Offline with Jon Favreau - What’s With All the Tech Layoffs?

Episode Date: January 29, 2023

Amazon, Google, Facebook and the entire tech sector just laid off tens of thousands of employees. How did America’s fastest growing industry become its most troubled? Annie Lowrey, staff writer at The Atlantic, joins Offline to break it down. She makes the case that while this moment may be particularly bad for tech, for the rest, better days are probably right around the corner. For a closed-captioned version of this episode, click here. For a transcript of this episode, please email [e-mail] and include the name of the podcast. 

When it comes down to it, do I think that chat GPT is going to replace like our Pulitzer Prize winning poets? Like, no, of course not. Of course not. Of course not. And I think that a lot of writing is rote and that's fine. And if it absorbs that work, like, you know cooler stuff, B, we become more productive, and C, you get to do things that are more human, ideally, and that that's a good thing. Yeah, replace our writing, just don't replace our takes. Yeah, they'll never take our takes. They will never, ever take our takes. I'm Jon Favreau. Welcome to Offline. Hey, everyone. My guest today is The Atlantic's Annie Lowry. So it's been a pretty bad month for tech workers. Amazon laid off 18,000 employees. Google laid off 12,000. The company formerly known as Facebook laid off 11,000. Same story at Microsoft, Twitter, Spotify, Salesforce. Since tech is an industry that's been known for explosive growth,

you might be wondering, as I've been, what's going on? We spend a lot of time on the show talking about the way tech impacts our brains, our politics, our culture. Today, I wanted to step back and talk about the way tech impacts our economy and whether these layoffs might lead to a deeper, broader downturn. I asked Annie to be our guide for this conversation because there are few people who speak and write about these issues in such a smart, accessible way. Recently, Annie's written in The Atlantic about housing, crypto, child care, the debt ceiling, AI, and the political impact of all these issues. But I mostly wanted to talk to her about her piece from last week that tackles the question, how did big tech become America's most troubled industry? In it, she argues that a perfect storm of high interest rates and a pandemic correction have hit tech particularly hard, but that better days might be around the corner.

We ended up talking about a lot more than that one piece. A surprising portion of this conversation is about America's housing crisis. And we also talked about whether there's any future for crypto, what chat GPT could mean for white-collar work, and which policies helped the U.S. bounce back from the pandemic faster than most countries. It wasn't the most internet-y conversation on the show, but it was definitely one of the most insightful. As always, if you have comments, questions, or episode ideas, please email us at offline

at crooked.com. And please rate, review, and share the show. Here's Annie Lowry. Annie Lowry, welcome to Offline. Thanks for having me. So you've been writing a lot about this weird, for lack of a better word, unsettled economic moment. Yes. Both the short-term instability that we're experiencing right now and also like the more fundamental shifts that have been taking place over the last few years, which I want to get to. But I'd love to start with what's happening in the tech industry. Less VC cash, fewer IPOs, and now tens of thousands of layoffs at companies like Google,

Facebook, Twitter, Spotify. What's your take on why this is happening? Yeah, I think that tech expanded a lot during the early years of the pandemic, a ton. And a lot of these companies really benefited from the shift to work from home. So there was an increase in digital advertising when people started buying more stuff online. Companies basically started competing harder to get you to buy like the Peloton or this other bike or whatever. People stopped doing so much stuff in person. And so they shifted a lot of activity to kind of like web-based services. So like an obvious example is started going to the grocery store or to their local restaurant less often, but started buying more food on things like Uber Eats. And these companies just had a lot of cash on hand and they expanded a ton. And this feels like a bit

of a correction from that. And I would note that a lot of these firms are still really, really profitable. So do they need to be firing workers? No. But one thing that we know happens with corporations is that when one does it, it kind of gives and there's this tough economic moment. It gives the others the cover to fire people without the blowback that would happen if you laid a lot of people off during a better economic moment. It doesn't seem unusual for the company to be doing it right now because their peers are doing it.

And I think that that's kind of an underrated component of what's happening when this kind of thing goes on. And then, you know, if you look at the firms individually, Facebook has just poured billions of dollars at, you know, its leaders into this virtual reality that nobody seems to be using.

