What This Week Revealed About Power

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0:30George Hahn:Now at McDonald's, a McDouble is$2.50, so you can get your gym gains on. Or just get lunch. For only$2.50. Get more value on the under$3 menu. Limit time only. Prices and participation may vary. Prices may be higher for delivery. Ba-da-ba-ba-ba. Morning decisions. How about a creamy mocha frappuccino drink? Or a sweet vanilla? Smooth caramel, maybe. Or a white chocolate mocha? Whichever you choose, delicious coffee awaits. Find Starbucks frappuccino drinks wherever you buy your groceries. Welcome to the first episode of The Week from Prop G Media, where we break down what mattered and what it all means.

1:09George Hahn:I'm George Hahn, and it's Friday, May 15th. This week, the story was about the trade-offs nobody wants to admit. AI is making companies more efficient, but potentially making workers less valuable. Inflation is rising again, just as Americans are running out of patience. And with Trump and Xi Jinping's summit underway, longtime China analysts are starting to wonder whether the balance of power has quietly shifted. Let's get into it. For the last two years, the conversation around AI has focused on one question. Will AI replace workers? This week, Silicon Valley started asking something else. What if companies need fewer managers, too?

1:59George Hahn:On Monday's Prof G Markets, Ed Elson broke down how companies, including Coinbase, PayPal, and Block, are already restructuring around AI. Coinbase CEO Brian Armstrong announced plans to cut roughly 14 % of staff last week, citing both market volatility and the speed at which AI is reshaping the business. PayPal made a similar move, saying it plans to reduce its workforce by 20 % over the next two to three years because of AI. And perhaps the clearest expression of this new thinking came from Jack Dorsey, who said, quote, most companies using AI today are giving everyone a co-pilot, which makes the existing structure work slightly better without changing it.

2:41We're off to something different, a company built as an intelligence with no need for a permanent middle management layer.

2:49George Hahn:Jack Dorsey said this after Block, the company that owns Square, Cash App, and Afterpay, cut 4 ,000 employees in February. That's 40 % of its workforce. And while tech executives talk about productivity gains, others are wondering what happens when people stop doing the actual thinking themselves. In other words, is AI making us stupid? On Tuesday's Prof G Markets, Cal Newport and Derek Thompson discussed whether AI is quietly weakening our cognitive abilities. Well, I think AI has the real capacity to make us dumber. It's new enough and usage of it is still growing that we're not seeing the major effects yet, but I fear that we are going to see it.

3:37And the way I conceptualize this world of cognitive fitness is that social media and highly engaging tools on our phones started this trend. It moved us away from more sustained, concentrated activities through which we strengthen our brain. AI is now taking target on the other main cognitive activity that makes us stronger, which is writing. This is emerging as one of the major uses of this tool is to alleviate the strain you feel when you look at a blank page and have to fill that blank page. So if AI does, in fact, significantly reduce the amount of writing we do, whether it's super important or just a memo, I do think we're going to see a continued diminishment of our intelligence that began with highly distracting phones about 10 years ago.

4:21When you ask artificial intelligence to summarize an article or to summarize a paper or, God forbid, to summarize an entire book, do you understand that article, that paper or that book as well as if you had read it? Of course not. Okay, now maybe you could argue that, all right, well, I saved time. Because now, rather than read that one book, which might have taken me 10 hours, I can summarize 15 books, and that'll take me sort of 10 hours to process or something. Well, even there, you're engaging at such a shallow level with each book that I'm not sure you really understand the degree to which they agree and disagree with each other.

4:57But also, you're depriving yourself from the inability to read anything for more than five or ten minutes at a time. And that is a skill that leads over time to the ability to make the sort of deep connections that I think are the basis of all true, insightful thinking.

5:17George Hahn:Want to hear something shocking? According to new data released Wednesday by the Educational Opportunity Project at Stanford, students are performing worse than their peers were 10 years ago, almost everywhere in America. In one in three school districts in the U.S., students are reading a full grade level lower than they were in 2015. This decline crosses socioeconomic, racial, and geographic divides. What does Scott think? There's no free lunch. He discussed this on a Prof G Plus deep dive some weeks ago.

6:23Consultants using AI completed 12 % more tasks, 25 % faster, at 40 % higher quality. For tasks outside AI's frontier, requiring judgment, contextual reasoning, real-world nuance, AI users were 19 percentage points less likely to produce correct solutions than those working without AI. Here's the takeaway. None of this means AI is bad. The BCG consultants using AI were dramatically more effective. A carefully designed AI tutor at Harvard produced learning gains more than double those of traditional instruction. The same technology, completely opposite outcomes. The difference in every single one of these studies comes down to the same variable.

7:04Who is doing the thinking? In sum, avoiding AI is likely not an option. The question is how you use it. Are you using it in a way that makes you stronger or weaker? and whether you're honest enough with yourself to know the difference.

7:21George Hahn:We'll be right back after the break.

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9:30George Hahn:Welcome back. This week, Trump flew to Beijing to meet Xi Jinping for the first time since 2017. On Thursday's Prof G Markets, James King, who has been covering U.S.-China summits since the 1980s, said this one stands apart. If I had to sum this up in one sentence, I would say that Trump is going to Beijing to rectify some of the problems that he himself created. As you rightly say, the U.S. put 145 % tariffs on Chinese exports at one point last year, Chinese exports of the U.S. And then after China said that it was going to restrict exports of critical minerals, these are critical minerals that are needed to make U.S.

