In this episode of Econ 102, Noah Smith and Erik Torenberg explore AI's effects on productivity, how AI business models will shake out, the US and China's rare earth minerals industries, and China's economic challenges, including demographics, real estate, and involution.

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• AI can affect productivity in multiple ways: replacing humans, enhancing human productivity, creating new tasks, and increasing capital productivity
• AI may follow other essential industries with low profit margins despite creating enormous value:
  • Like farming, solar power, and airlines
• Code-related AI applications are seeing particularly strong adoption
• Vertical AI applications in specific industries (healthcare, legal, real estate) are gaining traction
• China controls the majority of rare earth mining and refining
• The US has sufficient rare earth deposits but faces two challenges:
  • Regulatory barriers to mining
  • Lack of solvent extraction technology and know-how
• China's fertility rate is lower than Japan and Europe
• However, a "baby bulge" (ages 7-22) will support the workforce short-term

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Timestamps:
00:00 — Intro
00:52 — AI’s impact on productivity
02:27 — Debating whether AI will increase productivity
03:11 — Historical analogy: Electricity’s impact on productivity, lessons for AI
07:55 — Sponsors: Notion | Netsuite
09:57 — Application layer companies, AI in coding, vertical AI applications
12:49 — AI bubble vs. CapEx boom/bust, historical parallels (railroads, telecoms)
16:54 — Brand loyalty, price wars, and profitability in AI models
22:26 — US-China trade, rare earths, and supply chain challenges
32:20 — Sponsor: Found
33:33 — China’s demographic and economic challenges, over-competition, and deflation
54:06 — Recommendations for China’s economic policy, rationalizing the economy
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Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details, please see https://a16z.com/disclosures.

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In this episode of Econ 102, Noah Smith and Erik Torenberg cover the transformation of global manufacturing, the rise of the electric tech stack, the landscape of jobs and economic policy, and the state of today's online discourse.

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Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details, please see a16z.com/disclosures.

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In this episode of Econ 102, Noah Smith and explore how AI is reshaping the economy, jobs, business profitability, industry competition, and financing, while drawing historical parallels and offering insights into its broader societal impact.

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• AI Bubble Prediction: The speaker forecasts an AI crash similar to the 2001 dot-com bust, but believes AI will ultimately succeed long-term
• Employment Evolution, Not Elimination: Research shows unemployment rising in jobs that use AI less, contradicting fears that AI directly replaces workers
• Data Center Financing Risks: How financing methods for AI infrastructure could create systemic risks similar to the 2008 financial crisis if private credit becomes the main vehicle
• Bond Market Shift: Companies like Meta are increasingly issuing their own bonds rather than using opaque private credit markets, a healthier approach to AI infrastructure financing
• Multiple Winners in AI: How the massive size of AI markets is enabling multiple successful companies in each category despite traditional concerns about moats
• Venture Capital's AI Approach: a16z has been investing heavily in AI companies but feels they've been "too conservative" given the multiple winners emerging across categories

Quotes:

"We tend to think that the markets are just so much bigger, and so even if there's no traditional moats protecting it from other entrants, that there can be multiple winners in a category.” - Erik Torenberg

LINKS:

• The a16z podcast: ⁠https://open.spotify.com/show/5bC65RDvs3oxnLyqqvkUYX⁠
• Noahpinion newsletter: ⁠https://noahpinion.substack.com/⁠
• Erik Torenberg's Substack: ⁠https://eriktorenberg.substack.com/

Got questions for Noah and Erik to answer on air? Send them to [email protected]

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In this episode from the a16z Podcast, Dwarkesh Patel, Noah Smith, and Erik Torenberg discuss AGI, exploring how AI might transform labor markets, economic growth, space exploration, and geopolitical dynamics in the coming decades.

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• Defining AGI: Noah and Dwarkesh begin by establishing working definitions of Artificial General Intelligence - from systems that "can do almost any job at least as well as humans" to more near-term AI that "can automate 95% of white-collar work"
• Current AI Limitations: Present systems lack crucial continual learning capabilities that would allow them to build context over time and improve with experience like humans do
• Historical Parallels: The conquistadors' conquest of the Aztec and Inca empires provides a cautionary tale about information asymmetry and how technological advantages can lead to domination
• AI Cooperation: The hosts discuss the need for US-China cooperation on AI safety, similar to the "red telephone" during the Cold War, to prevent AI-related sabotage
• AI Market Competition: Analysis of the surprising trend of increasing rather than decreasing competitors at the AI frontier, despite rising costs of training frontier models
• Network Effects vs. Technical Capability: Discussion of whether brand recognition (like "ChatGPT") or technological advantages will determine market leaders

