The Dispatch Podcast - Why America Needs to Win the AI War | Interview: Megan McArdle

Episode Date: June 2, 2025

Megan McArdle joins Jamie Weinstein to react to the first few months of Donald Trump’s presidency and to explain why America needs to win the AI race. The Agenda:—Liberation Day: “It was shambolic”—Trump’s shadow Cabinet—What DOGE got right (and wrong)—Elon Musk: A “managerial mad genius?”—Paul Ryan vindicated again—How to adapt to an AI world—Calm before the AI storm The Dispatch Podcast is a production of ⁠⁠⁠⁠⁠The Dispatch⁠⁠⁠⁠⁠, a digital media company covering politics, policy, and culture from a non-partisan, conservative perspective. To access all of The Dispatch’s offerings—including members-only newsletters, bonus podcast episodes, and regular livestreams—⁠⁠⁠⁠⁠click here. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Close the garage door? Yep. Installed window sensors, smoke sensors, and HD cameras with night vision? No. And you set up credit card transaction alerts, a secure VPN for a private connection and continuous monitoring for our personal info on the dark web. Uh, I'm looking into it.

Stress less about security. Choose security solutions from TELUS for peace of mind at home and online. Visit TELUS.com. Total Security to learn more. Conditions apply. Welcome to the Dispatch podcast. I'm Jamie Weinstein. My guest today is Washington Post columnist Megan McCartle.

And we discuss a lot of different issues on this episode from Donald Trump's first 100 days to the tariff war, to Doge, to Elon Musk, to the debt problem, but primarily and maybe most importantly, AI and what it pretends for all of us. So without further ado, I think you're going to like this episode. here is Megan McCartle. Megan McArnell,

Megan McArdle, welcome to the Dispatch podcast. Thanks for having me. I want to get into a subject, which I think reviewing all your columns for the last year, might be the most important subject that you've been thinking about, AI, just based on the number of columns,

that have been written about it. But first, I'm obligated to ask you about the first hundred days or so of the Trump administration. So what is your initial thoughts? Has the first hundred days surprised you in any way? Has it gone as you expected? I would say it's about what I expected. It was, you know, shambolic. They came in with a lot of big plans and executed on very few of them. I will say that I think maybe I should take that back. They were more aggressive on DEI stuff

and more effective on it than I thought they would be. But in general, and I think the tariffs were more outsized and catastrophic than I expected. But broadly, I think, what you see is

what you get with Trump. He likes to talk a lot. He is not an execution guy. And that's pretty much what we have seen for most of this first hundred days. You mentioned the tariffs. Where were you on Liberation Day? And what was your initial reaction to our liberation? My initial reaction, honestly, was to get online

and order as many clothes as I could, knowing that many of them are made in China and that they might be going up in price. I also ordered a quilt and some sheets. So my initial reaction was, wow, that's big. And then I had better stuck up on textiles. Do you think there's a logic or a strategy behind this, you know, in some ways we hear from

Trump supporters that this is all part of a chess game, but then you read reports that, you know, they try to get Peter Navarro down the room so they can get Donald Trump to tweet something out to delay them? Look, there are like basically three camps in the administration. First of all, there's normie economic advisors who understand that tariffs are, A, going to be extremely unpopular because they're going to raise prices. saw how that went with the Biden administration, and B, that they are economically destructive and are likely to hurt American industries more than help them. The second camp is people who really

do see this as this is a negotiation tactic. They don't really want 45% tariffs. What they want is to use it as a battering ram to get lower trade barriers or other things that the U.S. government wants from other countries. And then the third camp are the people who are just like, Tariffs are awesome. Tariffs are how we are going to bring back 195 with brawny American men working in brawny American factories. And those three camps you can see in the interplay of what's been going on that those three camps are kind of warring. There is no one person who has managed to corral them into a vaguely coherent kind of policy. And one reason for that is that Donald Trump himself really loves tariffs.

He just has an intuitive sense, I think, that to import a lot is to be weak and dependent, and to export a lot is to be strong and influential. And that is what is driving his policy, is just that intuitive sense, not any kind of economic model, not even any kind of real sense for what the political fallout is going to be.

It's just that he loves them, and he wants them, and he thinks that if he does them, good things will happen in the American public war room and remember him fondly when he has passed out of this veil of tears and onto his role. If he's instinctually in the third camp, you know, the camp that thinks this is a good idea, how is he, why is he moving so much on this?

You know, why is he the taco trade going on that he's backing down? Because he has the attention to ban of a gnat with a meth habit. And so he wants to do this. He does it, and then he sees the blowback, and he reacts to that. He's incapable of not reacting to that. He is not someone who comes in with, like, a really strong, well-formed policy agenda, and just executes it, understanding what the political fallout is going to be, understanding where he's going to need to move and adjust.

He just, he does stuff because he thinks it'll be good, and when he sees, you know, he cares almost as, he cares about his own popularity pretty much as much as he cares about tariffs. And I think those, just as there are warring camps within the Trump administration, there are warring instincts within Donald Trump. On the one hand, he loves tariffs and thinks they're great. On the other hand, he really does not like it when his voters freak out about higher prices. Well, I want to ask you about that warring camp within Donald Trump. You know, he, in the first term, the stock market was a barometer for him. He loved to say that there was a new record high. It did seem for a moment in the, in term two, he was willing to, he was willing

to take big losses on the stock market for the tariffs. But it does seem now we're back to the part where he likes the stock market again and doesn't want to. Do you think he's, is the stock market now a barometer again and a kind of something to protect us from the worst end of the tariffs? I think so, because I think that Donald Trump is fundamentally a New York guy. One of my favorite explanations of Donald Trump is that everything he says makes sense. If you just imagine it preference, by Donnie from Queens, you're on the air. And in New York, people watched the stock market. I remember in 1987, I grew up in New York City.

