For Big AI, the Creepiness Is the Point

And more from this week…

We’re kicking off this week with some Dos and Don’ts.

DO: HAVE CHILDREN

A salute to Timothee Chalamet, for his comments in Vogue on the importance of family:

No spoilers, but the specter of fatherhood hangs over Marty Supreme too. It’s something Chalamet would like to experience. He remembers sitting with a friend, watching an interview with someone whose name he is “definitely” not going to share. The person in question was “bragging about not having kids and how much time it afforded them to do other stuff,” he says. Chalamet and his friend turned to each other: “Like, holy shit. Oh my God. Bleak.” He knows some people can’t have children or are never in a position to. But he does believe procreation is the reason we’re here. Yes, children: “That could be on the radar,” he says.

And a Bronx Cheer to The Economist for this tweet: “With Trump and Vance in power, many pro-natalists believe this is the moment to jump-start baby-making. But some critics see pro-natalism as part of an insidious project to create a whiter America.” Did they find racists who support having kids? Yes. There are racists who support free markets, too, but that doesn’t make The Economist part of an insidious project to create a whiter America.

Also notable, The Economist characterizes pro-natalist policy, from child allowances to subsiidized taxis for pregnant women, as evidence that “governments have tried to bribe people to have more babies.” Not sure whether they likewise characterize “pro-growth” corporate tax cuts as “bribes” to business leaders to get them investing more; we’ll have to check.

Choose your own reaction to “Give Parents the Vote,” a fascinating new article by Joshua Kleinfeld and Stephen Sachs in the Notre Dame Law Review. Kleinfeld joined Oren on the American Compass podcast last year to discuss his argument for demeny voting.

DON’T: DO… WHATEVER THIS IS

The AI creepiness continues, with a company called 2wai encouraging you to record your elderly mother before she dies so that you and your child can pretend to interact with her after she has passed away. Other “AI-powered apps allow you to ‘text with Jesus’ or ‘talk to the Bible,’ giving the impression you are communicating with a deity or angel,” reports Axios. In Japan, meanwhile, “a 32-year-old woman in Japan has officially married an AI persona she built using ChatGPT. After the virtual character ‘Klaus’ proposed, she accepted, ending a three-year relationship with a real partner, saying the AI understands her better.”

OK, but it’s not like the mainstream tech leaders are focused on these applications. Yes they are. Recall, “Zuckerberg’s Grand Vision: Most of Your Friends Will Be AI.”

Here’s Sam Altman, with a characteristically half-baked and incoherent attempt at sounding thoughtful on a serious issue:

Most users can keep a clear line between reality and fiction or role-play, but a small percentage cannot. We value user freedom as a core principle… Encouraging delusion in a user that is having trouble telling the difference between reality and fiction is an extreme case and it’s pretty clear what to do, but the concerns that worry me most are more subtle. There are going to be a lot of edge cases, and generally we plan to follow the principle of “treat adult users like adults,” which in some cases will include pushing back on users to ensure they are getting what they really want.

And when the adult user doesn’t want to tell the difference between reality and fiction? It’s pretty clear to do… what exactly?

A lot of people effectively use ChatGPT as a sort of therapist or life coach, even if they wouldn’t describe it that way. This can be really good! A lot of people are getting value from it already today.

If people are getting good advice, leveling up toward their own goals, and their life satisfaction is increasing over years, we will be proud of making something genuinely helpful, even if they use and rely on ChatGPT a lot. If, on the other hand, users have a relationship with ChatGPT where they think they feel better after talking but they’re unknowingly nudged away from their longer term well-being (however they define it), that’s bad.

Where does talking to an app pretending to be your deceased mother about your pregnancy, or marrying your AI friend, fall in all this? Looks good to Sam.

Notice the parallel between Matthew McConaughey’s nonsensical promotion of his own AI voice and ChatGPT’s promotion of its “Sora” social media app. “You’re helping create a future where we can look up from our screens and connect through something as timeless as humanity itself — our voices,” says McConaughey. Sora “kind of felt like a natural evolution of communication—from text messages to emojis to voice notes to this,” says the Sora team.

Prepare to be bombarded with this message, that the artificial and inhuman is indeed the true and natural endstate of progress.

At least when it comes to illegal genetic engineering of embryos, Sam Altman is… no, wait, sorry, he’s an investor in a company that is “searching for places to experiment where embryo editing is allowed, including the United Arab Emirates.”

