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How ‘Altman's Pause' could knock the AI industry off course
How ‘Altman's Pause' could knock the AI industry off course

Washington Post

time4 days ago

  • Business
  • Washington Post

How ‘Altman's Pause' could knock the AI industry off course

James Pethokoukis is a senior fellow at the American Enterprise Institute and author of 'The Conservative Futurist.' OpenAI's latest chatbot model, GPT-5, is an improved artificial-intelligence tool: faster, more capable, more accurate. But it's not the technomagic wand some AI optimists hoped for. The leap to 'superintelligence,' the prize behind $400 billion in Big Tech investment this year, now looks later rather than sooner, if even possible. It's not the end of the world if Silicon Valley adjusts its dreams of miracle cures, super-materials and warp-speed growth down toward steady office-automation efficiencies for now. Progress is often uneven, with periods of rapid innovation followed by plateaus in which new technology is incorporated. And tempering our immediate hopes for scientific wonders at least means diminishing our fears of rogue machines and mass job extinction. But this slowdown comes at a dangerous time in which investors are running one step ahead of a populist backlash that could shackle AI with regulation before the technology can reach its next breakthrough. There's now substantial risk that the industry's critics turn the public narrative toward its visible harms — whether it's fears of lost jobs, environmental harm or a broader upheaval of daily life — without enough visible benefits to counteract them. Americans already tell pollsters they are more concerned than excited about AI. Their doomscrolls bring stories of chatbot addiction, celebrity deepfakes and synthetic voices cloning loved ones to scam the elderly. Older generations worry that younger ones are cheating their way through school. Then there are worrisome economic headlines undermining the case for rapid AI progress with minimal government intervention. One example is the squeeze on entry-level tech positions, created by companies' turn to AI for tasks traditionally handled by recent graduates. As summarized by a recent New York Times headline: 'Goodbye, $165,000 Tech Jobs. Student Coders Seek Work at Chipotle.' (Plenty of readers probably texted that link to their college kids.) This disruption is mostly confined to certain tech sectors, but Americans are hearing constant speculation that their white-collar jobs are next, whether or not it's happening anytime soon. As with the China trade shock, limited or exaggerated downsides can dominate perception: Losses in manufacturing towns overshadowed diffuse gains from trade — cheaper goods, greater productivity, new export jobs — and fueled right-wing populism and tariffs. The economy is on shaky ground for reasons unrelated to AI— such as the trade war — and the technology could run into public worries about stagflation. Energy prices are set to rise as consumers compete for power with AI data centers, and the White House is shortsightedly cutting off new projects that might help. Now add the realistic possibility that the AI investment flood, responsible for half of the nation's growth of gross domestic product in the first half of the year, dries up. If the boom busts and drags down the economy, it could merge with job fears into a potent 'disruption without reward' narrative. That would make it far easier for policymakers to impose strict rules, automation taxes or moratoria — stalling AI not because it failed, but because politics killed it. We can see signs of how this might play out now: Trucking unions are pushing to let local governments block Waymo's expansion. Hollywood unions are pressing for strict limits on AI-written scripts and digital replicas. Organized groups protect their turf, while the public, which might enjoy safer transport or cheaper, more varied entertainment, often has little political voice. Should AI fail to deliver tangible benefits for ordinary voters, politicians may be more inclined to acquiesce to the protectionist entreaties of special interests. This echoes economic history. During the Industrial Revolution, Britain's productivity rose while wages stagnated — a period dubbed 'Engels's pause,' after Friedrich Engels's grim account of industrial poverty. Early mechanization spoils went mainly to factory owners, while laborers saw their traditional livelihoods disrupted, sparking the infamous Luddite attacks on textile machinery. Britain's leaders pressed ahead — and later generations reaped enormous prosperity — but the long lag in sharing those gains fueled years of social unrest. Today's version could be 'Altman's pause' in honor of OpenAI boss Sam Altman: Tech giants take most early AI profits, while disrupted workers wait for the promised rising tide to lift all boats. And unlike in the 19th century, modern populist leaders might side with the displaced this time — as Donald Trump did with dockworkers fighting port automation — or with environmentalists alarmed by data centers' water and energy demands. Anti-disruption sentiment is brewing within both progressive and MAGA coalitions, meaning political blowback could come from multiple directions. Engels's pause ended when gains finally spread: New industries created better-paying jobs, skills improved and living standards rose. Governments today should focus on accelerating that diffusion. That means keeping a light touch on regulation, scaling workforce training so algorithms complement rather than replace workers, and ensuring there is reliable and affordable energy — including nuclear — to power AI data centers. Permitting reform should make it easier to build. Sensible safeguards against misuse are essential, but fear should not freeze progress. The aim is to turn any Altman's pause into a short lull before a broad, sustained rise in prosperity.

