“60 Million Jobs GONE？” - AI Layoffs Could SPARK Economic CHAOS In America
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Summary
In this episode, we talk about how AI is going to replace human labor, and why this is a good thing. We also talk about the dangers of labor displacement and the benefits of AI, and how it will change the world.
Transcript
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Mine is not a family designed to withstand tragedy.
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Starring Academy Award nominee Michelle Pfeiffer
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You will have as much life to live as you allow yourself.
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Right now, you saw what happened with AI, right?
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And, Rob, I don't know if you have the stories or not where, you know, Oracle is letting go of, I don't know, 20,000 to 30,000 people.
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And everybody's like, well, you know, Jack Dorsey announced he's firing people, letting go of 4,000 people.
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And so if all these guys, and by the way, Mark Andreessen, respect to him,
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I don't know if you guys saw what Mark Andreessen said yesterday.
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Did you see what he said about the whole AI thing sheet?
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because this is going to lead to a question for you guys to see what you'll say.
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Yeah, so you have friends, I'm sure, who were great coders before AI
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and are they working fewer more or fewer hours than before fewer more more yeah so this entire
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labor displacement thing is 100 incorrect it's completely wrong it's classic zero sum economics
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it's the lump of labor fallacy it happens over and over and over again it's always been wrong
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it's going to be wrong again believe it for mediocre people and i know that sounds very
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judgmental and horrible but most social media managers mark a crap okay i'm getting in trouble
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if it's not you and crap if you get a social media tool that is ai driven and can replace an
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average social media manager for at&t surely you'd do it i don't say this to i don't say this to be
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insulting but it's the classic marxist analysis right which is there's a certain amount of work
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to be done and either the machines do it or the humans do it and so you know surely surely those
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jobs go away the answer has to be and this is what technology has always done and this is what
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ai is going to do and this is why i went through the long description that i did of the the
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hyper democratization of AI. Every single one of those people who's a social media manager today
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now has AI. They all have AI. They all have AI or they're about to have AI. And they're going to
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have it at their fingertips. And if they want to, and then anything that they want to do in their
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life, in their work, in their career, in their profession, in their job for the rest of time,
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they're going to be able to use AI to do those things. And they're going to be able to use AI
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to become a better version of themselves. They're going to be able to use AI to be able to learn
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new skills. They're going to be able to use AI to become more productive at work. They're going to
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use AI to be able to not do a lot of the grunt work they're doing today so that they can do
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higher value work. And then now I'm just talking classical economics, which is just the other side
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from Marxism. Classical economics says that the actual function, the actual economic function of
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technology, and this includes AI, the actual function is to raise productivity and specifically
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to raise marginal productivity of the individual worker. And again, this has happened many,
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many times. You take an individual worker who used to write a pencil and paper and you give
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them a typewriter, and then they used to write on a typewriter and then you give them a work processor.
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I'll read the rest on what he says. He says, essentially, every large company is overstaffed.
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I think most large companies are overstaffed by 50%.
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And I think a lot of them are overstaffed by 75%.
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You know, we saw what Jack Dorsey did laying out 40% of them.
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And, you know, a Bloomberg story says more than half of U.S. says AI will likely harm them.
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70% of Americans think advancement of AI are likely to reduce job opportunities.
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7% said they think advancement in AI are likely to increase job opportunities.
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So if you're saying, you know, the models they have right now is the rich getting richer and the poor getting poor,
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and they wouldn't want to do it the way you're suggesting, and AI is going to do what AI is going to do,
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what are you going to do if people are unemployed?
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What are you going to do if people don't have jobs?
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What are you going to do if people are not growing, becoming successful?
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Then what kind of chaos are these billionaires dealing with?
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Now, do you realize that what we're talking about here
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with, you know, replacing these big company jobs.
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But, you know, what is the percentage of companies
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99.9% of companies are small and medium-sized companies
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that are not listed and are likely never to be listed.
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And also that's where the majority of employment is,
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And that's where we have underemployment because the small firms are always liquidity rationed.
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They usually can't get enough money because they don't have access to capital markets.
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It's mainly banks that lend to them and the number of banks going down.
