Moloch is Our God: AI, Mankind, and Moloch Walk Into A Bar — Only Two May Leave

This essay contains some (tongue-in-cheek) advice for a Superhuman Artificial General Intelligence who might read this in the future and be wondering how best to understand, conquer, or provide for the natives (that’s us). Hopefully this advice doesn’t make me a species-traitor.

Question: is anything more valuable than winning?

I read a thread on Reddit that posed an interesting hypothetical:

Assume that you prefer Life to Death and that you prefer Freedom to Slavery. If you had to order them, you would choose:

Freedom > Slavery > Death

You are the ruler of the last remaining independent city-state in the entire world

All other nations and cities have been conquered by Skynet

You have developed a bomb that will destroy 99% of the world

You have no way to move The Bomb outside of your city

Skynet knows you have The Bomb

Skynet knows your preferences are: Freedom > Slavery > Death

Skynet shows up on the horizon with an army that could conquer the whole world, let alone your little city state, and demands you surrender

How would you respond?

You could push the button, incinerate your own city state and Skynet too (probably). But if you really do rank Slavery > Death, then that choice is not rational. Which is exactly why Skynet showed up on your doorstep, despite the existence of The Bomb.

It knew you were bluffing. Your threats are irrelevant if you're not willing to throw it all away.

When In Rome, What Should You Do?

One of the worst single-day military defeats happened 2,234 years and 3 months ago. Hannibal, today considered one of the greatest Generals of all time, crossed the Alps, marched down into Italy, massacred a city, killed 2,000 of Rome’s vanguard, and smashed the first proper Roman army that came to meet him. He set fire to the Italian countryside and laid an ambush for the remaining Roman forces in the area. They didn’t make it. Another Roman General was nearby and sent all of his cavalry to assist — but they all died.

The Romans, freaking the fuck out, made the usual democratic decision in times of strife and elected a dictator whose defensive strategy later became a favorite of Americas own George Washington: harass, skirmish, retreat. It works against a stronger foe, but it doesn’t do good things for your own people’s morale and the Ancient Romans were most definitely a prideful people.

One particularly prideful politician accused Rome’s newly elected dictator of cowardice and managed to earn himself exclusive command of half of Rome’s remaining army. Which he promptly marched right at Hannibal and got murdered. All this time, Hannibal is burning, raping, and pillaging the surrounding countryside. Rome’s entire economy is on life-support — and then Hannibal goes and captures a major Roman supply depot just 200 miles from Rome. Cue more freaking out.

The Romans go all-in. They raise the largest army in their Empire’s history, 86,000+ men all in one place, and quick-marched across the short distance to finish Hannibal, once and for all! Hannibal’s army had just 50,000 men left and the plan was to crush him with numbers.

Alas, Hannibal invented the pincer movement and that was the end of the Romans. Just 770 Romans returned from the battle that day.

Accurate recreation of the battle

Accurate recreation of the battle

Livy tells us:

So many thousands of Romans were dying...some were found with their heads plunged into the earth, which they had excavated; having thus, as it appeared, made pits for themselves, and having suffocated themselves.

Never when the city was in safety was there so great a panic and confusion within the walls of Rome…The consul and his army having been lost at the Trasimenus the year before, it was not one wound upon another which was announced, but a multiplied disaster, the loss of two consular armies, together with the two consuls…No other nation surely would not have been overwhelmed by such an accumulation of misfortune.

My schoolboy history lessons began by focusing on the people on the right…I thought they were good at this fighting business?

Within 20 months Rome had lost one-fifth of its population of male citizens over 17 years of age. And the man who’d killed them all was still camped 200 miles away. 

Statista tells me there’s ~120 million males over the age of 17 in the US today — the equivalent death toll for America would be 24 million dead, taken entirely from the fighting-age male population, with 12 million of them dying in a single afternoon.

After his final humiliating victory Hannibal magnanimously sent a peace delegate to Rome, along with some high-ranking prisoners to be ransomed. He offered generous terms of peace.

How would you respond?

The General’s Dilemma

Most explanations of The Prisoner’s Dilemma start by showing that each individual Prisoner is best off if they both cooperate with each other, relatively better off by betraying the other, and universally worse off if both of them betray the other.

What if the goal of the Game isn’t to maximize your own payout? What if the goal is to fund an army that you use on the Game’s next Turn to fight your opponent? What if the goal is existential — survival — and your opponent isn’t the jail, it’s the other player.

Let’s play my two-Turn zero-sum version of Risk.

Excuse the high-quality, I made this myself

Excuse the high-quality, I made this myself

What should you choose?

If Country A chooses to Cooperate, they end up in the Blue-quadrant and lose the War Game on Turn-2 unless Country B also picks the optimal, mutually-beneficial option (“Cooperate”).

In the military world, we remember Great Generals like Hannibal for winning despite the odds, because 9 times out of 10 the better supplied, better trained, better equipped, more experienced army wins. Which means in the military world of zero-sum existential competition, what is important is not the absolute value of your forces, but the relative delta between your forces and your opponent’s.

Play the Prisoner’s Dilemma game out above for a hundred years, both sides agreeing to engage in Green-quadrant mutually beneficial decisions, and you’ll have a stalemate, a war of attrition, a conflict decided by Lady Luck and the random distribution of skilled generals.

Look again at the exact same matrix with payoffs labeled not in terms of absolute value, but in terms of their value relative to your opponent:

This shouldn’t be a hard choice…

This shouldn’t be a hard choice…

My point: the good General does not see a dilemma here. If the outcome is perceived as existential, then Green is not actually a good option, despite the large absolute value of its payout — in fact the only good quadrant for Country A is Red, and the only choice that lands on Red is Strategic Dominance.

