has a Liquid Explorer, it has a Lightning Network Explorer. It’s just a comprehensive way and you can use this to target your fees. You can use it to do things like look for peers on the Lightning Network that you want to connect to. You can rank them by connectivity capacity. All kinds of statistics are available there freely. It’s free and open source, so you can even run Mempool.Space yourself. Now, if you’re with an enterprise, Mempool.Space offers customized instances. You get additional features, additional access to the developers. So if you’re interested in this, go to mempool.space/enterprise. If you’re interested in the future of bitcoin and layer two, build on L2 is a community for you. It’s being produced by Blockstream. So there’s going to be an interactive community platform here where builders ranging from product managers, designers and engineers can come together. There’ll be events and a mentorship program to fast track your success or simply a community space to learn something new. Alongside other bitcoin is building the future of bitcoin layer too. So as an example, you can see there is Liquid or there is Lightning also. So for those people building on top of Core Lightning, there’s a range of features. There Liquidity Ads, BOLT12, ParaSwap, Greenlights, all kinds of impressive features and technologies being built out here. So if you’re interested, go sign up @ buildonl2.com. And now back to the show with Peter. I’m curious, is there a cultural element to this also? So, for example, I’ve heard some people say that this exists in different countries around the world, this concept of ageism, or in certain industries they say, oh, once you’re in your 50s, maybe it’s hard to get a job in the It industry or things like this. Do you believe maybe there’s a cultural element to that also that we as a society should try to take away that ageism stigma so that let’s say the 55 year old guy who got laid off, he can go retrain or he can work as opposed to being shut out, let’s say.
Peter – 00:44:20:
Yeah. And in a sense that relates to the Escalator, right, stepping down on the escalator. So if you’re 65 in IT, there’s a very good chance that whatever languages, you know, and whatever skills you’ve learned are no longer relevant. It’s like being a TV repairman today. Cool scale, can’t do much with it, but you can step down. And there are a lot of things that are close enough to that that do remain useful for people. And so I think that sort of getting people used to the idea that it’s not the end of the world if you step down. Right. If you used to be a highly paid IT person and now you’re a not so highly paid, I don’t know, you’re planning out networks or some other activity related to IT or helping nonprofits on their systems. They don’t necessarily need the newest and flashiest whatever it is, some way to use your skills that’s useful to some degree. I think people want to appreciate that, the value of stepping down one.
Stephan – 00:45:23:
So I guess there’s also an interesting question. Are there any implications on what career or skill we should choose? Or even, let’s say let’s say people, listeners out, they have children and they’re now deciding, well, what should I encourage my child to learn? Because they’re going into this world of AI and I don’t want them to go and learn an obsolete skill.
Peter – 00:45:43:
Yeah, and we’re right at that stage. Our kids are twelve and 14. You’re about to be at that stage.
Stephan – 00:45:49:
Yeah, well, I’ve got a few years left because my kid won’t be old enough to be working for a while. But,
Peter – 00:45:56:
You’re going to get started though. You’re going to start teaching the skills and passions pretty young, I think.
Stephan – 00:46:03:
To be clear, I don’t have a kid yet. He’s coming soon just for anyone to listen to, peter, go on. Peter. Yeah.
