In short
The episode argues that (1) Trump and allies are dismissing the link between U.S. finances and foreign policy, while inflation and consumer stress are worsening; (2) U.S. test scores have been declining for about a decade, with COVID accelerating the drop; (3) education and childhood culture are being reshaped by screen time and reduced independence; and (4) AI’s expansion via data centers is driving local political backlash and may undermine capitalism’s labor model.
Guest backgrounds
Zach Exley is a former senior advisor to Bernie Sanders, co-founder of Justice Dems, and founder of the Consensus Think Tank. He joins to discuss AI, data centers, and labor impacts.
Key claims
J.D. Vance “misrepresented” Trump’s Iran-quote; PPI and CPI show inflation pressure tied to the Iran war and tariffs; credit card and mortgage delinquencies signal consumers are tapped out; reading/math scores are down in most districts; technology and screens (Chromebooks, internet devices) are blamed for learning declines; data centers face intense local opposition (e.g., Lake Tahoe power diversion, Utah referendum); AI will replace many knowledge jobs, and capitalism can’t survive AI.
Notable examples
producer price index up 1.4% in April (6% YoY); 83% of districts show reading declines and 70% show math declines; Utah data center debate (Tucker vs. Kevin O’Leary); Lake Tahoe utilities redirecting power to data centers; Israel’s summer GPT/AI training initiative; Melania Trump/VR “AI cross-cultural” program.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOTrump's Financial Comments and J.D. Vance's Response
2:03 to 3:48
Discussion on Trump's remarks regarding American finances and Vance's misrepresentation.
“as Trump is at his big meeting in China.”
Impact of Inflation on American Economy
3:48 to 6:01
Analyzing the latest inflation data and its impact on consumers.
“We got another very hot inflation reading.”
The Ripple Effect of Rising Costs
6:01 to 7:31
Understanding how rising energy prices affect everyday expenses.
“Energy prices jumped by 7.8 % in April after rising 10.1 % in March, and the price increases were not limited to energy, key point.”
Credit Card Delinquencies and Economic Stress
7:31 to 10:00
Examining the rise in credit card delinquencies and its implications for consumers.
“the economy where their sticker shock at these things is just so crazy.”
Future Implications of Low Harvests
10:00 to 12:19
Discussing the implications of low harvests on food prices and potential famine.
“I mean, look, the credit card stress one, I don't know, it's hard to say.”
Oil Prices and Economic Forecast
12:19 to 14:00
Analyzing the potential rise in oil prices and its future economic impact.
“We're already having farmers saying we can't afford to fully plant our crop.”
Prepping for Possible Escalation
14:00 to 14:12
Discussion on potential geopolitical events following a recent bombing.
“So give it, what, a week and we'll probably be there or another bombing or something like that to happen.”
Decline in Test Scores
15:33 to 17:30
Analysis of a New York Times investigation into declining test scores.
“This is a really depressing investigation from the New York Times with a lot of data behind it.”
Understanding Educational Declines
17:30 to 18:58
Exploration of cultural and technological factors contributing to educational declines.
“Here's the thing about the education system.”
The Role of Technology in Education
18:58 to 21:48
Discussion on the impact of technology on students' learning and attention.
“We were talking earlier about Chromebook and you were telling me about how your kids' school, like they issue them all Chromebooks.”
Show all 26 chapters
Socioeconomic Factors in Educational Outcomes
21:48 to 24:16
Insights into how different socioeconomic backgrounds affect educational recovery post-COVID.
“I have to roll the dice and I have to add them together and know how many places to move and be able to count that out.”
Cultural Shifts in Children's Independence
24:16 to 28:09
Examination of changing norms around children's independence and screen time.
“possible and potentially with one stay-at-home parent that can do all the work on the side.”
Shifts in Parenting and Safety Concerns
28:09 to 30:09
Explore how societal changes have influenced parenting styles and safety perceptions.
“It's a value-neutral phenomenon, but you have to observe it and say, what's the impact here on the education system?”
Cultural Differences in Independence
30:12 to 31:04
Discuss the cultural variations in children's independence across different regions.
“But there's no doubt that I raise my kids in a more restrictive way than I myself was raised.”
International Educational Innovations
31:07 to 32:09
Learn about Israel's AI initiative in education and its implications.
“I remember when you meet like an 18-year-old New York kid, you're like 30, dude.”
AI Integration in Schools
32:11 to 33:06
Debate the role of AI in education and the concerns surrounding its implementation.
“Sounds appropriately dystopian for that country.”
AI and Community Impact Discussion
34:29 to 38:34
Discuss the implications of AI and data centers on local communities and jobs.
“So as you guys know, we've been covering the development of AI and some of the local opposition to AI extensively on this show.”
Future of Work in the Age of AI
38:35 to 42:00
Examine how AI will transform the job market and the need for adaptation.
“Yeah, and I think it's great that people are fighting back against data centers.”
The Impact of AI on Jobs
42:00 to 43:10
Understand how AI will drastically change the job landscape.
“There's a million other things like that.”
Capitalism vs. AI: A New Paradigm
43:10 to 44:20
Explore the argument that capitalism can't adapt to the rise of AI.
“This is some of your work at New Consensus.”
Challenges Facing AI Development
44:20 to 46:20
Learn about the current limitations of AI technology and its evolution.
“Why are you so confident that this is going to be something other than, you know, a basically glorified Google search, how it's going to be this truly transformative technology, unlike something we've seen in the past?”
The Future Workforce with AI
46:20 to 48:20
Discover how AI will integrate into workplaces and its implications.
“And that leads a lot of people to yell at me online whenever they hear me say that.”
The Demand Doom Loop Explained
48:20 to 54:20
Understand the economic concept of the demand doom loop and its implications.
“And an AI is going to appear in your Google Meet at your team meeting at work.”
The Wealthy and Economic Irrelevance
54:20 to 56:00
Analyze the question of whether the wealthy can sustain the economy without the masses.
“Like is most of the population sort of irrelevant now to the functioning of capitalism?”
Analyzing the Future of Economic Structures
56:00 to 58:18
Learn about the potential collapse of AI companies and the need for a new economic movement.
“You know, look at the history of South Africa.”
Importance of Oligarch Accountability
58:18 to 59:08
Discover the significance of addressing oligarchs and planning for economic changes.
“And I think we might be surprised about, like, I really have no idea who's going to get it and who's not.”
