Is AI Really Taking Our Jobs? — With Noah Smith

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26:39Is your enterprise ready for the future of agentic AI? Visit agency.org to explore use cases now. That's A-G-N-T-C-Y dot O-R-G. And we're back here on Big Technology Podcast with Noah Smith, a.k.a. No Opinion. You can find his work at noopinion.blog. He also hosts a great podcast with Eric Torenberg. It's called Econ 102. You can find that on your podcast app of choice. Noah, great having you here. So before the break, we talked about the fact that, hey, it ain't that bad, right? There's been some decrease in the ability of entry-level workers to get jobs, but it's not catastrophic. There is inequality in our society, but there has been actually decreasing wage inequality, or the wages at the bottom have gone up.

27:25And yet it does seem like we are living in a society with a lot of unrest. It's certainly reflected in the politics. how do you square the fact that things are getting better in your view but politics is as politics of grievance and things getting worse um that's something i don't actually know i think it's primarily social media i think that social media uh so so i think that americans america was this very big diverse country you had ideological diversity we had geographic diversity not just like racial diversity which is what we typically think about. We had all these forms of diversity where you could really spread out and find your people.

28:04Like in 2010, you could go, if you wanted to live a conservative life, you could go to Texas. If you want to live a liberal life, you could go to California. But then social media came, and especially Twitter. And suddenly everyone was thrown in one little room with everyone else, and not just people from America, but English speaking people from all over the world. And we have the global language, right? So we've got people weighing in from Argentina, from Bulgaria, from Pakistan, from, you know, UK and places like that. And so immediately became this giant scrum where everyone was constantly exposed to people who hate them and despise them and disagree with them.

28:39We couldn't spread out, right? I think that this caused conflict in our society at every level of society, because people who had been able to segregate were no longer able to segregate. And so social media is what caused our thing, because every day, social media will find whoever hates you and concentrate them directly in your notifications tab. Right. That's what it does. But it's also, it's interesting because the politics is all about, again, like if things are getting better in society and in the economy, it's right. I think you're right that social media has brought us all into contact with each other.

29:14But the question is like, why has this messaging of you're being wronged and your economic interests are not being looked after and they want to, you know, make you broke. Why has that been this? I mean, it's been, I don't know, you could argue it's a culture war message, but there's also been an economic message that I think has really started to work in the U.S. Is it, I mean, is it also the fact that like, it's kind of this like FOMO culture where we are going to, we're, you know, we see all, all the activities of the super rich all the time because it's on, you know, TikTok and Instagram, or is there something, is there something else that missing um yeah no i think uh that is that is basically you know what's going on here's the thing a lot of the the conflicts that people immediately had were racial conflicts or things like that you know uh certainly during the first decade of and a half of twitter first decade of twitter let's say racial conflicts i mean there were some gender conflicts too but i think racial conflicts dominated so obviously black lives matter is about that but you saw conflicts over representation and wokeness and white supremacy and all this stuff, right?

30:21You saw there was like, you know, years of racially centered conflict in America. People probably get tired of it and people probably want to fight about something else. Economic conflicts never really got addressed, never really got resolved. Right. Well, let's talk about the sort of the racial conflict in the U.S. and sort of some of the puzzling things that are happening right now in the aftermath in our politics today. We're talking on Wednesday, June 25th. This episode will go live the following week. So there will be many news cycles between now and then. But we have the results in from the New York City primary, where Zoran Mamdami has won the Democratic primary.

31:04And you posted this on Twitter, and it's quite interesting. I think this is the racial breakup of people that voted for Zoran or Andrew Cuomo. So Hispanics, Cuomo won by 20%. White or Caucasian, Zoran won by 13%. Black or African American, Cuomo won by 44%. So can you explain what's happening here that you would imagine that Zoran is the spiritual inheritor of the Black Lives Matter protests and the woke left. And yet it seems like the minority groups within New York City are going towards his opponent while white and Caucasian groups are going towards him. Asian, by the way, Asian voters, 58 percent towards Zoran and 16 percent to Cuomo.