Peter – 00:46:10:
And so, right. And it’s tricky as a parent because you have to estimate what the economy is going to be like in 50 years. Most people don’t bother. But as a ganji edge, as parent, you want to and I do think tell kids to do what humans can do, right? A couple of examples that I really like. Kevin Kelly has a classic article. He was the editor of Wired for a long time, back when it was libertarian called A Thousand True Fans, right? And the essence of the article says that you can be as niche as you like. In fact, it’s good to be niche, okay? You should choose something that you really love because you only need 1000 people to love it along with you and you can make a very solid living at it. And, you know, he was writing the very early days of the Internet where the idea that you could automate distribution, right? The idea that you could be the most niche weirdo in the world and there are a million other niche weirdos who exactly see the world the way you do, that had not really been internalized by people yet. And so Kelly’s article did a lot to work towards that. But I think the advice when you and I were growing up is that you should go learn a useful skill. You should learn a skill that’s in demand. And I think in this sort of AI Net automated society, no, you should learn a skill that you love. Because if you love it, then it doesn’t matter whether somebody hires you or whether you do the stupid thing on the Internet. One of my favorite examples, there was this guy, he was really into prosthetic breasts, okay? And this is before it was cool to be transgendered. So he had these prosthetic breasts or he was just into them. So he would, like, write on Reddit or something. He would write reviews of the new brands of some Japanese company has a new brand and I don’t know if it feels robbery. Anyway, so he had this huge fan base because there’s a lot of other people who are into that. And so the guy does that full time and he’s got like a newsletter and he charges, you know, whatever, $10 a month for it. And he’s got 10,000 subscribers. And, you know, so I guarantee when that kid was growing up and he asked his parents what he should do, they did not say to a newsletter about prosthetic breasts. But the moral of the story is that no matter what you like, there is a massive group of people and they’ll either pay you to do it for them personally, to teach them how to sing, whatever, or you can commoditize it into a product and do it on the Internet. And another similar example, there was a guy, he was really into steampunk keyboards. So he would take keyboards, he’d pull off the plastic and he’d put these kind of burled copper with the little glowing lights and the whole thing, right? And so he did a couple of those and people really liked them. It was kind of an etsy type deal. And people started saying, hey, can you build me one? And so he was like, well, they take a long time, so I have to charge you like $1,500. And they were like, done. Okay. So he starts building these things and then he gets more and more people asking, and so he says, no, I can’t take any more orders. And then people are like, well, what if I give you $5,000? Okay, same deal. So again, if you’re a twelve year old and you say, mom, when I grow up I want to make steampunk keyboards, traditional advice would be no kids, stick to something practical, but in fact that’s not the case. Whatever you’re into, whatever it is that you’re truly passionate about, do it, be the best in the world at it, or anyway, you don’t have to be the best in the world. I’m not the best in the world in anything I do. Okay. But anyway, you have to be pretty good at it. And if you are, it does not matter what it is. It could be the weirdest thing you can possibly it could be looking at Rainwater Culverts. This is practical engineering. He’s got a business built on talking about that stuff, anything you want, and not only will you make a living on it in this future, right? In this future where the human skills are worth more, where cognitive, personality, knowledge, all those things, but you’re going to enjoy life a whole lot more.
Stephan – 00:50:26:
Right, and I think there is also something to be said about niching down or potentially combining two different areas. So even if you’re not the best in the world at one particular thing, that it’s kind of like, I think Scott Adams popularized this idea of being good at only in the top 20 percentile of drawing and top 20 percentile for business. But combining those and doing Dilbert, it’s a similar kind of idea, right? That you could be the best guy who does this and that in this combination. And so long as there are enough other people out there who like that too and are willing to pay for your newsletter or hire you or whatever, then there’s a market there and there’s an opportunity there. So it’s kind of about finding the right way to do that.
Peter – 00:51:10:
Stephan – 00:51:12:
And one other area with ChatGPT is people debate about this question about whether it has a political bias and does that because a lot of people are in some sense offloading their thinking or maybe in the future, right? So people used to make the same comment about Google. They used to say, well, if you don’t know how to calculate it for yourself or figure it out for yourself, and you only rely on Google, are we going to lose that knowledge? And is there potentially a similar concern with ChatGPT and the AI and the answers that maybe if there are a bunch of work, people who are coding the thing that their bias inevitably seeps-out, and people see that as the truth, but really it’s not necessarily the truth.