That probably, you know, Twitter, obviously, the Elon period has been tough for Twitter. So I think also you have kind of like individual issues within these companies, but tech is obviously a very big sector. So I mean, I feel like there were a lot of predictions over the last few years that some of the pandemic era changes to the way that we live and work would either be permanent or at least last a very long time. Working from home, movies from home, like you said, eating at home. Do you think that these tech layoffs suggest that those predictions were too sweeping? Or do you think that this is just sort of, like you said, a correction that

was bound to happen once we started leaving the height of the pandemic era? our lives has to do with, of all things, corporate vacancy rates in a lot of urban centers. So you go walk around in San Francisco downtown or in New York downtown, there's just way less office space getting used because a lot of people are still working at least partially from home. Whereas in other parts of the country, that's not really true and it was never really true. So my parents, for instance, spent a lot of the early years of the pandemic in Florida. It was like nothing had happened, right? Like everything was open all the time. So this is very regional type story. But, you know, we've seen a lot of mean reversion where people have just gone back to, you know, what they were doing before they've been back to the office, that kind of thing. So I think the country is so big and the economy is so big that there's

always many stories you can tell. And so I think both of those things are happening. But, you know, in the past two years, definitely, I think you've seen a real reversion to the mean in a lot of ways. You mentioned the advertising market. How much of the tech and media industry issues do you think are related to this downturn in the advertising market? And do you think it like, it seems like it could be a chicken or egg thing there? A lot, right? A lot. And the early kind of difficult, the most difficult, most dangerous part of the pandemic where, you know, we didn't have the vaccines and we didn't really understand the coronavirus and everybody was just really in their houses was this really big shock to the system. And there ended up, it sounds a little bit weird, but there ended up being an argument for companies to spend more on advertising because

people's behaviors were changing so quickly that you wanted to kind of capture that in the moment. And it's this funny thing, especially for like durable consumer goods. A lot of people were like buying stuff to cook at home, right? And you're going to buy one rice cooker or like one bread oven. And so companies would compete really hard to be that. And, you know, we just saw, you know, there was like some other shifts in spending that occurred. And so I think that currently now, yeah, the Jerome Powell is probably the godlike figure hovering over all of this, right? So when there was a lot of easy money, there isn't a lot of kind of calling companies to account and making them return to profitability. There's just a lot of cash sloshing around, and that's not really true now. We've had a pretty dramatic increase in interest rates. They're probably going to start taking their foot off the accelerator there at the Fed, but we don't know when that's going to happen. Mortgage rates have doubled. There's just been

a lot less of that kind of corporate investment, And I think that that's been the really disciplining force that has hit tech and media really hard. And why are interest rates of such particular importance to the tech industry? So they matter to everybody. And big companies, little companies, all companies, it affects every single one of them directly, indirectly. But for corporations, almost always directly, right? Big companies, even when they're producing cash, are reliant on borrowed cash in some way or another. And people are too, right? And so this is your mortgage rate, what you're paying for your car, your credit card, all of that. And tech is unusually susceptible to this because there are a lot of younger companies and companies that are growing quickly and use a lot of borrowed cash is basically the short answer to that. So, you know, I think that this has shifted somewhat because like obviously tech is in many cases is now dominated by these like kind of monopolies.

Right. So search is sort of dominated by Google. You know, Apple has a large share, though certainly not a monopolistic share of kind of like the hardware tech market. So it's a very mature industry. But nevertheless, you know, a lot of these firms, even some of the really big ones were really reliant on cash. And we're using cash to expand in this way, Uber is kind of the prominent example here. The degree to which Uber has not been profitable for its investors, you almost can't overstate it. In a lot of even its really mature markets, up until recently, it was losing money on rides. And it's just not a company that, for being so dominant, has ever made a lot of cash to pay back the people that have given it so much cash, which is kind of mind-blowing. And that's changed recently because they've come under some discipline.

But it's really remarkable if you look how much money has gotten funneled in and how much has not been paid back. And I don't know who coined the term the millennial lifestyle subsidy, but it's really great, right? This was this idea that for years and years, you were just getting your laundry done for really cheap or your food delivered or whatever else, because there were so many companies doing that around the Uber fax companies. Yeah. And now now you can't get an Uber or a Postmates delivery for that cheap anymore. No, no, no. It's much cheaper to like just get a taxi. It is wild, too, that I feel like for Uber, especially profitability was always just around the corner. And the fact that it's been around this long and we haven't seen it yet is pretty telling.