31:54So what's your read there? I think that you're seeing partly this is education polarization. I think that white people are more likely to have like college degrees and stuff. You know, so there's been like a lot of sort of lefty ideas have really caught on among the educated populace that have not caught on among the working class. Barbara Ehrenreich called this PMC socialism. She called it professional professional managerial class socialism. Right. And a lot of people like infinite people have remarked on this this tendency. I think it's the most important political tendency in America today.

32:29But then certainly, yeah, I think that you definitely see just lefty ideas appealing a lot to the educated professional class. So I think you have an educational divide there. Also, this is a Democratic primary. So you have people who register as Democrats. And I think in general, there's two reasons you'd register as a Democrat. one is that you feel that like republicans are against your group of people and the other is that you're a liberal right and so i think that with white people you don't think like you don't think republicans are against white people so you'd be a democrat if you're a liberal but if you're black if you're hispanic you might think well republicans you know you might be a kind of conservative person who doesn't like like trans stuff or whatever and then you might um you might think uh but you might also think republicans are against me you know and so i better be a democrat even though i'm kind of a conservative democrat so i think conservative democrats are less likely to be white so i think that's a that's another thing that you see that's going on here but i'm not a politics expert so this is just me you know of course but it is it's so interesting because the politics is tied to the economics and in this in this case i mean it was an economic campaign in many ways that Zoran ran and is running.

33:48And it's been interesting to see this professional, I think it's interesting, the professional managerial class coming out in support of him. You shared a tweet. It said, Zoran's left wing base, so 400 ,000 here, hedge fund employees have concluded that capitalists, the bourgeois bodega owners must be instrumentally liquidated as a class via a fall on the rate of profit in order for socialism to triumph. Talk a little bit about that. Yeah, that was a good joke. Yeah, I know. So the point is that if you look at some of Zoran's proposals, one of them is to have government run grocery stores. Now, the reason Zoran wants government run grocery stores is because he has a deep seated belief that that government can run industries better than the private sector in many cases.

34:38That's why he's a socialist. But also he thinks that poor people lack cheap food. He thinks that's a big problem for poor people in America, that they lack cheap food. Their food is too expensive. It makes sense because poor people spend a lot of money on food, you know. So, of course, the price of food is really important for poor people. We all know that. America gets cheaper food than other countries do. And actually, we do a pretty good job getting food cheaply to poor people compared to like most countries but that's not on zoran's radar right there so he's like food is too expensive and of course we saw when we saw inflation if you see inflation rise across the board if you see prices rise across the board well food is going to hit the poor people hardest right even if prices rise for like you know like cars or whatever like it's not going to hit poor people as much because they won't spend as much money on a car or maybe it'll it'll hit some poor people like a lot of poor people drive obviously but um so what but like things that rich people by like the price of like vacations.

35:33It's not going to hit poor people as hard, but food is going to hit them hard. So it's like, how do we get, so Zoran wants things to be cheaper for poor people and he thinks, how do we do that? Let's do grocery stores. And so he's kind of bought into this Elizabeth Warren rhetoric that grocery stores are taking all the money, man. They're making all this profit off your back and selling his expensive food. Well, it's wrong. It's just factually wrong. Grocery stores make almost no profit. Your corner store bodega makes no profit, basically. And your little indie grocery store in New York, which is actually what poor people mostly buy from they're not buying from like a big chain poor people are buying from like a little bodega or like a little like independent supermarket in their neighborhood those places you know they're they're sometimes their costs are a little bit higher because they're inefficient they just don't make any profit but they don't have these big supply chains and logistics they're like kroger has or something you know walmart has but but even walmart and kroger they don't make like like kroger doesn't make any profit like albertson's doesn't make any freaking profit safe way doesn't make any profit these companies make like almost no profit so like they're skating on the edge of like unprofitability here and so like there's really not much more water to be wrung from the sponge so if you make government-run grocery stores it'll do two things number one uh it will out compete all the little indie grocery stores and bodegas thus like a meager source of capital and wealth accumulation for like poor people in poor neighborhoods that's currently like how poor people do entrepreneurship that's where they make a little bit of money so they can like advance to the middle class who's starting like a little grocery store bodega or something like that most grocery stores most bodegas are run by like uh latinos and yemenis actually um in new york city and so so you're really pushing out the you know you're going to push out those people and then also because american government has this thing that the authors of the book Abundance talk about where American government hobbles itself.

