From: allin
Technological advancements, particularly in AI, are projected to significantly impact global economies and geopolitics, potentially leading to both productivity gains and disruptive societal changes [00:34:03].
The AI War
The “AI War” is described as a conflict no country can afford to lose, as its outcome is considered “more important than profits” [00:00:11]. If either China or the US were to truly lose this war, it would have profound implications [00:00:15]. This struggle is viewed as integral to national success, surpassing traditional profit motives [00:35:12].
Economic Impact and Productivity
AI is expected to drive productivity [00:34:30]. However, there’s significant disruption anticipated, with some entities becoming “disruptors” and others being “disrupted” [00:34:39]. The impact will be felt by those implementing and changing as a result of AI, rather than just those producing the technology [00:34:50].
Historically, periods of great invention and productivity increases, like the 1920s, have coincided with big debt increases and widening wealth gaps, indicating that technological progress alone does not resolve these issues [01:08:05].
AI and Job Displacement
A significant concern is the potential for AI to lead to substantial job losses, affecting millions in sectors like call centers and automotive lines [00:56:31]. Such widespread unemployment could create a demand for public support programs, potentially fueling the rise of socialism [00:57:08]. The profit impact and financial benefits from AI-driven productivity are not expected to be immediate enough to address the existing supply-demand issues or budget deficits [00:57:21].
Geopolitical Implications
The AI War has direct geopolitical implications, especially in the context of increased military spending [01:02:09]. The technology war is seen as directly linked to military power; losing the technology war means losing the military war [01:07:33].
China’s Role in AI Developments
China is noted to be somewhat behind in chip development but ahead in AI applications [00:35:52]. Their strategy may involve embedding inexpensive chips into manufactured goods and leveraging robotics [00:36:16]. China’s manufacturing prowess, accounting for 33% of all global manufactured goods (more than the combined US, German, and Japanese output), suggests a strong competitive drive where profit margins may be less of a concern [00:36:32].
Investing in the Age of AI
In an era of AI-driven disruption, investing in productivity-producing assets is advised [00:34:25]. However, caution is necessary, as “super scalers” like Nvidia carry risk issues [00:34:12]. The focus should be on those implementing and changing as a result of AI, or creating impactful applications [00:34:50].
Attention must be paid to pricing, as even “great companies” become less attractive if their stock is expensive [00:37:30]. The current environment, with high prices for “new hot things” like productivity growth drivers and a rising interest rate environment, is reminiscent of 1998-1999 [00:38:15].
Diversification is crucial due to widespread leverage and optimism [00:39:05]. Uncorrelated assets, such as gold, can reduce overall portfolio risk [00:39:14]. Productivity increases that translate to profits, possibly from capital gains, are also a factor, but the precise impact of AI on future revenues and efficiencies is hard to predict [00:54:50].