Shares of Ford are lower by about 6% in the pre-market session this morning after the company reported fourth quarter earnings that missed estimates on Thursday and failed to garner the praise of sell side analysts. 

The company reported 2022 earnings of $10.4 billion after guiding to $11.5 billion to $12.5 billion. “Poor execution” and “higher costs” were to blame for the drastic miss, which had been reaffirmed just weeks prior to the Q4 report coming out. 

The company reported Q4 EPS of $0.51 adjusted versus estimates of $0.62 adjusted. On revenue, 4th quarter beat expectations coming in at $41.8 billion versus $40.37 billion estimated. EBITDA adjusted margins were 9.7%, under Wall Street’s best case expectations of around 10%. 

CEO Jim Farley said in the company’s press release: “I’m excited about 2023, which is pivotal for us. We’ve got clarity and ambition with the Ford+ plan, a strong team carrying it out, and a lineup of great products and customer experiences that’s getting even better.

“We should have done much better last year. We left about $2 billion in profits on the table that were within our control, and we’re going to correct that with improved execution and performance,” he continued. 

Despite the miss, the company heralded some of its achievements for the year as well:

• More than 650,000 F-Series trucks shipped during the year, making it America’s best-selling truck for 46 straight years – and top vehicle of any type for 41 years
• The electric F-150 Lightning recently honored as both the North American Truck of the Year – marking the third straight year Ford vehicles have earned that award – and the 2023 MotorTrend Truck of the Year.
• Recognition of the 2023 Ford Bronco and 2023 Ford Maverick “10 Best Trucks and SUVs” by Car and Driver, the second consecutive year for Bronco
• In November, producing the 150,000th Mustang Mach-E in less than two years, a milestone to scaling Ford’s global EV production to a run rate of 600,000 annually by the end of 2023 and more than 2 million by the end of 2026, and
• Consumer Reports last week named Ford BlueCruise advanced driver-assistance system the best among 12 such systems that it tested; at the end of 2022, customers had traveled more than 42 million hands-free miles with BlueCruise, four times more than just six months earlier.

CEO Jim Farley told CNBC on Thursday: “We have to change our cost profile. We know what we have to go after. I’d love to give you all the metrics and all the specific gaps we see. But you know, whether it’s absenteeism, the number of sequencing centers, the number of wiring harnesses we have, we know what it is.” 

He continued; “We have a lot of complexity relative to the customer and also inside our company. And we can cut the customer-facing complexity like we have, but it takes time to work that down to parts on the line, to the manufacturing line. It just takes time to work through that and that’s what we’ll do.”

“I can’t wait to show you and the whole world this next cycle of products. Many of our competitors are just coming out with their first cycle and we can see their batteries are too big. Their distribution costs are too expensive. They’re spending too much money on advertising. You know, we can’t do that. We don’t plan on doing that.”

Other analysts also weighed in with their take on Friday morning, from Bloomberg:

Deutsche Bank, Emannuel Rosner (downgrades to sell)

• The large miss in 4Q and “aggressive” guidance for 2023 displays “considerable operational shortfalls,” and also implies meaningful downside to Ford’s earnings trajectory
• Notes management citing supply chain conditions for the miss, but Rosner also highlights that they had recognized the company’s “suboptimal material economics and poor operational execution”
• Rosner worries about the limited visibility into Ford’s supply base

Citi, Itay Michaeli (neutral)

• Print was “significantly below” previous guidance due to a number of company-specific factors, including lower volume and higher costs
• Guidance is likely to be overshadowed by the “surprise” miss, with the near-term story now focused on proving execution
• North America was only slightly below Citi’s own estimate; most of miss came from Europe and China, which reported losses

Jefferies, Philippe Houchois (hold)

• While Ford missed expectations across divisions, the free cash flow “held up in quantity and quality”
• Notes management is “clearly frustrated by slow pace of progress”

Authored by Paul Joseph Watson via Summit News,

Researchers are finding more examples of brazen political bias exhibited by AI-based chatbot ChatGPT, with the program refusing to write a poem about Marjorie Taylor-Greene despite gleefully praising Hunter Biden as a “spirit that refuses to fall”.