37:23It self-regulates to the point where government stuff costs more, costs too much. Because it does that, the government-run bodegas are not even, you know, they're going to have to be subsidized in order to compete. So it's just going to be like a fiscal drain if you want to have them actually produce stuff cheap enough to like sell to people. It's just a point of, it's just like a sort of a boondoggle, you know. Can I make the, so let me see if I can, because we haven't really given like the argument for why someone like Zoran might have risen yet, or I haven't. Let me just make the argument and throw it out to you.

37:54I mean, if you look at what's going on, we talked a little bit about asset inflation. It really is difficult to make it, I would argue, in New York and in many places in the United States, largely because real estate prices are really high. And so it might just be as simple as, you know, if you look at the culture horror stuff, you throw that out, throw the socialism stuff, the label out the window. Maybe what we're seeing in American politics right now, and I know this is not a full microcosm of American politics, but this flavor is starting to arise, is just that people have found that they are doing like the quote unquote right things and still unable to make a go of it there.

38:35The American dream is inaccessible to them. And when you look at the, you know, sort of joke about the professional managerial class. But a lot of people that have gone to college right now, they're saddled with, you know, hundreds of thousands of dollars or 100 ,000 plus in debt. They can't afford a home and they're pissed. And so maybe it's just that simple explanation as to why a candidate of this nature or candidates of grievance are winning. Well, yeah, but so Zoran, I understand that sort of anger over student debt, anger, you know, sort of middle class anger over student debt and you know expensive homes i understand why that's a thing that people are upset about but also it's true that zoran isn't really going to address either of those things like he hasn't talked about it it's not in the main policies and he doesn't have the power about i mean the rent freeze is i think and adjust addressing that in some way well is it because the the rent freeze is for rent stabilized units only right right how many people who just graduate from college do you think live in a rent stabilized unit how do you get in that rent stabilized unit if you had it rent control doesn't transfer when you change tenants right correct okay so you get your rent reset when you change the tenant so yeah maybe in the future they live in a rent stabilized unit that then gets rent frozen in the future but then they don't they're not the people sitting on these like old apartments that have been rent stabilized forever those are all older people and so also if you're talking about the difficulty of buying a house you're then and you're talking about rent freeze as a as a way of appeasing the people who are pissed about the cost of buying a house well then you're looking at long-term renting of a rent stabilized unit as an alternative to home buying right you're saying well i can't buy a home at least i'm going to be able to have my rent stabilized and live here forever i've seen the people who live in rent stabilized units for like 30 years in lieu of buying a home and they're kind of poor they're not you know they're not they're not poor poor but they're it's it's a bit of a you know, a shabby bohemian existence to stay in that, in that rent controlled space for 30 years.

40:37And some people are going to like that. And maybe some people, maybe some young people see that and they're like, wow, that's, that's, that's the best I can do. I'm not going to buy a home. But I think that people still want to buy homes. You look at surveys, millennials still want to buy homes. Zoomers still want to buy homes, even though they're too young to do it yet. And, and so I think that, yes, I do think people care about these things. No, I don't think that was zeron's main appeal i don't think i think that um you know his main like yes people like young people would like a bit of rent stabilization um but i think that uh people like zeron's attitude he's handsome he cares he does oftentimes explain a lot in politics yeah he's a good looking guy he um you know he does a good video saying like i care about you people just want to vote for someone and like cuomo's a schmuck you know and a giant nimby and just basically like just a disaster of a politician and um and you know nothing really going for him and so people look at zora and they look at this young handsome guy who says i care about you i care about these prices you're paying blah blah and i don't think that people necessarily look at that deep economic impact and analyze like the economic impact of like oh how would government-run grocery stores actually do or like you know would would we really want free transit fair you know free bus fares and stuff like that.

