Transcription
They're booing it. I mean, they're booing it at graduation ceremonies. Yeah.
And so that I think is very different than I I don't think they were booing the automobile or booing radio in 1929. They all wanted a piece of it.
In 1929, Wall Street crashed. It was a crisis that reshaped politics, economics, and society for decades. Nearly a century later, as investors pour trillions into artificial intelligence and the world grapples with war, debt, and political instability. Are the lessons from 1929? But we are still ignoring. Well, Andrew Ross Sawin is a financial columnist for the New York Times, co-anchor of CNBC's Squirtbox and co-creator of TV's Billions and his book 1929 considers what those lessons might be. Andrew, welcome to Times Radio.
Thanks for having me.
Good to have you here. Look, in the years before the crash, that crash, people were optimistic, they were confident, and they were convinced that a new era was arriving. How similar is the excitement today around AI?
Feels kind of similar, doesn't it, doesn't it? Yeah.
I mean back in the 20s it was the automobile, it was radio. I mean there was a company called RCA which was the Nvidia of its time and people were so excited about what they thought the future was going uh to bring them and I think it's very similar in a way from a technological standpoint to what we all think uh may happen to the world with AI. There's one distinction between AI and those technologies though. The car and you know radio were not I mean they were going to put maybe the you know people on horseback out of out of business, but AI potentially could put us all out of business. So it's a it's a very interesting sort of juxtaposition when you think about I think about AI and I think oh you know are we in an AI bubble that feels similar to the 1920s yes but then I also think about what happens in success with AI and to justify these sky-high prices and valuations of these companies they have to create extraordinary productivity well where does productivity come from means you have to you know do more oftentimes with less and and we are the less, we are the less, we are the less.
I mean I guess the difference was back Then the people who were under threat by the new technology were not the same people whose job it was to think about the threat from the new technology. So it's a demographic thing.
I think it's a demographic thing. And by the way, you're seeing it now. I mean, interestingly, politically, I think even around the world, young people are increasingly against this new technology.
They're booing it. I mean, they're booing it at graduation ceremonies. Yeah. And so that I think is very different than I I don't think they were booing the automobile or booing radio in 1929. They all wanted a piece of it.
Yeah. I mean, so something I've noticed though is when I speak to I guess kind of my peers, you know, professionals, middle-aged professionals, they are extremely nervous about the rise of A and what it means for them. When I speak to the boss class, whether they're in in in film or in music or in media or in banking, they're extremely optimistic. They really they feel this is going to make them a lot of money because it's going to cut out all of the costs, cut out all of us. Yeah.
Well, think about think about if you if you're going to make a film that used to have a cast of and crew of 200 300 people and you could somehow do that with two or three people around a laptop. I mean, that's extraordinary. And the problem or the challenge that I think we're all going to face is the concentration of wealth, which is to say, you know, if AI is successful, does it help everybody or does it really help an even even tighter group of people than than we already have? And we already have extraordinary wealth inequality.
We'll come and we'll come to that in a moment. There is one big difference there then between now and 1929 just the level of popular optimism that people aren't people aren't waking up in the morning and thinking hey life's about to get amazing which I guess maybe they were before that crash. I mean, I think in the 1920s, people thought life was about to get amazing. But I also think that they were therefore jumping into the stock market, you know, with both feet. And this was for the first time that, you know, ordinary people could invest in the stock market. And they were doing it with an incredible amount of borrowing. The banks, these brokerage houses were handing you, you know, you'd walk in, you'd give them a dollar, they would loan you $10 for every dollar you gave them.
And so people were jumping in. in the same way in truth that that's happening today. Now it's not happening with uh loans of this sort of extraordinary magnitude this 10 to1 but the excitement in the stock market right now is as real as it's ever been. I mean you can look at this SpaceX IPO which of course has an element of AI embedded in the right middle of it anthropic saying for anthropic, they're saying a trillion dollars for anthropic there we have open AI potentially going public later this year. So there is the popular conception and then the investor uh view of all this and the investor view of all of this is to the moon.
But I mean so on the investor side of things it'd be one thing if it was just if it was amorphous investing if it's investing in the share price and the share price is going up and up and up but you're also worried about the amount of money actually going into real stuff into chips into data centers into infrastructure. What what worries you there?