And in 1987, the stock market crashed. It was known as the flash crash because basically all of these automated trading algorithms in a very primitive form had sort of moved in a herd all at once in a way no one expected and the market crashed. And people came to school and, I mean, imagine this is like seven, seventh graders, it's all they can talk about is the flash crash. That's not normal. In most parts of the country, seventh graders are not paying attention to the stock market, but in New York, everyone does. And so I think that that's why he is liked it as a barometer of his success

and why he is always going to pay attention to it and not going to have the ability to stay the course when stock traders are quite rationally looking at what he's doing to the economy and saying, no good, boss, I don't like this. Tell me what you think of Scott Besson. He's kind of an interesting figure. He comes from all these cultural elite institutions, worked for George Soros, went to Yale, worked for Stanley, Drucken Miller. And yet, MAGA claims him.

I mean, Steve Bannon had him on the war room leading up to the election. I would guess he's in the middle camp or use him as negotiations. But what are we to make of Scott this on? Look, I think that there, you know, When Trump 1 happened, as listeners may know, there is always a kind of shadow cabinet of normal Republican or Democratic advisors who, when they're out of power, goes to think tanks, goes to universities, and waits for their next chance to help shape policy. And in 2016, there was a really hard conversation among those people.

do I go into this administration when I think that Trump is bad for democracy I think he is an unstable character who says terrible things do I go in and try to move policy in a good direction or do I stay out and I knew people in both camps

I like people in both camps but the people who decided to go in had a really hard time of it Especially higher up in the administration, almost no one got out of it with a reputations intact. And I think that this time around, the hunt for advisors has been even more difficult. And people looked at what happened to Gary Cohn and those folks, the reputational damage they suffered, but also just the personal cost of being in the middle of all that chaos and trying to keep Trump from going completely off the rails and said, no thanks.

But here's the thing, if you are a fairly normal person and you aren't quite as alarmed about Donald Trump as other people, that does create a kind of niche where people who wouldn't have had that kind of power and influence have an opportunity to be really high up in an administration and shape policy. And that is an intoxicating process. And you saw this with like Steve Mnuchin, who, you know, kind of very frankly said to people when in, in 2015 and 2016, why would you support this guy? He said, because I could be in the administration and in normal times that wouldn't happen. And that is also how I, I, how I explain Scott Bassant. I think he's a basically normal guy who looked at this and said, like, look, I could, I could be in one of the most powerful jobs in the world. And he is. You know, he's, I follow kind of these figures in the financial world, you know, a little bit. I never heard of Scott Bissent. Have you heard of him before? He, I guess, frames himself also as an economic historian that he teaches economic history. I think, I'm going to say NYU, I could be wrong. But is this a figure that you were aware of?

No, he was not. He is. And again, like, with no slam on Scott Bissent. But this is, the sheer fact that so many people are reluctant to associate themselves with the three-ring goat rodeo means that people who otherwise would not have had that kind of opportunity now can, you know, vault themselves into center stage when they were fairly minor figures on Wall Street. You know, it's, again, not a slam on Besant. There's a lot of people who are quite successful,

but you've never heard of. And now he is on the world stage for better and for worse. If this tariff war ends up being, you know, a 10% across the board tariff, as some think, or at least maybe hope, is that something that we can handle without major issue? You know, speaking of Scott Besant, his mentor, Stanley Drucken Miller, I mean, he came out to clarify because people were saying that he would support these larger tariffs, but he says that he thinks that he, we could support 10% but was opposed to the larger ones. Is 10% handleable?

Yeah, look, I don't love. tariffs in any form. I would like to see them all gone. But, you know, I was talking to a pretty prominent economist, and he was saying that he was talking to some of his colleagues, and they got into an argument, and he said, look, the effect of a modest tariff is just on GDP. It's just not that big. The United States doesn't import or export that much. We're very large. We make most of what we consume inside. More of our economy is services than it used to be, which also lowers the impact of tariffs. And so a 10% tariff, like, it's going to raise prices on imported goods by about 10%,

and anything that is made with imported goods, which includes things we think of as domestic, like big three autos. But, yeah, the economy can absorb that. It will be a slight economic hit. We will be poorer than we otherwise would have been. but it's not, you know, these 145% tariffs on China are a whole different deal than a 10% across the board. You hit on the concern I had initially earlier this year in a column. You wrote what was accumulated over decades of patient rectitude can be lost in one quick burst of irresponsibility.

Once you've raised questions about your integrity, it is hard to return to the status quo. I think this question has died down a little bit since the S&P has risen, but it still remains with me. And the question for you is, what if America lost is exceptionalism premium? What happens, what would that affect be on America if we were no longer seen as that steady place to put capital when all the world is in trouble? Yeah, I think a lot of things happen. And I think they are already happening to some extent. Look, we are benefiting as we have long benefited from, as one trader put it to me being the prettiest ugly girl on the block

that we have issues, our deficits are large, there are real concerns now about how we're going to handle our massive national debt, are we going to inflate it away? You know, even raising the specter of defaults, something that the United

States has never done in its 250 year history, almost 250 years. So we've already lost. People are already looking at us and they're asking for a little risk premium for our debt because we might decide to inflate away some of the value of that debt and they would like to get paid for taking that risk. It would also involve people looking to diversify out of the dollar.