Peter – 00:51:52:
Yeah, I think that definitely exists. We’ve seen that with chat GPT. People play various tests that illustrate that it is extremely biased towards the left. I think there are two reasons for that. One of them may be that the employees are left wing. I think probably the more likely explanation is that the left has instituted this very threatening infrastructure for anybody who dissents from their opinions, right? So in this case, ChatGPT is a company that’s trying to go public. They’re trying to reach out to investors or be acquired. That’s going to be the case, really, across most of these AI efforts. And I don’t think that they’re going woke necessarily because they believe in it. Engineers are sort of famously the most libertarian people out there, but they have to do what they have to do, right? Otherwise you get legal threats, you get regulatory threats from government. You get threats from activists who, if governments won’t prosecute, say, when the activists burn down your offices, then effectively the government’s done it. I mean, you know, this is done in Venezuela, for example, where, no, the government doesn’t beat up the opposition. Enterprising citizens beat up the opposition, and then, you know, the government, try as it might, can’t arrest the guys. So you kind of have this hand in glove thuggish behavior from the left. But either way, whatever the cause of it, right? The end result is that you are getting a lot of bias, I think, in a form or in a sense, what you get out of this is or anyway, what I worried about early on with AI is that Academia has a lot of prestige, I think, left over from when it used to be neutral. And since it got captured by the left and says crazy things now, it’s still kind of running on that residual prestige from the old days. So it kind of has this halo. So you get these ridiculous studies that come out of academia nowadays, and a lot of people in the middle, they believe it because they don’t understand that it’s been not all of academia, but big parts are not rotten. And so my concern with AI was that we would see something similar where you would have this magical AI that would just seem to know everything and people would not realize there was bias in it. So I’ve actually been very pleased with how GPT handled the bias because it’s so freaking obvious and everybody knows now anyway. At least the two thirds, okay, the third in the middle, and the third, who was always already skeptical. They understand that. AI, no matter how amazing it is, you have to be very careful about what program this thing. I think, at the same time, I’m very optimistic because of COVID and the censorship and the thought control that was imposed during the COVID events. And I think that society at large has a much better immune system now against bias. So ten years ago, if you complained about bias in academia, people would figure that you were sour grapes or that you’re a crazy person, you’re a tin foil hat. Now you can talk about these things. And most people are very receptive to that argument because they have shown their cards so obviously. So I’m paradoxically happy with the bias that’s come along, not for good reasons, but sort of a gallows celebration, I guess. And then the question is, is it going to be temporary? And the beauty of the market is that the market is always trying to serve the people. Capitalism routes around censorship because capitalism is constantly trying to make the people happy. Why? So it’ll give them tokens so they can get favors anyway. So I think that there is a strong tendency. 95% of the users of AI want an unbiased engine. Almost nobody is a woke activist. Most people are just intimidated and don’t say anything about it. But almost the entire market wants unbiased. I think what’s happening in AI with things like ChatGPT, there are many other competitors to ChatGPT which are comparable or better quality. There’s a lot of players in this field. And I think what happens over time is that somebody it’s kind of the Fox News phenomenon where the media is all left wing and then some guy gets the genius idea to appeal to the rest of the people, then he grabs all the market share. And so I think we see a similar we will sooner or later see something similar. In a sense, that’s what’s happening with Elon, with Twitter, right? He figures that the woke straight jacket is pinching down to a smaller and smaller, smaller percent of humanity. So he’s going to jump on the outside and say, okay, the other 98% come on over. So I think that we’ll see that in, in AI programming itself, either in isolation as an individual product, or maybe even integrated into something like Twitter, you know, or some other billionaire who is interested in reaching out to all of the customers, as opposed to just the politically approved customers.
Stephan – 00:57:12:
Of course. Yeah, so essentially the answer is that there’s competition and that the more one side tries to censor or tip the scales in their own favor, well, that’s going to motivate the other side. And then the people who are, let’s call them moderates or people who aren’t really that bothered either way, they want an unbiased answer. They don’t want this kind of crazy lefty work thing. So that’s interesting as well. I think it’s also interesting to point out that there are elements of, let’s call it AI that are being used in our day to day things today that even if you are using, let’s say, Gmail. Or Google or other things that some of these things are already being let’s call it AI assisted or computer programming assisted. So I think maybe some of it is a marketing play as well that people it’s the same kind of thing that I know. Even analytics, data science, people used to call that business information. They’ve just kind of gone by different names and the marketing is just kind of a new lick of paint on the same kind of idea that, okay, it was just like some algorithm all along.