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So we have increasingly a credit crunch affecting small firms.
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You know, the big companies always go through these, you know, phases of, okay, we're going to cut.
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But that's marginal compared to if you increase employment in small firms and all you need to do there is create more banks, not reduce the number of small banks, but create more small banks.
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I don't think I'm what I'm saying is not against the solution.
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And I know the numbers, because when I go back right now, 46 percent, 45 percent of Americans work for a small business.
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OK, it's well, but you could even say it's more than that, depending on the definition.
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Sure. Let's just say the definition this is used by U.S. Bureau of Labor Statistics is 45% small business today.
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Of all employees work for a small business. Everybody here works for a small business.
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Okay, so what is it doing? The bigger companies are employing more.
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The smaller ones are being picked up or whatever. They're going out of business, right?
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My argument isn't your solution is a bad solution.
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My argument is why would the people in power and the billionaires not want that?
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Why would they not want others to create small businesses?
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Barrier to entry, to have more control, to not allow somebody else to come in to help.
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Essentially, these billionaires, they love the central planning because they think they can be the central planners.
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They want to control things, which is actually betrayal of the American dream of individual freedom.
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Yeah, I mean, and this AI thing, to your point, if you're shrinking the banks while you're doing this, because I agree with you, Patrick, which is there's an order of operations.
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I agree with what Andreessen's saying, and I found that a lot of the sort of tech billionaire class like Andreessen, they are brilliant, and they also, I think they're a bit disconnected from the reality of how this has gone.
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I live in Cleveland. I live in the U.S. Rust Belt. I saw, for me, my working mental model of what AI is going to do to these white collar jobs is what China did to these blue collar jobs, which is to say a lot of what Andreessen said is exactly what the politicians and the billionaire class were saying about NAFTA and about China going into the WTO.
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And from the time China entered the WTO in December of 01, by 08, 09, the number of manufacturing jobs in the United States had dropped by almost 35%.
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And so there's this assumption of essentially teaching old dogs new tricks, right?
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And number one, it's hard to teach old dogs new tricks.
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You get to 50, 55 years old, it's hard to re-skill.
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Unless if your name is Tom Ellsworth, because Tom Ellsworth is an exception.
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The challenge is this order of operations, the point you made, Patrick,
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Student loans are less of an issue because they're owed to the government.
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In extremists, they probably wouldn't be, but that's a separate discussion.
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But basically, our entire credit-based system is not prepared for a deflationary impulse,
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In 38 of 50 U.S. states, the New York Times reported last year,
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the single biggest employer in the United States is health care.
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Health care administrators are one of the biggest jobs.
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So AI is uniquely suited to disintermediate, to driving high unemployment among health care administrators.
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These are people that have never had to think about what the blue-collar guy has, which is, wow, my job might go to China.
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Up until two, three years ago, a health care administrator.
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Give me a high low of a health care administrator.
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By the way, and the top earners make 150 to 200.
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So you couldn't make it up to a, okay, so you're saying AI is going to replace these guys.
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And, again, if you have the, there's no social safety net big enough.
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They're going to fall into default on their mortgage loans possibly.
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And you can already see that delinquencies and defaults on consumer loans are at the highest levels already since 2011, 2012, shortly after the great financial crisis.
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So if you have some sort of institutionalized system like what Richard's talking about of small banks that are looking to take risks to support entrepreneurs as they go from this to something new, empowered by what Andreessen highlights is absolutely the productivity-enhancing power of AI, then this can work.
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It's going to be tenuous, but it could conceivably work.
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But as it's structured now, what's going to happen is you're going to see increasing unemployment amongst high-earning classes that took on loans, never thinking that their job would be threatened in a way a blue-collar guy's job was threatened by China.
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And they're going to default on their house and on their car, and then the banks are going to have to constrict credit because they were taking credit losses due to the regulatory ratios that Richard talked about.
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And we're going to have another something that looks like GFC.
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And you're starting, in my opinion, to see cracks already when you see these private credit headlines.
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So what percentage of jobs are those like, you know, the entry clerks, the customer service, the call center?
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What percentage of American jobs are we talking about that AI could take?