Again, I think it's really hard to diversify out of the dollar. It's really hard for the dollar to lose its world reserve currency status because there aren't a lot of good competitors. The Eurozone is increasingly becoming like a lifestyle museum. living in Europe is very nice but they have basically missed out on the tech revolution they don't have a lot of new companies forming

they're aging their economic growth is not high 10, 15, 20 years ago I used to have a lot of arguments with people on the center left about whether we should try to be more like a European country, you know, higher social services,

higher taxes, more leisure, less of our kind of obsessive work culture and that was a harder argument to win 15 or 20 years ago but now you look at where Europe is and you say I definitely don't want to be there with my population declining

my growth very lackluster all of these big bills for the social services coming due and so it's hard for us to lose our reserve currency status and of course China which would be the other obvious place their currency doesn't even trade freely

They have currency controls, they have all of these issues that make it hard for people to leave the dollar. That said, it's not impossible, and if you act erratically enough, people will just decide, you know, it's hard, but I got to figure it out because this is unacceptable. It's definitely going to have risks for investment with tariffs, with things like if people have been watching the Nip and Steel deal, where the Biden administration, said no at the behest of unions. Trump administration has come in and said, okay, well, you know, nip and steel can buy these steel plants, but the

United States government has to have this golden share that's going to give them seats on the board. All of those things are things that are going to make people when they have extra money that they want to invest somewhere abroad. You know, the United States is now a less attractive prospect. And that

is very real for us. I mean, first of all, it means less consumption. Um, because the dollars that come in, people, they are used to pay workers. Those workers go out and buy stuff. Um, it raises wages. Uh, it also means less investment in things like capital, like, you know, factories, um, other productive and R&D, other productive investments that help make, allow us to buy more stuff later when we get richer and bigger and we grow. Um, so yeah, this is absolutely, this erratic behavior is going to have an impact. Now, I think the fact that Trump has walked back a lot of the most extreme gyrations and trade policy does mean that the follow will be less than it could have been. But I think we're now in the position of, you know, it's kind of like if you're dating someone and you've been dating a long time and then they go nuts and they spend all of your money and they trash your house, right? like maybe and then they stop right they're like no i'm not going to trash the house anymore i'm sorry that was a mistake you still look at this person and you're like well but you did that once how do i know you're not going to do it again and so it's going to take a long time and maybe even if

you stay with them right but you're still kind of watching are they doing anything right and it's going to take you a long time, many years before you have processed that person, assuming that we do not discover that, for example, they had a brain tumor and has now been removed, it's going to take you, assuming they just did this one thing once, you're going to like, you're really like, well, okay, they're not doing it now, but they might again. And I got to watch real close. And maybe I'm going to keep some money on the side, have an out and escape plan for if this relationship, if it happens again. And that's who we are now. We were the sober, sane, respectable person, and now we are the person who might at any moment do something

insane. And even if we're rich and all the rest of it, you know, even if there's still all the reasons stay in a relationship with us, you're going to want to diversify a little bit. You're going to want to have some escape patches just in case. Not long ago, I saw someone go through a sudden loss, and it was a stark reminder of how quickly life can change and why protecting the people you love is so important. Knowing you can take steps to help protect your loved ones and give them that extra layer of security brings real peace of mind. The truth is the consequences of not having life insurance can be serious. That kind of financial strain on top of everything else is why life insurance indeed matters. Ethos is an online platform that makes getting life insurance

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your first purchase of a website or domain. I saw Mark Rowan of Apollo, and I guess the runner-up to be treasurer's secretary, put it that we went from hyper-exceptional to exceptional. But is that the bet that that's maybe the floor because everyone else is, there's no other place to go, and even if you wanted to go, as you mentioned, it would take a lot of work to wean yourself off America? Is that what Trump is hoping for that it's just too difficult

to wean yourself off America? I think that's kind of his operating assumption. But I think that was his operating assumption before he did the tariffs. It was just like, you know, they don't have a choice. They're going to have to do what I say. And it turned out that wasn't true.

And then, you know, now we're just hoping that people don't take it further. I think, look, we can, this could be the floor, but that's going to depend on our behavior. And not just tariffs, by the way. It is going to depend on whether we run our government in a minimally fiscal sane way or if we just keep running up the debt to totally unsustainable levels. Doge, how should we understand Elon Musk?

Look, I think Elon Musk is kind of a managerial mad genius. If you look at what he does at his companies, he is really, really good at optimizing processes. Right? He goes in and he just questions everything. Why do we use this part instead of that part? Could we do this with a $10 part instead of a $250 part over and over and over again? He forces people. So for example, one thing that I think is really interesting is that you're not allowed to just have a policy. Everything his company does, someone is responsible for it and has to be able to answer questions about it. And so for, and he applies that outside of the company as well. So he says, like, when you tell me I can't do something, I don't want to hear that that's because the government said we can't. I want to know what regulation it is. I want to know the details.