Yeah, there's like a Friedman unit thing going on there, I think. Very, very soon. You mentioned that rising interest rates are also one of the reasons crypto prices have collapsed. Yeah. Why is that? This wasn't supposed to happen. We got told that this wouldn't happen, but it did. So I think that probably it's not like monocausal with crypto, but there was just this rush of investment that was really reliant on interest

rates being low. And I don't think it's an accident that you saw a really sharp decline in Bitcoin and Ether when all of a sudden, it was a lot less fun to be building things in this space. Because, you know, if you're borrowing money at 7% instead of 4%, right, like that's a lot less exciting. And so just remarkably, the peak, which was just about a year ago, a little bit more than a year ago, really coincided with right when Jay Powell and the Fed started deciding to hike rates. But you've seen just, I think it's now like $2 trillion and counting in paper money sort of bleeding out of that ecosystem because it was the most speculative and the most gambling, the newest, the most fun. A lot of people were raising a lot of money to go do stuff with crypto and now that money is gone.

I mean, the other big reason crypto prices have collapsed is because of the FTX debacle, which has certainly proven the point of crypto skeptics. Yeah. The whole thing is more of a Ponzi scheme than an actual industry. Yeah. Do you think crypto can ever come back

from the FTX collapse? Should it? Sure. Yeah, I actually really think so. So I think that if you were just thinking kind of in small scale, sort of like the price of Bitcoin, the price of Ether, I think they'll absolutely go back up. We've already seen them go back up a little bit. And it's just a question of like, who's willing to buy? And towards the end of the really big run up in crypto prices, there were just a ton of people willing to buy, right? There was all of this like pandemic money sloshing around. There's all of these advertisements.

And I think a lot of people who aren't really investors, aren't really people who are like day trading stocks or, you know, really like following their 401ks really closely. They were like, oh, yeah, like a hundred bucks, maybe it'll turn into a thousand bucks. Wouldn't that be cool? And so you just saw a ton of that kind of casual money. I hate the word unsophisticated, but like all of that money sort of like bled in there. And then once FTX and Celsius before it, we've seen so many of these companies, once the whole space started to look really rickety and all of a sudden on the front page of like the Wall Street Journal, you saw that these companies aren't like FDIC insured banks. You're not going to get your

money back if they collapse. You know, I think that people's risk tolerance really changed once they understood what it really was. And I think it's unfortunate that, you know, it kind of took this really big public debacle to demonstrate that for people. But the prices had gone down way before that, right? Like the price decrease is part of what makes the seeming Ponzi scheme unravel. How does this become like a mature market that's not susceptible to this kind of fraud or gambling. I know that you pointed out

that sort of because crypto didn't get what they wanted from policymakers and regulators, that's like one reason why the problems with crypto have not bled into the larger economy. Yeah. It's this funny thing where regulators on purpose kind of slow walked regulating lawmakers, not entirely on purpose, slow walked lawmaking and then regulators slow walked rulemaking. And it meant that you didn't have like Wall Street get super in on crypto. So you can look at, you know, and these are folks who I think would have been perfectly happy to make the buck if they had been allowed to, but they weren't allowed to because there was this kind of like regulatory miasma. It wasn't clear that they were able to. These

companies, the kind of crypto companies were not really like part of the broader regulatory umbrella. And so this prevented financial contagion, but it didn't stop individual investors from putting a lot of money in and losing a lot of money. And those investors, the flip side of that is that they had none of those FDIC protections. The CFTC and other regulators are now going after them. But individuals were free to lose as much cash as they wanted. And I think a lot of them didn't quite realize because these companies gave the impression often that they were regulated like American companies are regulated, you know, and finance. We can debate whether it's regulated enough or not, but it does come under a pretty hefty

set of regulations. And the SEC and the related agencies really do go after them. But, you know, FDX, right, it was like a company based in the Bahamas. It wasn't like a Goldman Sachs or a Bank of America or Wells Fargo. So one of the biggest questions right now is whether the broader economy will face the same downturn the tech industry is facing. On one hand, you know, U.S. just had another solid quarter of better than expected economic growth. We're still adding jobs. Consumers are still spending. And maybe most importantly, inflation has started to cool. On the other hand, the Fed is, you know, still raising rates. There's still a ton of uncertainty here and especially all over the world. And most forecasters are still predicting a recession by the end of the year. What do you think? These things are really hard to predict. I think that you basically have an economy that's doing pretty well with two very large recessions in it, not like economy wide recessions, but there's like a tech recession and there's

a housing recession. And those are really fairly large sectors of the economy. But again, if the rest of the economy is doing just fine, you know, and rates stop going up, yeah, I think it's quite possible that, you know, there isn't going to be a recession. And the thing that I kind of worry about is that recessions have like the psychological component in which people think, ooh, this is bad. This is a bad year. We're not going to buy a house this year. We're not going to buy that car. We're not going to go on vacation because, gosh, if, you, if this guy gets laid off or if