Transcript
Automatic transcript. May contain errors.0:00This is an iHeart Podcast. Guaranteed human. Apple Vacations, where your story starts. Apple Vacations semi-annual sale is here and it's the perfect time to plan your next beach getaway. Enjoy up to$250 off international and Hawaii vacations. Up to$150 off domestic trips and hotel savings up to 70 % off. With instant savings of$300,$500 or even$700, your escape has never been more rewarding. Book by May 28th at AppleVacations.com or contact your local travel advisor. Vacations, where your story starts. And now, another appliance triumph from your friends at Grand Appliance. Meet Jan. Her fridge died days before a dinner party, but she didn't panic.
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1:55We need your help to build the future of independent news media, and we hope to see you at breakingpoints.com.
2:03Let's turn to how things are going domestically in the U.S. as Trump is at his big meeting in China. So you'll recall yesterday we covered Trump getting asked whether he considers Americans' financial situations when thinking about the Iran war. And he said, no, I don't think about that at all. Well, yesterday, Vice President J.D. Vance got asked about those comments and just straight up was, oh, I don't think he said that at all. Let's take a listen. When approaching the war with Iran, do you agree with the president's position that Americans' financial situations should not be a consideration in that decision-making process?
2:36Well, I don't think the president said that. I think that's a misrepresentation of what the president said. But look, I agree with the president that Iran should not have a nuclear weapon. We're obviously engaged in a very aggressive and very engaged diplomatic process to try to ensure that that doesn't happen. And the president has a lot of options. So he thinks that was misrepresented. He doesn't think the president said that. Just as a reminder, here are the president's own words. When you're negotiating with Iran, Mr. President, to what extent are American financial situations motivating you to make a deal?
3:07Not even a little bit. The only thing that matters when I'm talking about Iran, they can't have a nuclear weapon. I don't think about American financial situation. I don't think about anybody. I think about one thing. We cannot let Iran have a nuclear weapon. That's all. That's the only thing about it. There's a whole quote. Literally, I don't think about Americans' financial situation, Sagar. Yeah. I mean, at a certain point, what do you even do? You just deny that it ever happened, I guess. It took me out of context. Not good. Yeah. Not good. And Vance having to just, like, lie about him. I don't think that's what he said.
3:45It just shows you what a devastating quote it ultimately was. So let's take a look at Americans' financial situation, shall we? We got another very hot inflation reading. Let's put C3 up on the screen. This was wholesale prices that jumped in April. From The New York Times, they say prices rose at their fastest rate in four years, the latest sign that the war with Iran is taking a toll on the U.S. economy. The producer price index, a measure of the cost that businesses pay for goods and services, rose 1.4 % in April and was up 6 % from a year earlier. You can see the spike there, guys, on that chart.
4:21And it's very clear what that is attributable to. That is attributable to a war of choice in Iran that this president decided to start at the urging of Benjamin Netanyahu. That is why these prices are going up. They go on to say the news came one day after the government reported the better known consumer price index rose 3.8 % in April from a year earlier, the fastest pace of inflation in nearly three years. Producer index typically gets less attention than the consumer index. But economists watch the measure closely, especially during periods of global disruption, because it gives an early look at how costs are filtering through the supply chain.
4:57So these are wholesale prices. This is what businesses will be paying. Do you think that they're going to just absorb those costs and decrease their profit margins? Of course they're not, they're going to pass those costs on to you. And very likely then some, in addition, because we hear them on their earnings call, Sagar, we saw this play out during COVID, where they were bragging to their investors about, hey, because of inflation, we're able to raise our prices above and beyond even what our increase in costs are, which is why corporate profit margins have continued to go up and up and up, no matter what the inflation numbers are doing and whether their actual costs have risen at the same pace.
5:37Yeah, exactly. And actually, initially, what they had seen in the last time that this happened from last month, the BLS said that PPI rose only by 0.5 % in March, which they said at the time was an encouraging sign that the energy price shock was not setting off a broader inflationary spiral. However, after two months, they say that optimism is now called into question. The increase in March was revised up and April's gain was triple what forecasters had expected. Energy prices jumped by 7.8 % in April after rising 10.1 % in March, and the price increases were not limited to energy, key point.
6:13Core producer prices, energy and other volatile categories were up 4 % to 5 % from the year before, suggests that the oil price shock, as well as the tariffs, is working through the supply chain. I will just challenge anybody in the world to tell me that a 17 % increase in energy is not going to show up in a bill somewhere. I mean, do obviously be real, like, you know, just take a look at credit card debt at all of the other consumer, you know, goods that are beginning to price. Honestly, I still don't even think that we've begun began to see really any of it because right now the increase, it's only been two months.
6:50It's only at the gas pump and with diesel, there are contracts being booked out six months from now. There are hotels that people haven't booked yet for August or for September. There is some, there's some guy out there, maybe me, who's supposed to have done a rental car who hasn't done it yet. Like there, you know, there are a lot of, there are guys like that who it's been on his task list from his wife for over six months and he's just going to push it to the end. There's a guy out there again, maybe me, who is going to be paying probably triple for what he was supposed to have paid if he had just done it whenever he was told.
7:26But that is one of those which is just going to continue to ripple out, I think, through the economy where their sticker shock at these things is just so crazy. I was just talking to my parents because they flew back from India and they're saying, if you want to avoid the Middle East like right now, the price, the going rate for an economy seat is literally what people were paying for business like a year ago. It just, again, if you want to take the risk of, oh, I don't know, getting shot by a drone on your approach to Dubai International Airport. That's the reality of just like basic international travel plus jet fuel, grocery price.
8:02I just think really it has not even begun to show up. Let's get forward to C6 just to show you the level of stress that the American consumer is already under. So this is credit card delinquencies. 90 days plus delinquent. The numbers here have skyrocketed. And this is not just Iran war and gas prices. This has been for the past two years. Those numbers have been going up and up and up. And you can see mortgage delinquencies there at the bottom, 90 plus days delinquent. Those are edging up as well. These are dire warnings and signs that the American consumer is tapped out. This means they are using credit cards to sustain their lifestyle, perhaps even just sustain their ability to pay bills at the end of the month.