Japan is showing the world's economies how to age gracefully
Japan is showing the world's economies how to age gracefully

Washington Post

time25-06-2025

  • Business
  • Washington Post

Japan is showing the world's economies how to age gracefully

James Pethokoukis is a senior fellow at the American Enterprise Institute and author of 'The Conservative Futurist.' Economic coverage of falling birth rates these days sounds like a CNBC adaptation of the 2006 dystopian thriller 'Children of Men,' a film about societal meltdown in a childless future. Income growth will stall! Innovation will wane! Consumer demand will falter! 'This is how great civilizations throughout history have ended,' Elon Musk warned in one of his many grave pronouncements about 'population collapse.' As this stagnation scenario becomes the default economic forecast, governments around the world are scrambling for ways, often at great fiscal cost, to slow or even reverse their baby busts. From cash incentives to paid leave, the results have been disappointing, and there's little sign of a promising untried fix waiting in reserve. Yet Japan, 17 years into population shrinkage despite its own attempts at pricey natalist policies, now offers a surprisingly hopeful counter that an aging economy can still offer growth and prosperity. Japan's falling birth rate has been treated as a national crisis both inside and outside the country for decades. The negative effects are visible enough: Rural Japan is hollowing out, offering a melancholic tableau that's great for TikTok doomscrolling: closed schools, shuttered shops and an abundance of abandoned homes, or 'akiya.' Perhaps you've heard about the village of Ichinono, where the remaining 60 or so residents craft and publicly display life-size puppets, a wistful echo of a more populous past. The data, however, tells a more upbeat tale (if without any Miyazaki whimsy). A Goldman Sachs analysis this year found that wage growth has risen from 0.3 percent in the 2010s to 1.2 percent in the 2020s, while core inflation has climbed from 0.5 percent to a healthier 1.5 percent, an encouraging development in a country that was long stuck in a deflationary trap. As Goldman sees things, the demographic decline that once drained vitality is now creating a 'virtuous cycle' of tightening labor markets, increased worker bargaining power and more investment in productivity-enhancing tech. These trends are helping prop up the economy even as it weathers a shock from the U.S.-led trade war. When Japan's population peaked in the late 2000s, the country initially offset the decline by drawing more women and older people into the workforce. Rising participation helped mask demographic pressures and kept wages subdued. Now, Japan is running out of workers to tap, and scarcity is finally exerting upward pressure on wages, a boon for the remaining labor force. But rather than just grumbling about the lack of workers, businesses are finding ways to use fewer of them. From software to machines — here's where AI and robotics can really lend a hand — productivity has gone up in Japan's most labor-starved sectors, with corporate profits hitting record highs in fiscal 2024. Recent performance doesn't guarantee long-term results, as the report cautions. Still, the Japan scenario seems a more promising path forward than further natalist nudges. Hungary's lavish baby bonuses and generous parental benefits in Scandinavia have barely budged birth rates, proving again that you can't fight a values-based war with economic weapons. Cash-for-kids advocates Musk and JD Vance would protest, but no financially feasible subsidy can compete with 21st-century attitudes about families, career priorities and life goals. A survey by Pew Research Center this month finds that younger Americans report wanting dramatically fewer children than even just a decade ago. Even if we do find ways to boost marriage rates and fertility at the margins, bigger changes would require a massive cultural shift. The religiously observant maintain higher birth rates; a Gen Z faith revival might prompt a revival in fecundity. People with higher incomes are having more children lately; an AI-led economic boom might build on this trend. And you never know, some futurists think a Muskian breakthrough in space travel might rekindle a sense of purpose for those eager to populate the new colonies. These are fun scenarios to contemplate, but they offer little guidance to policymakers grappling with population trends staring them in the face right now. Accepting a Japan-like fate as a manageable result might encourage policies that help better adjust to it. We could emphasize productivity — the business investment provisions in the Senate tax bill would help here, but so would retooling immigration to focus on letting in the smartest, highest-achieving workers. We could encourage a labor market that maximizes mobility so the right person is in the right job in the right place, perhaps by easing occupational licensing requirements and providing vouchers for job relocation. And there's no time like the present to reform pension systems to reflect the new reality of longer lives and shrinking workforces. If a country that's considered an archetype of demographic decline can go gently into that good night, so, too, might the United States and other rich countries. Like the willow in the wind, better to go with the flow than fight against it.

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