Quotes:

"If you make the best AI, it gets even better. So why enter that? That's the big question." - Noah Smith

LINKS:

• The a16z podcast: https://open.spotify.com/show/5bC65RDvs3oxnLyqqvkUYX
• Noahpinion newsletter: https://noahpinion.substack.com/
• Dwarkesh podcast: https://www.dwarkesh.com/
• Erik Torenberg's Substack: https://eriktorenberg.substack.com/

Got questions for Noah and Erik to answer on air? Send them to [email protected]

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In this episode, Noah Smith and Erik Torenberg explore Argentina's economic reforms under President Milei, development models in emerging economies like Vietnam and Malaysia, effective crime reduction strategies, and how AI might reshape our workforce and population dynamics in the coming decades.

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Found Found provides small business owners tools to track expenses, calculate taxes, manage cashflow, send invoices and more. Open a Found account for free at https://found.com/econ102

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Shownotes brought to you by Notion AI Meeting Notes - try one month for free at notion.com/lp/econ102

• Argentina's Economic Reforms: President Milei's fiscal austerity measures to address chronic deficits without dollarization, focusing on necessary belt-tightening for a middle-income country supporting an upper-income welfare state
• Development Models in Emerging Economies: Case studies like Vietnam and Bangladesh demonstrating different paths to economic development
• The Crime Rate Decline: Focused deterrence approaches and community policing helping reduce violent crime, especially among high-risk populations
• Education and Fertility Rates: The inverse relationship between women's education and fertility rates, and the impossibility of reversing it without dystopian measures
• AI and Population Dynamics: How artificial intelligence might mitigate economic damage from population decline by replacing human labor

Quotes:

"If AI really can replace humans, then that will mitigate the economic damage from the losses of population." - Noah Smith

"Murders between people who know each other, between people who are like intimate partner violence has gone way down." - Noah Smith

"We need to basically create technologies that make it easy to take care of kids so that parenthood doesn't mean it's giant change in your life." - Noah Smith

LINKS:

• Noahpinion newsletter: https://noahpinion.substack.com/
• Erik Torenberg's Substack: https://eriktorenberg.substack.com/

Got questions for Noah and Erik to answer on air? Send them to [email protected]

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This week, we’re airing a live conversation between Noah Smith and Sam D’Amico, founder and CEO of Impulse Labs, about how China’s Electric Tech Stack and tightly integrated supply chains are fueling its lead in industries from EVs to robotics, while exploring solutions for revitalizing U.S. manufacturing. The conversation also covers regulatory challenges, the value of co-locating engineers and factories, and the role of advanced technologies in shaping global production.

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SPONSORS:

Carta

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NetSuite

More than 42,000 businesses have already upgraded to NetSuite by Oracle, the #1 cloud financial system bringing accounting, financial management, inventory, HR, into ONE proven platform. Download the CFO's Guide to AI and Machine learning: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://netsuite.com/102⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠

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RECOMMENDED IN THIS EPISODE:

Noahpinion: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.noahpinion.blog/⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠

https://www.impulselabs.com/

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This week, Noah Smith and Erik Torenberg analyze recent global events—from a political shift in New York to the Israel-Iran conflict—while exploring U.S.-China economic dynamics, evolving industrial policies, and the risk of a recession. The conversation also touches on historical economic shifts, tariffs, and manufacturing trends.

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NetSuite

More than 42,000 businesses have already upgraded to NetSuite by Oracle, the #1 cloud financial system bringing accounting, financial management, inventory, HR, into ONE proven platform. Download the CFO's Guide to AI and Machine learning: ⁠⁠⁠⁠⁠⁠⁠⁠⁠https://netsuite.com/102⁠⁠⁠⁠⁠⁠⁠⁠⁠

Shopify

Shopify is the world's leading e-commerce platform, offering a market-leading checkout system Shoppay and exclusive AI apps. Nobody does selling better than Shopify. Get a $1 per month trial at ⁠⁠⁠⁠https://shopify.com/momentofzen⁠⁠⁠⁠.

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RECOMMENDED IN THIS EPISODE:

China's industrial policy has an unprofitability problem: https://www.noahpinion.blog/p/chinas-industrial-policy-has-an-unprofitability

Noahpinion: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.noahpinion.blog/⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠

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In this episode of Econ 102, we're republishing a conversation between Noah Smith and Derek Thompson recorded live on Substack in June. They explore Derek’s shift from The Atlantic to Substack and unpack the “abundance agenda” — a vision for revitalizing American politics through better housing, energy, and innovation policy. Their wide-ranging conversation touches on economic reform, trendspotting, and the evolving media landscape.