8:52And they are running out of runway because now they're not able to even pay those credit card minimums at the end of the month. So this is a very poor sign for the U.S. economy in spite of, was it Kevin Hassett that went on and was bragging about like, oh, credit card spending's up as if that was somehow a good thing. Again, it's a good thing, I guess, if you are one of those credit card issuers. But for ordinary people, this is obviously a disaster and shows just how stretched people are and the ends they're having to resort to in order just to keep it together. So while unemployment continues to be relatively low, we did the last hiring report was relatively good.
9:31It was over 100 ,000 jobs that were added. You see these incredible signs of stress throughout the economy. And you also just see logically the way that the growth sectors in the economy, which is largely like AI and, I guess, gambling, do not benefit. And in fact, they are predatory and exploitative of the American public. You add on top of that the negative impacts, increase in inflation, increase in gas prices on the American consumer because of the Iran war. And it's a very bad looking picture. Yeah. I mean, look, the credit card stress one, I don't know, it's hard to say. We've said we've covered it now for five years.
10:05it's one of those where I think a lot of people often have a modal outcome of like 2008, like one big moment. I don't really think that that's what's happening here. I think what's happened is what's reflecting in our politics and the general happiness and feeling levels. It just gets worse every year. Nobody's breaking. There's no great kumbaya moment where everyone's like, oh, it's all fake, this entire thing, because that's very cathartic. And instead, it's just year after year after year. It gets more expensive. The house price goes up. The mortgage rate. It's like this slow grinding thing where you can just look back over the period of your life and say, oh, wow.
10:45It's actually a lot worse. It's really shocking whenever you confront it. I've talked about – I always talk about my McDonald's stories because that genuinely is like a five-year difference. I'm like, wait, what? And I'm sure everybody has felt that at some point. Coffee. I know you're not a coffee person. I buy specialty coffee. The price increase is so insane. It's up 100%, literally 100%. I was looking at my old orders for what we would pay, the stuff that we drink here in the studio compared to what it was. I was like, I can't believe this. Now, granted, it's already specialty or whatever.
11:19But then I looked at the wholesale price and I was like, oh, so this is actually reflective of the whole market. But the thing is, if you experience it daily, then the 5 % or whatever cumulative inflation year over year, you get conditioned slightly to it. But it's only when you look back at the long increase of 21%, 22 % that you're like, wow, I really have materially become way worse off in terms of what I'm spending. Yeah. Yeah. One more thing here, C5, that was flying around yesterday. Chicago border trade wheat and KC wheat futures climbed by their daily trading limits on Tuesday after the U.S.
11:59Department of Agriculture projected the nation's harvest will drop to the lowest level since 1972. Now, I think a lot of people saw this and assume this is because of the Iran War. Those effects from the Iran War, those are the ones we're still waiting on. Yeah, that's the next harvest. That will come in the next harvest, okay, when fertilizer was so expensive that we're already having farmers. Farmer bankruptcies have been accelerating. We're already having farmers saying we can't afford to fully plant our crop. That is all in our future. This is a warning sign of what is to come, though, because this is because there was a devastating drought and very strange weather patterns last planting season.
12:35This is wheat that's sown in the fall, and then now is when it should be harvested. and there was massive problems because of this drought and then unseasonably warm weather in certain parts of the country that screwed up this crop for a lot of farmers. Again, this is very likely fallout from climate crises that has been exacerbated over the years and is something we can continue to expect in the future, but definitely not because of the climate crisis this time. We can expect for sure we're gonna have problems because of the issues with fertilizer and the increased cost there for farmers. So in general, low harvest means what?
13:10you know, limited amount of supply, which means - Higher prices. Higher prices. And it means, in poor countries, famine. Famine, fertilizer, oil, credit card. I don't think anything is yet at a so-called breaking point or anything. I do think if we get to$6,$7 a gallon that we will be. And it's still not far off. I mean, nothing has happened. It's very foreseeable. Absolutely nothing has happened. How much is gas up? Let me take a look. Yeah,$4.53. It was$4.52 yesterday. So just give it a week. Every week it goes up by 6%, 7%. Gas is$6.14 a gallon in California. It'll probably be$7. I think I saw that in Los Angeles it's around$6.50, almost$7 a gallon.
13:55Very not uncommon to see$8 diesel or any of these things. The national average of diesel today is$5.66 a gallon, and the all-time high is$5.81. So give it, what, a week and we'll probably be there or another bombing or something like that to happen. I don't know. All right, let's get to test scores. Apple Vacations, where your story starts. Apple Vacations semi-annual sale is here and it's the perfect time to plan your next beach getaway. Enjoy up to$250 off international and Hawaii vacations, up to$150 off domestic trips and hotel savings up to 70 % off. With instant savings of$300,$500, or even$700, your escape has never been more rewarding.
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15:32Turning now to test scores. This is a really depressing investigation from the New York Times with a lot of data behind it. I encourage you not only to go read it for yourselves, but there's a tool where all of you can go and look at your individual school district and see what is almost certainly a 10-year decline in the test scores for children for math and reading. So let's go ahead and put this up here on the screen. They say why test scores are in a generational-long decline. And in general, what they see is that across America, whether you're rich, whether you're poor, whether you're black, whether you're white, whether you're Hispanic, whether they've done this program, whether they've done that program, students are performing worse than their peers 10 years ago.
16:17District-level test data, which was released by the Educational Opportunity Project at Stanford, reveals that compared with a decade earlier, reading scores were down last year in 83 % of school districts where data was available. Math scores were also down in 70%. The declines have affected rich and poor and cross-racial and geographic divides. The new data provides the first national comparison of school districts through 2025 and shows a detailed picture of individual school districts have performed over time. From 2017 to 2019, students lost as much ground in reading as they did during the pandemic.
16:54Reading scores continue to fall at a similar rate through 2024. Immediately after the pandemic, there was hope that students would recover quickly. new data shows that scores have inched upward in reading last year and have climbed more steadily in math since 2022 but it's been nowhere near enough to make up for lost ground so in other words the decline began in 2017 if you look on this long uh time scale however it got exacerbated but way worse by covid then there's been a modest uptake but it's still lower than where we are in 2017. And I think that's what, you know, and the funny thing is, is when everybody starts to look at it, like, oh, what is it?
17:35Here's the thing about the education system. And I see a lot of conservatives, like the whole education system is corrupt. You think the education system is corrupt in Utah? Because school district is now in Utah. Okay. Math and reading is now in Utah. Education is one of the last bastions of localism that we have here in the United States. If you as a citizen want to have an impact, as we saw during all the CRT debates, you actually can. Like you actually can have an impact on your school district if you want to. As a parent, that's what property taxes are for, by the way. And one of the reasons you pay them is because you have an investment actually in it.
