With recent rallies in Tesla (and now Rivian), market participants are starting to mull whether or not EV stocks are about to be looked at favorably and outperform once again. 

But insane-valuation- and hot-money-history may not be ready to repeat itself just yet. The industry is facing headwinds that it hasn’t before, with Tesla leading a charge of price cutting to start 2023 and now HSBC reporting that an already saturated and competitive market is going to become…even more saturated and competitive – especially in China.

In a note out early this week, Yuqian Ding, HSBC Head of China Auto Research said the growing competition is “not sustainable”. He says there are “far too many” car models in China, Bloomberg wrote in a wrap up on Tuesday.

Ding predicts that “smaller, less advanced manufacturers will be squeezed out” as competition becomes more robust. Larger automakers account for 73% of the country’s EV market, he writes, meaning that 57 other brands are left fighting for the remaining 27% of the market. 

Currently, there’s about 400 to 600 ICE models available and Ding notes that 75% of 250 new models being launched over the next 12-18 months will be EVs. He predicts that the price war that’s currently ongoing will come to a halt, writing: “The price war will eventually fizzle out as competition squeezes the smaller players, which are burning through cash, out of the market”.

He predicts that up to 8.2 million EVs will be sold in 2023 and 12.6 million per year by 2025. By 2030, he is expecting 22.6 million EV sales per year and he has raised his forecast on higher volumes and increased supplies. 

He is bullish on BYD, Li Auto and Geely, maintaining his “buy” rating on those names while writing that: “Leaders will tighten their grip on the market. With the exception of Tesla, we think they will all be China EV brands.”

And Tesla is definitely holding its own for now. We noted yesterday that despite price wars, Tesla was able to grow its sales in the country by 20.6% MOM. Tesla sold 74,212 vehicles and exported 19,468 units for the month of June, solidifying a 20.6% sequential rise for the EV maker, per Bloomberg’s calculations.

Even more impressive for Tesla is that China’s June Retail Passenger Vehicle sales were lower by -2.6 YOY, falling to 1.89 million units, according to the same data. For comparison on a sequential basis, Tesla’s 20.6% month-over-month jump outpaced China’s 8.7% month-over-month gain on sales.

Bloomberg noted this weekend that total NEV sales in the country continue to be the driving force behind its sales growth. NEVs in China were up 25.2% YOY, totaling 665,000 units. Passenger vehicle output fell 0.5% YOY but was up 10.3% sequentially, coming in at 2.2 million units. 

The company’s robust sales are still being helped along by price cuts it put into place at the beginning of the year, with Bloomberg noting that “after a price war leading into the Shanghai auto show in April, deliveries started to pick up again and the overall market for new-energy vehicles remained strong.”

Now we’ll see how it handles a larger field of EV entrants going forward…

Authored by Mimi Nguyen Ly via The Epoch Times (emphasis ours),

The Biden administration has introduced a new immigration program to allow some nationals of Central America and Colombia to enter the United States.

The U.S. Department of Homeland Security (DHS) announced on July 7 that it’s implementing “new family reunification parole (FRP) processes” for Colombia, El Salvador, Guatemala, and Honduras. The program was first announced in April.

The FRP processes allow certain migrants with U.S. relatives to enter and work legally while they await their U.S. immigration visas.

“Specifically, nationals of these [four] countries can be considered for parole on a case-by-case basis for a period of up to three years while they wait to apply to become a lawful permanent resident,” the DHS stated on July 7.

Potentially eligible migrants are those from the four countries who have family members who are U.S. citizens or lawful permanent residents in the United States.

The latest initiative, according to the DHS, is part of the comprehensive measures the DHS and State Department announced in April “to further reduce unlawful migration across the Western Hemisphere, significantly expand lawful pathways for protection, and facilitate the safe, orderly, and humane processing of migrants.”

The FRP processes were available to Cubans starting in 2007 and Haitians starting in 2014. The Trump administration had halted the programs, but the Biden administration later restarted them.

US ‘Intends to Welcome as Many as 100,000’

The U.S. family member must file Form I-30—also referred to as the Petition for Alien Relative—on behalf of their Colombian, Salvadoran, Guatemalan, or Honduran relative.