I lose my second job or I don't get a raise, let's be conservative. And if everybody does that at an economy-wide scale, you just have a recession happen really, really quickly. But right now, that's not happening, right? That's a hypothetical. I think that the other really big thing that is out of our control is just what happens with the rest of the world. And the US doesn't tend to kind of catch the same colds. We give the colds, we don't catch them quite as easily, which is unfair. But if there's a really bad recession in Asia or Europe, that is going to blow back on us. And maybe all of these little things add up and you see a real softening. But I think the last two recessions that we've lived through have been really large and really horrible. We recovered really quickly from the COVID recession, but it was like awful for a lot of people, right? It was

just like a terrifying thing to have happen. And then obviously, you might recall the Great Recession and the years that followed. They were awful. It was terrible. It was terrible for like half a decade. It was terrible. And so I think that we have that muscle memory of just things going to absolute shit. And so I think that we just expect it. Why do you think that the U.S. bounced back from the COVID recession faster and stronger than most of the rest of the world? It's just like the giant fire hose of money is the answer. We like really, I'm not going to

say that we overdid it. But if you look at low income households, they generally during recessions take a pretty big hit to their income and thus to their consumption. This is all sorts of awful downstream effects because those low-income households, you start to see issues with like kids getting enough calories type stuff, right? Like the absolute worst, worst of the worst, right? Like heart attack. It's awful. Worst of the worst stuff that comes out of recessions. And in this past recession, because of the expanded UI and because of the cash payments and the six months of the CTC monthly payments, low income households were not only kept in aggregate, obviously some households did poorly. In aggregate, they weren't just made whole. They actually had more cash on hand. And that cash has lasted for a little while for them. It's given this buffer that they didn't

really have. And it's just like an amazing policy triumph. And I think for all of us who remember the policy wars that ensued after the Great Recession, it's just remarkable that trillions and trillions and trillions of dollars, so much more money than ever got spent to fight the Great Recession got spent on this. And it worked. We like kind of went back to, you know, the economy that we had before fairly quickly, relatively low unemployment rate, really low unemployment rate, wage growth for the lowest income workers. You know, we saw more people at the lower end of the income and wealth scales buying

houses. It really worked. The giant firehouse of money. It worked great. It was big enough. workers you know we saw more people at the lower end of the income and wealth scales buying houses it really worked the giant firehose of money it worked great it was big enough and good job policymakers which we don't get to say often no no and i also spent so much time being like bad job well and i also i think back to like you know i think b Biden was able to pass that giant COVID package in part because, you know, Trump was able to do it. And the one weird sort of non-crazy right wing thing about Trump is that he like didn't care about spending money. Although I guess you could say that about Bush too. But still, like you wouldn't get it. He still did it.

He still did it. You didn't have like the Paul Ryan kind of mindset there, you know? I think about it all the time. What would have happened if COVID had hit when Joe Biden was president or when Barack Obama was president? And there was like a Republican House or Republican Senate or both. I mean, yeah. Oh, yeah. Oh, yeah. If it was like Barack Obama and Paul Ryan during COVID, I don't want to actually,

I don't want to think about it. It would have been a really bad scenario. A really bad scenario. Really bad. Yeah. Really bad. I think about that all the time. Yeah.

Well, speaking of those, the two recessions that you mentioned. I think about that all the time. It's so sad. I'm constantly haunted. Stuck. Stuck in the Paul Ryanyan by the man from jamesville coming back budget wars love love the 2011 uh moment um on those two recessions you had this piece in the atlantic last month yeah about how the economy's fundamental problem has changed and you wrote that after the Great Recession,

we went through a decade in which economic life was defined by a lack of demand. Now, after the COVID recession, we've entered a period in which economic life is defined by a lack of supply. Can you talk a little bit about what that means and why this shift happened? Yeah. So I think that there has been, if we were having this conversation in 2011 and a housing economist sat down with us and told us that the seeds of a giant financial problem were being sown because the US was not building enough houses, I would have laughed in your face and I would have been like, have you been outside of Reno recently?

