00:00:00.760Okay, you want to understand what is happening with AI?
00:00:05.120All I have to do is tell you about GM and streetcars.
00:00:08.420Also, 9-12, the day after, and the flag that flies in my office right behind my desk.
00:00:16.860It's actually a significant flag from 9-11, and I've never told the story on the air.
00:00:22.180I share it with you on today's podcast.
00:00:30.000you're listening to the best of the blend back program
00:00:35.860all right um i want to explain the ai thing and by using history this is what i think is happening
00:00:46.680now if you ever saw um who framed roger rabbit you know the story general motors and the oil
00:00:54.580companies and the tire companies they all got together and they bought up america street car
00:00:58.880system and they ripped the tracks out and forced all of us into cars that's the cartoon version
00:01:04.240most of it is wrong um but it's it has true parts to it uh and it's better in stranger than the
00:01:12.380legend okay here's what's true a bus company called national city lines went looking for
00:01:18.240capital in the late 30s and got it and they got it from firestone standard oil of california
00:01:24.420Phillips Petroleum and Mack Trucks and some from General Motors. The money came with a string.
00:01:31.360The transit systems they bought had to buy their buses and their tires and their fuel from the
00:01:37.480investors. So in 1947, the Justice Department indicted them. 1949, a Chicago jury convicted
00:01:44.320them and held it up on appeal. This is where the legend comes from, you know, that the jury
00:01:51.220convicted them but it convicted them of one thing monopolizing the sale of buses and fuel and parts
00:01:57.720to the companies they already controlled okay a closed supply loop on the other count conspiring
00:02:05.440to monopolize transportation itself the jury acquitted them general motors was fined five
00:02:11.600thousand dollars its treasurer was fined a dollar okay so as usual the big guys get away with it
00:02:16.600But 25 years later, a young government lawyer testified before a Senate subcommittee and described that conviction as a conviction for monopolizing ground transportation, which is not what the jury said.
00:02:29.080But the press ran with it, Hollywood ran with it, and America has believed it ever since.
00:02:35.060Not because GM was clean, but because the trolley was already dead and it was killed by something a lot closer to home.
00:02:44.040let me now take you quickly jason give me the stats that you just ran with uh palantir and
00:02:52.300what they were saying about open sources yeah so um palantir said that um they have been running
00:02:59.580their their own models and their own models they're it's all it's all open source and they
00:03:07.080just said they said quote the cost of our fine-tuned open source model was 95 percent lower
00:03:13.620than the frontier models the big ones that the you know think think google you know uh you know
00:03:18.840open ai anthropic 95 percent lower costs than what those frontier models are using
00:03:24.780so what happens to claude and to uh chat gpt and grok and everything else if somebody else a
00:03:35.500smaller company has suddenly found that they can lower the cost of compute by 95%. Puts those
00:03:44.000companies out of business. So let me go back to the streetcars. You have to understand what a
00:03:50.560streetcar company actually was, okay? It wasn't in business in the ordinary sense. It was a bargain
00:03:57.640with a city. The company got a franchise, the exclusive right to run the rails down the public
00:04:04.140street no competitors and in exchange the city wrote down what it would charge and what it could
00:04:10.340do okay the fare was a nickel and it was locked into a nickel for decades it was a nickel and the
00:04:16.920company agreed to pave and maintain the strip of public street between the rails and a couple of
00:04:22.120feet on either side and plow the snow off it and everything else a monopoly that nobody could touch
00:04:27.720at a price it could never change with a road and a road crew attached to it 20 good years
00:04:36.040great deal for everybody then in 1914 a man in los angeles out of work puts a sign in his
00:04:44.120windshield of his model t and he starts picking people up along the streetcar route for five
00:04:50.580cents so five cents less than what the street car was doing okay um it was called a jitney
00:04:57.380it went across uh the country like a fever i mean it's you know what happened when people started
00:05:05.660doing uber this is really kind of the first uber within a year there was something like 60 000 of
00:05:11.060these jitneys they were just model t's and they would you know put a sign in their window going
00:05:16.080from here to here and they would drop people off okay thousands of them portland maine to san
00:05:22.080francisco all of them they had no fixed routes driver in san antonio wouldn't even choose a
00:05:27.640destination until his first passenger got in he said where are you going then he'd chalk it in
00:05:32.140on the window and fill the car along the way you didn't need to get to your door he he um you know
00:05:39.680he would take you close or he would take you to your door okay well people loved loved them
00:05:46.860the clients loved it was half the price of the streetcar and it could take you right to your
00:05:51.340door one man wrote in 1915 nothing is going to stop the jitney now no corporation no legislation
00:05:58.240nothing will ever stop the two the streetcar industries their own trade journal called this
00:06:04.480the Frankenstein of transportation. Then the streetcar companies did the thing this whole
00:06:10.920hour is all about and what's really happening with AI. They didn't compete. They just went to
00:06:17.800City Hall. And what did they do? What did they ask for? The most reasonable sounding request you have
00:06:25.360ever heard. They said, we don't want you to ban these guys. That's a free market. We're just
00:06:30.820asking you to hold them to the same standard that you hold us. They should have licenses.