And I want to know if the government, when it says this, is right or is just operating on a kind of, that's not how we do things. And that has been extraordinarily successful at his companies. And I think the people who want to dismiss, Elon Musk is like he's just a rich kid who lucked into he didn't you don't luck into as many companies as he has made they're not all successful right he has a high he's he's kind of a high volatility play he does stuff that you know he tries risky stuff he has a greater risk appetite than most people um and that means that some of the stuff he tries doesn't work but a lot

of it does and he's able to do stuff that people can't other people can't because he is focused on optimizing, and because he takes risks so other people won't. Here's the thing, though, he's working at engineering companies, right? He has a fast feedback loop from reality. We're going to try this in the rocket, then we're going to see, did the rocket blow up, did it perform the way I expected? Okay, let's figure out why and fix it. Right?

And if you're in that fast feedback iteration cycle, you can do amazing things. The government does not work that way, right? you try something, and the feedback mechanisms are loose, there are all sorts of unexpected interactions, and the cycle is just much slower than it is in engineering. And so I think he came in with an incorrect theory for what he was doing. It works in his domain really well. It didn't work super well in the government.

And I think the other thing, though, is that I kind of defend Doge because I do think that the government if you could get a leader in who would do that kind of management, it would be good for us. It would be good to have a government that worked better that worked more likely

an Elon Musk company than like the government does. So he had constraints. So first of all, legally, rather, in order to not leave Tesla and his companies, which he didn't want to do, he could only work for the government temporarily. so that puts a time limit on it. And then he's got an even tighter time limit

because, as I think I mentioned, Donald Trump has the attention span of a meth-addicted gnat. And so you were never going to, you know, the kind of transformation that he does, he does as CEO. And he is totally committed to that. His board is behind him.

What he was doing with Doge, he had a president who has a very short attention span and no appetite for political risk, or at least limited appetite. Let's not say none. No one who had no appetite for political risk would have done the tariffs, but who was not going to sustain support

when it got unpopular, when it got difficult, when there was bad publicity or something went wrong. So these guys went in knowing they had like three months. And within three months, the kind of transformational reform that I think would be really good was not possible. Within that constraint, I think they made a bunch of mistakes. They made claims that weren't true about how much money they could save. I think they genuinely believed there was a lot more

fraud. I also think that they didn't appreciate that a lot of the problems with government are not problems with the bureaucrats. Don't get me wrong. There are some problems with the bureaucrats, not all of them, but they're definitely, the bureaucratic culture of the U.S. government is profoundly dysfunctional, and there are a lot of people in the government who, because it's very hard to fire them, have functionally retired in place. But I think that they thought that there would be more of those people than there were, and they thought that there would be easier wins than there were. And anyone who kind of knew about the topic could have told them that. They didn't talk to those people. But within that constraint, I think what they decided was what we're going to do

is a kind of Hulk smash operation. We just break the bureaucracy as much as we can. And I think the defense of that, this is not a strong defense, I don't think it worked. But it's, the defense of that is like, look, you break the culture,

and you fire a bunch of people, and then when the administration rehires people who need to be rehired, and here is another problem with Elon Musk strategy, just to digress, for a minute, is that when he fired, like, he says if you, if you don't realize you needed to put 10% of it back, you didn't cut enough, right? The way you find out that you don't need

something, the way you find out that you need some of it is by cutting it and realizing you needed it. But the thing is, if you do that at a normal company, you can then just go hire people. It's not super easy, but you can go hire people. If you, like, at Twitter, right, where he fired a bunch of people and then started rehiring them. In the federal government hiring processes are insane, and they take forever. And so you were not going to be able to quickly restore things that you had accidentally cut and then found out you needed. But it's not impossible to me that in 10 years we're going to see liberal pundits writing columns about stuff that they were able to do because Doge had gone in and turned a flamethrower on the bureaucracy. I don't know that that's the most likely outcome,

but I don't think it's impossible that ultimately some of it will turn out to have been better than it looks right now because it will have sort of like going in and doing a controlled burn or in this case a kind of semi-controlled burn in a forest that has a lot of undergrowth that's kind of a fire risk and it's hard to get through, that it may turn out that having cleared away some of that, that undergrowth does enable government to be more effective in the future.

I'm certainly not promising that. I can't say it looks super likely right now, but I think that that is the best defense is just that they couldn't do much in the time they had. And so that what they did was decide to burn down the undergrowth that was just gumming everything up and making it hard to have a thriving forest. You mentioned one of the constraints was Trump's limited willingness to take political risk. And I think, and correct me if I'm wrong, you might be alluding to entitlement reform, which is it possible to even come close to cutting what Elon Musk said he wanted to cut

without doing some serious type of entitlement reform? And if that's the case, why was Elon and the all-in podcast universe mocking the idea that, you know, kind of the old school Republicans say that entitled reform is where it was. It seems like they, anybody that looks at it knew that that's where the bulk of the money had to come from. The left has a fantasy that rich people are just sitting on enormous hordes of gold. That they, that if you just tax that, you could have a European-style welfare state.

and that's false. The right has a fantasy that the government is sitting on a horde of waste fraud and abuse that if you could just cut that and like spending, bad spending that's dumb, look, I think we do a lot of bad spending that's dumb, to be clear.

I remember looking through when Doge started on the Department of Education, I was looking through their budget and I was like, you know, if we cut this, how much, and this budget is very lengthy, But there were a bunch of, I was looking at, like, we cut half of this.