Well I think there's a question about how it's being financed. um there's a lot of debt around all of this. So you have companies even like Google which has extraordinary um capacity to make money and they do make you know tens of billions of dollars. They are spending extraordinary money by taking out loans. other people uh meta are taking loans. um we often don't focus on it but the entire sort of energy complex that is um powering these data centers there's a huge amount of debt around that the construction companies the real estate companies so I think what we have to watch for more than anything is debt debt is the thing that is the it is the match that lights the fire of every financial crisis it's not just the the promise of a new technology it is how it is how it's being financed how transparent or not that ultimately is. And right now, by the way, I think we're lacking that that full disclosure, that full transparency. So, those are the things that I worry about.
How much do you worry about the next new technology, the all the stuff that billions upon billions are being spent on now are in a year obsolete. I mean, you look at, for example, you know, you look at what the what the I forget. I forgot the name. The what the the Chinese AI seem to be doing with a fraction of the resources of Deep Seek. Deep Secret Precisely. How worried are you about suddenly, you know, you've got all these companies, they're investing so much money into all this infrastructure and oh look, this infrastructure is obsolete.
So I'm not so convinced that the infrastructure is going to be obsolete so quickly. Um I do think there will be and we should hope for a great technological breakthrough that makes all of this that much more efficient so that you don't need um more and more and more data centers. There should be some kind of of limit at some point to this or at least the slowing of this otherwise the capital expenditures will just continue a pace and the economics of this really won't make any sense. Uh but I do think the large language models will get more efficient. I imagine some of the chips uh may get significantly more efficient. But then again, you think about, you know, a SpaceX and part of the entire vision of that company is this idea they're going to put data centers in space and that there'll be a need to put data centers in space. Maybe we won't have that need. Maybe maybe all the processing power will be done on on this phone that I'm holding right here.
So, look, I mean, I can understand there'll be people who think who are thinking uh sure I'm worried about AI. Sure, I'm worried about my job ceasing to exist, about whatever happens there. And I suppose nebulously I'm worried about whatever happens with those stock market guys and whatever they're doing. How is if we're really worried about a a bursting bubble effectively is what we're talking about. How does that affect the little guy? Why should the little guy be concerned about that?
So I never like to call the little guy the little guy.
You're talking to me. I am the little guy.
Okay. Yeah. And and I'm the little guy, too, in this regard. But I think the the larger implication is that anytime we have a financial crisis, it ultimately results in what's called a contraction of credit. Means that banks stop making loans. It means that the cost of the loans you do have goes even higher. So if you have a credit card, now I'm worried. You're talking about my mortgage. Yeah, I'm talking about your mortgage. I'm talking about your credit card payments and the interest that they're going to charge you on those things. If there is a real contraction in the economy, if in fact the banks and some of these what are called private credit funds get burned on these AI investments, it means they're going to be less likely to lend to other people. Less lending typically means fewer jobs. It means higher higher rates. It means a harder opportunity to get that mortgage. Those are the real implications and that's why it has a demonstrable impact on the entire economy whether you have anything to do with AI or not.
Cheery. Um so look when it comes to finance itself the other sort of I guess the other revolution that's going on is the cryptocurrency revolution.
Mhm. Is that as worrying as AI? Is it the same worry? It should be alive these worries together. How worried are you about that? and and and more to the point is it similar to the sort of democratization of finance that happened in the 1920s?
I don't fully connect him but I will say this this phrase democratization finance was such um was used repeatedly over and over again in the 1920s anytime they would introduce a new product to the public they would sort of wrap it in the flag of we're democratizing finance they're talking to the little guy they're talking to the little guy and they're giving you an opportunity that you otherwise didn't have now your shot at the lottery ticket and I I see a whole number of products, crypto being one of them. Um, there's efforts now to make private equity and venture capital and other kinds of investments available to the quote unquote little guy. Every time we we introduce new products into the market like this, invariably they do not come with the safeguards, with the the guard rails that you ultimately want. And it's only until we go over the cliff, till we tip over, before somebody says, typically regulators, we can't do it like this anymore. And so that's my worry. It's not to say, by the way, that some of these products uh may be good products long term. They may very well be. Um, and I think actually there's a lot of innovation happening in the world of finance. And that's all for the good. The problem is that when those things happen, the people who are building those products are never saying, you know what, I'm gonna I'm gonna I'm gonna rain it in a bit. I'm gonna rain it in a little bit. I'm not going to let everybody participate or I'm going to put limits on on their ability to participate.