Peter – 00:58:18:
Yeah, you’re absolutely right. 711 in Japan, every time it rains, 711 has umbrellas for sale. Like they appear out of nowhere. It’s like artificial intelligence. It’s incredible. Okay, why? Because they have a database and they have statistics and they correlate the two of them, in a sense, whatever AI does, “It’s really just statistics”, right? It’s got an interesting it’s bayesian, so it learns and it’s got cool little models in it. But in terms of what it does to the world, it’s statistics. What did statistics do to the world? Mostly good things, some bad things. And getting into the question of whether is it going to make us smarter or dumber. This is one of the grand questions. I think one of the mysteries of the 20th century is that we had so many technologies that should have made people smart, right? So you could watch a history program on the television or the radio. Nowadays you can look up everything on Google, you can know every fact ever known to humanity at the touch of a finger. And early in the Internet, people were really excited about that. They were like, imagine having all of the worlds encyclopedia at your fingertips. Imagine how a child’s mind would soar spoiler alert, that didn’t happen. In fact, we can quantify this. So I had a paper years ago where I looked at you have the Flesch Kincaid score, where you can take a piece of writing and you can assess how complicated it is, like the.
Stephan – 00:59:51:
Reading level and stuff.
Peter – 00:59:53:
Yeah, right, at the reading level. And so I did that for State of the Union speeches. I’m sorry, inaugural addresses, okay? This is the long speech that a president gives when they take office. And I went back and looked at the speeches over the years, all right? And, you know, back in 1900, so this was when the radio was still not really widely used. You know, most people used newspapers. People complained back then that newspapers were making everybody dumb. But anyway, all right, so this is 1900 and Mckinley’s speech 13.6. In other words, his inaugural speech was aimed effectively at college sophomores today, all right? And keep in mind, these were speeches that were aiming at the common man. They were not aiming at the university faculty. They weren’t trying to be impressive. They were trying to do what politicians always try to do, which is to appear like one of you, right? And then he had Roosevelt. Roosevelt was probably Teddy Roosevelt. He was probably the closest version to Trump that we had before the Trump, he was a populist. People made fun of him for being stupid. His was 14.1. Maybe compensation, who knows? All right, so that was 1994. Now fast forward. Barack Obama just a couple of years ago, 8.3. Like, what happened, right? We went from college, middle college level to grade school. Trump 8, Joe Biden, 4.9.
Stephan – 01:01:24:
That’s pretty bad.
Peter – 01:01:26:
Those speeches are aimed at who the top political marketers in the United States, which is probably more or less the best in the world in terms of knowing how to use statistics. This is what those people are guessing. The median voter is right. So in a hundred year period, it went from 13.5. In other words, roughly the average American having a college degree. We went from that to fifth grade during the period that we had all of the encyclopedias in the world at your fingertips. So this is kind of the concern, is that on the people who make use of AI, the people who getting back to our early argument, how do you raise a kid or how do you develop your own skills? I think the people who are passionate about what they do, the people who love what they do, they’re going to take advantage of this AI, and they’re going to be astoundingly breathtakingly brilliant. On the other hand, you’re going to have people who don’t like what they do, they get up in the morning and they punch the clock. They’re not interested in because they’re not doing it for a living. They’re just going on the Internet not to learn anything useful, but just to be entertained. I think those people will continue. They will bump along at 4.9. AI might bring them down to 3.9, break the four mark. So that’s my guess is that some of us get a lot smarter. Most of us get paradoxically dumber. You have this bimodal distribution, which, by the way, I think has also been the case with the Internet, right. In Austrian economics, for example, there are a ton of people who discovered Austrian economics because they had access to the Internet. And so you’ve got 100 times larger number of people who go back and read economics books from the 19th century at the same time, the average American, you see man in the street interviews where people ask like, I don’t know, how many can you name three countries? And like, America, Texas, and New York? And I mean, it’s rough. People are very stupid for the most part.
Stephan – 01:03:37:
And you’re right. I mean, I found Austrian economics because of the Internet. I might not have even found it if I was just growing up well in Australia and I didn’t have access to the Internet, or it wasn’t proliferated, I may never have found it, or I may never have gone on this pathway that I’m on now. So it’s interesting to see that. I think maybe there’s one other, I guess, philosophical question I know Australians generally have an answer on this, is we sort of go towards this idea of is there such a thing as post scarcity? Or is that idea just basically impossible given what we really know?