If the petition is approved, the State Department issues an invitation to the petitioning U.S. family member, who can then start the FRP process by filing a request on behalf of the migrant relative to be considered for advance travel authorization and parole.

The DHS said on July 7 that if the foreign national is granted parole status, which permits entry into the United States, that person can then request employment authorization while waiting for his or her immigrant visa to become available. When the immigrant visa is available, he or she may apply for permanent residency—also referred to as a green card.

The FRP process can be a faster pathway to enter the United States than the regular process of U.S. citizens’ and green-card holders’ applying and waiting for an immigrant visa for their relatives.

The Biden administration announced on May 2 that the United States “intends to welcome as many as 100,000 individuals from Honduras, Guatemala, and El Salvador” under the FRP processes. No time frame has been provided, however, and a numerical cap for Colombian migrants has also not been specified.

‘Lawful Pathways’

Homeland Security Secretary Alejandro Mayorkas said in a statement that the new processes “promote family unity and provide lawful pathways consistent with our laws and our values.”

“The Department has proven that the expansion of safe, orderly, and lawful pathways, combined with strong enforcement, is effective in reducing dangerous, irregular migration to the United States,” he said.

According to data from the U.S. Customs and Border Protection more than 126,200 Colombians, 40,700 Salvadorans, 115,100 Guatemalans, and 110,000 Hondurans have been processed at the southwest border so far in fiscal 2023.

The DHS stated that the new FRP processes “allow for parole only on a discretionary, case-by-case, and temporary basis upon a demonstration of urgent humanitarian reasons or significant public benefit, as well as a demonstration that the beneficiary warrants a favorable exercise of discretion.”

The above stipulations are in accordance with the Immigration and Nationality Act (INA), enacted in 1952. The INA authorizes the Homeland Security secretary—currently Mr. Mayorkas—to decide whether to parole a foreign national into the United States.

Parole Status Previously Granted Sparingly

An immigration expert told The Epoch Times in 2022 that parole should be a “very, very boutique thing” and should be used in only special cases, such as when a family member needs entry into the United States to donate a kidney to his brother, or if a witness to a criminal case is needed to testify.

Read more here…

Illinois Governor J.B. Pritzker signed SB 1817 into law, which mandates landlords must rent property to illegal immigrants. Democrats in this ultra-progressive crime-ridden state are under fire for prioritizing the needs of migrants over the needs of their constituents. 

Breitbart first reported Pritzker signed SB 1817 into law on June 30. The rule amends the Illinois Human Rights Act to include “immigration status” as a protected class. This means landlords could get slapped with a civil rights violation if they ‘discriminate’ against a migrant. 

“This law sets clear boundaries, protecting the rights of immigrants and ensuring that financial institutions and service providers cannot engage in discriminatory practices,” Democratic State Sen. Ann Gillespie wrote in a statement. 

Gillespie continued, “Putting these protections in place will promote fairness to ensure people are not unjustly denied housing.”

The law comes after Texas Governor Greg Abbott sent more than 8,000 migrants to Chicago amid the worst border crisis ever — sparked by the Biden administration’s failed open border policies. In the last few years, the record surge of migrant and drug flows into the country has triggered a twin crisis this country has never seen before. 

Meanwhile, Democratic leadership in Chicago has pleaded with Abbott to halt the bussing of migrants from the southern border to their city because resources are limited to help them. 

As for landlords, running a background check and credit report on potential tenants is standard. The question is, how does one vet illegals?

Just wait until the Pritzker allocates millions of dollars for ’emergency’ housing assistance for illegals. 

As for the working poor and/or people experiencing homelessness in the state — this is yet another example of Democrats putting their constituents last while trying to appease illegal aliens in hopes of becoming new voters for their party ahead of the 2024 presidential election cycle. 

Authored by Christopher Roach via American Greatness,

Last week was a big week for the Supreme Court.