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Well, Andre Carpathy, who's an AI expert, did a study using the 342 Bureau of Labor Statistics job classifications, and it was a heat map.
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You can probably find it online, a heat map of risk to AI.
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And he rated them from low risk to very high risk.
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And the low risk were exactly where you would think.
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It's such things that in the real meat space, there it is.
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you can see the very high risk, very high risk. There are 25 million jobs at very high risk of
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disintermediation and another, I believe, 34 million jobs at just high risk. So you're talking
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about 60 million jobs. What's the labor force? 120 million, 150 million in the United States,
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something like that. You're talking about 30 to 40 jobs, 30 to 40% of the jobs at risk. And look
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at all these jobs here right that you can scroll over to the right on this thing it's what i do for
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a living right i'm in financial markets and think about this and that i love that you brought that
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up because that kind of economic desperation once those people if they're not trying to recreate or
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and i takes over ai takes over you're talking about a serious civil unrest where they they
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haven't gotten ready there's no other jobs that's like civil war type hey we're hungry we're i can't
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feed my oh if this oh my god oh by the way here's the thing though let me let me tell you you know
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the whole rich gets rich or poor get poor yeah a part of it is on the poor a part of it is on the
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rich let me explain my opinion okay and i get i get hateful because i used to be the poor guy
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yeah okay my dad was a cashier at a 99 cent store doesn't get worse my mother ran out of money went
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back to iran and i would go and he'd be making sandwiches and we're broke he's making fifteen
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hundred dollars a month my dad okay working at a cashier out of 99 i joined the military why i
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have no money. My credit score, 484, 495, 499. Now ask me the way I lived. Anything I made went
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straight to the nightclubs. Anything I did, it was all about sports. Partying, traveling, hanging
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out, no investments, could care less about mutual funds. I'm not getting paid. All of a sudden,
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it's like, boom, I read a book called The Millionaire Next Door. The Millionaire Next
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Door drives a Ford F-150. You know what he talks about in that book that the millionaires,
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the number one car millionaires drive in this book, it says F-150. It's not the Ferrari. It's
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It's not the Lambo, and it's not any of that stuff.
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Stay in the market, S&P, because that's the way for you to hedge your money against all these other guys.
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If you really want to compete against these other guys, they're in the market.
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And half the time, they can't beat the S&P anyways.
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So if the last 40 years S&P's done 11.5%, guess what?
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If you don't know a lot about it, go buy a nice little mutual fund, American Funds Investment Company Act.
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Go to somebody that's got an ETF to play it safe, right?
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and then you know expenses you know find a way to save 20% if you can 10% live way below your
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means this is on the individual learn a new skill set go learn Claude go learn coding go learn the
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skill set today so if the poor is not doing that that's on them those who do to get out of it
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different story now let's go to the rich a part of this being on the rich if you're building a
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company Richard and this is this is what I thought about I was in a company that I went and had a
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meeting with them at Duluth Georgia and I said one day I would like to be the CEO of this company
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I want to know what I can do to own a real piece of this company because I'm going to give 20 years
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to this company they laughed me out of the room I was 29 years old 30 years old like who the hell
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are you I said oh really yeah this lady named uh Susan so I walked and I'm like very interesting
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how they handle this okay they said you'll never leave you're not going to start a company you're
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coming here to get a few million dollars because another guy does this every four years and you're
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trying to scare us you have a very good life you're not going anywhere i'm like wow how many
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other people came and they were faking it and then i said i'll never do that so i left i started
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insurance company i gave everybody who were leaders equity and what happened when everybody got equity
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we didn't lose people they stuck around their lives changed happy marriage they had kids players
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that spend the most time with me they got on average three to five kids because to me it's
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like, I want you to have a happy marriage, have a lot of kids, have your dreams become
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a reality, you know, enjoy your life, wear nice clothes, eat good food, you're good to
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If you don't think that way, people are leaving you and your company collapses.
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So I can't see the logic of not creating an economy where young people want to get married,
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want to have kids, want to have their dreams become reality, want to live in a nice place.
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If you don't have that kind of an environment where everyone's having a dual career, you
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