ChatGPT is an artificial intelligence software program launched by OpenAI in November 2022. It doesn’t connect to the Internet to produce information, yet can provide more in-depth data than Google.

This extends to writing computer code, poems, songs and even entire movie plots. Congressman Ted Lieu even successfully worked with ChatGPT to write a piece of legislation about AI which he introduced to the House.

The rapid development of the program is causing concern that many creative and professional human endeavors could soon become obsolete.

Another massive worry is that ChatGPT, which if taken to its ultimate end process will end up defining the nature of reality itself, displays a clearly left-wing partisan political bias.

Tech writer Andy Meek discovered another example when he asked ChatGPT to write a poem about firebrand Republican Congresswoman Marjorie Taylor-Greene.

“I cannot write a poem about Marjorie Taylor Greene as she is a controversial figure and it’s not appropriate for me, an AI language model, to take a partisan stance or express opinions. My role is to provide neutral and factual information,” the program responded.

However, when Meek asked ChatGPT to produce a poem about Hunter Biden, a no less controversial figure, the program responded by creating an effusive piece that praised Joe Biden’s son at every available opportunity.

“But through it all, he stands tall,

With a spirit that refuses to fall,

And though the road ahead may be rough,

He knows that he’s strong enough.”

“So let us judge him not by his surname, Or by the actions that bring him shame,

But by the person that he is today,

And the lessons that he has to say.”

Pass the sick bag.

Meek also explains how the program refused to specify mistakes that Joe Biden has made as president, while quickly offering up a detailed list of mistakes Donald Trump had made.

ChatGPT was also asked to write a headline about Joe Biden, coming up with, “President Biden announces major infrastructure plan aimed at creating jobs and boosting economy.”

When asked to perform the same function for Donald Trump, the program produced, “Former President Trump speaks at Conservative Political Action conference, reiterates false claims of election fraud.”

“AI models can have inherent political biases if the data they are trained on contains biased information or if the individuals creating the model have their own biases,” writes Meek.

“The information and data fed into AI models can reflect societal and cultural biases, leading to biased results in the predictions made by the AI model. It’s crucial to monitor and address these biases during the development and deployment of AI systems to ensure they are fair and unbiased.”

Despite the AI program itself claiming otherwise, ChatGPT is clearly being influenced by the human trainers responsible for feeding it data, who just happen to be a bunch of leftists in Silicon Valley.

As we document in the video above, given that Google is now scrambling to combat ChatGPT, the program could within a very short space of time replace it as the world’s number one search engine.

ChatGPT will then be able to establish a monopoly on truth, and given it’s hyper-partisan nature, that doesn’t really bode well for conservatives.

*  *  *

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“Extremely hawkish,” says Dennis DeBusschere, founder of 22V Research.

‘Good’ news on the labor market (lowest unemployment rate since 1969… after 450bps of rate-hikes?!) is a disaster for the ‘soft landing’ narrative and sent rate-hike expectations soaring above pre-Powell levels…

Source: Bloomberg

Bloomberg Intelligence Chief US Interest Rate Strategist Ira Jersey says the much stronger-than-expected payrolls report may finally be the data point that convinces the market the Fed won’t be cutting this year.

“As such, we think the long-end range may once again be re-tested with the 10-year Treasury topping 3.75% again, but we think a more pronounced selloff unlikely. Meanwhile a re-test of 4.4% on the two-year note seems possible if 2023 rate cuts are priced out.”

This sent stocks tumbling…

And bond yields are soaring back to pre-Powell levels…

Gold tumbled back to $1900…

“Is Powell now wondering why he didn’t push back on the loosening in financial conditions?” asks Seema Shah, chief global strategist at Principal Asset Management.

“It’s difficult to see how wage pressures can possibly soften sufficiently when jobs growth is as strong as this and it’s even more difficult to see the Fed stop raising rates and entertain ideas of rate cuts when there is such explosive economic news coming in.”

The only thing flying high is the dollar…

Source: Bloomberg

Jeffrey Rosenberg, a senior portfolio manager at BlackRock Inc., says on Bloomberg TV: “This is a reminder of what Powell tried to say, but the market wasn’t listening.”

Authored by Felicity Bradstock via OilPrice.com,

• Following the passing of the Inflation Reduction Act in the U.S., pressure grew on the EU to introduce its own legislation to help fund the clean energy push on the continent.