But see, that's what's so interesting about where we are now politically. I say where we are now, where the United States particularly is now, that when these sorts of things began, when the tech boom started, be it AI or anything else, when cryptocurrency began, it was said against it was basically a revolution against government, right? It's a tech revolution against government. It was trying to do things the government wouldn't allow. Whereas now you've got a white house very much that is leaning in that is trying to remove barriers. Is that Oh, is that is is that all the more scary?
Well, you're watching the guard rails come down.
I mean, it you can see it with your own eyes. It's happening uh every day. The regulators are genuinely leaning into all of this. And so that is worrisome. Look, here's the part that I wrestle with and I'm curious where you land. I probably sound relatively paternalistic about how we should think about the world of finance and the little guy. I often get emails and text messages and and notes on social media from the quote little guy all the time that are saying, "Sorcin, stop trying to protect me, man. Don't protect me. I want an opportunity. I want the lottery ticket." And by the way, when you say you're protecting me, you're really not protecting me. You're protecting the man.
Yeah. Oh, 100%. I mean, so I I don't write about finance, but I write about tech. And it's exactly that dynamic. I'm like, I feel like someone needs to save you guys. And they're like, "Get out of the way." And so I wrestle with what the right answer is. What I have found though, having written these books and covered this these these worlds for so long is everybody wants a chance at the lottery ticket until the lottery ticket goes wrong. And most of the lot time the lottery ticket does go wrong. And when it does then the fingers and blame game begins.
And nobody blames themselves. By the way, interestingly, 1929, you go back and you read the diaries of people who lost money in 1929. They didn't blame others. They actually blamed themselves. They would write diary entries to themselves saying, "I can't believe I did this. What a mistake. I shouldn't have done this. It was my fault. I can't believe I did this to my family." Blah blah blah blah blah. It it was almost the opposite of the kind of way we live today where, you know, post 2008, it was the banker's fault. It was the regulator's fault. It was the lawyer's fault. Nobody said, "Oh, maybe I shouldn't have taken on the loan." It's not just going to be a crash. We're going to be snowflakes about it.
Um, look, um, in sort of past periods of technological revolution, certainly going back to the 20s, there was a lot of fear that I mean, you go back to the to the loom, the printing press, there was a lot of fear that this is going to take away jobs. In the end it sort of you know ended up vastly creating new industries created the industrial revolution and so on. What a lot of people today would say is, "Okay, you're naysayers about AI. You're saying it's going to take all our jobs. You're saying it's going to wipe out wipe out white collar employment. Actually, new jobs will come of the like that you can scarcely yet imagine." What do you how do you respond to that argument, which you must have heard?
Oh, I've heard it all the time. And by the way, it may it may ultimately be right, but I have to imagine there's going to be a transition period at a minimum. Um, and the idea, you know, right now we're talking about AI in the form of the, you know, a chatbot that I can talk to on a phone or a computer. We haven't really talked about what humanoid robots could do. And, you know, if they're controlled by AI. So, there's a lot of things that you start to say to yourself, wow, you'd have to create a lot of jobs, a lot of completely new different kinds of jobs, and can the robot do it better than a human? Interestingly, I don't know if you followed what's happening with mammograms.
No. So there was a view that you know the first people who were going to lose their jobs were radiologists who dealt with mammograms because AI can read mamograms better than a human eye. There are more radiologists doing mamograms today than ever before. There's more jobs. And you might say, well what's happened? The price of mamograms has come down so tremendously that more women happily are getting mamograms. and they still need people to communicate with patients about what the result of the mammogram is. So again, maybe we'll find out there really are more jobs in the other side, but um I'm skeptical. We talked about the uh the focus of wealth with AI, the way that wealth gets narrower, an ever smaller, narrower group of people end up having having huge wealth. And with wealth, of course, becomes comes power. Um, and I'm interested in whether you foresee through this uh a looming democratic crisis as well that cuz basically cuz cuz I mean tech tech investors look I would argue we're already in a in the looming crisis is here.