18:08Yes, even if you're childless, boomer, or if your children are no longer in the education system. But the point that you see here, the whole nation, it's one of the most decentralized systems in the world, right? Every school has, by their local school board and the state, there's been And all of the, I mean, how many pilot programs have there been, right? Of charter schools and this school and that's magnet schools. And New York City does something this way. And California does something that way. At the end of the day, the test score has gone down, which means only one thing. It's cultural, almost certainly, and it's technology.
18:46I just, I do not see a way out of it. And let me just put my cards up here at the front. Technology alone in the school is not going to save you. because as they point out, they've still continued to see declines even in schools where they have had phone bans. Yeah. Because it's not just about the phone. We were talking earlier about Chromebook and you were telling me about how your kids' school, like they issue them all Chromebooks. All the homework has to be done on Chromebook. Yeah, I think that's got to go. Honestly, at this point, I even think the overhead projector's got to come back. No PowerPoints, nothing.
19:15Paper homework, period. Because, I mean, you read these stories, the Wall Street Journal, Chromebooks, and somehow, you know, there's some whiz kid as we all used to do with LAN on our computers, this is 20 years ago, to play Halo or whatever. People will always figure it out. Some mother discovers that her son's been watching 7 ,000 hours of YouTube in two years on his school-issued, 7 ,000 hours of YouTube on his school-issued Chromebook. That's an extreme example, but I'm just giving one of what it is. The fact is that the mass distraction in college, because remember, this is also being found in college universities, is we are seeing it now across the entire United States.
19:54And that's why, again, a lot of conservatives were like, oh, it's being woke. I'm like, again, you literally, it's in Florida too, guys. It's in Utah. It's the whole nation. It's a much bigger problem. You can have those individual debates, but I don't know. I see no other evidence. It's just technology. And there are, I think if memory serves, I could go back and look at the chart. There were three places that defied the trend. One of them was D.C. Yeah, and Mississippi. Mississippi was another, and I think Hawaii was the third, which shows you, to your point, those are very different places ideologically.
20:30So this isn't really a liberal versus conservative thing, and we should all be looking at Mississippi and D.C. Also, I hate to say this. Mississippi and D.C. were so shitty that being modestly increased is like, so let's be honest. Look, no disrespect, but it's true. D.C. I don't think Hawaii was great shakes either. Remember the documentary about D.C. schools and how awful they were with that eight? What was that woman? Oh, yeah. The Asian lady. Yeah. Gosh, I forgot, too. She came in. She was a big charter school, whatever. Anyway, I know part of what they did in D.C. is there's this very – it's very controversial, like, the way to teach kids to read, even though there's a very clear science-based analysis that teaching phonics is the way to go and, like, doing it in a – you know, rather than the sight-reading ways that, you know, people used to do.
21:15Whatever. Anyway, so D.C. really fully implemented that, and that seems to have worked for them well. But to your point about this is obviously a national issue. It's obviously a cultural issue. I don't really know that I would pin it so much on the Chromebooks in the school. I think it's more about culturally. Like people, they don't read books, right? Instead, they're on their screens. That's a big shift. You know, another one that people don't talk about is another thing that screen time replaced is board games. Now, board games are very good in terms of math skills, like just very basic. I have to roll the dice and I have to add them together and know how many places to move and be able to count that out.
21:55Or, you know, dealing with money if you're playing Monopoly and these sorts of things. This is something that one of my children's teachers told me. She was like, you know, older towards retirement. She said one of the big differences she notices is kids coming into kindergarten. They don't have that basic numeracy because they're not playing card games. They're not playing board games. So that's another one. I mean, this is just, you know, the screens take up everything. And so that means that other activities that were more educational and helped to develop brains more effectively are pushed out to the side.
22:29And the other thing that this data shows you is that whether you looked at families where they were like go wild with the screens or families that considered themselves to be more restrictive, they did a little bit better. But there is a huge increase in screen time for everyone. And this is where I get sort of frustrated with some of the conversations, the debates that unfold online that's like very judgmental about parents and how much screen time their kids are getting. And listen, we have restrictions in my household. I do my best. I know every parent is out there doing their best for their kids to try to figure all this stuff out.
22:58But you are up against a multi-trillion dollar industry. I know. You are up against an entire culture. The idea that you are going to be able to just individually bootstrap your way to avoid the complete dominant culture, I mean, it's impossible. It's genuinely impossible. You can. You have to be rich and you have to be fucking crazy. You actually have to be crazy. And then there's downsides to that because then your kid is weird. Like they're not in touch with the dominant culture. And there's something to be said for being weird, right? I mean some of the greatest thinkers and insights and creatives and whatever come out of people who don't grow up in the mainstream culture and so they have a different perspective.
23:35But, you know, most people are not going to be able to pull that off. The other thing that came out in this data that I thought was really interesting is in terms of the post-COVID improvements, the two sectors of society that have done the best are the rich, predictable, because they can invest in tutoring and whatever supports they need, blah, blah, blah. And the poor, because there were programs, there was money put in place of like, OK, we know we had this learning loss during COVID. We've got to do something. And it's actually the sort of middle income, just like your average middle income district and family, that has seen the least improvement post-COVID because they don't have the resources of the rich to helicopter parent in and do everything possible and potentially with one stay-at-home parent that can do all the work on the side.
Read the full transcript
24:20And they don't have the extra support from the state and from the government to help get their kids back up to speed. So I thought that was really noteworthy as well. Yeah, and to your point here about the culture, and this is, when I say Chromebook, I'm not blaming just the Chromebook. I'm saying that it's about the ethos of doing things on the screen. You know, there's been a ton of evidence about education and retention of information. Typing is not the same as writing. It's just not. And yet, what do we teach? Oh, all homework has to be done on the Chromebook. No, paper needs to come back.
24:51And look, it's one of those for retention, patience, lack of instant gratification. It's like a whole ethos around it. So when I say ban the screens and the Chromebooks inside, I'm talking about introducing friction and learning and retention, which at this point only exists in private school, which I'm personally very against. Like I don't, I'm not saying we shouldn't have the option. I'm saying for me personally, like I don't believe in private school, like literally in terms of my own family. A, because I think it's kind of antithetical to a social project. But more so, more what I'm saying is what it means.