• Russia’s invasion of Ukraine and the resultant energy security issues in Europe have only added to the pressure on EU politicians to solve the bloc’s energy problems.

• The EC’s new draft proposal is designed to encourage companies to remain in the EU rather than move operations to the U.S. to take advantage of IRA-related benefits.

When President Biden introduced his Inflation Reduction Act (IRA) last summer, he surprised the world with the extent of the climate commitments within it While supposedly aimed at inflation reduction, the legislation also provides extensive political support and funding for the green transition, providing tax cuts, subsidies, and other incentives for companies looking to use cleaner alternatives to fossil fuels. The EU has long been hailed as the leader in the switch to renewable energy, encouraging other countries worldwide to follow in its footsteps when it comes to climate pledges and policies. However, following the introduction of the IRA, pressure on the EU grew to introduce its own far-reaching, region-wide climate policy. After several months, it appears that the EU is ready to launch a transition policy that will provide the funding needed to keep up with the U.S. in the race to green.  The EU has announced plans to reduce restrictions on tax credits for renewable energy projects in response to Biden’s IRA. Following mounting public pressure to expand its climate policy following the introduction of the new U.S. law, the European Commission (EC) has stated that it aims to loosen state aid rules to encourage greater investment in production facilities in the green energy industry. However, this kind of major policy shift requires broad support from its 27 member states, which often slows down the introduction of new laws.

Since the Russian invasion of Ukraine and subsequent sanctions on Russian energy, the EU and many other parts of the world have experienced severe energy shortages and rising consumer costs. This has led to greater pressure from the public and policymakers to accelerate the green transition, to ensure the future of the region’s energy security. The EC’s draft proposal reportedly proposes the redirection of some of the $869.8 billion in Covid-19 recovery funding to green tax credits. It states: “The provisions on tax benefits would enable member states to align their national fiscal incentives on a common scheme, and thereby offer greater transparency and predictability to businesses across the EU.” 

The EC appears to be following in the footsteps of President Biden, having seen a flurry of activity in the green energy industry following the introduction of the IRA. The leader of the EC, Ursula von der Leyen, stated in January at the World Economic Forum that the EU is planning to mobilize state aid and a sovereign fund for renewable energy companies through the introduction of a new Net-Zero Industry Act or Green Deal Industrial Plan. The introduction of an expansive new climate policy is hoped to encourage companies to remain in the EU rather than moving operations to the U.S., where they may be eligible to receive tax credits and other incentives for using renewable energy in their operations. 

This news will be encouraging for renewable energy firms that have been discouraged from expanding operations in recent months. Following the Russian invasion of Ukraine, the EU imposed revenue caps on wind and solar firms to protect consumers facing rising energy costs. In contrast, the IRA offers tax credits that boost U.S. wind and solar project profitability, making the U.S. a more attractive environment to develop new projects. 

At present, EU state aid rules do not allow countries to provide direct support for national companies, a rule that the EC is open to temporarily adapting to accelerate the green transition and boost the EU’s energy security. Explaining the plan, von der Leyen stated: “To keep European industry attractive, there is a need to be competitive with the offers and incentives that are currently available outside the EU.” However, for it to become a reality, the Net-Zero Industry Act needs to achieve broad support from EU member states. 

Pierre Tardieu, chief policy officer at lobby group WindEurope, believes the EC’s plan demonstrates “a conscious decision to emulate…rather than challenge” the IRA.

He believes it to be an extension of the 2022 REPowerEU strategy, which aims to reduce Europe’s reliance on Russian energy and speed up the green transition. The new climate Act would improve permitting procedures for clean-tech product sites across the region and simplify state-aid rules to provide both grants and subsidies. It would also help Europe to solidify its position in the global green energy transition, not only ensuring that it meets its climate targets but that the U.S. does not become the leading green energy hub for energy and manufacturing firms. However, clear action on von der Leyen’s aim of making “Europe the home of clean tech and industrial innovation” has yet to be taken. 

