Dana Blankenhorn

The Wealth of AI

The battle over who gets what when productivity blossoms has been going on since the Renaissance made learning cheap 500 years ago. It accelerated with the Industrial Revolution, accelerated again with the Computer Age, and again with the Internet. It’s accelerating again.

The wealth of AI is the rocket fuel of Moore’s Law.

The late, great Gordon Moore was an engineer, who saw his theory as a self-limiting phenomenon. In various editions of my book on the subject I have tried to explain how this constant, exponential improvement works outward, from processors, to everything silicon touches.

Like software.

Software is still mostly written by hand. In the 20^th century productivity improved only in line with the tools used to write it. The 21^st century brought Moore’s Law to software. Once software goes online, in a managed cloud, it’s instantly accessible to everyone. All the barriers created over a century to cordon off markets disappear. Some can be rebuilt, but at an enormous cost to efficiency.

Open source is a big part of this new Moore’s Law of Software. The more hands on the code, the faster the code improves. Software communities mean everyone is building, together, on a constantly rising platform. There’s no more reinventing the wheel.

Beating Jim Crow

What Republicans in the South are trying to do is to reimpose the political and social order that went by the name of Jim Crow.

Between the 1877 withdrawal of federal troops, and the 1964 Civil Rights Act, the South had a social order based on racism and the misogynistic tenets of the Southern Baptist Church. This required strict separation of the races, and the sexes. Blacks were either exiled to the North or condemned to lives of brutality. It wasn’t slavery. In many ways it was worse.

What sustained Jim Crow was a leaky economic boycott by the North. Atlanta tried to resist it, with economic exhibitions, with education, then with social pressure. (To learn more about the struggle, read anything by or about W.E.B. Dubois (1867-1963).)

The “white” history of this period, from Henry Grady’s New South Speech to the story of Coca-Cola, is much less heroic.  What businesses mainly did was treat the South as a colony. Tobacco and cotton drew a price, but most of the value went elsewhere. What modernity came in, starting in the early 20^th century, was a century-old order of textile manufacture, drawn from New England by cheap labor. The South remained backward.

The status quo was protected by white race riots, by lynching, and by laws like Georgia’s “county unit system,” which prevented liberals from ever winning statewide by requiring candidates to win a majority of its 159 counties. This was defended by poor white farmers, the “wool hat boys”  whose muscle, and guns, maintained segregation.

The North built railway networks, utility systems, then scaled high-margin manufacturing. The South didn’t. That is, until the advent of air conditioning which, combined with the Civil Rights movement, blew the whole thing up.

The Limits of Senior Power

If I were around 100 years ago, I would be dead. Instead, I’m rich. (Pictured are my grandparents, May and Edmund O'Donnell, in 1918.)

It’s a demographic and economic transformation that is destroying hope for change in America and (perhaps) making us the last generation.

Until recently, people lived their first 20 years dependent on parents, the next 20 as parents, the next (if they were lucky) 20 as grandparents and anything past that dependent on the children. Most of the world still lives this way.

But starting with Social Security in 1934, and continuing through general prosperity to today, America has turned this on its head. Seniors aren’t just living to an average age of 83, we’re doing it with money. I’m just a 68-year old journalist but, thanks in large part to a wife who works in tech, I’m a millionaire. We own our house. We have enough invested to guarantee a fine retirement, God willing. There may even be something left when we’re gone.

This has changed political incentives. There’s no better example than Florida where The Villages, a huge retirement town of 150,000 (almost all of whom vote), has turned the state’s politics on its head. Add them to those already living up-and-down the state’s east, west and south coasts, and you get a huge state entirely devoted to short term thinking. Education, the environment? Fuck ‘em. We’ll be gone.

What Xi Jinping Doesn’t Know

Dictators can do many things.

They can hold territory. They can terrorize people, even kill them.  They can force our bodies into lives of drudgery and poverty.

What they can’t do is whip people into creativity.

Xi Jinping is betting he can. By controlling what people see and hear, by whipping up patriotic fervor, he thinks he can make China a dominant economy. Many western analysts agree.

He’s wrong. They’re wrong.

This has nothing to do with western investment. It lies in the nature of the 21^st century economy. Because money no longer comes out of the ground. It rains down from the clouds. Technology provides added value. That trend is accelerating.

The Cloud is Hardening Borders

One of the biggest untold stories of 2022 is that of our hardening borders.

I’m not talking about national borders. I’m talking about borders between states.

This started with business. Since a worker can be anywhere, and so can a CEO, companies can now arbitrage their location based on local tax law. Tesla still employs people in California. So do companies like Snowflake, which now says it’s based in Montana because the CEO is there. Caterpillar is still an Illinois company but it’s moving to Dallas. They’re doing it to dodge taxes, moving just their CEOs, and their headquarters, to “low-tax” states.