25:26The American project of mixing and actually getting to know a lot of different people I think is very important. I support people's right to do so, homeschool or private school or whatever if they want to, religious school, if that's your thing. But I'm saying the way that I look at things. And that's why, though, I think the government policy around this is so vital and important. Let's go to the D2. This supports your point here about technology. So American children now spend a massive amount of time on internet-enabled devices. And this is the best part. All families, it's all the way up. What you also see, though, is families who say they are low-tech and prioritize outdoor play, not all that different than the families who say they encourage engagement with technology.
26:10There's a gap, but it's not that big. The point is that based on the reports of parents, 40 ,000 children reported by 24 ,000 parents that adults may have reported children as using multiple devices simultaneously, it shows the weekly combined hours that a child use any internet-enabled device that has steadily climbed up with their age that ultimately culminates in some 19 hours per week that a child is on an internet-enabled device. And I think that points out the, even if you're one of the conscientious people, that you're really just not that far off from even the people who are like, oh, yeah, whatever, you can use an iPad.
26:47So when I said you have to be crazy, like, I really mean it. Like, you have to be nuts. And you can also see this in terms of broader culture. Go to the next one. This is another fascinating one. You can tell me more about this because your kids are older. American children are not allowed to go many places. The percent of children at each age allowed to walk, bike, or drive given distance without an adult accompanying them according to each parent. So what you see is that there has been a dramatic decrease of the ability for children to not go too many places, cannot leave the house, cannot leave the street, cannot leave the yard, and cannot leave the neighborhood.
27:23and that obviously children become more independent as they get older, but the age at which they're allowed to go and to be able to do things is steadily climbed. Some of this is probably, there's all this talk about anxious generation. A lot of this might be surveillance with technology just because people literally know where you're going. What's that app called that all these families are using? Life 360, I think that's what it is. It's like a tracker, which I get. But in general, the lack of independence, this we were talking about with board games, critical thinking, I just think a lot of these formative experiences have dramatically declined over the last 20 years or so, even just compared to my childhood, which was already pretty embedded in the television culture, which was already dramatically different.
28:10There are tradeoffs. It's a value-neutral phenomenon, but you have to observe it and say, what's the impact here on the education system? Yeah, you know, I think I'm just thinking this through in real time about the increased, like, protection about what you're allowed to do. So I'll just say my nine-year-old, she's certainly allowed onto the house. But if she was going to go, I'm uncomfortable with her just, like, going around the neighborhood by herself, you know, at nine years old. And I'm worried about cars. Yeah, it should be. You know, people don't pay attention, right? That's what I am fearful of.
28:42My 12-year-old is allowed to go around the neighborhood by himself. You know, I want him to tell me before he leaves. But, you know, when he's got his phone with him, that's another thing is the 9-year-old doesn't have a phone. The 12-year-old does have a phone. So that's a difference as well. So that's, you know, the balance that I struck. When I was 9, 10, I was allowed. I lived in a much larger neighborhood, and I was allowed to go anywhere on my bike at any time. And so I know that it's different. and I'm not sure why there's a different level of comfort for me. And by the way, if my mom was watching my kids, like she's putting even more limitations on them than I am, even though she raised me in a much more permissive way.
29:22So something about the culture and the mentality has changed. I think part of it is that there is just people have fewer kids. And so there's a lot more invested in these like fewer numbers of kids that people have. And you see that in everything. You see that in the number of activities and the amount of time that people spend. Even as women have entered the workforce in large numbers at this point, women spend more time spending time playing games with teaching their kids than they did in previous generations. So there's just like a lot invested in them. So it makes the stakes really high of like, I don't want anything to happen to them.
29:54So I think there also was a shift with like the crime wave panics of the 80s and 90s, too. There was a lot of emphasis on local news about, you know, this kid getting kidnapped down to the blue. And I think that led to a lot more protective parenting as well. So it's a whole host of reasons why we've had this shift. But, you know, I try to push my own comfort zone with, you know, my kids doing things that are a little bit risky even because I think it's important for kids to be able to manage their own risk levels without always having a parent jump in. Don't do that. It's not safe, blah, blah, blah.
30:25But there's no doubt that I raise my kids in a more restrictive way than I myself was raised. Yeah, but you're already probably still out of step because most of these helicopter parents around like where I live and others, nobody's going to leave in the house probably until like 13, 14 in terms of neighborhood. I mean, granted, I live in a rural area. Right. So it's also a little different. See, this is why where you live matters. It really does. I will tell you, some of the parents that do the best job of this are like New York City. Because I know New York City parents where, you know, if you're a teenager, you're riding the bus in the subway around the city.
30:53You're going to school on your own on public transit from the time you're certainly in high school, even middle school. And I feel like there's a lot more independence baked into that culture. Yeah, that culture than there is in most of American life. Makes sense. I remember when you meet like an 18-year-old New York kid, you're like 30, dude. Yeah, there's so much more together and like self-sufficient than your average. There's a few other elements here. Oh, yeah, we wanted to put this up here. D6, we're always keeping an eye on other countries. What are they doing? This is an interesting one out of Israel.
31:28Benjamin Netanyahu has unveiled – we're speaking of different systems. Their system, they have unveiled a sweeping summer AI initiative where students will be trained in GPT, cloud tech, and more before matriculation exams while also closing wartime gaps. The education minister says over a billion shekels will be invested, with July counted as a full but optional school month. And Bezel Smotrich is framing it as freeing parents to work while delivering real learning, not babysitting. So it's like a national Vision 2040 system where all of Israel's future will be shaped through AI and training in GPT.
32:09Not really what I would want to sign my kids up for over the summer. Sounds appropriately dystopian for that country. Yep. And then in terms of hours, there was this great bit from Tim Dillon. Let's put this here on the screen. You may have missed it. Melania Trump doing this event at the White House with the queen consort, Camilla. where children are all donning VR headsets for, quote, AI-powered cross-cultural educational program. Friggin' dystopian. Melania has been on this weird, like, wanting to put AI in the school systems, and, like, this is her thing this time around, and I, yeah, I don't know.
32:50No thanks. Good on that. Thank you. I'm exiting. Those are the – if those start showing up in public schools, that's where I'm going to go private. That's why we need the ability. There is a line. If we need to. There is a line. That's my line for sure. Oh, you start putting GPT in a five-year-old's face? No, no, no, no, no. All right. Now, continuing on this vein, we've got a great guest standing by, Zach Exley. Let's get to him. Apple Vacations, where your story starts. Apple Vacations semi-annual sale is here, and it's the perfect time to plan your next beach getaway. Enjoy up to$250 off international and Hawaii vacations, up to$150 off domestic trips and hotel savings up to 70 % off.