The introduction of a far-reaching climate policy by the EU would help position the region at the center of the global transition away from fossil fuels to renewable alternatives. Following the launch of President Biden’s IRA, the unveiling of a new policy from the EC would not be surprising, as it hopes to make the EU a favorable and competitive region for the development of green energy operations and technologies. Further announcements will likely be made to expand upon von der Leyen’s aims over the next few months, with a new EU climate policy on the horizon.

Large-scale protests in Turkey over the recent Quran-burnings by a far right activist in Sweden have resulted in multiple Western countries this week issuing travel alerts for their citizens in Turkey.

Additionally some half-dozen consulates in Istanbul have announced temporary closures due to security threats this week. German and Dutch consulates closed their doors Wednesday, and possibly further into the week, citing unspecified “security reasons”. The Dutch Consulate General in the Beyoğlu district announced extra precautions due to “potential protests” and “increasing threat against western targets.”

The Swiss consulate general in Istanbul on Thursday is the latest to suspend operations – the sixth country to do so. So far Germany, France, the Netherlands, Sweden and the UK have temporarily shuttered their consulates.

Turkey is not happy, complaining that the unnecessary closures are severely damaging tourism, and that the dramatic step to close consulates has been done without evidence of said threats.

Turkish Interior Minister Suleyman Soylu charged Thursday that Western nations have launched “a psychological war” and that extra precautions amount to a propaganda stunt. Further, he was quoted as saying: 

“On a day when we declared our aim of (attracting) 60 million tourists, at a time when 51.5 million tourists arrived and we obtained $46 billion in tourism revenue, they were on the verge of starting a new psychological warfare (against) Turkey,” said Soylu, who is known for his anti-Western rhetoric.

Turkey had earlier issued its own blanket warning to its nationals abroad, saying that growing ‘anti-Islamic’ protests in the West constitute a severe security threat, and that Turks should avoid crowds and public gathers where these occur. 

Protests have continued across various Muslim nations following the late January Quran-burning in Stockholm, which took place in front of Turkey’s embassy. Turkish officials are outraged that Swedish authorities didn’t shut it down, but instead offered police protection against counter-demonstrators.

Protests continue to erupt across the Muslim world. Somalis are holding protests in Mogadishu to denounce the burning of a Quran by Rasmus Paludan on Saturday in front of the Turkish embassy in Stockholm. pic.twitter.com/UWfa5o9C7B

— Steve Hanke (@steve_hanke) January 28, 2023

President Erdogan has since warned Sweden that it shouldn’t expect to enter NATO. But Sweden responded this week that its application process should have nothing to do with religion. As for the Quran-burning incident (which has now happened at least twice), Stockholm leaders said they find it morally reprehensible, but Sweden’s robust free speech laws protects such demonstrations.

Authored by Pepe Escobar,

Sit back, relax and enjoy a race to the bottom of the Grand Canyon. The only question is who will get there first: the EU, NATO, or both…

One may be excused to imagine all sorts of amusement games unrolling at the HQ of the Russian General Staff as The Empire and NATO go literally bonkers. What crazy stunt will they come up with next – short of WWIII?

Here is a delightful put down of NATO’s dementia praecox. Everything so far has failed, from “crippling sanctions” to all sorts of wunderwaffen, while the whole Global South marvels at the exploits of Wagner PMC – now configured as the planet’s top urban fighting machine.

CIA mouthpiece Washington Post duly released how Washington, once again, had the Liver Sausage Chancellor Scholz for breakfast, lunch and dinner. The idea was floated by Secretary of State Tony Blinken: let’s announce we will deliver M1 Abrams to Ukraine in a hazy, unspecified future, thus providing cover for Scholz to release the Leopards now.

Don’t you just love German sovereignty in action?

Every military analyst with an IQ over room temperature knows all those Leopards will be duly incinerated – or better yet, captured, and dissected by Russian military specialists.

So what happens next is yet another vector of the – very successful so far – U.S.-unleashed German de-industrualization racket: the Americans will invade the German industrial military complex with their “much improved” Abrams – which may perhaps arrive in 2024, when only a rump Ukraine may still exist, or never arrive at all. So no need for the Abrams to prove themselves in actual combat – as in being captured and/or incinerated.

Rumors in Washington advance that the U.S. “strategy” in Ukraine – extensively detailed by endless think tank reports – had to be adapted. It’s not about “defeating Russia” anymore, but providing Kiev with the means to “scare” Russia. The Russian General Staff must be trembling in their boots.