And it would have to be the right half, to be clear, we should not cut, like, funding for poor schools or disabled education. But if we cut half of this, would America really be a worse place in 20 years? Like, if we cut funding for ESL language learning, how many people wouldn't speak English in the America of 2045? But that said, look, most of what the government is. does cash-wise is it mails out checks. And it mails out checks for stuff that Donald Trump has said he will not cut, like Medicare and Social Security. And if you're not willing to touch

those things, then you just cannot reduce government spending that much. That's where the money is. Just like you have to, you know, European welfare states, you want to have a European welfare state, you got to tax the middle class because that's where the money is. And if you are not willing to do those things as people on the left and the right or not, then you just have to accept that this is how much money we spend and you've got to live with that. And you can modestly adjust tax rates and I think we should to bring it in balance. You can cut where you can and I think we should do that too. But ultimately, it's mostly just checks. My question is, I mean, you have this incoming administration MAGA who said

they're going to cut the deficit through waste front of abuse, while ridiculing Paul Ryan, you had people come in from the tech world saying that you didn't have to touch entitlements, we can cut this while ridiculing the old establishment, Paul Ryan. Isn't he vindicated in all of this? Isn't he? He said that you can't do this unless you do an indictment reform and took political risks to do it. I mean, look, it's not even like Paul Ryan is vindicated. Math is vindicated. You can look at the federal government budget and see where the money goes. It's really clear. The Social Security Administration is not spending zillions of dollars

because it has 80 billion bureaucrats working for it. It's sending checks to old people. Its overhead is very low. Medicare is overhead. Pretty low. Arguably too low. They could probably do some more fraud checks and do some more effective forms of spending.

But it's mostly just checks to old people and doctors who care for old people and doctors who care for disabled people and veterans that's where the money goes it's not complicated it's right there you can look and the fact that they didn't look

before they came in and made these promises look but why these are I can understand Donald Trump not looking these are business people the world's greatest businessman perhaps and who would think you would who would be able to

look at this very easily and determine that the only way to do those type of cuts that he's talking about is to touch this. And I believe he's mocked the idea that you had to do entitlement row forward. I think this is a great mystery. I don't know why they didn't look. I really, I have, I got nothing, right? Like, they could have asked anyone. I would have told them. I'm very friendly, like, not with, but to the tech bros. It's not like they all call me it up and we, you know, hang out on our signal chats. Actually, I guess it's on the West Coast. It would be a WhatsApp chap. But, like, I don't know why they didn't just ask some people who knew what they were doing,

whether it is because they, in fact, did know and had, but thought that the bureaucracy could, should be cut, and that saying this, professing this belief was the fastest route to cutting the bureaucracy, or whether they were genuinely confused. and I think probably some of both. They actually, I mean, if the all-in podcast is a proxy for these people, they mocked them. They mocked the people that would say that entitlement reform. So it's even, they must have seen that some people said this and then thought them as mock, you know, establishment, you know, people that didn't know what they're talking about and cutting business. So this is also a thing is that like, and not entirely unfairly, there is a perception that people in Washington talk their book.

They say things are impossible that are clearly not impossible, and that what it needed was some good old know-how to get in there and, you know, private sector, rah-rah. And look, private sector, rah-rah, we should have more of these folks in government. I wish they would come for more than three months. I understand they're very busy running their important companies, but I think there was nonetheless, you know, I'm kind of reminded of in 2008,

one of the most fantastic things that I still kind of can't believe is that the UAW just did not believe that GM was going bankrupt and like GM files audited public financial statements and you can read them and you can see that they have a certain amount of cash and every month that number is $1 billion lower and all you have to do is just extrapolate the trend, and you can see that they are going to get below what's called working capital. This is basically like just the amount that you need to have in your accounts.

It's not zero in the same way that you don't want zero in your bank account because like your mortgage might come due before your paycheck clears, right? That they're going to go below the minimum amount of working capital they need and then they're going to have to file for bankruptcy. And the UAW just flatly, management's a bunch of liars. You can read the statements yourself. You don't need to take their word for it. And they just couldn't believe that this was the case.

And I think it's that kind of mindset of like, oh, those people always say it's impossible. Well, you know, it is true. They say things that are impossible that aren't. But some of the things they say are impossible are. Just like when your kids tell you that it is impossible for them to clean their room, that is not true. but if your child tells you it's impossible for them to fly, believe them.

And the inability to distinguish between those two cases, I think, was a big mental block. Well, all of this is a good lead-up to the subject I really want to talk to you about. And I guess my opening question is, does anything that we just discussed matter, the tariffs, the debt problem, trusting America's word and uncertainty if our companies in our country win the proverbial AI war, that the American companies come out on top and that we lead in the AI race.

I think about this a lot. I also think, of course, about whether it matters if, like, you know, our new robot overlords decide that the planet would be a lot tidier without all that carbon in the way. And I think, yes, on the margin of matters, look, if we win the AI war, if we really win it, and there's this AI-2027 scenario

done by Scott Alexander and another guy that's really interesting. I don't think it's, I think the timeline seems a little accelerated for me, and I think they're assuming that AI can be more. effective in meat space, then it's actually going to be in the short term, right? They have AI, like, building all of these robots in a very short period of time, and I think that's probably not going to happen.

But if we win it, if we really decisively win it, and if winning the AI race means, as some people think, and this is not clear to me, that, like, once you won, there's no second place. There's no prize for a second place. because the AI will accelerate itself. And again, I think this is speculative, I think we don't know yet, but that, you know, if you get an AI that breaks through

to general intelligence, to the ability to, you know, kind of consciousness, that it will just keep making itself smarter and smarter and smarter. And that, therefore, it will be impossible for a rival ever to catch up. Do you mean rival company or rival country? Or rival country. A rival country.