Right? face. And I would have been like, have you been outside of Reno recently? Right. But it was that far back. And in California, even further far back that a lack of housing construction in desirable metros started and it just got worse year after year after year after year. And now it is so bad that we have a housing gap of like seven million homes. And people are always like, oh, there's homes, they're just not, you know, like construction has kept up roughly. And what about these places, you can go buy a home and, you know, such and such market for X amount of money. And the issue, again, is in the places that people most want to live, at least judging by housing costs. So Los Angeles is a great example of this, New York. And that has caused this kind of great affordability crisis because the lack of housing and the

attending high housing prices, they've made it hard for people to get into the market. They've jacked up the price of everything else. So child care is a really good example of this. If people can't live cheaply in a given place, you're not going to have enough workers to staff the daycares in that place. Also because these places pay rent. And then I think that during COVID, you had this kind of like breakage of, you know, the international system for getting stuff around, right?

You saw all of these sort of like disruptions. And I think it became really clear that like we are making more stuff in the U.S. than we used to, but we still are reliant on these supply chains that often break down. And so we've seen just like persistent shortages of consumer goods in a way that and even sometimes really essential ones. So the formula is really terrifying. Children's Tylenol you can't get anywhere right now. Tylenol? Tylenol. What is going on? It's so bad. We had like extra Tylenol and we were like giving some to our neighbors because there was like nothing at Rite Aid. Because the shelves at Rite Aid look like we're in the middle of a fucking hurricane. Yeah. What's going on here? It was my younger son. It was for almost the entire time he was drinking formula.

We never got our preferred brand ever, which was just not something that had occurred to me that it would happen. Just like coin shortages. There's shortages in all sources. There's now a labor shortage, which is coming downstream of the Trump era immigration restrictions. We don't have enough people in certain labor categories. And so I think this is like a really big problem. And I think it's going to be a pretty hard one to unwind, especially on the housing component, because, you know, a lot of places are trying to build more houses. But like the force of nimbyism is really strong. And we don't have any lever for setting policy at a national level where we have that lever in other places. It's all really done at the local level. And so it can be hard to kind of set a kind of global policy goal for that. I think that's important because when people hear about, you know, supply issues, they think related to the pandemic specifically and like how a lot of these supply chains have broken and stuff like that. But, you know, you point out with housing

and things like in services like child care, that it's much bigger than just it's not going to be something that's just solved by the pandemic going away, partly because it's not just the pandemic that caused it, but a lot of other factors over the last decade that sort of led to this overall supply issue. Is that right? Yeah, absolutely. And I think that, you know, the way that the economy has grown in the past decade, so for such a long time, so defined by kind of like the one spending power of lower income and middle income families, that when you get to the very end of the 2010s, and those families kind of finally want stuff and have the cash to buy it, that stuff is like no longer available for them in some cases. Yeah. Which is like a real, it's a real bummer. And, you know, on the housing thing, I think that also just so many of our numbers about

this understate the problem because people will make their housing match their budget. And that just means that they'll live places that they don't want to be. They'll take jobs they don't want. They'll commute further than they want. And so they might not be like rent burdened or cost burdened when you look at the numbers, but they're just kind of like mad about it as they should be, right? Like if your dream was to live in New York and raise your kid in New York, it's not crazy to say that like policy should allow you to do that even if you have a job that you're not making like $250,000 a year,

which almost no Americans are, or relatively few. I know this affects everyone, but like I have been thinking a lot about the younger people who are graduating from college, like many with a lot of debt who get jobs in and around these big cities where you can't afford housing, childcare, education. And it seems like that economic pain is also going to lead to a lot of frustration and anger among a cohort that's really the core of the Democratic Party's coalition right now. Yeah. And I wonder, like, especially in the cities and the suburbs around the cities. And I know you've like written a little bit about like the problems that mayors are having right now. Poor mayors. That seems like it's gonna be

just a huge political problem to grapple with. Absolutely. I think that like millennials, to generalize horribly, like millennials are sad and Gen Zers are angry. I think that they are, you know, I often think about how I have like, I remember the 80s and I remember the 90s, right? I remember when things really in a profound way

seemed like they were getting better and things were going to be okay. And I was like a teenager when 9-11 happened. And I guess probably we should date the alternatives timeline to Bush v. Gore, right? Maybe that's the big branching. But you talk to really young people and they're just like, I don't remember a time when this country ever seemed like it really worked. And I'm like, well, I do actually. Although I think that obviously that would be really different if you weren't growing up as a white person or were growing up with, I always like to, I should definitely, definitely caveat that. But just like at a big level, I think that the economy has not been delivering for people for a long time. And there was really just that last couple of years in the 2010s in which it