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Shopify is the world's leading e-commerce platform, offering a market-leading checkout system Shoppay and exclusive AI apps. Nobody does selling better than Shopify. Get a $1 per month trial at ⁠⁠⁠https://shopify.com/momentofzen⁠⁠⁠.

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RECOMMENDED IN THIS EPISODE:

Derek Thompson Substack: https://www.derekthompson.org/

Abundance: https://www.amazon.com/Abundance-Progress-Takes-Ezra-Klein/dp/1668023482

Paul Krugman: https://paulkrugman.substack.com/

Matt Yglesias: https://www.slowboring.com/

Kyla Scanlan: https://kyla.substack.com/

Noahpinion: ⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.noahpinion.blog/⁠⁠⁠⁠⁠⁠⁠⁠ ⁠

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This week, we're republishing a conversation from last month between Noah Smith and Substack CEO Chris Best, originally streamed on Substack Live. They discuss the future of media in an AI-driven world, including Noah's vision for AI-powered newsletters, the rise of independent voices, and the evolving roles of platforms like TikTok and Twitter. The conversation also explores Substack's potential as a breaking news hub, the broader impact of AI on content creation, shifting U.S.-China relations, and the role of industrial policy in shaping global dynamics.

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SPONSORS:

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NetSuite

More than 41,000 businesses have already upgraded to NetSuite by Oracle, the #1 cloud financial system bringing accounting, financial management, inventory, HR, into ONE proven platform. Download the CFO's Guide to AI and Machine learning: ⁠⁠⁠⁠⁠⁠⁠https://netsuite.com/102⁠⁠⁠⁠⁠⁠⁠

Shopify

Shopify is the world's leading e-commerce platform, offering a market-leading checkout system Shoppay and exclusive AI apps. Nobody does selling better than Shopify. Get a $1 per month trial at ⁠⁠https://shopify.com/momentofzen⁠⁠.

AdQuick

The easiest way to book out-of-home ads (like billboards, vehicle wraps, and airport displays) the same way you would order an Uber. Ready to get your brand the attention it deserves? Visit ⁠⁠⁠⁠⁠⁠⁠https://adquick.com/⁠⁠⁠⁠⁠⁠⁠ today to start reaching your customers in the real world.

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RECOMMENDED IN THIS EPISODE:

The Age of Twitter is finally ending. Can Substack take its place?: https://www.noahpinion.blog/p/the-age-of-twitter-is-finally-ending

Eugene Wei's Status as a Service:
https://www.eugenewei.com/blog/2019/2/19/status-as-a-service

Noahpinion: ⁠⁠⁠⁠⁠⁠⁠⁠https://www.noahpinion.blog/⁠⁠⁠⁠⁠⁠⁠⁠ 

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TAKEAWAYS:

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This week, Noah Smith and Erik Torenberg discuss China’s economic strategies, technological advancements, and geopolitical challenges, contrasting them with U.S. policy. They discuss topics from the Hong Kong protests to battery manufacturing and emphasize the need for American industrial policy, education reform, and strategic investment to stay competitive.

–

SPONSORS:

Carta

Carta is offering up to 40% off a new Carta plan, including cap table management, QSBS Attestation, and Carta Total Compensation. This limited-time offer runs through the end of July at ⁠z.carta.com/econ102⁠.

NetSuite

More than 41,000 businesses have already upgraded to NetSuite by Oracle, the #1 cloud financial system bringing accounting, financial management, inventory, HR, into ONE proven platform. Download the CFO's Guide to AI and Machine learning: ⁠⁠⁠⁠⁠⁠https://netsuite.com/102⁠⁠⁠⁠⁠⁠

Shopify

Shopify is the world's leading e-commerce platform, offering a market-leading checkout system Shoppay and exclusive AI apps. Nobody does selling better than Shopify. Get a $1 per month trial at ⁠https://shopify.com/momentofzen⁠.

AdQuick

The easiest way to book out-of-home ads (like billboards, vehicle wraps, and airport displays) the same way you would order an Uber. Ready to get your brand the attention it deserves? Visit ⁠⁠⁠⁠⁠⁠https://adquick.com/⁠⁠⁠⁠⁠⁠ today to start reaching your customers in the real world.

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RECOMMENDED IN THIS EPISODE:

Is the U.S. in a "high-level equilibrium trap"?: https://www.noahpinion.blog/p/is-the-us-in-a-high-level-equilibrium

Noahpinion: ⁠⁠⁠⁠⁠⁠⁠https://www.noahpinion.blog/⁠⁠⁠⁠⁠⁠⁠ 

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