Would rival country benefit just by the nature of assault them? I mean, it would benefit, look, we care about two things, right? We care about relative status, and we care about absolute status. So we care about our absolute prosperity a lot. But we also care about being the richest person. We'd care about being rich person. We'd expand our leader. We would have a level of influence.

If we could control it, which is also something we don't know, right? If it is aligned, it is a patriotic little machine that just wants the very best for the United States of America. If all of those things are true, then yes. You know, I'm not that worried about whether the dollar stays the world's reserve currency at that point. I mean, are we even using dollars, or are we just like thinking things with our mind and they, you know, sort of pop into existence? out of our matter converters. But I don't know that we're going to win it. You know, China has exactly these same concerns

and is trying very hard to win the race. So they're investing a lot in it. I think they have some drawbacks, right? They don't have our most advanced chips, for one thing, which means, you know, they're trying to catch up by basically they have very cheap power. They've invested a lot in generation. We have underinvested in that,

and that is a real drawback in the AI race. really need to rethink this is a strategic as well as a sort of personal comfort and expense thing. But their chips are less powerful. They are compensating by using designs that take more energy, which they have a lot of than ours do. I think also their strength is that the government can monofocus on something in a way that U.S. industry cannot. But here's the thing, like US capital markets are kind of monofocused on AI right now, and they can mobilize just as much capital, if not more, more, I think, than the Chinese government can. And, you know, I think it's going to be a tight race to get, to see who crosses the finish line first. How worried you

about Paul Tudor Jones was on CNBC the other month and said to some elite conference of people like him, and they brought in all these AI experts, the people that actually built it. And I forget it was 25% or 50% chance thought that AI could just end up destroying us all. The deep downside scenarios, do you think those are real? I think they're real, and I don't think they're solvable. In the same way that I don't think global warming is solvable. I think it's real. And I think that the kind of command and control solution is just never going to work.

has not worked. Is that because of our race with China, that we know that if we are at ourselves, China we can't keep China from doing this. How would you even, say you did a treaty, would you believe that they were abiding by it? I wouldn't. It's not like nuclear explosions, you can, you know, they throw off radiation, they're detectable, which is how we were allowed to do arms control. AI does not, like, what would you look for, like lots of electricity?

usage. Maybe there is some nifty way to detect it that I can't think of. But I think that it would be very difficult to trust China, not to get us to sign a treaty, stop all this, and then themselves just defect. And so I think these scenarios are real and more. I don't know how worrying they are. I think there are ways, you know, like my friend Tim Lee, who writes a fantastic newsletter on AI called Understanding AI, which everyone should subscribe to. If you are thinking about this stuff and if you are not thinking about this stuff,

you need to be. So subscribe to his newsletter. He says, like, one, why not air gap the machine so that you can turn them off? Right? Like, keep them enough away from the physical world of things like power plants that they

cannot act to, like, have these things in an isolated isolated enough from our grids and so forth that a human being could physically go and unplug, you know, cut the wires to the AI if it started getting frisky. And air gap our critical infrastructure, don't give it access to our power plants,

even if that would make it like marginally more efficient. Don't let it design our power plants, right? Like don't, I think these are hard scenarios, but because I don't see any way to stop this arms race, I just don't think about them because I don't see any useful way to fix them. If other people have useful ideas,

you should write the president of the United States and let him know about it. But I don't. And so I think planning for it seems what am I going to do? How do you plan, how do you doomsday prep for intelligent machines? I think that's not useful.

And so I choose to proceed, not because I'm not worried about it, but because I have nothing useful to do. I choose to focus on the scenarios that I think I can prepare for, which are things like what happens if AI displaces, you know, all of the entry-level workers in the white-collar workforce. Well, you write, you wrote a column on the revenge of the nerds might be coming to an end, the idea that the nerds in the school got the skills that later in the life that would, you know, allow them to, you know, become Silicon Valley tech moguls. What skills do you think are going to be important in this new era of AI.

It feels like we just came off a decade of STEM, STEM, STEM, STEM, and maybe that's not important to learn anymore. The thing I tell parents who are worried about their kids is people and place, right? Look for professions where either you are working, you are maintaining and enhancing relationships with people, or you are in a physical location, doing physical things in the physical world. So, well, I think that computer science is probably a bad bet, unless you are a very specialized AI designer, and even that,

for all we know, in 10 years, the AIs will be designing themselves. I would look at, like, electrical engineering, which involves, or something, or civil engineering, where you are on-site making modifications to the bridge that you can see, right? So that's one level, and that is for the nerds. That's for people who don't have great social skills because, you know, we're not all born as great people-pleasers. Not everyone likes being around people. Some people are introverted.

Some people don't have great social skills and are probably never going to develop into a first-class salesperson. And then place, right? So if you are a radiologist, your job is at risk. Now, I have spoken to people who are in the kind of AI radiologist, imaging industry, and what they say is like, no, we're not, we're not trying to displace these guys. We're just trying to prevent burnout because these, you know, scan, the number of scans has gone up. These guys are working too hard. I'm like, yeah, I don't think I believe you.