finally was. And we've gotten back there. So I think that the issue is until you fix the supply problem, I don't see, you know, how the math isn't just really brutal going forward. I did a bunch of focus groups for this other podcast called Wilderness. And one group was young people in Orange County. And they were all Biden voters, but they were in their 20s. And, you know, you would expect if you talk to young people that the issues would come up are, you know, they talk about climate. And they talk about, and at the time it was right after dobbs they did talk about dobbs they talked about um guns right so all those issues that you would expect came up but housing was like number one on their minds and it was what they were most angry about and most upset about and it was they were angry there's

also this like sense of resignation they're like i don't don't know, like I'm working a job. I'm like making a lot of money and I am living with my parents or I'm living with friends. And my number one dream is to just be able to live on my own and not have to like share an apartment with two other people. No one's really talking about that. That's not a huge part of our national political debate it's so hard and i've come to so there's these um economists who created this really cool model that basically said if you made more money in la than in like sheboygan you could just move and housing elasticity like demand for housing would create new housing in that place as it would in the median American city. And so the median American city with the like average housing regulations is Atlanta. Chicago is also right there at the medium. And then they run this simulation

and they show how many Americans would be living like down in the guts of the paper because the paper is actually about GDP, but down in the guts of the paper and in some associated work, they show how many Americans would be living where they currently live. And it's like more than half of Americans wouldn't. And the Bay Area would quintuple in size. And New York would be nine times bigger, nine times bigger. So millions of housing units,

absolute millions of housing units. Think of New York becoming like all Manhattanized, L.A. having five times the housing units. So take every home in L.A. and just go by five, right? That's how much demand there is for these places. And I just think that our sights are set so low on this. And I really I think that the answer is going to be probably that cities like, you know, San Antonio are going to be like the San Francisco's of the future. And I just hope that we have really good urban policy in those places because I actually have come to think that like your San Francisco's and your Seattle's like

they're just not going to change that much. You're just never going to build four million housing units in San Francisco. It's just not going to happen because we can't build like 10,000, right? Yeah. Well, I was going to say like not to turn this into an entire episode about housing policy, but I've been very fascinated about this. It's all anybody ever wants to talk about. Yeah. Well, every time I ask someone about it, it's always like, well, because it's split up between local, state, federal, it's sort of a mess, but where would you begin from a policy standpoint

on figuring out how to crack this? Is it pressure on a local level? Is it state level? How are we building more houses? So some places are already doing it. California is trying really hard. I think you have to find some way to preempt homeowners and preempt. This is going to be really popular.

Preempt jurisdictions from stopping the construction of housing. I mean, it become like a, you know, there's like eminent. You've probably have run into the eminent domain voters. There's a subset of voters who like only care about eminent you probably have run into the eminent domain voters there's a subset of voters who like only care about eminent domain but i'm going to be like a political leader whose only issue is eminent domain but i'm just going to seize everything to build social housing i am i'm for it the least popular politician in american life just instantaneously when I'm like, hello, homeowners, I'm here to appropriate your land or at the very least tax it. It's really tough. It's really tough because you're talking about, and I mean, there's so much great work on this. And I really recommend Jenny Schutz's book

at the Brookings Institution if people are interested. Golden Gates is another really good one about just you cannot you have highly motivated, wealthy homeowners are the people that you kind of have to defeat in a lot of places here. So like, yeah, you want to go up against the people who own all of the like mansions and Bel Air and tell them that they have to be like allowing small apartment buildings, right? Like that's really tough. And every single one of them will like show up at the community meeting and be like, I'm not giving you this campaign donation, Annie Lowry, which you're insane. That's no more private property platform. Your commie platform of just divvying up my land. But I also really support real estate development. So it's an unusual platform.

A lot of interesting constituencies there. Yeah. Are there other other policies you think would be effective in helping us sort of grapple with an era where lack of supply is the biggest problem and shifting away from the era when demand was our biggest problem? I think that we could make more things here, which again, is something that has been, you know, industrial policy, I think, has become much less controversial. And Joe Biden loves industrial policy. Loves it. Loves it.