SPEAKING OF MISERABLE AND HIGHLY PROFITABLE SOCIAL TRENDS…

Let’s check in on gambling, where Cleveland Guardians pitchers Emmanuel Clase and Luis Ortiz have been indicted for pitch rigging. In response, Major League Baseball has limited prop betting on individual pitches. And the NFL has now announced that it will prohibit a narrow set of prop bets as well. That’s really great, how they’re totally open to regulating this when it comes to the wellbeing of the leagues. The wellbeing of the fans remains irrelevant.

Also irrelevant is the wellbeing of players. The New York Post reports:

“I get death threats all the time — every day,” the veteran relief pitcher [Ryne Stanek] told The Post. “It’s not anything that every baseball player doesn’t deal with all the time. Like, ‘You cost me my parlay, I hope your family dies.’

“Gambling in baseball is doing nothing but making the day-to-day lives of players substantially worse. It’s just people that recklessly bet their money on just anything that they can and if you mess up their bad life choice, you’re the problem and you should die.”

Giants kicker Graham Gano — the team’s representative for the NFL Players Association — shed light this week on a not-new-but-growing epidemic in sports: Athletes learning to cope with abhorrent, violence-threatening messages sent on social media by nameless, faceless, overly invested strangers.

At OnLabor, Harvard Law School student Ben Gantt dives into the reasons for banning prop bets as a matter of player safety.

As for the ordinary people, read Derek Thompson on “The Monks in the Casino,” connecting the gambling craze to the larger set of social problems for young men:

The pro-social script—date around, marry, settle down, buy a house, have a kid—feels more like a luxury every year. The anti-social script—porn, posting, parlays—feels easy and even costless. If young people are throwing out the old script, it’s because they’re hunting for a deal, just like everybody else.

Thompson also highlights an interesting piece by Max Read, focused especially on “predictions markets and suckerfication crisis facing American men.” As online brokerage accounts become enabled to allow betting on virtually anything, the rest of the information ecosystem is cashing in too: “Gambling’s reach is extending deeper into the investment ecosystem as Google strikes a deal to pipe prediction market data from Kalshi Inc. and Polymarket into its finance platform,” reports Bloomberg.

What would it take for Google or the NFL to decide they are making enough money already? Insofar as all this is the profit motive at work, would anyone argue it represents progress?

Bonus link: “Jon Gray Is Reshaping Blackstone Into Everybody’s Investing Megastore” (Bloomberg). The famously exclusive Blackstone has suddenly decided it needs to begin marketing itself to retail investors. Is this a magnanimous awakening to the importance of serving the everyman? Or is it perhaps not a coincidence that the move comes just as the most sophisticated investors sour on the consistently poor returns and high fees of the private equity industry? Who’s to say, really.

THE KIDS ARE NOT ALRIGHT

Goodness, this is a depressing edition of Understanding America. But that’s what you get for your heart-warming dose of Chalamet up top.

Many students at the University of California San Diego cannot do elementary school math. That’s the conclusion of a new report issued by the university, which finds:

Between 2020 and 2025, the number of students whose math skills fall below middle-school level increased nearly thirtyfold, reaching roughly one in eight members of the entering cohort. This deterioration coincided with the COVID-19 pandemic and its effects on education, the elimination of standardized testing, grade inflation, and the expansion of admissions from under-resourced high schools.

Remember when you see high school graduation rates, college enrollment rates, and even college completion rates rising, there is no corresponding evidence that the education system is actually producing better outcomes on standardized test results. The data does not show a strengthening education system, but a fraudulently weakening one.

Did someone say “Fraudulent” and “Weak”? Meet the Harvard students upset that their university might do anything about absurd levels of grade inflation. “Harvard’s report on its undergraduate college found that about 60% of grades were A’s during the 2024-25 school year, a jump from about 25% in 2005-06. The median GPA upon graduation is now 3.83.”

Students “say they already study a lot, sleep very little and face immense stress to perform academically.” The data says they study no more than they used to.

IN HAPPIER NEWS… [drumoll]

TIME TO AWARD A JENSEN HUANG CHINA HAWK BADGE OF SHAME

Let’s meet the nominees for excellence in recognizing that China is not a friendly open market and technology partner.

Anthropic, for disrupting a highly sophisticated AI-led espionage campaign. The attack targeted large tech companies, financial institutions, chemical manufacturing companies, and government agencies. “We assess with high confidence that the threat actor was a Chinese state-sponsored group.”

Norwegian and Danish Authorities, for discovering that China had installed remote kill switches on electric buses sold to Europe. “The investigation comes after transport authorities in Norway, where the Yutong buses are also in service, found that the Chinese supplier had remote access for software updates and diagnostics to the vehicles’ control systems – which could be exploited to affect buses while in transit.”

General Motors, for directing “several thousand of its suppliers to scrub their supply chains of parts from China, four people familiar with the matter said, reflecting automakers’ growing frustration over geopolitical disruptions to their operations.”