The scam extends beyond income taxes. It goes to operations. It’s now common for companies to demand tax hand-outs in exchange for building the factories they intend to build anyway. Georgia is doing it for Rivian. Ohio is doing it for Intel. In all cases these companies are pushing tax burdens down, onto the middle class, away from where the money is.

The truth is there are no low-tax states. All states have similar responsibilities, so all states have taxes. Texas has high, regressive sales taxes and high property taxes, which hit the middle class hardest. California chose to target the wealthy with income taxes.

The tax war has been followed by states lobbing missiles at each other over national policies. The stunts cost their taxpayers cash but offer nothing in the way of relief. I’m not just talking about Texas and Florida transporting migrants to D.C. or Martha’s Vineyard. I’m also talking about California buying billboards offering help with red state pregnancies. It’s done in the name of local support, pushing national issues, owning red people in blue states and vice versa.

The Way to Wealth is Tolerance

There’s nothing wrong with wealth.

Wealth is supposed to create a sense of responsibility. Andrew Carnegie understood this after he sold his Carnegie Steel in 1901.  Thereafter he devoted himself to giving all his money away. MacKenzie Scott, formerly Mrs. Jeff Bezos, is doing that today. Bill Gates and Warren Buffett have promised to do that.

They do it to protect the system. In The Wealth of Nations, Adam Smith defended capitalism by positing that wealthy people would be inclined toward the common good. Some are. Others are not.

For every Carnegie there’s a Vanderbilt. The good news is that, after a few generations of profligacy, even a Vanderbilt fortune can run dry. Anderson Cooper is the son of Gloria Vanderbilt but he’s not a rich man. That’s a hopeful story.

The good news is that, so far, 2022 is giving me an 1898 feeling. David Traxel’s book on 1898  describes a nation facing a Populist uprising amid a progressive ferment. It describes a war that was blissfully short, a turning point because it brought to power a man who would get along with Wall Street.

The Progressive movement and Wall Street’s self-interest lined up perfectly. Few people understand this, even today. Utilities for electricity, telephony, for transport, for water and for natural gas, could only be created through regulated monopolies. The late 19^th century’s efforts to create them in other ways failed. J.P. Morgan portrayed the evil trust king in the popular imagination, and Theodore Roosevelt the benevolent trust-buster. But they were working toward the same end. The result was today’s American cities.

Ghosts of Our Fathers, Angels of Our Nature

When someone says of the Fascists, oligarchs, religious bigots, and racists of today’s Republican Party “that’s not us,” I shake my head.

That is us. I’m a history major. America has always been a battle between our ghosts and our better angels. There’s nothing Russia or China can teach us in that regard.

• Slavery? We perfected it, in the American South.
• Genocide? We perfected it, in the American West.
• Eugenics? We invented it, in American cities.

The Taliban have been here since the Puritans. Nearly all Christianity’s craziest cults were American-born. The Great Awakening of the 19^th century was just an appetizer.

The Creativity Economy

The Creativity Economy is why Trumpism won’t win.

Technology created the Creativity Economy. Creativity is now the gating factor to economic growth. America has more creativity than any other country, thus more growth.

This means more than having talent. Lots of places have talent. But the Creativity Economy has needs that go beyond having talent. Talent must be taught, and it must be free to learn. It must be mentored. Most importantly it must be empowered. Anything, or anyone, who says “no” to a creative person is harming the economy.

Creativity has many dimensions. The Creativity Economy draws from all of them. Whether your talent lies in organizing, in selling, in technology or explaining it, in music or art, the Creativity Economy needs you. Many business leaders don’t have degrees in business. Part of nurturing the Creativity Economy is giving people the freedom to change their path.

Will Rogers Was Right

“I’m not a member of any organized political party. I’m a Democrat.”

Will Rogers’ saying of a century ago is just as true now, even though the political positions of the parties have reversed.

Republicans are united. Once you’re in, all you need do is follow the leader. They make it easy. You never have to think. It doesn’t matter if the leader is a madman, or you’re taking the country off a cliff. That’s why Joe McCarthy wasn’t fatal. Neither is Trump.

Democrats remain a collection of interests. Instead of ethnic machines and southern whites, it’s a rainbow of McGovern-era complainers.

Democrats make it very hard to be a Democrat. Liberal elites are constantly creating new red lines, and anyone who crosses one crosses them all. Anything that goes wrong, whether large or small, is a sign of the apocalypse, a sign to surrender rather than attack.

Eternal White Majority

When my Irish ancestors came to America, this is how they were portrayed.

The whole point of the Scorsese movie Gangs of New York was to illustrate the contempt with which the Anglo-American majority treated Irish immigrants. They saw them as black.

The same thing happened later, with the Italians. Then with the Russians. But today you wouldn’t see Bruce Springsteen or Jerry Seinfeld portrayed as anything but white. Like Alec Baldwin. Like me.

When people write that America will soon be “majority non-white” this is what they’re ignoring. People can easily be made “white” when it’s convenient. By being made “white,” these same people can then look down upon other people, darker people.