As we’ve seen multiple breakthroughs in AI - I have been thinking a lot about the short, medium, and long term consequences. I have come to the opinion that, over some undefined but likely relatively short timeline, there are really two potential futures.
I do have a predisposition towards the nationalization of certain industries, particularly ones that are extremely harmful because they are run privately (health insurance is one such example, but hardly the only). While each of these industries becoming publicized would represent large quality of life improvements for the American people - AI nationalization dwarfs all the others by multiple times.
What do I mean by consequences? Well, I’d like to frame the discussion in these areas of concern.
Effect on labor
Corporate power
Inefficiency of private AI
AI Superiority
Now, obviously - each of these are extremely interdependent and so it is a bit hard to cleanly divide the supporting points of each section; but I will do my best.
Assumptions
The main assumption I’d like to put forth is that AI is powerful and will continue to accelerate. The time frame is in question, but the assumption is at some point we will have AI more intelligent and capable than any human or group of humans.
What could nationalization look like?
Well, at a high level - in my scenario, it could go something like this:
The federal government creates its own AI lab
The law must define the goals of this lab and regulations therein.
It would be critical that it is a program with transparency, oversight, and regulation more comprehensive than any existing program.
It outlaws private research on AI and/or direct ownership of certain / amount of GPUs/chips.
You’d also need to outlaw citizens working on AI in other countries.
This may feel radical - however there is precedent for such an action. Consider that any given private company or citizen can not develop a nuclear weapon.
Consolidate the existing AI labs under the federal government’s AI lab
The goals and research direction would likely change from the current private labs, but its goals and research direction would be clearly defined and transparent to the public.
Institute direct rebate programs to citizens (especially to anyone affected directly by job loss due to AI)
Perhaps direct rebate is not the correct way to go here, but the point would be to socialize the benefits of AI - however that looks.
My thesis, which I hope to convince you of by the end of the series, is that we must nationalize AI; and to a lesser extent, that it should look like the outline above.
In the next part of the series, we will discuss the effect of AI on the labor market and why it demonstrates a strong reason to nationalize: Nationalize AI - Part 2 - Labor
Based on the knee-jerk reactions on social when I posted my last Jon Stewart must-watch - Jon Stewart - Why Men Are Leaving the Left - there are a lot of people who really don’t have much respect for Jon Stewart at this point. And I know that is also the case with Bernie Sanders, as well, especially in a specific part of the democratic party.
I was also out on both of these guys until recently. I don’t believe Bernie would have won, necessarily, but I do subscribe, now, to the idea that politics now is less about left vs right but really establishment vs anti-establishment.
The points talked about in the video are critical, in my opinion, to the election loss. I don’t 100% agree with everything, but largely - I find the analysis correct.
If you watch, I request you watch with an open mind, and of course - I don’t expect you to agree!
As a reminder, this post (Part 2) and the previous one (Part 1) in this series are intended to be relatively generic, providing non-partisan information on tariffs and the pros and cons thereof. While Part 1 is not technically a prerequisite, you will need to have read it or generally have some base knowledge of tariffs and their effects on an economy.
Additionally, we cannot account for every complex variable in an economy, so this discussion is intended to provide a relatively high-level, generalized analysis centered on outcomes that are highly likely based on established economic principles.
I also am not currently talking, in these posts, specifically about current policy proposals or discussions. This post does, however, consider a hypothetical issuance of a large-scale tariff program and its implications on the current economy.
Due to the length of Part 1, I did not delve into at least two additional important consequences of tariffs with the level of detail necessary to further round out our understanding of the potential severity that tariffs — especially large-scale ones — may or may not cause.
Both of these outstanding issues on my mind are particularly pernicious, in my opinion, but I will only tackle one here for now - as to attempt to keep the length of this reined in.
The image above is a bit much, but I thought it was funny.
An Impossible Balance?
Defining the hypothetical
Summary
In the case of the issuance of a large tariff program, such as described; inflation rises, job loss occurs, and the economy slows. This is referred to as stagflation.
For the purpose of this article, let’s imagine our (USA) government issuing large tariffs - large, in this case, meaning a high percentage on the majority (or all?) imported goods.
The mechanics are covered in Part 1, however, this course of action would likely cause relatively severe:
Inflation.
Overalljob loss in the broader economy.
Overallreduction in aggregate demand (growth slows or turns to loss).
This is a particularly challenging situation, sometimes colloquially referred to as stagflation.
Although the reduction in demand puts downward pressure on prices (disinflation), this effect is dampened by the inflationary effects of the tariffs. Perhaps, so much so, that inflation keeps rising - especially with particularly high tariffs on a high enough amount of goods.