00:06:37.160Make them post a liability bond because these cars, a lot of them are uninsured and people
00:06:41.660are going to get hurt. Make them run a fixed route so a rider can depend on them. Make them
00:06:47.500run a full day, not just profitable hours, but a full day. Okay, well, so I guess you could say
00:06:54.460every one of those is defensible. Two of them are good ideas. But whose advantage did that work
00:07:00.760to salt lake city was the first city to pass this effective the first of april 1915 you had to have
00:07:08.000a license a bond and a requirement that you would operate 16 continuous hours a day 16 hours
00:07:15.460that one line is the whole thing yeah i mean the driver how is he gonna drive now you have to hire
00:07:21.740other people this was just a guy with a car and a job driving a couple of hours this is this is uber
00:07:28.940Okay. 16 continuous hours doesn't regulate that man. It deletes that man. So the ordinance took
00:07:37.780place April 1st. By April 4th, nearly every Jitney operator in Salt Lake City had walked
00:07:46.400into the city offices and handed his license back and said, I don't want it. 40 Jitneys
00:07:51.000down to two in three days and it worked okay it worked every city city after city same result
00:08:01.680within a couple of years the jitney was completely gone okay it was a national thing
00:08:07.820street companies now just had their their streets back streetcar companies they all of a sudden now
00:08:12.860they're the only ways to get around then the war came and it was the worst inflation the country
00:08:18.540had ever seen and everything that people bought had doubled in price wages were rising so the
00:08:25.400companies went back to the same city halls that had just done them a favor and said hey can you
00:08:30.440raise the fare to seven cents answer was no we can't do that of course it was no you can't hand
00:08:39.160a politician the monopoly of price control and then ask him to give you back the price control
00:08:45.640okay no you're not going to raise the price on anybody that's what broke the streetcar companies
00:08:54.880okay because anybody who would vote for it to say we're going to raise the price they would lose
00:09:00.120his seat by 1919 streetcar companies were failing all over the united states enough of them that
00:09:06.440president wilson convened a federal commission on it that's 15 years before general motors bought a
00:09:12.000single share of anything. They had handed their freedom for protection. They had used the
00:09:17.800protection to kill the only competitor who could have ever shown a city what a ride was actually
00:09:22.900worth. And then they found that that protection was actually a cage. And by the time the buses
00:09:27.560showed up, there was nothing left to conspire against because GM just bought a corpse.
00:09:34.100Two things to take out of that. First, you've heard me talk about all this hour
00:09:39.800And the streetcar men would recognize every word.
00:09:44.980Nobody writes a law that says, eliminate my competitor.
00:22:46.160That evening, a train full of doctors and nurses and supplies pushed north through the storm, got there ahead of the help from Halifax's own capital.
00:22:58.860The next Christmas, Nova Scotia sent Boston a tree.
00:23:04.200And then everybody who had been there got old and it stopped for 50 years.
00:28:09.620or we're just voting for people and it's all about personalities.
00:28:14.400So learn the principles and the values.
00:28:16.240And there were these great clubs all over the country and people had summer camps for kids and groups were getting together and reading the founding documents and everything together.
00:32:11.820And as everything was coming down, out of the sky, everything that was happening, she reached for her flag to put it over herself, to protect her.
00:32:33.060She sat in that kitchen for a while and they talked and...
00:38:48.820This only ends two ways. You know that, right? Have you actually war-gamed this out at all? There's only two ways this story ends. We either come back together and we find a way to forgive each other and to come back to common sense, or one side kills the other side.
00:39:10.340we become rwanda where one side says the other side is evil go kill them and they do
00:39:20.440that it either ends in roundups or in forgiveness and coming back together i know which side i'm
00:39:27.740rooting for i'm rooting for the hey let's get back together i don't think the roundups sound
00:39:33.460like fun. But that's going to take effort to do it. We're going to have to have conversations
00:39:42.060with each other like that. Hey, can you just war game this out with me? I know you hate my guts
00:39:47.160right now. I don't hate you. I don't want to hate you. We disagree with each other. But can I just
00:39:51.560war game this out with you? How does it end? How does this end? If I hate you and you hate me
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