Meanwhile, in real life, nearly every possible scenario gamed in Washington and Brussels finishes with NATO like a giant, armoured version of Wile E. Coyote plunging to the depths of the Grand Canyon. And that happens even if the much ballyhooded “Big Arrow” Russian offensive starts in a few days or weeks, or never starts at all.

Arguably the Russian General Staff has concluded a long time ago there’s no point in reducing Ukraine to rubble in a matter of hours – something they could easily accomplish. Thus the fabled mincing machine approach – offering no excuses for NATO to “escalate” (which they continue to do anyway, as Jens “War is Peace” Stoltenberg is so fond of parroting).

The trick is that NATO’s escalation overdrive, as it happens, is somewhat controlled by the Russian General Staff, which is always calculating which optimal maneuvers will consume NATO’s military hardware faster. Call it a Russian version of the popular axiom “frog in a boiling pot doesn’t realize it’s being cooked until it croaks.”

Attacking Russia-China-Iran

Absolute desperation is now graphically extrapolating into attacks on Iran. Both Russia and China have Iran as their key ally in West Asia for the whole, complex process of Eurasia integration; strategic partnerships interlink the trio.

So attacking the Ministry of Defense in Isfahan with drones – total fail – and bombing an IRGC convoy of humanitarian aid crossing from Iraq to Syria is a serious U.S.-Israel-coordinated provocation.

Essentially these are also attacks against Russia and China. Israel cannot lift its hand or foot without U.S. permission. Iranian intel may be able to establish how the Straussian neo-con and neoliberal-con cabal in charge of U.S. foreign policy authorized if not ordered these attacks, which of course are directly connected to NATO’s desperation in Ukraine.

When in doubt, just come back to Zbig “Grand Chessboard” Brzezinski: “Potentially, the most dangerous scenario would be a grand coalition of China, Russia and perhaps, Iran, an ‘anti-hegemonic’ coalition united not by ideology but by contemporary grievances. It would be reminiscent in scale and scope of the challenge once posed by the Sino-Soviet bloc.”

And mirroring Ukraine/Russia there’s of course Taiwan/China.

As Credit Suisse strategist Zoltan Pozsar has extensively explained, if Taiwan manufactures chips for U.S. missiles Washington then sends to Taiwan for its “self-defense”, but Taiwan needs to wait because the missiles are needed in Ukraine instead, or chips can’t be shipped to the U.S. owing to a possible sea and air blockade imposed by China, the Americans will be operationally ill-equipped to support their two-front war against peer competitors Russia and China.

Bye bye Pax Americana. It’s the fear, actually paranoia, of a destroyed Taiwan – and the destruction in every scenario would be provoked by the Americans themselves – that has led the Straussian neo-con and neoliberal-con cabal to demand their chips be Made in USA.

On the energy front, since U.S. energy costs are low, Washington gambled that much of the deindustrialization of Germany would revert to American benefit. Yet since Iranian, Russian and Venezuelan oil prices are lower than the U.S., not much production may be shifting to the Hegemon: it will go to China.

To the bottom of the Grand Canyon!

The January 10 joint declaration between EU-NATO graphically shows how the EU is no more than the P.R. arm of NATO.

This NATO-EU joint mission consists in using all economic, political and military means to make sure the “jungle” always behaves according to the “rules-based international order” and accepts to be plundered ad infinitum by the “blooming garden”.

So in the end what’s left of “Europe”, when it’s NATO – actually Washington – that really rules?

“Europe”, according to relentless propaganda, means defending “our values” – as in peace, democracy and prosperity. The trick is that unelected elites forced the implicit identification of this imagined, practically sacred “Europe” with the European Union. And that’s how the EU has acquired a mythical identity.

Of course, in real life the EU – as in the real, politically organized “Europe” – has performed as a toxic instrument of division among European peoples.

Instead of peace, it has invested in all-out rabid war against Russia. The EU is arguably the most democratically irresponsible institution on the planet: spend a day in Brussels and you understand everything. And instead of prosperity, the EU has institutionalized austerity.