Now you read my column last week. The looming crisis is here. The the amount of money that is effectively buying influence in Washington is demonstrable. We we've seen it already. And I can't even imagine how we get out of that doom loop. Meaning, I can't ever imagine that any of the individuals who are currently using their money to influence the government are ever going to do it to undo their own influence. And so the oligarchy, the plutocracy is only going to manifest itself and get larger. And what is that going to do ultimately? The politics and and the polarization.
Well, I mean do you foresee um I don't know like revolutionary feeling because of that I mean or well there are people like Ray Dallio um you know who's a famed investor who believes that we are on the cusp of if not already at this moment of sort of civil unrest that's going to turn into some kind of civil war. I I can't speak to that. Um I don't know. But I do think that the polarization is likely to get worse not better.
So I mean you've spent years interviewing some of the most sort of powerful people in technology. You had a role in in in in billions in showing us what these people are like. Something that fascinated me from billions fas fascinates me from your other work as well is the question of do you like these guys? Do you feel what do you I mean do you trust them and do you like them are different questions but I guess I want to ask both those questions.
So, I have great empathy for anyone. Um, one of the things that I have learned over the years is no matter how much money you have in your bank account or what title's on your business card, um, it's not emotional armor. Mhm. So I always find in my role as a journalist to some degree when I'm reporting, and this is different than columnizing with an opinion, but when I'm reporting, my job is to meet them where they are. Not necessarily where I want them to be or where you may want them to be, but where they are. And so when you say, "Do I like them?" I think there are aspects and things about a lot of them that I think are fascinating and interesting and and great and there are other elements where I say to myself, I cannot believe that the moral compass is this or that or what have you. So, um that's probably where I land. It's not um a one-sizefits-all uh for everybody at all. But I also look there there's so many things about these individuals that I admire. Some of them created great um you know revolutionary products which we use you know in our lives and have change you know have authentically changed our world.
How often are they frightened? How often are they frightened about what they've created and where it might be leading?
Well, what's so interesting to me is that you talk to a Sam Alman who runs OpenAI or a Dario uh Amod who runs Anthropic and both of them I think they're underneath there's a level of being frightened um because I think they understand the power of the technology in a way perhaps maybe others others don't. Um, I don't think that most of the other individuals that I have covered over the years are frightened of of what they've created. I don't think I've just interviewed Jeff Bezos a couple weeks ago. I don't think that Jeff Bezos is frightened of what Amazon has done. I think he thinks that Amazon has and I think it's true and authentic has has changed the world in so many different ways. Um, I think uh for the better for a lot of it. Uh but obviously it's cost you know workers uh and stores and you know it's changed the way we shop. Um I don't know what he thinks about I I don't think he would think that Blue Origin is is um dangerous per se to to humankind.
No, but he might think the collapse of the high street is dangerous to humankind. He might think the the, you know, the the the collapse of physical shopping, right? The replacement of humans in his warehouses by robots, that kind of thing.
Look, I actually think that that Jeff Bezos does have a deep appreciation for sort of the the issues that all of this creates. Um, I don't know if he has an answer to it. And I think that he does think that it's better the opportunity for you to be able to shop on your phone and get it uh this afternoon and um to be able to get it into places and be able to get products or even sell products from places that you could never do that, you know, 10 years ago. That's a better world today than it is before. But I think he also >> I think he's very cognizant of of what it of what the costs are on the other end.
Look, finally then, and I'm aware no one can really answer this question, but you can probably answer it better than most better than most. What does the world look like in 10 years time? What has what what has this done to our politics? What has this done to our money? What has this done to our lives? Are we having this conversation or is one robot chatting to another one?
No, we're going to be having this conversation. We may be lamenting [laughter] what's happening. Um, I think that the inequality piece, unless rectified through some kind of real shifts in in government policy, are going to be real. Um, I think we're going to be having a big conversation of what that transition looks like in terms of what AI is doing to jobs and where the future of jobs really lies. I think that actually it may come uh for some white collar jobs before it comes for certain blue collar jobs. Um, and I think we're going to have a bigger conversation about wealth and taxes um and what inequality is and and I think the bigger issue is going to be the dignity of work ultimately. Um I get great um satisfaction from working. I have a family. I love my kids. I love my wife. But I really enjoy working. I do. And um I think a lot of people in their own way depending on some people may not love their job as much as I do. But I think if if we lose that, that is the thing that could change the conversation we'll be having a decade from now.
Andrew Rossen, thank you very much indeed.
Thank you for having me.