The Court disposed of its rather muddled affirmative action precedents by declaring the entire practice anathema. It enforced constitutionally required separation of powers by rejecting Joe Biden’s executive order creating a $430B student loan forgiveness program. And finally, in keeping with the earlier Masterpiece Cakeshop decision, it reaffirmed the right for people in business to avoid compulsory expressive speech (in this case, web design) contrary to their religious beliefs.

This line of decisions comes on the heels of last year’s ruling in Dobbs, through which the Supreme Court overruled Roe v. Wade, returning the question of abortion to the political process within the states.

The Court has been doing a lot of work and, in the process, overturning a range of anti-democratic, activist precedents that have accrued since the 1960s. In the process, a number of decades-long conservative goals have reached fruition.

Recent Decisions Restore Principles of Self-Government

The recent decisions affirm the principles of majority rule, as limited by the plain language of the Constitution. In spite of the Left’s attempted ownership of the concept of democracy, this principle is not advanced by selectively and randomly vetoing legislative enactments and torturing constitutional language to reach favored conclusions.

Instead, self-government requires adherence to a fairly prosaic set of ideas: we elect men to make laws; the words that constitute laws mean what they say; this principle applies to the supreme law that is the Constitution; and, judges are supposed to interpret those words naturally according to their original meaning and neutrally as between the litigants.

This means that “equal protection” does not permit policies of collective punishment towards the white race because of certain past evils. Even under the Fourteenth Amendment, the law deals with individuals as individuals, not as avatars of preferred or disfavored groups.

Similarly, the separation of powers principles and the plain language of Article I of the Constitution require spending—including a massive loan forgiveness program—to originate in the Congress. Biden’s student loan decision may very well be a good policy or a terrible one. But the Court was rightly agnostic on the question of merits, instead asking whether the enactment is within the President’s power.

The decision touching on free speech and gay rights reflects an unavoidable tension, which the Court’s precedents have never fully resolved. Namely, antidiscrimination laws, particularly as applied to private businesses, represent an equal and opposite set of principles as those of the First Amendment. The former turn everyone de facto into a common carrier, a quasi-public institution, which must serve all paying customers equally. By contrast, the First Amendment permits expressive conduct by businesses, even offensive conduct, as well as the right of refusal under the principle of voluntary association.

The Left’s Unprincipled Approach to the Constitution

This week’s decisions present a real problem to the Left. They’re a reminder that courts, properly functioning, impose limits on the state. But leftist political principles are not easily reconciled with constitutional limits. We saw this in the original court-packing scheme under FDR. Today, the Left’s unhappiness is amplified because it believed history was on its side, and it also had no particular commitment to procedures or process. The Left wants results and wants them now.

The Left’s approach to politics is versatile and, procedurally speaking, unprincipled. Earlier victories arising from the Supreme Court, each far more aggressive and hostile to the limits of the constitutional text than those being pilloried at the moment, were applauded when they circumvented a stalled political process. This includes rulings ranging from abortion to gay marriage, where there was substantial public dissensus and, in some cases, conservative majorities opposing left-wing change.

One heard few concerns for Our Democracy™ back in those days.

Both sides’ partisans do this to some extent. But conservatives, independents, and moderates are understandably wary about messing with rules of game in mid-game through an extreme measure like packing the court. By contrast, the Left is truly indifferent about procedures, process, and the constitutional principle of precommitment. Rather, the Left is bold in the pursuit of its goals.

This kind of power move only makes sense if one concludes that their side will win all future elections and retain political power indefinitely. Otherwise, overreach means they pack the Court this time, and we re-pack it the next time, and pretty soon the court is as big as the U.S. Congress.

The Left has mostly captured the legal profession, and the capture is even more complete in the elite institutions that feed the ranks of the federal judiciary, Department of Justice, and related national institutions. Until recently, this meant the Left felt a great deal of comfort with court-led social change and activism. After all, judges were “our kind of people.”

But, as Barack Obama said, elections have consequences, and since 2000, a little over half of the time the country had a Republican president. Republican presidents mean Republican judicial nominees.