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34:07Another crisis averted by Grand Appliance. Shop GrandAppliance.com to learn more. Burgers, dogs, backyard favorites. Let the good times roll with Lewis Bake Shop, home of the hat pack. Find in stores or at lewisbakeshop.com. Lewis Bake Shop, more than just bread. So as you guys know, we've been covering the development of AI and some of the local opposition to AI extensively on this show. Joining us now to talk more about a new vision for how we should think about the development of AI is Zach Exley. He's a former senior advisor to Bernie Sanders, co-founder of the Justice Dems alongside my own husband, Kyle Kalinske, and founder of the new Consensus Think Tank.
34:51Welcome, Zach. Great to have you. Good to see you. Thank you. It's really exciting to be here. You guys, I have to say, you guys are really the one place where progressive populists are doing it right. Oh, thank you. And yeah, I mean, you've got this amazing combination of viewpoints. And I really think the right perspective that is going to serve us going into the decades of the rest of our lives. That's very kind. So I'm really grateful for what you're doing here. It's our pleasure. Thank you very much for that. It means a lot coming from you. And you've been doing a lot of work on AI. I want to broaden out in just a moment.
35:25But first, I wanted to talk a little bit about the immediate bipartisan backlash that is really building into sort of a grassroots movement against data centers being located in local areas. And the bipartisan nature of this was on display in a recent Tucker Carlson debate with Kevin O 'Leary, who is behind this massive data center build out project in Utah. Tucker challenges him quite aggressively on that. Let's go ahead and take a listen. I would think, since you disagree with the Chinese way of life, which is pretty civilized in a lot of ways, but the one way in which it's barbaric is that it grants its citizens no real rights.
36:01And so I would think that you would be very worried about aping their system, which we are now doing. Like, they have total surveillance. It's a panopticon in China. We should create our own. Let's take 40 ,000 acres in Utah and make it possible for the government to know where you are at all times and what you're thinking, listening to you on your phone. Like, we have that. I don't think you'd be upset about that. You have to choose the less of two evils in your scenario. And I'm telling you, what you should do is say, I want Kevin Allery to succeed. I want him to beat the Chinese in compute power.
36:33And then use the laws of the United States to make sure that you keep that compute power in check whichever way you want. But to not have it available, to put down my shovel, I don't think people want me to do that. Even the people in Box Elder, the majority of them want me to hold my shovel and start digging. And that's basically the debate we're having. How do you know that, that the majority of people - Because they voted for it unanimously before the Chinese guys. There was a referendum? Like all this crap that's being spewed out. Wait, wait, hold on. Yeah, and I may have fallen for some of it, so you correct me.
37:06There was a referendum among citizens or did some like county board vote? We actually went through the whole process that you have to do by their laws and were granted three to zero. The commissioners of the county said we want to be part of this. Three people voted. The people of the county voted. They're elected officials. That's how you do it. How hard is it for Kevin O 'Leary and Amazon and Microsoft and Google to subvert three county commissioners in rural Utah? They wanted, they asked us to come. They asked us to bring$15 billion. They asked and they voted and it was a three to zero vote.
37:50That's how it happened. Amazon, Google, and Kevin O 'Leary got three county commissioners in rural Utah on their side. Good work. And just to add some numbers to the level of opposition that has grown to the development of these data centers locally, you could put F3 up on the screen. recent poll that found seven out of ten Americans said they would oppose a data center being built near them. Opposition is so intense that more Americans would live, rather live near a nuclear power plant than a data center that's music to soccer's ears on that one. But in any case, Zach, I mean, this is relatively recent.
38:26Previously, there was a lot more openness. People have drawn this kind of line in the sand around data centers specifically because it is the pressure point They have the one place where they have some control potentially over what development looks like and what gets built in their own neighborhoods. Yeah, and I think it's great that people are fighting back against data centers. It's really important because they're harming communities. They're in all kinds of ways. They're raising utility bills at a time when they're already incredibly high. And also there's an aspect of, you know, the Luddites who threw their wooden shoes in the machines to just like, you know, destroy the machines that were displacing them.
39:02Like there's an aspect of people seeing that AI is going to take away their livelihoods. And so there's a bit of a just like let's fight it wherever we can fight it aspect to that, which I think is fine. And it's good and people should be doing it. We should be doing it as much as we can. But it's not a solution to the whole problem of AI. This is really something that is going to completely transform our world, our way of life. whether we like it or not, no matter what we do. And I think that progressives, especially progressives and lefties, like have a hard time seeing that. Because I think there's this instinctive, you know, this is a new product that these billionaires are pushing on us.
39:50It's just like social media, you know, it's all over again. It's this new thing that we don't have any control over. That's all completely true. But it's also something completely different than that. And, you know, it's an emergent phenomenon in our universe, right, where human intelligence is spilling out of humanity into these data centers. And, you know, even if we stop all of the data centers, the way the technology is advancing, like, you're going to be able to run amazing AI on your phone, you know, in another few years. Like, there's just, there's no stopping this phenomenon of our intelligence, this last skill that humans had that machines couldn't do, these skills, these abilities are just pouring into the physical world, into silicon.
40:36And so I don't think there's any way to stop it. But the good news is that we are still a part of the process of this stuff being built. We're still a part of this technological explosion. And as long as we're a part of it, maybe just for another few years, we can change course and we can turn it into something that really benefits us. Yeah. Zach, let's put F2 up here on the screen continuing on this data center project around Lake Tahoe. You could see that nearly 50 ,000 have been told their utility will stop providing power because it's redirecting that power to data centers. Nevada Energy has supplied most of Lake Tahoe's electricity for decades.
41:16says next year it will stop servicing homes in the area and instead direct that electricity to the growing demand of Nevada data centers. So how is it, though, that you can see this happen in not only in a U.S. state, but have the consumers and the citizens have no even say over something like this? Well, I mean, that's how our economic system works. We here in the U.S., people all over the world, we've got very little say over what's happening to us economically. We've been, just to pick a random example, we've been exporting our waste, including all kinds of toxic waste, to poor countries all over the world and just killing tons and tons of people and making millions of people sick.