I think that your ultimate plan is that there will not be a person doing this. But on the other hand, like, obstetricians are going to be catching babies for a long time. It's going to be a long time before, A, we let a robot do that, and an AI can't. So I think that if you're going into medicine, you pick the things that involve being in a physical place with a person and do like surgeons, right? Like, dermatologists, on their hand, you know, a lot of what they do, that's, it's reading, it's reading the signs and AI dermatology is probably going to be pretty good at, like, seeing whether that lesion is cancerous or not. And so, that's the best I've got is, and I personally in my own job, I did a marathon

conference circuit this spring. I was on the road pretty much for three months, three and a half months. My life was like get on a plane, go somewhere, talk to a bunch of people, come back, put my clothes in the washer, put them in the dryer, put them back in the suitcase, get on another plane, go right, and that was really wearing. but that's a thing that AI can't do. The thing where I'm sitting in my bedroom comfortably or on my sofa or in my office and reading a white paper

and having some thoughts about it, AI can do that. It's already pretty good at it and it's only going to get better at it. So while I still read that stuff, that I'm leaning away from that and I'm leaning into the parts of my job that are talking to people,

building relationships with my audience. Because I think that's where in journalism, the comparative advantage is going to be, is do you have a relationship with other people who will tell you things that the AI doesn't know, or do you have a relationship with an audience? Also, things that, like, you have personally noticed in your own life, right? Those are the things that AI can't copy,

and so lean into that part of the job. Is the real winner in some way, in the same way that if the United States wins the AI competition, it's going to outpace the next competitor by a large amount, current asset holders versus those who are not current asset holders? I mean, if you have the companies that win AI, isn't that just going to stratify the gap between those who already have assets and those

who do not? Maybe is the answer. Look, I also think there's going to be a whole world of crazy stuff to do that we can't even imagine yet with AI. And so I think about, like, if you go back and talk to 1995 me, and say, you know, someday, they're going to be people getting rich by making movies of themselves cleaning toilets. I would have said, that, I think you are incorrect about that. That does not sound like a job. Or making videos of themselves applying makeup. Right? People you've never heard of. These people will just start a business in their

where they turn on a camera and they, you know, do some, they clean their house or they fix the, you know, the drywall. That's not a job, right? Okay, Bob Vila has the job where he fixes the drywall, but he's the only guy. And that just turned out to be incorrect, right? Podcasting, if you had tried to explain to me that, like, random people would just start radio shows of their own whenever they felt like it. and would reach people all over the country,

I would have said, I don't think so. I think wrong, wrong person. And so similarly, and no one had any idea that that was going to be a job on the internet, and then it was. And similarly, I don't know, there's going to be a bunch of people

getting really successful at using AI in some way I cannot possibly imagine, which is the beauty of markets, right? is that they go and they discover stuff you didn't even know you wanted. Okay, so like one of my favorite things to watch on TikTok. I don't actually watch a lot of TikTok.

I usually only watch it when I'm thinking about writing a column. But I will say that when I, you know, decided when it became controversial over China, I started an account, you know, signed on, created an account. And it turns out I really like watching people with pressure wash rugs. Again, if you had said pressure washing a rug is going to be a job. I know, I would have said yes,

obviously it's a job. There are rug cleaners, but pressure washing a rug for entertainment purposes is going to be a job. I would have said, that's crazy. But it's really soothing, and the videos are nice and short,

right? You can't actually clean a whole rug in two minutes, but you can see a whole rug being cleaned in two minutes with the power of stop motion video. And it's that thing, the market is phenomenally good. I don't think that the rug cleaners understood. that people wanted to watch this

and that this was an entertaining thing that people would, and they're really big, they have a very big following. And I think that at this point, there cannot be that many filthy, like rugs so filthy that they're literally black with it rugs in the world.

And I think they must now, at this point, be dirtying rugs for the purposes of cleaning them. But the market discovered that people wanted to watch that. And it's great. And the market is going to, to discover all sorts of other stuff that people want to do with AI, that we sitting here could try to theorize, but we would never in a million years come up with pressure washing

rugs on video, and we shouldn't think that we'd be better at guessing what the next round will be. And I think that there will be people who become really successful doing stuff with AI, not just building AM. Let me close with this. You wrote a column that we might be in the column before the AI storm. When does the storm hit? No idea. Look, I think, it's already starting to hit like the the sprinkles are falling um and so you know you had the you had a senior guy at anthropic um saying that he thinks 50 percent of uh entry level jobs could be gone within five years um coders are already seeing that it is hard for them to get jobs companies are using this to cut head count um you know the head of shopify which is a basically allows you to build

websites for your business and sell, not just build like a nice little page that says your restaurant is here, but sell things. Build a business online. He put out a memo to employees saying before you're allowed to ask for more resources or headcount, you have to explain to me why you can't do it

with AI. And so we're already seeing it. But I think institutions will take longer to adapt than people expect. Human culture does not move at digital speeds. And the example I gave in the column was,

I worked as a secretary in the 90s, which was already a job that shouldn't exist. It was just obviously, except for people whose time is so valuable that it literally makes sense to pay someone like $75,000 a year to keep your calendar for you. There are people like that,

but there aren't a lot of them, and there used to be a lot of them. I was working at a nonprofit for, you know, the head of legal, the head of operations. These were, and they would literally dictate letters

into a voice recorder, and then I would type those letters out which by the way it takes a lot longer to do than it takes to type it yourself it's just because you keep having to they talk faster than you can and the device I had did not now you would just slow it down

and you could slow it down a little bit but you have to go back and you re-listen and like so they would dictate a letter in like 20 minutes and then I would spend like an hour typing that letter up even though I typed 80 words a minute I could have typed my own letter much faster.