41:56It's like, oh, this guy wants to reduce costs for us. He's a young, handsome guy, looks cool, does a good video. I'll vote for that guy. And if you look at surveys of people who are voting for Zora, and a lot of them think like that, especially when your opponent is this complete schmuck. And so, yeah, let's talk about what the Republican answer to these conversations, at least coming from the White House. And there have been two policies that you've written a bunch about, which has been tariffs and restrictions on immigration. Let's start with immigration first, because I know that you're passionate about this one.

42:31What do you think the net impact of the Trump immigration crackdown is going to be on the U.S. long term? I think the net impact of the Trump immigration crackdown will be fairly economically will be negative, but not huge. The reason is because fundamentally immigrants are a source of both supply and demand for labor, for everything, for products. And the reason why a flood of immigration does not actually reduce wages is that immigrants are also buying things and the demand from buying things creates labor demand for native born people. and so so immigrants really don't do much to wages and what that means is when you kick out a whole bunch of immigrants you're not going to do much to wages either what you're going to do is cause disruption you know and by the way this also applies to prices so like immigrants will demand more stuff which puts prices up pushes prices up but they also supply more stuff which pushes prices down you know you you get a bunch of uh like it's it's 1995 and you get a bunch of mexican guys moving into LA, yeah, they're going to bid for houses and your rent will go up.

43:42Okay. But also at the same time, they're going to provide like cheap lawn care and cheap like daycare and stuff like that. And those prices will go down. So immigration pushes up demand and it pushes up supply as well. Okay. And so then what about, let me, can I make the counter argument? I don't want to say it's going to have no economic impact because it's going to cause disruptions. Like if you're in an industry, it's going to cause bottlenecks, right? If you're in an industry that relies entirely on immigrant labor, illegal immigrant labor, like some agricultural industries do. I'm not saying that's good that they do.

44:11And, you know, I think we should enforce wage laws and blah, blah, blah. But I'm saying that if you do have an industry that has become reliant on that labor, and then suddenly you cut them off completely from their source of labor, that industry will be disrupted and that will create bottlenecks in our system, which will create some disruption, could create some temporary inflation. Let me just make this argument about the AI industry, because a lot of talent that's working on AI today is people coming from overseas to work in the United States to work at these labs. Now, we haven't seen people show up to open AI and try to deport people.

44:44But I think that there's potential long-term consequence here where the best and the brightest who wanted to come to the United States aren't thinking about doing that as much. So I know it's hard to measure because it's a hypothetical, but I wanted to run that by you and get your thoughts on it. I think that that's really important. So cutting us off from skilled immigration would reduce our innovation, which reduces our long term productivity growth. And I think it reduces clustering effects, which affects productivity growth a lot. So like, where do where do companies want to invest? They want to invest where the smart people are.

45:17And if we don't have the smart people here, we're in trouble because we'll get less investment. So I think that when you look at the economic impact of low skilled immigration, it's not a lot either way. But when you look at the economic impact of high skilled immigration, strongly positive. So we're really playing with fire if we start kicking out the smart people. OK, and the other side is tariffs. We have a tariff deadline coming up. It's going to be on July 4th. No, July 4th is the tax and spending bill. And July 9th is the expiration of the global tariff pause. This is according to Bloomberg.

