And China is really good at executing on long term 5-10 year plans. I am sure they have really smart scientists advising the government to pace themselves unlike the US where pretty much all of the GDP growth came from AI spend.
"paying an ad-tax to the gatekeepers of eyeballs" is such a great analogy for paying for google/fb ads. Its disheartening that to sell anything online you have to pay these companies thousands of dollars just to get in front of people.
Yes, it would assuming pension funds have AI/Tech stock exposure.
- A rule of thumb suggested by one study is that every $100 drop in stock market wealth leads, on average, to a $3.20 drop in consumer spending. Under such an assumption, a dotcom-style crash would cut American consumption by about $890bn, or 2.9% of GDP.
- A drop in nominal values on the same scale as the dotcom bust would wipe out $16T, or 8% of American household wealth. Foreign investors would lose $7T.
> The richest Americans own the vast majority of the US stock market, according to Fed data. The top 10% of Americans held 93% of all stocks, the highest level ever recorded. Meanwhile, the bottom 50% of Americans held just 1% of all stocks in the third quarter of 2023.
(the vast majority of wealth for the non wealthy in the US is someone's primary residence real estate)
Indeed, the vast majority of Americans have no exposure to equities, or limited exposure through a 401k or a pension. "Be a shame if something happened to these meager rows in a database we've been conning you is the path to financial independence and security. Won't you think of your crumbs?" But I digress. TLDR If the equities market implodes, it'll be mostly fine. The stock market is not the economy [1] [2]. The economy is demand for goods and services.
(and I say this as someone with more exposure to the capital markets than most Americans, while hedging against irrationality, voting vs weighing machine and all that)
You have to use caution when interpreting those numbers. The bottom 50% doesn't have much wealth, so a big chunk of their wealth will decrease. It also tends to be unevenly distributed, so for those trying to improve their situation (think someone 60 years old with $50K in retirement savings), it would hit really hard. Plus a lot of those people would lose their jobs when the highest 10% cut back on spending.
That doesn't reflect the reality of life for those in the bottom half of the wealth distribution, and especially for those in the bottom quarter. $30K is a lot of money to them. The 30th percentile of income in the US in 2023 was under $30K. They're hoping to grow their $50K to $100K or $150K before retiring at 70.
> (the vast majority of wealth for the non wealthy in the US is someone's primary residence real estate)
But this is not solely on the top 10% to be maligned. We should force everyone to save.... even $5-10/month adds up for the least privileged over time. We force everyone to immediately pay taxes because the money would not be there year end - we should do the same for saving because it is easier than changing human behaviour.
A lack of education at most societal levels to: be taught the impacts of forgoing now for later, think long term, act long term, resist impulse to spend on consumer or ego level goods for societal "approval" or mating.
Home are the primary source of wealth for families because it is forced payment.
It is what a good parent would do - and every person needs a "parent" for some aspect of our lives (we're all bad at something).
60% of Americans cannot meet their basic needs on their income. They simply do not have enough income and cashflow to get exposure to the capital markets. No amount of education fixes a system structured to extract. We took pensions away saying they were unaffordable (they weren't, those contributions just go to shareholders now), took wages away through globalization and more corporate power, and then blame the human as if this was their fault. "Have you tried eating less avocado toast?"
- The above totals do not include indirect holdings-such as investments via pension funds and life-insurance companies-of which American households have some $20T.
This is a stat that we should take with a huge grain of salt. Poorer people indirectly own stocks through their participation in various pension schemes.
Land prices are subject to speculative bubbles as well. The only way to get rid of speculation in the real estate market is to drive the price of land down to zero by taxing it.
You also need a lot of money to purchase land, so this effectively allows banks to make a lot of money on overly inflated price of land.
Land by itself doesn't generate wealth, only improvements on top of it does. Only problem is that we tax improvement along with the land, leading to the perverse incentive that building anything increases your tax burden. We call them property tax.
We're getting into the weeds, but the goal is usually to own your home free and clear by the time you retire, reducing your income needs from retirement to death by not having a non discretionary housing payment. The wealth in most homes cannot be tapped until sold, death, or stripping the equity (HELOC or reverse mortgage) and hoping you die with zero.
You can sort of think of a house as an I bond you can live in [1], and the return is the equity gains (historically). You need lots of money to buy land because demand outstrips supply, there is a shortage of ~4M housing units in the US, and the pipeline for building new housing was permanently impaired after the 2008 global financial crisis. We will never build as fast as we used to as we go into structural demographic labor shortages in the US; the value of existing real estate is ancient embodied construction productivity and material costs, similar to how oil is ancient sunlight.
Drive down the price of land to zero via taxation and you cannot use that home to reduce your income need from retirement. It will force them to sell the property to make way for further development, since the cost of land is no longer so high that you need to borrow money from the bank to purchase land, only to pay the ongoing taxes.
A rule of thumb suggested by one study is that every $100 drop in stock market wealth leads, on average, to a $3.20 drop in consumer spending. Under such an assumption, a dotcom-style crash would cut American consumption by about $890bn, or 2.9% of GDP.
First, wealth and money are not the same. If you live in a mansion, but your bank account is zero, you can be wealthy and money-poor at the same time.
Money isn't some fixed object, like the amount of bills in circulation. It's the gross valuation of all sales, whether you trade a dollar bill or swipe a debit card or take out a small loan with a credit card tap.
And money can disappear, if something valued at $10 only sells for $9.
Government printing bills has literally nothing to do with the amount of wealth in the world. They don't use those physical objects to pay government debts, nor do they dole them out to stranger or "friends".
The government can generate money in the short term by changing lending rates ("the Prime"), which allows you to buy more for less interest, which encourages purchases. The long-term effect includes paying off that interest, of course, and someone still has to want to loan money at that rate; if the Prime went to zero your credit card rates still wouldn't be zero.
The industry will truly only find out how well AI adoption is going if it allows users both internal (employees, tech workers) and external (general users/consumers) to fully opt-out.
AI is being forced down peoples' throat. Millions want to but cannot disable Gemini from Gmail. Many SWEs don't want to use AI tools but managers are forcing them to do so.
How do you know if something is really liked/needed/wanted when there is no opt-out?
> Overall, 59 percent said they regard AI as a threat to their future job prospects, far more than immigration (31 percent).
This is in line with my observation, unlike what many older folks think, Gen Z are more skeptical of new tech. Many who were the first generation to grow up with social media are the first ones quitting social apps like Facebook, Instagram etc.
On the physical/hardware side, old tech is making a massive comeback among Gen Z. Film cameras, 2000s digicams etc.
Thanks, this is really practical advice. The consistency is difficult; for reasons not (fully) understood to me, I often isolate myself after a mounting internal pressure, described in this comment: https://news.ycombinator.com/item?id=46139449
Don't feel you have to add anything more, but if you have advice not covered in the article, I would love to hear what you have to say.