10:17weapons, that are needed by all the big U.S. tech companies to make the products that they sell, uh trump then blinked and now the tariffs are back down to 47.5 on average so to me the key inflection point in this relationship in trump in this trump administration's relationship with china has been china's uh invocation of these critical mineral export sanctions on the u.s last October. This is a patch-up work. This is an attempt to make nice to the Chinese. And this is why I was saying on the previous episode of China Decode, if you ask me, this is the first summit in U.S.-China history where the Chinese president has the upper hand and Trump is going there asking, you know, rather than the other way around.

11:15George Hahn:And on Tuesday's Raging Moderates, Sarah Longwell, publisher of The Bulwark, explained why China has no reason to give Trump much of anything. Look, I think that China has Trump's number and has for a while. Like, they are, you know, they're trade allies with Iran. They are helping Iran right now in this war. And I think they understand that as long as they flatter Trump, like this is what Xi knows, if you flatter Trump and you pat him on the head and you roll out the red carpet, that Trump just will kind of cave for you. In 2017, when the last time he was there, people still had sort of Trump's madman theory of politics.

11:58The other world leaders did too. This guy's really unpredictable. He could do crazy things. But Xi's got him over a barrel now, right? Like what they're doing, what they're in their best interest now is for America to be in a sort of long simmering conflict with Iran while China becomes the world power because we are committing superpower suicide in real time. China seeks to fill that vacuum. And so they're they're they're helping Iran right now. And they know that if they just flatter Trump that he won't do anything to them. You hear Trump there. You can hear Trump's admiration for the fact that Xi rules his country with an iron fist.

12:40And so I just think they know how to play him and they will flatter him and then they will eat his lunch along the way.

12:47George Hahn:Scott spoke about this on Thursday's Raging Moderates. If I'm Xi, I just think every day this war goes on, there's a small leakage of power and global currency from the United States to China. So you just have to look at their incentives. And my understanding is, while the free flow of energy has an impact on China, I don't even think they've tapped into their strategic reserves yet. I don't think they see an imminent threat. And also the difference is if China gets anywhere close to having an energy shortage, it'll immediately go to brownouts and 1.5 billion people will put up with it. If we ask consumers in America to turn off their lights at night, they call it, you know, they call it fashion.

13:30I mean, they just their tolerance for pain and their willingness to subject their citizenry to pain is in just a different universe than us.

13:39George Hahn:Here's the thing about China's leverage. It comes back to Iran. Because the Strait of Hormuz is still closed, China has been buying cheap Iranian oil and building reserves while the rest of the world scrambles. The U.S., meanwhile, is footing the bill. Our very own president had this to say when asked whether Americans' financial situations were motivating him to close a deal with Iran. Not 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.

14:19George Hahn:We cannot let Iran have a nuclear weapon. That's all. That's the only thing that motivates us. On Wednesday's Prof G Markets, Ed spoke with economist Justin Wolfers about what the Iran war is actually costing us. We can look every single time that the president has been more belligerent and pushed into the war. Markets have fallen. literally as he speaks. Every single time he steps back and looks like he might taco, markets rise. So that's markets saying they believe, they're acting as if they believe that Americans, large companies will be more profitable over the longer run if the president were to step back from the conflict rather than stepping into the conflict.

15:02We also know that the oil price is up about 60 or 70 percent over the course of the war. And so if you want to extrapolate my negative 0.9 coefficient, that says you take the 70 % rise in oil prices multiplied by minus 0.9, and you can say that U.S. stocks are about 6 % lower than they would otherwise be at 6.3 % as a result of this war. This says that U.S.

15:25George Hahn:stocks are 5 percentage points lower as a result of the president's aggression so far. And although Pentagon officials claim that$25 billion has been spent on the war in Iran, many experts, including Justin Wolfers, say the actual cost is much higher. And finally, after all that, something completely different. To close out our first edition of the week, here are a few moments from the past few years that never quite made it to air.

16:01It's not easy. You think it's easy being mediocre looking? I think it's super easy to be fucking ugly. Like I could be ugly so easily. I just lean into the ugly. I'm ready. Daddy saw a baby bear today, a baby bear. And what did I do? I immediately wanted to give it my muffin. And that's like the worst thing you can do, supposedly. But he was so cute. And then I remembered, oh, that means that there's usually a mama bear. If I got mauled by a bear, that would be not a bad way from a brand standpoint for me to go, right? Or what happened to that crazy professor with erectile dysfunction? Oh, didn't you hear it?

16:33He got mauled by a barren aspen. I think that makes for a great headline. Oh, daddy. Hello, fuego. Can I send fuego? Son el pedo. And there's some people who are like that. They just start from how do they make the world a better place? I'm not one of those people. I wake up every morning and think, how can I make my life more awesome. You get to my age, you travel, you get sick. So I need a private plan. Need you guys to work harder. Need you guys to work harder. Increíble. That was both provocative, politically incorrect, in a very moving, dramatic way. I'm just going to make all of you stars.

17:14I'm going to make all of you stars. You're going to be like, oh, we worked at Prop G. You're hired. You're swimming in the tank with, like, the original Shamu. Like, he's a little bit tortured, but oh my God, can he perform on command, right? But what a thrill for you to be in the splash zone for the initial show of Shamu.

17:36George Hahn:We'll be back next Friday with a fresh edition of the week from Prop G Media, breaking down what mattered and what it all means. Until then, we'll see you around the Prop G universe.

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