Just as the Church often became stronger under persecution, the small number of conservatives in elite legal circles have become more focused, rigorous, and purposeful since the creation of the Federalist Society in 1982. And that has meant, under Trump in particular, the availability of talented individuals to appoint to the high court who shared a philosophical commitment to originalism.

Trump’s appointees—Justices Gorsuch, Kavanaugh, and Barrett—are undeniably smart, and each of them had a golden resume before appointment to the Court. They are joined by their stalwart predecessors, Justices Alito and Thomas. Each of these justices deviates greatly from the profession’s leftward tilt. They are able to explain their rulings with a vigor and precision that resists attack.

Thus, the extreme hostility directed at them has the intensity reserved for class traitors.

Whose Country?

The reality of self-government has been under stress for many decades from a variety of sources. Mass immigration, deficient civic education, and an overbearing and out-of-control administrative state all combine to discourage optimism and participation. The “fortification” of the 2020 election and the daily spectacle of the senile Joe Biden only increases collective cynicism.

As if recent revelations of government-coordinated censorship and the indictment of a former president were not enough, packing the Court would be the final nail in the coffin, confirmation that self-government, representation and limited government are all dead.

After all, even when they disagreed strongly with the Court’s Warren-era precedents, activists on the right spent many years honing the arguments, supporting candidates, pressuring elected officials and otherwise slowly pursuing relief within the process. Doing so again after court-packing would be pointless and humiliating; if somehow we obtained a future court that made a ruling that was worthwhile, the Court could simply be packed again.

Changing the size and composition of the Court to vouchsafe a particular, ideologically preferred outcome is the opposite of “blind justice” and completely incompatible with the rule of law. Yet one should not be surprised that people who rig elections also now aim to rig the courts.

Authored by Matt Taibbi via Racket News,

I spent much of the weekend combing through the Twitter Files for examples of the “Censorship Enterprise” described by the Attorneys General in the landmark Missouri v. Biden lawsuit. As I was about to publish, a new report was issued by the House Weaponization of Government Committee that takes the Twitter Files theme in several crazy new directions.

A month ago, Aaron Maté of The Grayzone published a new piece about a bizarre finding in the Twitter Files. An FBI agent named Alexander Kozbanets had forwarded to Twitter a list sent to the FBI by Ukraine’s Security Service, the SBU. These accounts, Kozbanets said, were “suspected by the SBU of spreading fear and disinformation.” Of the 170-odd account names on the list, most were Russian, but one stood out: Aaron’s! Here he is, along with the popular Russian newspaper “Rush Hour” (Chas-Pik) and a host of Cyrillic names:

The shame of this story wasn’t that the SBU sent this list over, but rather that the FBI collaborated in the effort, even having the gall to forward the name of a respected, award-winning Canadian journalist to Twitter. To its credit, Twitter Trust and Safety chief Yoel Roth pushed back, noting Aaron’s name and saying, “authentic news outlets and reporters who cover the conflict with a pro-Russian stance are unlikely to be found in violation of our rules.” Nonetheless, the fact that the FBI even tried this lunatic stunt was damning.

Now, thanks to the Weaponization Committee, we find out this situation with Aaron appears not to have been a one-off incident.

In fact, the Committee found that since the invasion of Ukraine by Russia, there’s been an ongoing pattern of mass-censorship requests, funneled from the SBU through the FBI to a whole variety of platforms: Twitter, Facebook, Instagram, and YouTube, for starters. As the report notes:

The FBI, at the request of the SBU, flagged for social media companies the authentic accounts of Americans, including a verified U.S. State Department account and those belonging to American journalists. The FBI and SBU repeatedly requested the removal or suspension of authentic accounts expressing unambiguously pro-Ukrainian views, as well as those voicing opposition to Russian President Vladimir Putin.

As to the latter, the Committee suggested the part of the problem may be connected to an incident in which President Volodymyr Zelensky fired the head of the SBU “on account of Russian infiltration.”