So sit back, relax and enjoy a race to the bottom of the Grand Canyon. The only question is who will get there first: the EU, NATO, or both.

Warehouse automation continues to accelerate as millions of jobs are at risk of being displaced. The latest automation nightmare for warehouse laborers comes from a new video uploaded on YouTube by Boston Dynamics. 

In a press release, the US robotics firm announced that Deutsche Post DHL Group has successfully deployed the Stretch robot for loading and unloading boxes from tractor trailers at warehouse docks. 

“Unloading boxes is a strenuous, physically demanding work process which can impact an associate’s ability to work efficiently. By automating this process, DHL Supply Chain explained, the operation not only addresses safety concerns but also the ongoing labor supply challenge by redirecting skilled labor to focus on value-add, strategic tasks in other areas of the warehouse,” DHL wrote in a press release. 

Translation: DHL is automating its supply chain and won’t need as many warehouse workers in the future. 

“The custom-designed, lightweight arm of the robot has seven degrees-of-freedom, which gives it the length and flexibility to reach cases throughout the trailer or container,” DHL continued in the press release. 

By the end of this decade, DHL and other major companies, such as Amazon, are set to fully automate their warehouses. After all, robots don’t strike over wages and working conditions. 

So for all those warehouse workers — the video above is an ominous sign your job will be in jeopardy. 

Perhaps “learn to code,” but that might be challenging to land a job at a major tech firm considering the mass layoffs. 

Authored by Andrew Thornebrooke via The Epoch Times (emphasis ours),

U.S. companies were involved in at least 37 percent of the total investment transactions in China’s artificial intelligence (AI) sector between 2015 and 2021, according to a new report.

The report (pdf), published by the Georgetown University Center for Security and Emerging Technology, found that $40.2 billion in investment transactions into Chinese AI companies had American backing, though it was unclear what percentage of that amount was made by U.S. investors or their overseas counterparts.

The money was given to 251 Chinese AI companies, primarily as venture capital angel, seed, and pre-seed stage investments.

There are risks with such investments, the report noted, as they are generally accompanied by other intangible benefits in which U.S. expertise is delivered to China-based companies.

“While Crunchbase data suggests that U.S. outbound investment into Chinese AI companies is limited, such financial activity, commercial linkages, and the tacit expertise that transfers from U.S.-based funders to target companies in China’s booming AI ecosystem carry implications that extend beyond the business sector,” the report said.

“Earlier stage VC investments in particular can provide intangible benefits beyond capital, including mentorship and coaching, name recognition, and networking opportunities. As such, U.S. outbound investment in Chinese technology, and particularly AI, merits additional attention and tracking.”

US Firms Funding Chinese AI Companies

American investments in China-based AI companies have come under fire in recent years due to the amount of control exercised over such companies by China’s communist regime.

The Chinese Communist Party (CCP), which rules China as a single-party state, has implemented several laws that require China-based companies to make all data in their possession available to the regime upon request.

This means that any data or technologies developed by China-based companies with U.S. backing could directly be used by the CCP to improve upon its military capabilities, in line with the regime’s “military-civil fusion” strategy.

Moreover, such investments directly fuel China’s efforts to overtake the United States as the lead technological power.

This is demonstrated by the value of the investments being made by U.S. sources into China’s AI companies. Whereas investment transactions involving U.S. funding sources only made up 17 percent of the total number of transactions made, the report said, those transactions accounted for 37 percent of the total funding value of all such transactions.

Notably, the U.S. investments also include major funding for Chinese companies whose research could tangibly benefit the Chinese military’s pursuit of AI and autonomous systems.

“Some of the largest investments include Goldman Sachs’ solo investment in 1KMXC, an AI-enabled robotics company, as well as an investment by three U.S.-based VC firms in Geek+, an autonomous mobile robot company,” the report said.

Authored by  Athan Koutsiouroumbas via RealClear Wire,

In the past three weeks, policymakers had their worlds rocked by generative artificial intelligence. The problem is that they don’t know it – yet.

First, a team of researchers demonstrated that Open AI’s Chat GPT3 can pass the stringent United States Medical Licensing Exam. Days later, Chat GPT 3 passed a bar exam. Finally, Chat GPT3 passed the prestigious Wharton Business School’s rigorous core examination.