And so, imagine this incredible situation that we would be in here - rising unemployment and increased inflation. An economy can handle relatively moderate rises in one - but not typically both at once without intense problems.
The Federal Reserve’s Task
Summary
The Federal Reserve is tasked to balance unemployment and prices as best it can, via monetary policy. The primary mechanism discussed is the raising and lowering of interest rates. Raising them tends to slow the economy and inflation, while lowering them tends to stimulate the economy and raise inflation.
One of the most important roles of the Federal Reserve (aka ‘The Fed’), the U.S. Central Bank, is managing monetary policy.
This is the dual mandate of The Fed:
Maintaining the maximum sustainable employment while maintaining a stable inflation rate.
Trying to maintain stable prices.
So - how does The Fed do this? Well a few ways - but one of the main levers is adjusting interest rates. I won’t go into detail on the specifics there. At a high level - changing the interest rates can be used to indirectly affect prices (inflation / disinflation) by adjusting them in the following way:
Raising interest rates helps reduce inflation by slowing demand in the economy, but this comes at the cost of slowing growth & higher unemployment. Conversely, lowering rates can stimulate the economy but fuels inflation.
The mechanisms through which these actions cause these changes is not material here, but if you’re interested let me know on Bluesky and perhaps I will write about that at another time.
The Impossible Balance
Summary
Considering stagflation, The Federal Reserve is placed into the harsh reality of being forced to raise interest rates, in order to reduce inflation.
So, going back to our situation in the economy after the issuance of the hypothetical large tariffs. Rising inflation and rising unemployment.
In this case, what could or would the government do to counteract these issues through fiscal policy, outside the Federal Reserve’s actions? Introduce stimulus programs or cash via Congress, and inflation rises. Cut spending to reduce aggregate demand, and more jobs are lost.
Similarly, what is The Federal Reserve to do, here? It is between a rock and a hard place; but nevertheless - forced to act.
Considering that The Fed would certainly prioritize avoiding runaway inflation - it would either leave rates where they are for longer or even more likely — raise them further.
Then What?
Summary
The economy, in the state of stagflation, and considering The Fed's action - raising the interest rate, is thrown into an even deeper recession in order to attempt to get things back on track over the long term.
Well, to summarize the series of events, from the beginning:
The damaging effects of these large-scale tariffs would place the larger economy into a state of stagflation
A challenging situation in which unemployment and inflation are rising while economy is slowing.
We explored how The Fed would now be stuck in a tough position, basically forced to raise rates to curb inflation.
As discussed earlier in The Federal Reserve’s Task section, raising interest rates helps dampen inflation but also slows the economy, leading to job loss.
In conclusion, the first-order effects of the tariffs are severe enough, but The Fed would then be compelled to push the economy into a deeper recession to set it on a path for long-term recovery. Such a recovery might take years, depending on the magnitude of the stagflation and the effectiveness of coordinated policy responses such as fiscal stimulus.
Why would a government, with a stable economy, purposefully risk throwing itself into long-term economic chaos immediately after suffering (and recovering from) high inflation? Why issue such large and sweeping tariffs and commit an unforced error of this magnitude? Surely you wouldn’t, right?
So, Biden pardoned his son Hunter yesterday - and the reaction has been very mixed.
Some of the main criticisms I am seeing so far, and I’ll give my thoughts.
He previously said he would not pardon Hunter.
Sure, but the situation has drastically changed. The next president has explicitly talked about targeting people he considers “enemies.” Remember, this obsession with Hunter Biden has been purely political, driven by Trump and his allies. Hunter would not face the same scrutiny for his crimes if he were not a Biden.
It normalizes “breaking norms” - and will be used by the next administration as an excuse to break norms.
This criticism is ridiculous on its face, especially considering Trump’s first term and the rhetoric he has been using during his campaign.
Either way - I’m not convinced this move “breaks norms” to the extent many believe. It’s certainly not ideal, but it’s far from a wild or a severe situation, with all the context considered. As a reminder, Hunter’s convictions are unrelated to Joe Biden—they are tax and gun charges.
There are many people who deserve pardons just as much, if not more.
This is absolutely true. Biden should have announced this pardon alongside many pardons he ought to issue. There’s significant injustice he has the power to at least partially address.
My point here also addresses rule of law concerns: there should not be different rules for the President’s family. Again, Biden needs to correct other similar injustices as soon as possible before he leaves office.
Overall, I am not surprised Biden pardoned his son, despite him insisting he was not going to previously. It is also fine, and won’t encourage anything that wouldn’t already happen under the next administration. But, Biden has a lot more work to do to fix many injustices before he is gone.
Additionally, this outrage once again shows how high the bar is for Democrats but so abysmally low for MAGA. Democrats are expected to be perfect and the other side could literally do anything and it is shrugged off.