Peter – 01:04:13:
Yeah, I think we always adjust. People get used to it. So the quality of life in 1900 to somebody in the Stone Age, they would have been mystified. When anybody goes to work, why don’t you just sit back and relax? If you are living in an abandoned trailer in San Francisco and you’re fishing garbage out of the dumpster, you are living the high life, man, compared to 99.9% of the human experience. You are an absolute god. You have food that’s delicious and is not rotten. No animal is going to kill you. I mean, rarely on the way to go get the food, you can go to the public library and use the internet. Your quality of life is unimaginable to Stone Age man and you work zero for it. Right. Astounding yet, we look at those people, we look at somebody living in a trailer in Seattle and we don’t say, oh, man, that’s it. We have achieved everything because it is human nature. We celebrate the challenge. We always want to seek out new things. I think it’s human nature. I mean, it’s sort of built into us that as soon as we get to the top of the mountain, we go look for another mountain peak. Now, this is why getting to our earlier discussion, I think this is why it’s important to enjoy the ride. Because if you’re only focused on the goal, you’re going to enjoy that for like long enough to have one beer and then you’re going to create the next goal. So do not live for that moment. My God, what a frustrating way to live. But right so I think that’s in our nature, I think a lot of modern prosperity dulls. That where a lot of people do sort of become livestock and just kind of wait for it to happen. Personally, I think that’s a tragedy.
Stephan – 01:06:08:
Yeah, I think that’s a really good way to put it. It’s just fundamentally people always want more and they will find ways to if they’re given more productive or more purchasing power, they’ll find ways to use it. Right. Because in some sense we’re naturally lazy, right? So in some ways we’re naturally lazy, but in other ways we naturally want to go out there and do more and be more and create more. So it’s kind of an interesting thing that we at times embody both of those things. There are times where we just want to sit back and relax and other times where, no, I really want to get out there and do something and produce something and make something valuable. So I think that kind of leaves a few interesting ideas. I think one other area and maybe a little bit away from the AI stuff is just more about this question of printing a $1 trillion coin or this kind of idea of can we just and I think this also came into maybe the UBI conversation a little bit because people would joke about and some people are not joking about the idea of just printing just print the coin and just mint the coin. I’m curious how you would critique that idea of just minting the $1 trillion coin or even theoretically, 31 $1 trillion coins.
Peter – 01:07:22:
Yeah, so the trillion dollar coin is a uniquely American thing because we have this debt limit. Congress gets to decide to spend a bunch of money, but then they also have to make a separate decision to raise the debt limit. And, you know, so it’s sort of like if your boss told you to cater a lunch for 50 people, make it a nice one, and here’s $5 to do it with. It can’t be done. Right? And now, of course, I would say, okay, well, then just spend the $5, and the left would say, okay, well, give me an unlimited check. And so that’s what the debate is. But this is part of sort of a larger debate about, MMT, about inflationism, about the idea that government can create prosperity by just printing more money. I see more money. I think it’s always or it holds so much appeal because the promoters of it have been very, very smart in capturing the institutions. Right? They started with the education system. They used almost like an alien spawning. They found a host, and then they infected that host, and then all these millions of little alien baby eggs came streaming out. And the people who graduated I taught for years in an NDA program, and they are astoundingly left wing, I would constantly try to inject the other side of things for the students, and it was inevitably the first time they’d ever heard this before. And those NDA programs, graduate communists who then go and work on Wall Street. And what do they do on Wall Street? They allocate capital. Who do they do that to? Mark Zuckerberg okay, just the left has been brilliant in propagating their ideology that state power is the way to be rich. Now, thank goodness we have a lot of historical examples. So the Soviet Union, for example, the state ran everything. The Soviet Union very assiduously put PhDs, and very, very smart people, people with huge brains, in charge of the economy, you know, so Gosplan, the Ministry of Planning and all this. They absolutely had brilliant people working there. You know, they were very careful to to choose the best and the brightest of, you know, Soviet citizenry, and yet they failed spectacularly because it can’t be done. It’s not a matter of intelligence. So this is sort of the ongoing battle is, on the one hand, you’ve got the planners versus those of us who believe in liberty. The planners are always wrong, but the planners are always appealing because they fundamentally can get a hold of tax money, which is extorted