It would have made much more sense to buy these guys a computer pre-installed with Mavis Bacon's typing tutor and just teach them to type. But in that time and place, a sufficiently senior person had a secretary, at least a shared one.

And they would have been felt slighted if the secretary had been cut, right? And other people would have looked at them And it's like, why is this guy showing me into the meeting? Why isn't his assistant doing that? Why doesn't he have an assistant to get us coffee? Right? Like, all of that stuff, just there's lag.

And what tends to happen is, I mean, first of all, as people who could type and were computer native started moving up management hierarchies, it became easier to get rid of those positions. But then the second thing that happens is what really happens is a recession hits. And then companies are like, okay, well, I'm sorry, you're going to have a sad about this, but we're getting rid of your secretary. And so that is going to take time. And especially because there's going to be political blowback.

Like, if this really starts cutting a new employment, and I don't think, I think in the long term, provided that, again, that the AIs do not decide that the carbon is in the way, I think in the long term, we're not going to see higher unemployment. Because the history of technological change is that jobs change. Some jobs do go away. or they de-skill. So, for example, being a bank manager

used to be a really responsible as a loan officer, used to be a really responsible position where you have a lot of discretion and they were relying on your skills at sussing out who was like literally repaid the loan. And then credit scoring happened and computers got good at using those credit scores

and other stuff to calculate your likelihood of repayment. And now being a loan officer is basically you're someone who just puts the paperwork through. All of that is going to happen a lot of people are going to be, are going to hate it. They will, their job will be disskilled or they will lose their job.

There's going to be a big disruption. But I think in the long term, probably, you know, people are going to be employed doing something. I don't know what that thing is, but I think there will still be employment. But, you know, it's hard to say how fast this adaptation is going to happen. It's really difficult to see, this is the most uncertain I have ever been in my life about the future. Trying to look into the next, even in the financial crisis where it seemed like the whole world was blowing up, right?

Just everything seems like it's blowing up, right? During the financial crisis, you still had a good sense that like a government job was safe, that going to medical school was pretty safe, you'd get in. Now it's just, I have no idea when it's going to hit, really hit, where we're starting to see. But I think it will be slowed by the fact that if that really starts to hit, and you know, Citibank says, we're laying off 30,000 people because we can do their jobs with AI, that's going to be a brand problem for them. And that, too, will slow it. But on the other hand, if we have a recession, right, they're going to do it anyway, because they're just

going to say, like, look, I'm losing, you know, $100 million a year. I'm going to do something. And this is what I can do. And so all of that stuff, it's just so hard, like, is AI going to induce a recession because people are losing their jobs? Is it going to not induce a recession because productivity is going up?

How is the productivity going to be captured? So I use AI to do more work. I joined the editorial board in October, and I basically now have two full-time jobs. So I am really grateful that I have these tools that speed up everything I do. But I've been writing these columns saying, guys, you've got to get AI literate,

you've got to be prepared, you've got to be working these models all the time, they're changing what AI literacy meant a year ago, isn't what it means now, you've just got to be on top of this. And I have a bunch of friends who are like, eh, it's not that big a deal. Slowly, they are diving into AI. I also have a lot of friends who are like,

this is a really big deal. I use AI all the time, but I have those people who are like, I think you're exaggerating, you know. And so a friend of me, mine, I will remain nameless and I will not identify his industry, but he said, I just used AI for the first time in my work to draft a client proposal. And I was interested, so I asked him about it. And he said, well, he estimated it would save it, it saved him about two to four hours.

And I said, and what did you do with that time? He said, I take the fifth. Right. A lot of people, I think, I think it's already here. And the reason it's actually not more disruptive than it is, a lot of workers are using it to generate more leisure. In the same way that when I was starting blogging in the early 2000s, you could see in your traffic that almost all of what we were doing, and it was also true for mainstream publications, by the way. What we were doing was providing something that looked like work but wasn't,

and that was our primary business. Because at 9 a.m., our traffic would start to rise, and it would go up throughout the day, and then the workday would end, and it would plummet. Right? So you were providing something that people could do on their computers that was indistinguishable visually to other people from working, but was not working.

And I think that probably AI is creating a lot of that as well. It is creating a way. So people were genuine, the computers were genuinely making people much more efficient. It's just much more efficient to do a document and a word processor than it is to do one on a time. typewriter or to write it out so someone else can type it up for you. But we didn't see the productivity show up immediately because people used the extra time they generated, not to do more work, but to do work-like leisure activities. And I think AI is probably having that same effect

where it's probably actually increased productivity a lot more than we can see, but that people are mostly using that time to enjoy themselves at work rather than produce twice as much stuff. And it's going to take time for basically the people who are going to ruin it for everyone else or the people like me who will, out of necessity or out of personal honor, just use it to do more work, which will show the managers how much work is possible to be done, and then workloads will go up. And that bonus, the AI leisure bonus, will disappear eventually as it did, computers, I think. But in the meantime, you know, so I think all of these forces, there's some that could speed it up, but right now we have a lot of forces that are slowing it down. And so that makes

it even harder to say, because it's not when the AI capability gets here, it's when the human capability to use the AI gets here and to use it to increase productivity gets here. And that is happening slower than the pace of digital development. With that, Megan McArdo, thank you for joining the Dispatch podcast. Thanks for having me. Thank you.