The United States, for maintaining restrictions on the sale of advanced semiconductors to China. “Shortages of advanced semiconductors are so acute that the government has begun intervening in how the output of China’s largest contract chip maker, Semiconductor Manufacturing International, is distributed, according to people familiar with the matter. … Chinese tech companies are fighting to secure limited domestic capacity and, in some cases, labs are smuggling coveted supplies of high-performance chips.”

So hard to choose—you’re all winners in our book.

A TIME FOR CHOOSING, CONTINUED

We may not have to choose, we can give out Jensen Huang China Hawk Badges of Shame to everyone.

But Europe does have to choose: Join the United States in pushing China out of its economy, or get steamrolled. “China’s Massive Surplus is Everywhere (Yet The IMF Still Has Trouble Seeing It Clearly),” Brad Setser explains at the Council on Foreign Relations. And, per Bloomberg, Chinese overcapacity is triggering of deflation, which it will now export to trading partners:

Deflation signals a lopsided economy where supply dwarfs demand. That hurts companies, which in turn hurts workers. As consumption weakens, businesses spend less, economic activity slows, debt burdens rise, which then causes more deflation. The downward loop, known in economics as a deflationary spiral, feeds on itself once entrenched. The trend also carries global implications: cheap Chinese exports can depress prices abroad, strain relations with trading partners, and create knock-on effects for multinational companies. Global institutions are sounding the alarm, with the International Monetary Fund projecting that consumer inflation in China will average zero this year — the second-lowest of nearly 200 economies it tracks. The Bank of Korea warned in July that China could export deflation to its trading partners.”

All this continues coming home to roost in Germany, where “industrial production sits at the 2005 level even after a partial rebound in September,” reports the Financial Times. One problem: “A large industrial base that is hard to decarbonise.” Maybe don’t do that? And then, note this asymmetry in reporting: “All this is exacerbated by two distinct political decisions in the US and China, taken 10 years apart: Donald Trump’s trade war, and Beijing’s decision a decade ago to turn itself into a global high-tech engineering powerhouse.” When China upends the global trading system to beggar-its-neighbors and seize control of vital industries, it’s just “turning itself into a global high-tech engineering powerhouse.” But when the United States decides to confront that abuse and restore sanity, that’s a “trade war.”

While Europe would so desperately like the United States to be the bad guy here, the FT continues:

The Trump tariffs have already hit German exporters hard: over the first nine months of the year, their US exports plunged by 7.4 per cent. But the prospects in China are if anything even bleaker, creating a “China shock” that is now biting into the bottom lines of globally successful German companies.

Brussels can be as angry as it wants at Washington—over trade policy, climate, Ukraine… but every single time, it will find Beijing the worse offender and the implausible partner. One positive sign? The EU is backing off its absurd efforts to impose its own uncompetitive ESG rules on American firms (Bloomberg):

The EU responded to concerns raised by America’s fossil-fuel industry and the American Chamber of Commerce, said Pascal Canfin, a senior lawmaker for the centrist Renew Party. “They won,” he said. As a long-time bastion of ESG, Europe’s decision to slash regulations once viewed as standard-setting marks a stunning retreat.

Perhaps not so much “stunning” as “wise,” and “inevitable.”

FINALLY, YOUR INDUSTRIAL POLICY READS FOR THE WEEK

At Ecologica Americana, “An American Shenzen?” Christopher Sandbatch tells the story of the Chinese one:

By the late 1990s, Shenzhen Bao’an International Airport was handling cargo 24/7 and linked directly to manufacturers via bonded “logistics parks,” warehouses where components could enter duty-free, be assembled, and re-exported without clearing customs. A dense mesh of Tier-1 and Tier-2 suppliers emerged around anchor firms like Foxconn, Huawei, and ZTE, compressing supply chains from thousands of miles to tens. It became normal for a prototype smartphone to go from CAD file to physical unit in forty-eight hours.

And the Institute for Progress launches Factory Settings, a new project from leaders of the Biden administration’s CHIPS office:

In the coming years, the federal government will try to increase our resilience in domains like energy, critical minerals, and advanced pharmaceuticals. By default, those interventions are likely to fail. If they do, they’ll deepen Americans’ sense that the government can’t do its job.

The CHIPS office succeeded in dramatically increasing investment in a critical domain, and it executed that goal quickly and effectively. But to succeed, the team had to optimize an operating model that too often fails.

The lessons the CHIPS team learned are applicable whether you’re a socialist or a libertarian, an industrial policy fan or skeptic. If you care about making government work better, the story of CHIPS has lessons for you.

Subscribe to them! And, yes, enjoy the weekend!