The Three Words No One Wants to Hear
Hello, I hope the spring is going well for you! Kind of feels like we skipped a season.
I spoke at the University at Albany last week and met with a number of students. They were bright and thinking about their future. A couple of them said they wanted to go to law school.
I responded, “If you go, try to find an inexpensive way to get your degree. I’m not sure the numbers will work out.” We went through the math. Maybe $80k a year for tuition, room and board. Times 3 = $240,000 in debt. How much would you have to make for that to make sense - and would that job be waiting for them in 4 years? I was openly dubious but didn’t want to be a jackass raining on their ambition. It’s good that they even had an ambition, after all.
But it left me thinking about just how rough it’s going to be for the next generation.
“Things have gotten so much worse in the last 10 years.” This is what the CEO of a major AI-enabled company said to me this week. His company has tripled its revenue in the last few years. But he’s cutting staff and sounding the alarm about AI. “The truth is, the faster we replace people, the better we will do.” He’s for a negative income tax to give people a floor paid for by AI-fueled profits.
His summary of the situation in three words: “With the help of AI, capital displaces labor.”
That’s actually the best distillation of the moment we’re in.
Also this idea: “The easiest people to fire are those you haven’t hired yet.” It’s one reason why college students are going into the most unwelcoming job market in a generation.
I wrote last week about unemployed and underemployed college graduates. I said in 2019 “coders will definitely be automated.” I knew that was the case because what coders do is highly structured and rules-based, sort of like the corporate law contracts I reviewed in my twenties, and I knew that highly structured rules-based work would be catnip for AI.
“A lot of corporate workers are there to maintain a legacy system or manage a project that isn’t core to the company’s work,” a tech executive commented to me. “Maybe 25% are touching something vital to what the company is doing right now.” That leaves 75% scrambling to justify their role. The end of the office will be painful.
“AI is going to push millions of people up or down a class. People don’t take that well.” That’s what an AI executive said to me over dinner.
Capitalism plus AI will be no one’s idea of a good time.
I’m pretty sure the numbers will show that entrepreneurship is going to rise, simply because there will be a ton of unemployed college grads and techies and others and they’ll have no choice. I love entrepreneurship as it can bring out the best in people. But for every successful startup, there will be 9 or 10 failures. Starting a business is not for everyone, and this environment will be unforgiving as the work gets stripped away.
The footwear company Allbirds pivoted to AI and its stock popped 700%. Maybe your shoes will tell you that your feet stink.
The water level is going to rise quickly. Appreciate what you’ve got, build a boat as best you can and try to bring others in.
You know something we can all do better on? Our data. Go to noblemobile.com/yang for 3 months off your wireless bill, the best deal around that will also reduce your screen time and help you save for your family. Email matt@noblemobile.com to get a human being. A new study just came out showing that time off of Instagram and Facebook improves your mood dramatically. I interview Princeton neuroscientist turned Congressional candidate Sam Wang on the podcast this week. The Hudson Valley Ideas Fest returns to Rosendale, NY on April 25th. Go outside and look up.