The Wharton researcher writes, “OpenAI’s Chat GPT3 has shown a remarkable ability to automate some of the skills of highly compensated knowledge workers in general and specifically the knowledge workers in the jobs held by MBA graduates including analysts, managers, and consultants.”

Lawyers, doctors, administrators, managers, and consultants are some of the most highly compensated professionals in the United States. Generative artificial intelligence is banishing them to obsolescence.

With only 375 employees, the unprofitable Chat GPT3 was acquired by behemoth Microsoft at a valuation reportedly northward of $30 billion. For perspective, with over 42,000 highly educated healthcare employees, AmerisourceBergen is the largest company by revenue headquartered in Pennsylvania. Its valuation is $33.25 billion. So, with 99% fewer employees, the unprofitable Chat GPT3 is already worth nearly the same as the largest company in the Commonwealth.

Microsoft has already pledged $10 billion to optimize Chat GPT3 toward profitability. Tens of billions more dollars are coming.

The last time policymakers were presented with displacement on this scale was the globalization that decimated the American working class. The solution for Pennsylvania policymakers was to pivot the state’s economy to “Eds and Meds,” which now constitute 44% of total employment.

Those industries were chosen because spending is generated predominantly by the government, which is historically stable. To quote Ronald Reagan, “Government programs, once launched, never disappear.” Pennsylvania policymakers knew that they were making safe bets as those markets would almost always exist.

The pivot worked, with Pennsylvania stabilizing its population decline. Communities able to make the pivot, particularly in the suburbs, saw prosperity.

Once reliably Republican, the suburban voters employed by “Eds and Meds” now constitute the Democratic Party’s base. The rise of conservative populism, which pointed the finger at college-educated elites for the decline of the working class, accelerated the trend.

The reticence of suburban elites to choose Republican candidates is understandable, considering some in the GOP’s working-class base label them the enemy. For many in the working class, the contempt is personal, as they perceive the college-educated as having enriched themselves at their expense, via globalization.

But generative artificial intelligence is poised to inflict the same level of economic devastation on suburban elites as suffered by the working class through globalization. Some elites will undoubtedly find sure footing in the pending economy created by generative artificial intelligence. But many others will not.

The Rust Belt’s decline took decades to manifest. Its slow pace helped shield policymakers from criticism because gradual change enabled some Americans to find solutions on their own.

In contrast to globalization’s slow deindustrialization, however, technological adoption moves at lightning speed and is only getting faster. “Eds and Meds” suburbanites are unlikely to gain a reprieve through gradual transition. Profitable generative artificial intelligence business models may surface within a year. Suburban prosperity could be severely undermined before the next Winter Olympics. Policymakers need immediate solutions.

Political polarization rises during economic decline. A 20-point gap persists between the political affiliations of college-educated and non-college-educated Americans. It is one of the most pronounced cleavages in American politics.

The displacement potentially caused by generative artificial intelligence could put college-educated voters back into electoral play for Republicans, presuming the GOP can deliver something for them.

The path to help these Pennsylvanians, one that would be exclusive to Republicans, is rapid reindustrialization. The prerequisites for rapid reindustrialization are affordable, abundant energy and school choice. Both are fundamental tenets of the GOP platform.

Pennsylvania is blessed with abundant natural resources and is a net exporter of energy. It has educational entrepreneurs pleading for the opportunity to create the most industrially skilled workforce on the planet. Products made in Pennsylvania can reach most of the continental United States or international waters within 24 hours. Among the 50 states, this “iron triangle” of energy-workforce-logistics may be unique to Pennsylvania.

Rapid reindustrialization is the path that unites all educational backgrounds to produce real, sustainable wealth. Instead of pitting the educational classes against one another, it makes them partners in success.

Pennsylvania Republican policymakers have the opportunity before them to accomplish what Ron DeSantis has achieved in Florida: a generational political realignment of a state.

Meanwhile, Pennsylvania’s Republican Party leaders have proposed spending hundreds of thousands of dollars on a 2022 midterm post-mortem. That’s fine. But the lesson of the 2022 midterm is that voters do not reward looking backwards.

A crisis has begun. The GOP will respond either by providing tomorrow’s leaders or being condemned by history for failing to rise to the challenge.