Everybody loves industrial policy, as it turns out. And all these other countries were doing it all along. So I think that there's that, you know, on the zero to five educational front, there's such great promise in these public pre-K programs, pre-K three and pre-K four that you've seen in DC. DC's is now like 10 or 15 years old in New York. That's going to help, right? The more that you can kind of provide people with public solutions. I often think about how if there was some bill that just created pre-K three and pre-K four and federally financed it for all of these school districts, at least for a parent, you now only need to figure out zero to three instead of zero

to five. So you've had like 40% of your problem cut off. And so I think that there's there's probably that there's like the housing folks have lots of of of great solutions for the individual laws and kind of incentives that you you could change. It's something that I'm actually interested in is just like how Washington could do more to change the kind of policy framework for local communities because they do just have so much discretion. Yeah. But yeah, I think on energy, it's a place where I think the federal government has the most space. And obviously, there's a lot of money now that's going to go into hastening the energy transition, whether that's creating a lot new renewable energy supply or providing people with incentives to do

everything from get an electric car or to change their furnace in their house. So that I think is actually really exciting. And it's a place where I think we now have a lot of really good policy coming from Washington. And then immigration for the labor shortage, which is an easy problem to solve. Let them all in. Yeah. It's just the simplest and the most straightforward issue in Washington. A lot of consensus on that. Right after you take the land for housing, we're going to open the border. We just have to get everybody together and get everybody to agree, John.

It's going to go really well. I think it'll be fine. You end your piece about tech layoffs on an optimistic note. You say that maybe a tech summer is just around the corner. As you say, firms are still very profitable. Hopefully, the interest rate hike stops soon. And you note that artificial intelligence has started making amazing breakthroughs. You also wrote another piece about whether AI might destabilize white collar work. We just talked about this a few episodes ago.

Where do you come down on that? Are the robots coming for writing and journalism? Are they coming for our jobs? Just today, BuzzFeed stock went up quite a bit on the news that they were partnering with OpenAI, which is the creator of ChatGPT, which I think is a lot of people's way of seeing what's happening in AI technology. They kind of gave this public preview to everybody. And it's really,

really, it's really actually like really quite amazing that they're going to use it to start writing articles. And yeah, there's already been AI written articles for like tech things. And I know like there's like automatic summaries that will come out sometimes I think about like sports games and like stock movements, that sort of thing. Yeah, I think it's really, really awesome. And what's kind of happened, and I didn't get too much into this in the piece, is that the kind of predictive AI. So this is the stuff that powers the self-driving cars has been slower and harder and has made maybe less progress. So, you know, it was like 2014, there's this big freak out about, you know, all taxi drivers and truck drivers losing their jobs because self-driving cars were just right around the corner. And my understanding...

That's what was going to, that was going to make Uber profitable. We're still waiting on it. Back to Uber. Yeah, right. And instead, my understanding, and I'm not like an expert on this part of this, it's like this part of the technology is that they still, you know, have trouble driving in the rain, for instance, still kind of crash into things, including there's a great piece in the New York Times Magazine in which the opening anecdote involves like a self-driving car driving into a police car, which like a parked police cruiser.

So predictive AI has been kind of tough. And I think that there's a lot of reasons for why that is. But what we've seen is this tremendous flowering in what's called generative AI. And the AI that can kind of act like a chatbot that can write things, that can generate video, that can generate pictures. And we haven't really seen this kind of technology get so advanced, so widespread with such disruptive potential for white collar work. It's in modern memory, we haven't had like mass job loss among white collar workers. There was sort of the downsizing trend of the 90s a little bit. But, you know, as a general point, this has been the best part of the labor economy to be in is like the highest income and, you know, with the highest educational credentials and these, I don't use this term, but the highly skilled workers. I hate that term, the highly skilled workers. And I think that, you know, you have all of these folks who are kind of arguing that AI in time is going to

replace a huge amount of this work. And I don't know that that's going to happen, but I do think it's going to disrupt it and change it. And I think there's going to be a certain inequality to it where the stuff that is more rote, more routine, easier to kind of tell an AI to do, like absolutely it's going to start changing work in there. What that actually does to employment is really, really hard to say. And I had this conversation with David Autor, who's an economist at MIT, and I think is like one of the world's experts on technological change and employment. And he's done a lot of really great work on the China shock, which is