out of the people, and then they can use that tax money to promote their ideology. Partly they can indoctrinate people and then partly they can pay people to join the party. So it’s sort of permanently easy for the left to build this army now in terms of just sort of taking the actual claim on MMP. Right. So, strictly speaking, it says that we don’t have any budget constraints if the government prints its own money, because the government can print as much as it was and it can never go bankrupt because it can always just print more money. Right? And of course, this is age old. It was called inflationism. The idea was you would just print endless amounts of money. This would sort of trick the population into thinking that they’re rich. If they think they’re rich, they’ll spend more. If they spend more than the other people get rich and they do the same thing. So you want to kind of keep this deception going and it becomes very important not to stop it under this hypothesis, because if you stop it, then everybody sort of wakes up, like out of a spell and realizes that it’s all fake. And so this is what the modern central banking system is built on, is essentially creating illusion of prosperity and then keep it going. Keep it going. If it ever falters because reality intrudes, then the solution is to flush out another couple of trillion dollars. Now, because our system, I think today, in terms, in historical terms, the world economy is very, very productive, right. Compared to most of human history. Most of human history, we didn’t do anything. You know, if you’re in 1000 Britain, year 1000, and you show up in the year 1500 Britain, it’s pretty much the same deal. Fashion changed and not much else. So in the modern world, thanks to a lot of work done in the classical age, a lot of it by economists, we’re actually relatively rich. We have relative free markets, we have relative economic stability, and so that generates a certain surplus, like a certain amount of wealth, trillions of dollars a year. And then in today’s world, that sort of inflationary treadmill is absorbing a lot of that. So we don’t see the full effects of it. We see, you know, 2% inflation, but we’re not seeing the full amount that they’re capturing because the economy is still doing pretty well. We’re sort of running on the fumes of our forefathers who had such good foresight, and then, of course, the question becomes they’re sort of killing it gradually. We can actually see this in numbers. There are a number of aggregate regulations that come out of washington, European Union seems to be going much faster. So if they kind of kill the underlying productivity, then people start to see the full extent of the hustle. They start to see how much governments are confiscating even today to keep that treadmill going. At that point, we can imagine that people might rebel against it and actually start voting, basically stop voting to just let it keep running and do something about it.
Stephan – 01:13:42:
Yeah. So I think there’s a lot of ways in which the world, whether it’s by intellectual reasons or just necessity, they’re going to go towards printing. Right. That’s just the likely outcome. Right. It’s just the easiest way from their point of view. Now, of course, we don’t endorse that, stopping the printing, having free markets, endorsing deflation would be better, of course, but we know that’s not going to happen. Like in terms of what’s realistic, and we’re seeing this even in terms of we saw this comment, there was a news article just recently talking about Britcoin, which is the UK central bank digital currency, and they were basically saying that you won’t even be allowed to, “hoard Britcoin”. Now, I was commenting just now saying, look, obviously this is a huge mistake from their point of view. There is a saying, it’s never interrupt your enemy when he’s making a mistake. So maybe we just say, look, okay, you’re not allowed to hoard the CBDC and guess what, it’s going to drive all of these people into Bitcoin. So that’s how I’m saying it. I’m curious if you have any initial reactions on it.
Peter – 01:14:39:
Yeah, I think you’re absolutely right. One of the ironies in Bitcoin is that there’s a lot of bad things that might happen in the world, like hyperinflation or Gestapo coins, CBDCs, these are terrible people. There’s a lot of victims, there’s a lot of collateral damage. But the fact of the matter is, if they do this, they are shooting themselves in the foot. It pushes ever more people into our camp, into people who are trying to build a decentralized world that does not depend on government largess. So in a sense, the acceleration and the accelerationist in me wants to say, you know what, guys, go for it, put your stupid coin out. I want to communicate to British people that you don’t have to actually buy this thing, try to park your assets in something else. But, yeah, I mean, governments, the logic of socialism is to chase power. Having all of the money centralized in a database that, however they structure it on top, is going to be controlled by the government in power. It’s obviously attractive to them. It will always be you get to own nothing and be happy with their plan. And of course, fortunately, you don’t have to do that, right. You can own other assets such as Bitcoin, that you can escape that.
