Editor’s Note: We do not support Artificial Intelligence, its development, or the vast majority of its potential uses. This article is intended to be informative to prepare Americans for what may be coming if we’re not able to stop it. Here’s Per Bylund from Mises…
In a recent article, we briefly summarized what it is that we today call artificial intelligence (AI). Whereas these technologies are certainly impressive and may even pass the Turing test, they are not beings and have no consciousness. Thus, this is neither the time nor the place to discuss philosophical issues of how to define a true or full AI—an artificial general intelligence—and whether we should recognize AI software legally as a person (after all, corporations are).
Economically speaking, AI as technology, whether it is used for entertainment or in production, is a good. As Carl Menger taught, what makes something a good is that it (whatever it may be) has the ability to satisfy a human need, that it must be recognized as such, and that a person—the consumer—has or can gain command over it to satisfy those actual needs. In other words, it must be scarce (there is less of it than we can use to satisfy wants) and understood as valuable (because we believe it can satisfy wants). AI certainly fits the criteria.
AI as a Consumption Good
When people entertain themselves by “discussing” with AI (try, for example, Windows Copilot) or generating quirky images using DALL-E (try it here), it is a good of the lowest order—a consumption good. As such, the economic consequences are limited to the effect this has on consumer behavior. But this may in turn have a significant impact on production.
Some consumption goods revolutionize the economy and society. Examples of such goods include the automobile (from the introduction of Ford’s Model-T) and the smartphone (starting with Apple’s iPhone). The former disrupted transportation and infrastructure and facilitated just-in-time manufacturing and urban sprawl, just to mention a few effects. The latter changed everything from how we bank to how we travel.
The point here is that as consumer behavior changes, the production structure follows along. For example, with the broad adoption of the smartphone, paper map production has all but disappeared; whereas, digital location services and intelligent logistics have seen enormous growth and development. And change leads to more change because entrepreneurs build on, add to, and challenge the new discoveries.
AI has the potential to change consumer behavior well beyond its designed functionality. Exactly how and in what ways remains to be seen. But it is safe to say that it has potential. (On the other hand, many goods have had potential to disrupt but didn’t leave a mark.) For example, we may see people produce their own stories, songs, images, and even movies. So perhaps, instead of relying on television or Netflix and Hollywood producers, we’ll make movie night into a make-a-movie night where we watch content we have generated and that fits us perfectly.
AI as a Higher-Order Good
As a tool and thus a good of a higher order, AI has already had an effect and promises to disrupt several trades. Because it is very effective at producing and presenting content, including translating and editing texts, content-related professions are threatened by AI. This includes journalists and copyeditors, as AI programs can write and edit faster than humans. After all, anyone can ask AI to produce or edit a text. Students already use AI to spice up or improve their papers—or let AI write them from scratch.
AI is similarly affecting photographers and illustrators. It only takes a minute to have DALL-E produce a new image exactly as directed, or to have an AI algorithm remove or add things in a picture you snapped. Whereas, having an illustrator create something takes much longer (not to mention the cost).
Programmers and system developers are also seeing the effects of AI, which has no problem both generating new code (without bugs!) or checking already written code. Legacy software written in dated and ineffective programming languages can be run through an AI to make the coding more efficient—and converted into a modern language.
AI is also affecting academia. Why have an instructor tell students about some subject matter instead of letting AI do it? After all, the AI can easily present content in a way that the student prefers. For example, make a movie to explain, say, biology or chemistry in an entertaining way. And it can answer all kinds of questions without ever getting bothered or cranky—and it has nowhere else to be. In research, AI can analyze data more effectively and run thousands of different regressions on data to find something that is significant and important (so-called HARKing, which is very poor research practice—but who will know?). It can write up the paper too, with citations and everything, in just seconds.
AI as Production Capital
All of this means AI can and will be used in production. In fact, it already is and we have only started to see the effects.
AI is best categorized as capital, which is used to make labor more productive (more value output per hour of labor invested) through facilitating more roundabout (but more effective) production structures. Capital goods in general have one (or both) of two functions: it makes existing production processes more effective by increasing productivity, or it makes possible types of production that were not previously possible. AI checks both boxes.
We have already seen how people working in several types of content-based professions can easily be made more productive or replaced entirely by AI. It can also do things that people may have been unable to do—or never thought of doing. This of course can cause so-called technological unemployment as people lose their jobs because AI can do them better (and cheaper). But this is a dystopian way of describing something quite normal and highly useful: that we relieve people, with all their ingenuity, from comparatively simple tasks so that they can create much more value elsewhere.
It is of course problematic for any person losing their source of income, but it is highly beneficial to consumers (and therefore society at large) that these (and other) professions are “creatively destroyed.” The economic point of employment is not to provide people with an income so they can pay taxes (although politicians seem to think so) but to produce goods that can satisfy consumer wants—to make our lives better. Just like there are very few stable boys or buggy-whip producers since the automobile revolution, the future will see fewer people doing news reporting, copyediting, or coding.
Note also that this revolution is not nearly as sudden and disruptive as it may at first seem: the news media, for example, have for many years reduced the number of journalists doing reporting (most outlets nowadays merely republishing standard articles from AP or Reuters). And software development already uses increasingly effective development environments that correct and predict commands, allow for WYSIWYG and drag-and-drop development, and can debug code and suggest solutions to bugs.
AI is only another step in this process. But the threat is greatly exaggerated. We tend to overestimate the impact of technology in the short term but underestimate it in the long term.
Limitations to Overcome
There is a problem, however, and it has to do with how large language models work and what responses they generate. When used in a setting that is strictly rules-based, such as in computer programming, the AI “understanding” of code can greatly improve the productivity of coders (or replace them). AI will not introduce bugs in software unless the specifications are incomplete or contradictory, and it will not make errors.
The same is true for AI’s language generation: it draws from large troves of text data and has a good “understanding” for how humans use language. But there are no rules-based ways by which it can distinguish fact from fiction. Instead, AI draws from what statistically is more likely to be a human-sounding response. For this reason, it produces content that can be entirely wrong.
For example, I asked AI to summarize the content of my 2022 economics primer, How to Think about the Economy. Since it has access to the text, it did a pretty good job summarizing what is in the book. But it also added comments on content that is typically in economics books but that is not in the primer (such as equilibrium theory, perfect competition, and mathematical equations). The AI is correct that economics books typically discuss such things and thus it is statistically probable that my primer would do the same. But it doesn’t.
There is a difference between statistical probability and truth. We will look at this problem and the potential threat that AI poses to human society in a future article.
Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