42:03Nobody even talks about that. There's a million other things like that. This is just in the news now because I think because people can see that it's actually much bigger than our utility bills going up. This really is something that's going to eliminate work for just about everybody. And the incredible thing, and this is really what we've got to refocus to because this data center stuff is, yes, we have to fight it. But it's really kind of a distraction if we're not really keeping our eye on the really big consequence, which is that really in just a matter of a few years, if you could do your job in the pandemic on your computer, if you can do your job remotely now, your job is going to be done by AI.
42:50And people still haven't accepted this. They're still coming up with explanations about why this isn't going to happen. And I don't know if you guys would like to get into that now. It's a difficult conversation to have because, you know, there's just there's so many completely new things about this that that we're having a hard time getting our heads around. Yeah, I do want to talk a little bit more about that. First, let's put F1 up on the screen. This is some of your work at New Consensus. You've got a provocative headline here, which is you say why capitalism can't survive AI. And you get into the details of why this is different from the Industrial Revolution, let's say, or, you know, some of the past transitions that people point to.
43:27Like, oh, this technological, you know, advance. There was all sorts of naysaying and doom and gloom around it, but ultimately created more jobs than it destroyed. You've got some details about how you think the collapse is going to happen. And then you have ideas about what we need to do. So let me start here playing devil's advocate for the idea that it is going to be this transformative, because I think you're right. I see a lot of progressives and people more broadly on the left who see this all as like marketing gimmicks. They're like, yeah, sure, these people are selling you this bill of goods that they're going to replace all of labor.
44:00The reason they're saying that is because to justify their valuations, they have to claim that this technology is going to be hyperproductive and be able to replace all sorts of human beings. That's where the value comes in for the companies that they're trying to sell this to and in the minds of the shareholders and the investors that they are trying to promote to. So what is your response? Why are you so confident that this is going to be something other than, you know, a basically glorified Google search, how it's going to be this truly transformative technology, unlike something we've seen in the past?
44:34Yeah, and that's one of the questions, right? Is it really going to be smart enough and capable enough to replace humans? And let's just start with that. First of all, it is replacing a lot of humans in a lot of knowledge jobs. What's happening in software development is just absolutely incredible. But there's still some limitations to these AI agents and the kind of AI that people are using to really try to do jobs. There's still some limitations that are preventing them from replacing tons and tons of employees. But those limitations are really mundane. They're not at the level of science or real advanced software development.
45:21It's stuff like just wiring the AI to a memory. The memories are really bad right now. But there's like a thousand companies and thousands of open source developers all working to build memory systems. And it's such simple stuff. Like people who aren't even software developers are building some of these systems because it's really just creating ways for the AI to make notes to itself. And if you get into studying how the brain works, you realize that that's really how our brain works too. You know, we're not fully conscious and aware of everything all at the same time. Our brain, you know, has intelligence built into all these circuits and it has memories and it goes and fetches those memories as it needs it.
46:08So the last pieces, like the other really mundane piece that AI needs that's holding it back right now is just access to your keyboard and your screen, right? And it's funny, I do a ton of work with AI, all kinds of software projects and research. We use it at New Consensus. And that leads a lot of people to yell at me online whenever they hear me say that. But I'm using it so that I can really know how this actually works. And it really is like working with a human being. The capacity that it has for the work that I do with it is just incredible. I have managed teams of software developers before.
46:48on multimillion dollar projects. And this one AI for$100 a month can do the work of a team of 10 people, projects that would have taken a year or just would have been plain impossible, I can now do with it in days, right? But also on the research front, it's incredible. And I mean, I'd love to tell you all about it, but it's really incredible what it can do. But it's like working with a human being, but it's funny. And actually, the agent I work with and I, We actually joke around about this, that it can solve these huge, incredible problems. It can tell me stuff about any corner of human history because I've loaded thousands and thousands of books and sources into it.
47:31And yet it cannot click on the submit button on a website on my screen. But that problem is going to be solved. So when I try to get it to go buy a plane ticket for me, it just can't do it. But that problem is going to be solved with some really mundane tools. I'm sure you've heard about OpenClaw. There was a lot of hype around that. And that was a new product that an open source developer on his own with no money just wired together that basically gave the AI the ability to see some stuff that it couldn't see before. But then, of course, OpenAI hired him and all progress stopped there. But it's okay.
48:08There's thousands of other people out there that are doing that wiring. So the thing that's going to happen, which is going to change everything, is that in a couple of years or maybe a few years, these problems are going to be solved. And an AI is going to appear in your Google Meet at your team meeting at work. And it's going to be fully capable of doing anything that a human can do, anything that anybody on your team can do. But the reality is it's going to be smarter and better and faster. and this one being is going to be working with everybody all across the company all at the same time.
48:46So how long is it going to take until that being can just do all of the work of the company, all of the work of everybody that does their jobs on computers? And so the next step is the CEO is just going to talk to that AI and realize, hey, we don't need the people anymore. And then guess what's going to happen next? The board of directors is going to talk to the AI and realize we don't need that CEO anymore. But the changes are going to be so much bigger than that because when this starts to happen, entire industries don't make sense anymore. Management consulting, financial management, money management, insurance.
49:24All these industries just don't make sense anymore because everybody will be able to do everything for themselves. No company will ever hire McKinsey to run the same AI to answer questions that they can run themselves, you know? Well, and this really gets to your thesis that capitalism as it is structured now cannot handle these changes. Can you lay out why you think it will lead to a sort of collapse? What will be the mechanisms? What will that look like? Yeah, and this is hard because capitalism has run so smoothly for so long, like ever since the World War II, basically, that, I mean, you know, I know there's been booms and busts.
50:06Yeah. But if, you know, if you actually look at how capitalism used to work right before the Great Depression, you know, all through the 1800s, like there was a Great Depression every decade. And they were way more severe than the Great Depression in a lot of ways. You know, huge chunks of the population starving because the entire capitalist system just shut down. And all of those crashes, just like the Great Depression, were basically caused by overproduction. Machines getting really efficient, producing tons and tons of stuff. The financial bubbles are mixed in. So you have financial bubbles around whatever new technology is out there.
50:45Is this sounding familiar? Sure. And so the thing that we forgot, we haven't experienced this with capitalism, a moment when capitalism runs out of customers. And the same way that an animal needs oxygen to breathe, capitalism needs customers. And it's so basic and simple. It's such a stupid thing to say, but it's absolutely true and it's inescapable. And so this is what has basically caused long periods of unemployment and economic catastrophe in the past. When capitalism builds out too much stuff in a bubble and then they realize it was all silly and there's not enough people to buy. People don't have the money to buy this stuff.