45:50Noah, from an economics perspective, what's been the impact of tariffs so far? We have like some conflicting reporting. Some say everything is held up in like the L.A. and Long Beach ports. And others are like, well, you know, everything is back to normal. And then Trump will, you know, everybody's anticipating that Trump will chicken out again. And you have the S &P 500, which, you know, the day we're recording is up nearly 4 % on the year. It was down 15 % on the year, April 8th. So an unbelievable rebound from the S &P. So what's going on? So I do think that the reason why the financial markets are doing well is because people have decided that Trump's going to chicken out and that these pauses will be permanent.

46:30And then they'll announce, quote unquote, deals that allow us to cut all these tariffs. And that basically Trump's a bag of wind. I think traders are betting on that. It's pretty obvious. And the reason why financial markets abruptly crashed when Trump announced the tariffs was because they thought this is for real. When they decided it wasn't for real, they bought. and financial market prices, asset prices went back up. However, do I think that that's really true? I think that there's some issues. There are some negative effects that these tariffs are going to have that even if Trump does chicken out, there's uncertainty about what if Trump doesn't chicken out on this or that.

47:06Also, it's not like tariffs haven't gone up. They have gone up just like much more modestly than Trump was threatening. That will go up a bunch of things. how big an impact it's going to have is hard to say because currency movements adjust and other things adjust to like balance it out. But like it's going to be, there's going to be some pain from that, especially in certain sectors. And the threat of tariff-driven inflation will lead the Fed to keep interest rates higher a little longer as we just saw with Powell. And, you know, conflicting with J.D. Vance, all the administration is like, no, push rates down because they want like an economic boost.

47:41so that's going to be a factor too and so i and then there's uncertainty there's people like companies how much do you want to invest if you don't know what the economic overall economic policy regime of america is going to be in 10 years five years what if the next person who comes after trump what if jd vance gets elected what if he does tears for real because he doesn't chicken out okay do you want to do an investment that takes 10 years to pay off if if trump's only going to be there for three more you know and so like there's those questions are tariffs now just the consensus policy of the land is have we just all become fucking protectionists can i curse on your show sorry yeah yeah you're welcome to i agree yeah definitely um yeah so then so i think that that those will erode our economic strength in ways that don't look like an abrupt crash but they'll look like data getting like a little bit worse and a little bit worse that's my prediction but again hard to say it's hard to predict which is i guess part of the problem so um all right look before we end i i heard you uh in another podcast sort of make the case for why the united states and china are um are i i would say maybe more adversarial than a lot of people can see on the surface i would love to hear you just kind of share that with our audience about like why the united states and china have interests that are competing and are potentially leading them on a on a collision course and what might happen as a result well i think that that's now become conventional wisdom the idea that china china's leaders do not mean america well and mean america harm has become conventional wisdom in america since i wrote that stuff my position has now become the mainstream and if you ask most people the attitudes or China are very negative.

49:27Although that's moderate a little bit as people realize that Trump, our leaders suck too. But then China's ruled by old guys, by boomers. And it's you know, they're feeling their oats from a massive run up in development. It's very hard to point to countries that got rich without starting wars and being aggressive. If you can think of any, let me know which ones those are. I mean, Switzerland, like little countries, maybe, but like big countries that became like great powers. China's building 100 nuclear weapons a year. 100 a year? 100 a year. That's a lot. That's a lot, man. A lot of nukes. I feel like once you get to 50, you're good.

50:13But I suppose not. Call them and tell them that. I don't know. You can argue that with them. But they are building 100 nukes a year. They're building one of the most, the most impressive military buildup in the world right now. And in absolute terms, the most impressive military buildup the world has ever seen, ever, is happening in China right now. What are they going to do with that? Do you think? What do you think? What do I think they're going to do with that? Fight a war, Alex. That's what that's for. they'll fight a war with the war tools they're building otherwise it becomes a sea of rusting metal you know the soviet union built up all these tanks massive amounts of tanks and then they never used it until ukraine and now they've used them all right chekhov's gun okay what do you do with a military well we did you know we built up our military in the cold war we built up this giant military and then we went to war in 1991 we went to war in 2003 you know iraq war war on terror all this stuff maybe the fact we built up this giant arsenal was one reason we used it okay it's like we got this tool better use it you know we got all this stuff and so like yeah man they they build that shit for a reason and do you think it's going to be taiwan uh that's the likeliest i i don't know if they're going to go to war it might be that they don't, that we deter them, that they have internal dissent.