Whatever the reason for some of the moderation decisions, the pattern of behavior the Commitee uncovered probably explains some of the documents we found in the Twitter Files. For instance, now that we know for sure the FBI was forwarding SBU moderation requests to YouTube, the following document we found decrying “anti-Ukrainian narratives” in YouTube videos,” which the FITF sent to Twitter from an unidentified source, may make more sense:

The Committee report also noted that the lists the SBU sent, which sometimes contained thousands of names, mostly targeted accounts from places like Russia or Belarus. However, they also roped in Americans, from a New York photographer, to the manager of a moving company in South Carolina, to a musician in Minnesota, to a professor and an author of children’s books, even an Instagram account belonging to the U.S. State Department!

Subscribers to Racket News can read the rest here…

Secretary of State Antony Blinken while at the NATO summit in Lithuania is promoting a message that Washington essentially had no choice but to arm Ukraine with cluster munitions because the country would have been “defenseless” with them. 

He gave an interview to MSNBC’s “Andrea Mitchell Reports” and asserted that Ukraine’s own stockpile of cluster bombs and artillery is running out, even merely exhausted. 

“The stockpiles around the world and in Ukraine of the unitary munitions, not the cluster munitions, were running out, about to be depleted,” Blinken began.

“And so, the hard but necessary choice to give them the cluster munitions amounted to this: If we didn’t do it, we don’t do it, then they will run out of ammunition,” he explained to Mitchell. “If they run out of ammunition, then they will be defenseless.”

He also when pressed by the MSNBC host continued to advance the White House talking point that Russia is already doing worse, so cluster bombs are permissible despite the well-known human rights and war crimes issues.

Mitchell asked whether the US is ceding the moral high ground in delivering bombs which are banned by over 120 nations. “Every ally I’ve talked to has said they understand why we’re doing this when we’re doing it,” Blinken claimed.

NATO Secretary-General Jens Stoltenberg has relied on the same logic. “We are facing a brutal war, and we have to remember this brutality is reflected, that every day we see casualties, and that cluster munitions are used by both sides,” Stoltenberg said days ago. “And Russia used cluster munitions to invade another country. Ukraine is using cluster munitions to defend itself.”

Meanwhile, a number of European allies have broken from the US on the issue, condemning the move – most notably Germany. Ukraine has long accused Berlin of being weak and hesitate in the face of the Russian invasion.

But Blinken’s method of arguing makes clear, Washington has framed each new escalation decision as matter of life & death, despite billions in arms already shipped. Every moment is somehow “facing down Hitler”… we are told.

Authored by Jack Phillips via The Epoch Times (emphasis ours),

Apple will permanently delete a photo album from iPhones in about two weeks and has stopped uploading pictures to it, the company confirmed.

My Photo Stream is an iCloud service that originally launched in 2011. What the service does is temporarily uploads photos taken on a device so they can be seen on another device with My Photo Stream enabled. It also allows users to import the pictures to that device.

Up to around 1,000 photos can be stored in My Photo Stream for about 30 days. They are then automatically deleted from Apple’s iCloud.

But it will no longer be available in just a few days, and users are advised to save any photos they may have in that soon-to-be-deleted photo album.

Apple confirmed in a recent bulletin that My Photo Stream will be “shutting down” on July 26. It did not provide a reason for the shuttering of the service that was launched in 2011.

The Cupertino, California-based firm added that new photo uploads stopped on June 26. Apple then provided a statement that there “will be no photos remaining in My Photo Stream” by July 26.

“My Photo Stream is a separate service from iCloud Photos. Moving forward, iCloud Photos is the best way to keep the photos and videos you take up to date across all your devices and safely stored in iCloud,” Apple said. “If you already have iCloud Photos enabled on all of your devices, you don’t need to do anything else—your photos are already uploaded and stored in iCloud.”

How to Save Photos

Apple then advises users that to save any photos that are being kept on My Photo Stream should open Photos and tap the Albums section. Then, they’re advised to tap My Photo Stream and click Select.

After that, users should tap the photos they want to save and then tap the Share button and then Save Image. On a Mac, the photos will be automatically imported to their photos library.

“The photos in My Photo Stream are already stored on at least one of your devices, so as long as you have the device with your originals, you won’t lose any photos as part of this process,” Apple notes on its support page.