what they called the sort of loss of manufacturing jobs and what that did to the heartland. And he was like, we're just really bad at predicting this. But the thing about the new generative AI is that it has the capacity to take on work and to be flexible in a way that other technologies kind of haven't. And so I think it's like a really, really interesting moment. And I think this didn't make it into the piece either, but I do think that we have this muscle memory, this kind of like fear that the robots will come and put all this out of a job. And if you grew up in like Ohio or Pennsylvania,

that's not a crazy fear at all, right? Like this actually happened not that long ago, starting in the 1970s. But most technologies come in and don't have that effect. And in fact, it's really hard to see, you know, computers didn't cause mass job loss. The internet didn't cause mass job loss. Electricity didn't cause mass job loss. And so, you know, it's a thing that I'm watching

and I'm kind of humbled by. Just because like the AI stuff now, it's so cool for for so long and I live in San Francisco for so long you talk to the AI people and they'd be like it was like they'd seen God right they were like I can't explain it to you but it's amazing and it's going to change your life and I'm like oh yeah you're super cool big spreadsheet I'll wait on that and then all of a sudden like Chad TPT comes out and Dolly comes out and I'm like, oh yeah,

that is actually really cool. Yeah. And it's, and I also think we're seeing probably a version of it that is going to, like they're going to have a new and improved version

of chat GPT soon enough, right? And they're going to have another version. And like the version now, it, you know, you use it

and it's pretty amazing. And then you're like, and then there's a moment where you're like, yeah, well, it's pretty rote And then there's a moment where you're like, yeah, well, it's pretty rote. It's making some mistakes. And this could never replace real writing. And then you use it some more and you're like,

okay, well, it couldn't replace real creativity in writing, but it could definitely spit out a first draft that will be easier for me to edit and put my own finishes on. And so I guess the optimistic case on sort of the generative AI is that it won't replace jobs, but it will make jobs easier to do. Yeah, I think that that's exactly correct. And can you imagine if you are like a presidential speechwriter who is like struggling and is like,

can you just write five versions of this same paragraph so that i can take those and like tinker with them and capture this one dude's cadence or whatever i think that there's going to be a tremendous amount of this that's like assistive and makes you more productive but like also when it comes down to it do i think that you know um chat gpt is going to replace like our Pulitzer Prize winning poets? Like, no, of course not. Of course not. Of course not. And I think that a lot of writing is rote and that's fine. And if it absorbs that work, like, you know, I think that that could be hard for certain sectors of the labor market. But fundamentally,

the idea with all of these things is that like a we get cooler stuff b we become more productive and c you get to do things that are more human ideally and that that's a good thing yeah replace our writing just don't replace our takes yeah they'll never take our takes they will never ever take our takes the internet will come up with just absolutely bizarre stuff to talk about until until the end of time and the thing that i keep on thinking about is like the depths of youtube like what's going to be down in there now that this stuff you know i don't know oh god yeah it's like well that they talk about losing productivity people be down a rabbit hole and we'll never see them again oh my gosh yeah anything else making you optimistic about the economy?

I am feeling better. I would never want to come on here and tell you that I knew what was going to happen with the economy. But I'm feeling a lot better about the fact that we might not only have a soft landing, but actually like 2023 might be okay. One of the things that makes me most hopeful is that we are finally seeing strong

wage growth at the bottom. And we're even starting to see jobs that were kind of low-income jobs become kind of middle-ish income jobs with benefits. And that takes a tight labor market running for a long time. And it brings all sorts of new people into the labor market. And that is a great trend that needs like lots and lots of time. Because I think that, you know, you're not going to really solve the country's inequality problem until you act on, you know, unionization and improving labor structures. We still, the federal minimum wage is still $7.25 an hour. It's like abysmal. But it makes me so hopeful to think that, yeah, actually your job at the fast food restaurant has benefits if it's over 40 hours and you get $18 an hour.

That's such an improvement over like 6.75, you know, such an improvement. So I'm really hopeful about that. That's good. All right, on that note, Annie Lowry, thanks for joining Offline. Thank you for having me. Offline is a Crooked Media production.

It's written and hosted by me, Jon Favreau. It's produced by Austin Fisher. Emma Illick-Frank is our associate producer. Andrew Chadwick is our sound editor. Kyle Seglin, Charlotte Landis, and Vassilis Fotopoulos sound engineered the show. Jordan Katz and Kenny Siegel take care of our music. Thanks to Michael Martinez, Ari Schwartz, Amelia Montooth, and Sandy Gerard for production support. And to our digital team, Elijah Cohn and Narmel Konian, who film and share our episodes as videos every week.