51:45There's a lot of reasons why we might not go to war. I don't think it's certain that we'll go to war. I really hope we don't. That would suck. Great power war is even worse than normal war. And so we might not go to war, but I'm saying that it's a reason why we need to establish deterrence. And if we don't, we're just being dumb. Right? We're like, oh, look, look at those guys building that massive army over there. Cool. How's that working out for y 'all? then they're like you know like bye motherfucker out see ya and then we're like oh no oh no i mean this is a dumb question but how do you establish deterrence against the country that's building 100 nuclear weapons a year well i mean like you said if you have a sufficient number of nukes you don't need to build 100 a year you have enough to deter them um but then also you you build up a large army and you get a bunch of allies we need allies and trump doesn't realize this enough and trump administrations really under emphasize this you get a gang together there's a big guy on the block big tough guy you get a gang you roll deep you know what i'm saying and so we need to ally with india we need to ally with japan we need to ally i mean we're already allied with japan we need to ally with but we need to strengthen that alliance and get japan to like remilitarize korea obviously um uh vietnam we should be focusing on uh indonesia maybe could possibly be helpful to us in some way.

53:09Australia, obviously, is small, but they're around. Europe, you know, Europe needs to handle Russia, which fortunately they may now do. And so there's all these countries that we need to ally more with. And Trump has been tearing up, not just tearing up our alliances, but like also tariffing people and just being a general asshole to everybody we like. This is going in the wrong direction. It's not establishing deterrence. But then Democrats, you know, tend to cut military budgets, which is also not great. and so like we need to build up our own army and get the armies of our allies because china is very big and powerful um we'll see how much china is inclined to use that military like in the past rising powers usually have a small war before the big war so you saw you know uh germany had the um austro-prussian war before they did the franco-prussian war and then that was before world war one where they tried to take on everybody at once japan had the sino japanese war and the russian japanese war before it did world war ii and tried to take on everyone at once so you see we had the spanish-american war okay so you see countries have these these little wars before they start the big war so we'll see what china does and maybe if china starts a little war it'll wake us up to their aggressiveness and i think that's one reason they're holding off because they don't want people to realize they don't want people to think of them as being aggressive they want the chance to start the big war as the first thing but politically that's difficult you know big war is a big big jumping off a cliff when you don't even know how well your army knows how to fight.

54:33So let me just wrap up the whole conversation because we started with AI. We're ending with China. Let's just cross the two and then we'll let you go. Does this make the US-China competition on AI much more meaningful than a lot of people are taking, I mean, yeah, giving it credit for? I don't know. I think AI will be very important. We need things like computer vision, autonomy. Obviously, autonomous drones are going to rule the battlefield. That will rule the battlefield. So we need that. As for whether we need better LLMs, I don't know how militarily useful LLMs are. Daria would say a lot, but I cannot vouch for that.

55:06So you got me. But whatever it is, we need to be good at it. We need good military technology. We also need large-scale production because technology alone does not win wars, as Germany found out in World War II when they had great rocket bombs and jet fighters, and that did absolutely nothing to help them win. So, yeah, no, we need as good AI as possible. and military competition is only one of many reasons we need good AI. The website is noopinion.blog. Highly recommend you go and subscribe. And you can also listen to the Econ 102 podcast on your app of choice. Noah Smith, great to see you. Thanks for coming on the show.

55:44Good to see you, Alex. Thanks for having me on. All right. Thanks, everybody, for listening. And we'll see you next time on Big Technology Podcast.