It then recommends that users turn on iCloud Photos if they want their pictures to be saved and accessible across multiple devices. However, iCloud gives only 5 gigabytes of free space before users have to pay a monthly fee for more storage.

“You can turn on iCloud Photos on any iPhone with iOS 8.3 or later, iPad with iPadOS 8.3 or later, or Mac with OS X Yosemite or later,” it says. “After that, you can view your photos and videos in the Photos app on your iPhone, iPad, Mac, Apple TV, iCloud.com, and even sync them to a Windows PC using iCloud for Windows.”

Apple’s iCloud costs 99 cents for 50 gigabytes of storage, $2.99 for 200 gigabytes, and $9.99 for 2 terabytes, the company’s website says.

Read more here…

The notorious Russian prankster duo Vovan and Lexus have duped veteran US statesman Henry Kissinger in their latest stunt. In a phone call, the now 100-year old former Secretary of State believed he was speaking directly to Ukrainian President Vladimir Zelensky. 

The fake “Zelensky” at one point in the call began saying revealing things about the Nord Stream pipeline sabotage, which initially was widely blamed on Russia, but increasingly evidence points to either Kiev or Western intelligence being behind the Sept. 26, 2022 explosion. And then Kissinger revealed his views on who was behind the Nord Stream blasts…

Former US Secretary of State Henry Kissinger admits during a Vovan and Lexus prank call that he thought “Zelensky” was responsible for destroying Nord Stream 2. pic.twitter.com/5eIHDfWwtI

— Blackrussian (@Blackrussiantv) July 11, 2023

Vovan and Lexus later revealed the key clip on their show. They press Kissinger on whether he believes Moscow really did blow up their own pipelines. After he hesitates, they then press him on who really did it. 

That’s when Kissinger finally said, “I, frankly, have thought it was you,” based on the dubbed over translation of the exchange. 

The fake Zelensky then insisted it wasn’t Ukraine behind the sabotage. Kissinger then sought to assure that he “didn’t blame” Kiev even if it was the case that the Ukrainians did it.

Pranksters Vovan and Lexus got through to former US Secretary of State Kissinger, introduced themselves as Zelensky and asked, “Who blew up Nord Stream?”

“I thought it was you,” Kissinger replied. pic.twitter.com/kbrWib8l6k

— Spriter Team (@SpriterTeam) July 11, 2023

One obvious conclusion is that Washington insiders have understood all along that it wasn’t the Russians that took out their own vital Russia-to-Germany pipelines which are to supply Europe.

And legendary journalist Seymour Hersh has stood by his bombshell investigative report saying based on high-level sources that the CIA conducted the sabotage in a major covert operation: How America Took Out The Nord Stream Pipeline. But it seems Kissinger has understood and held to the ‘alternative’ views himself: i.e.: Ukraine or the West did it.

Authored by Charles Hugh Smith via OfTwoMinds blog,

So what happens if AI destroys both profits (due to it being “free” and a freely distributed commodity) and jobs?

Setting aside sensationalist dystopian fears of AI taking over our Spaceship (“I’m sorry, Dave. I’m afraid I can’t do that,” the famous line from the film 2001: A Space Odyssey), let’s focus on two more realistic possibilities:

1. Per my blog post What If AI Is Only a Cost and Not a Profit Bonanza?, AI is already a commodity and therefore there is no way to establish enduring profits as competitors have the same tools, much less grow high-profit trillion-dollar monopolies such as Google, Apple or Microsoft based on commoditized AI.

2. AI eliminates jobs which are not replaced by a massive wave of new jobs, a process known as technological job displacement (the elimination of jobs when human workers are replaced by technology).

The economist John Maynard Keynes discussed the potential of technological job displacement to disrupt the economy and society, as the gains (higher corporate profits and productivity) would be outweighed by the loss of broad-based, stable employment.

I am skeptical of the claims that tens of millions of jobs will be lost due to LLM AI (large language model) or machine-learning AI. I discussed the limits of AI and technology in my book Will You Be Richer or Poorer?: Profit, Power and A.I. in a Traumatized World.