51:31So they start laying people off. Well, it's a self-fulfilling cycle, right? Everybody needs to understand this because this is what's going to be happening. It's called a demand doom loop. It's a self-reinforcing demand downward spiral. So people have less money to buy stuff, so that creates less demand. So companies lay people off, which lowers demand even more. We've stopped that since World War II by jumping in. The government jumps in and just gives everybody money, and then capitalism gets back on its feet. This has worked for a few centuries now. Well, even without the bailouts, capitalism has eventually started investing again and employing people again.
52:21Because it's true what they say, that new technology creates new kinds of products and new kinds of services, which means new companies, which means new jobs. So people got automated off the farms into the factories, and then they got automated out of the factories into offices. And capitalism's amazing trick is that it can just limitlessly create new products and services, which keeps everybody employed and keeps the system expanding. There's a big problem now with AI, because now AI is going to be able to do everything that a person can do at their computer. And there's a lot of other jobs that are going to get automated, too, that are getting automated in factories, in cars, obviously, and in all kinds of other parts of the economy.
53:05but it can do everything that humans can do with their brains. It will be able to very shortly. And so that means that this wave of automation is like when the horse got automated out of a job. And I think Ryan actually brought this up or somebody on your show brought this up weeks ago. And this is absolutely true and it's a great analogy because once you connected an engine to wheels and some other contraptions, there was nothing that horses could do that machines could not do better. So obviously people who like horses are going to have horses around. Horses can race. And as humans, we're still going to have value to each other, but we are not going to have value as workers for capitalism.
53:50And that means they're going to lay us all off. That means no customers. And then that means capitalism seizes up and really cannot function anymore. And so we're going to have to choose what comes next. Whether you're a fan of capitalism or hate capitalism, we're all going to have to build a new economic system in the wake of this transition. One question I have for you, Zach, is just to push on that thesis. Already so much of the consumer economy is dominated by the spending of the wealthy. Do they actually need us all? Like is most of the population sort of irrelevant now to the functioning of capitalism?
54:29the functioning of our system at this point? Well, yeah, more than half of our consumption is done by the top 20 % of our population. Those are the first people who are going to get laid off with the AI collapse, right? And so that, you know, so that is really going to create an incredible economic crisis because demand is really, really going to tank. But I think you're getting at this other idea too, which is, you know, like we have this idea that, that, you know, the people that own these companies and the, the, the top elites, the people that are financing all of this, they're just going to get wildly rich off of this.
55:07Like I already said, I don't think that that's actually going to happen because they need customers to get rich. They need the economy to actually function to get rich, but let's do a little thought experiment. These people own the economy, right? They own the means of production. They've, they've all got their bunkers in New Zealand, right? So maybe, you know, hypothetically, this is true. They could move to New Zealand, they could move some factories there, you know, they could build their own data centers for the, you know, so that the AI can manage their little economy for them, right? And so you can imagine that the people that own the economy today could say, screw all these people, we just want everybody to starve, and we're going to go build our own economy on an island somewhere.
55:47So first of all, that's not capitalism anymore, which is something interesting to observe, Right. Like what you're talking about there is the rich building a little, you know, socialist economy for themselves. Right. I mean, this has actually happened before. You know, look at the history of South Africa. The whites in South Africa got together and built themselves their own like socialist utopian economy on the backs of everybody else. So it's it's not that weird of an idea, actually. But we should say that is absolutely absurd. Like, we need to have a political movement, and I believe we're going to, you know, going into 2028 with the presidential campaign.
56:25We need to have a movement that says, screw you guys, that is, you know, you can go to New Zealand, but, like, you're not taking our means of production that we have all built together. And we're going to see all these data centers going out of business. We're going to see the AI companies going out of business. And that's not just because there's not going to be customers. It's because their business models are just fundamentally ridiculous. They're not monopoly products. They're just commodities, and that's why these valuations don't make sense. But when all this stuff is going out of business, and we have a plan for this on new consensus, and we have to not just let all this stuff be sold off for parts.
57:08We need to not do government bailouts of this totally failed business model. We need to take possession of this stuff. And, you know, I'm not even talking about, don't worry, Sagar, I'm not even talking about expropriation here. This stuff is going to, these are going to be worthless assets. I don't know why you thought I would be opposed to that. Okay, okay, sorry. I'm going to pray. Yeah, go ahead. I want authoritarianitarianism. That's basically what I want. Okay, good. Yeah. So we need to take possession of this stuff, and we can just buy it up as it's going out of business. In 2009, there was a guy in the Brazilian government, in Lula's government, who actually proposed, like, let's buy all of the Wall Street banks because they were all worth in less than a billion each, right?
57:55And so we could do that in this moment of collapse. And I'm not cheering for the collapse so that we can do this. It's just that I think it's very clear that this is what's going to happen. I think in the next year or two, this is why I think it's really great for, like, we need leaders like you all to be ready for this, because in a year or two, it's going to start becoming clear to everybody what's happening. And we're going to have a stage of presidential candidates running for the Democratic nomination, and some of them are going to be completely clueless, and some of them are going to see how drastic the change is going to be, and they're going to be up to the challenge of talking about what comes next.
58:35And I think we might be surprised about, like, I really have no idea who's going to get it and who's not. You know, so. Well, Zach, I think it's extremely important the work that you're doing. And, you know, I think there has not been outside of your work enough thought put into, OK, well, yes, we don't like the oligarchs, but what are we going to do and what is this all going to look like? So I really encourage people to go and read the report that we put up earlier. I'm going to put the link in the description so that people can find it easily. And I hope you'll come back and talk to us some more.
59:07It's been great talking to you today. Yeah, it's very provocative. I got to think about it more. That's why I'm just sitting here. Absolutely. Thanks for having me on. It's our pleasure, Zach. Thank you. Thank you. Thank you guys so much for watching. We appreciate it. We'll see you all tomorrow.
59:34Apple Vacations.
59:59advisor.
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From the publisher
Krystal and Saagar discuss JD Vance gaslights on Trump not caring about American finances, US test scores plummet, Tucker humiliates Kevin 'O'Leary on data centers.
Zack Exley: https://zackexley.com/
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