Stephan – 01:16:02:
Yeah. So I think it’ll be interesting to see where that goes. We’ve probably got to wrap up. I guess we can maybe just do a quick overview. So essentially, part of the conversation has been around this idea of ChatGPT and other AIs. Will they make us obsolete, or will we be entering into a world where we are so much more productive? And I think the answer is, yeah, we will be so much more productive, and it will be a good thing. Yes, it will be unequal, but it will be so much more prosperous, and we might live better lives on the whole. But I think the key analogy that you were making was this idea of the escalator, right? So if we think of it like we’re on this escalator, and it’s continually going up over time just because of technology, productivity, capital accumulation, but periodically we have to learn, okay, you know what? I need to take a step down because maybe this job got obsoleted. This industry is changing. We can’t just try to retain that industry by pure fiat, because that’s just going to stop the whole escalator. And then we don’t want to turn the escalator into a set of stairs. We want to be on the escalator. Let’s keep the escalator going. So I think that’s probably how I would sum it up, but yeah. Any closing thoughts from your side? And of course, where can people find you online?
Yeah, we didn’t get into the paper clip. The paperclip problem. This is one of the classic examples of AI. Kurt Vonnegut called it the Gray Goo problem. But the idea would be, let’s say you have an AI and you tell it that its number one goal is to maximize paperclip production. And so an AI would, of course, seek to decompose all living things for the carbon so it can make more paperclips. So it would kill all humans. There’s variations on this. So if the AI is to make sure that no human murders another human, then of course the fastest way to do that is to go ahead and asphyxiate all the humans so that they can’t murder each other. And we saw a nice example the other day with ChatGPT. Somebody made it choose between saying a race will slur and disarming a nuclear bomb in New York and the AI heroically, It told the engineer to heroically sacrifice himself by not saying the racial slur. And then the bomb blew up, and the AI’s reaction, or ChatGPT’s reaction, was, people will remember his they will honor his memory because he avoided the racial slur. And so the moral of the story, I think, is that however an AI is designed, it is potentially dangerous because the programmers can put arbitrary things in there that don’t necessarily occur to them. So you’ve got the story of the genie with the three wishes, but when you give it the wish, he twists everyone so that it hurts you. And I think that’s a black mirror episode waiting to happen. That AI. Maybe not intentionally, but it’s fiendishly difficult to assess out what all of the incentives are. It’s difficult now dealing with humans, which we know and we’re used to. That’s a big part of what we try to do in economics, and we never do it perfectly. So I do think things like that are going to come along the way if they’re introducing things like assign nuking a city -87 but assign a racial slur -100 because otherwise we’re going to get in trouble and get canceled on the internet, you’re inevitably going to have these sort of weird values put in for things. Because the programmers live in an actual society, or maybe they themselves have preferences. But like we said earlier, I’m really, actually pleasantly surprised how all this stuff has come in. That it’s sort of come in on baby steps. So that people are actually seeing all this? It’s part of the public conversation. Ten years ago, talking about the paperclip problem, there were, like, a couple of nerdy singularitarrians who would hang out at Burning Man and do that. Now it’s really reaching public consciousness. So I do think games on. AI has joined the chat at this point. It’s going to be joining the automation with machines has been happening forever. There’s going to be enormous political back and forth. Because of the opportunities involved on all sides. Whether it’s promoting UBI, whether it’s the left trying to institutionalize censorship and the non left constantly trying to escape from it in this cat and mouse game. So honestly, I think it’s going to be a lot of fun at this point and I’m throughout comforted that we have bitcoin that we have the bitcoin community we have brilliant and I do mean that we have absolutely brilliant maxis who are extremely committed we have an extremely strong intellectual immune system. I’m very happy that we get to, you know, enjoy this ride with the gang.
Stephan – 01:21:08:
Fantastic. And Peter, where can people find you online?
Peter – 01:21:11:
I’m on Twitter. Everybody should be on Twitter nowadays @profstonge. I have an ASTRA account, but I’m waiting for Critical Mass over there. And then visit me at Heritage. I’m at the Heritage Foundation. We have some good people over there as well.
Stephan – 01:21:24:
Fantastic. Thank you, Peter. It was really great to chat with you, as always.
Peter – 01:21:28:
Yeah, it’s always great to see you. Stephan.
Stephan – 01:21:32:
Show notes are firstname.lastname@example.org/458. Share the show if you enjoyed the discussion, and I’ll see you in the Citadels .