It seems more likely that these AI tools will boost the productivity of skilled human workers rather than entirely replace skilled human workers.

But for the sake of debate, let’s assume the projections of 30 million jobs will be lost will prove accurate.

Optimists point to the remarkable success of technology in creating new jobs as fast as old ones are lost. Thus factory jobs were replaced by new service-sector jobs. The chart below illustrates one specific technological advance–spreadsheets such as Microsoft Excel (Multiplan on the original Mac, in a bit of tech nostalgia)–which many feared would wipe out bookkeeping jobs.

These tools did drastically reduce bookkeeping employment but they created many more jobs in auditing, accounting and financial analysis.

This history suggests to many that AI will create millions of new jobs within the AI industry.

The evidence is actually not quite so clear that this new job creation is predictable. The number of jobs in high tech has been remarkably stable for many years. The advance of new technologies hasn’t doubled or tripled the number of jobs in high tech.

If Elon Musk’s recent drastic reduction in the number of Twitter employees is any indication, it seems many of the jobs within Big Tech–especially the non-engineering sectors– are superfluous, even without AI.

The Disappearing White-Collar Job: A once-in-a-generation convergence of technology and pressure to operate more efficiently has corporations saying many lost jobs may never return. (WSJ.com)

In other words, we may find that AI delivers the worst of both worlds: it slashes profits as everyone loads up on the higher costs of AI but without any enduring competitive advantage that would support higher prices and profits, and it displaces wide swaths of human labor that are not replaced with new sectors generating tens of millions of new jobs.

The whole point of AI, after all, it that it learns on its own and fixes its own coding. In other words, the whole point is the removal of human labor from the process of improvement and debugging.

Yes, there will always be human oversight and input– for example, “We Are Grunt Workers”: The Lowly Humans Helping Run ChatGPT Make Just $15 Per Hour–but there is no guarantee the scale of such employment will magically equal the jobs lost.

There is a feedback loop to job losses that aren’t replaced, something Keynes recognized: when people lose their earned income and depend on unemployment or possibly Universal Basic Income (UBI), their income is typically lower and they’re no longer able to spend and consume as much as when they had a job. The entire economy shrinks.

In the idealized world of UBI proponents, corporations will always be immensely profitable and so we can pay for UBI by taxing corporations and the wealthy who receive the dividends, stock options and capital gains generated by immensely profitable corporations.

So what happens if AI destroys both profits (due to it being “free” and a freely distributed commodity) and jobs, especially the kind of higher paying jobs that have been impervious to the technological displacements that have ravaged working-class employment in factories and low-skill work?

Ironically, it’s the high-skill manual labor jobs that are least likely to be replaced by AI. Even so-called low-skill labor isn’t as easy to replace as many assume. As many have noted, “ChatGPT can’t make a hotel bed.”

While videos of robots that can leap and dance abound, can the robot clean a hotel room for a total lifecycle cost that’s less than a human maid? Recall that robots are costly, need to be maintained and recharged, etc. By the time a robot is developed that can do all the tasks of cleaning a messy hotel room, lift the heavy bed, place new plastic trash bags in the bins, etc., will it really be cheaper than human labor? It’s an open question because the numerous tasks that must be performed require a great many different levels of strength and dexterity.

The core assumptions at work in the optimistic view are: AI will deliver untold profits via the reduction of human labor and millions of new jobs will be created by AI. Both assumptions are essentially based on the magic of history repeating itself rather than on the fundamentals of AI, the source of profits and the creation of jobs, which first and foremost must generate a reliable profit for the employer.

These questions should elicit discussions about fundamental changes we could make in how labor and capital (i.e. technology) are treated. For example, what if the 15.3% tax on labor for Social Security and Medicare (the combined employer and employee taxes) and the income tax on earned income from labor (up to 37%) for all but super-high earners were eliminated and those taxes were instead loaded onto capital and technology?

In other words, what if capital carried a 50% tax rate and labor was untaxed below $200,000 per individual? How would that change the costs and benefits of labor and capital?

We as a society may be forced to entertain these tradeoffs in ways few seem to anticipate.

*  *  *

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