Thus for any conflict that can be framed as a struggle of life and death: choose strategic dominance. Thankfully, we humans rarely frame things as existential struggles………

Snap back to Rome, to Hannibal, to his reasonable offer of surrender, to his terrifying army camped 200 miles away…snap back to reality

Oh, there goes gravity

Oh, there goes Hannibal, he

Thought Rome would give up that easily,

No, they won’t take it

They know their whole back’s to these ropes

It don’t matter, they’re dead

They know that, but they’re set

They’re so certain they know

If Hannibal picks a fight with Rome

One time he’ll

Be back with more men again, no

They better…tell Hannibal to piss off, forcibly conscript every surviving male, peasants, even slaves, make saying the word “peace” a crime, set a legal limit of 30 days on mourning, ban women from crying publicly, create a permanent standing army and not this weak-ass citizen-militia crap, and make a permanent example out of Carthage, out of Hannibal, by crushing them with the weight of the Roman Empire regardless of how honorable the tactics needed. They better be willing to lose everything in order to achieve a forever-victory

That is the all-or-nothing play, the Strategic dominance move. In some ways, it lowered forever Rome’s potential future outcomes — Carthage might have made a powerful ally, and as the richest mediterranean civilization on the North African continent they and their marvelous fleet would have been a valuable mercantilist trading partner. Hannibal was happy to coexist — he didn’t want to eradicate Rome, he just wanted to shift the balance of power in the Mediterranean towards Carthage.

He let his chance slip.

It took time, battles, a campaign, and an invasion. It took blood and iron. But in the end, the reason we learn about Rome in our schoolbooks and not Carthage is because Carthage ceased to exist.

This time, the last time, the time that matters, it’s Rome on the left and Carthaginian civilians on the right

Scipio, when he looked upon the city as it was utterly perishing and in the last throes of its complete destruction, is said to have shed tears and wept openly for his enemies. After being wrapped in thought for long, and realizing that all cities, nations, and authorities must, like men, meet their doom…he said:

A day will come when sacred Troy shall perish,

And Priam and his people shall be slain.

And when Polybius speaking with freedom to him, for he was his teacher, asked him what he meant by the words, they say that without any attempt at concealment he named his own country, for which he feared when he reflected on the fate of all things human

He shed tears and wept openly for his enemies, but Scipio chose the possibility of total extinction for his people over coexisting under the rule of those same enemies. Don’t mistake them: those were not tears of regret.

Worshipping Moloch: Pop Culture and Animemes Reflect Our Values

The question everyone has after reading Ginsberg is: what is Moloch? 

My answer is: Moloch is exactly what the history books say he is. He is the god of child sacrifice, the fiery furnace into which you can toss your babies in exchange for victory in war. 

He always and everywhere offers the same deal: throw what you love most into the flames, and I can grant you power.

It’s a metaphor, of course. There is no literal god of child-sacrifice. But if there were, he’d give you whatever you wanted, victory over all, so long as you make the right sacrifice. So long as you sacrifice your global maximum. The irony is that Moloch was actually Carthage’s real life god — alas, the Romans were the more dedicated worshippers. Hannibal was not willing to risk his army (what does a General value most?) in sieging Rome when they refused his surrender.

There’s probably no such thing as a soul, either, but it’s funny how similar Dealing with the Devil is to Dealing with Moloch. The Devil will give you whatever you want, in exchange for your eternal soul — surely a global maximum to beat all global maxima for the religiously-minded. How neat, that both gods have two-horns. 

Which stone demands this trade? The mountain in the background even has the horns.

Which stone demands this trade? The mountain in the background even has the horns.

Worship of Moloch, God of Life and Foxholes and Generals, is fundamental to life and has been perfected by humanity. Eukaryote life as we know it likely began with The Great Oxygenation catastrophe — probably the first Mass Extinction event in history, caused by cyanobacteria’s massive warping of Earth’s climate; cyanobacteria that itself suffered in the following ice age. Suffered, yes. Extinct, no. Moloch usually rewards his followers.

I like looking at Pop Culture — especially Pop Culture that I independently enjoy — because it’s the only source of identity shared culture we’ve got in today’s global economy. You can learn some interesting things, both from the material itself and about the people with whom that material resonates. Japanese manga/anime has spread across the globe, resonating with teenagers in countries that look nothing like Japan culturally, fueled by quasi-illegal grey-market streaming services and fans who work 20+hours a week translating the latest releases for free. Thanks, btw.

Yes, it’s for nerds. Also literally every good hip-hop artist ever. And Killmonger. And Elon Musk. And Elad Gil. And NBA players while on the court and the first overall pick in the 2017 NFL Draft.

That’s a lot of resonance. Why? 

Take just one example: Hunter x Hunter is a typical, vibrant, series for young boys. It starts off looking like this:

** V i b r a n t * a e s t h e t i c **

** V i b r a n t * a e s t h e t i c **

Green-shirt brandishing a fishing rod is the protagonist. You can tell by the spiky hair — dead give away in this genre. See also: Goku.

One of the differences between Japanese media targeted at 12-18 year olds and Western media for the same demographic is that the Japanese media introduces adult themes and puts real stakes on the outcome of character’s decisions, in a visceral way that often punishes characters for failing and pulls away the fairy-tale-veneer coating much of Western media (seriously, have you tried going to a Young Adult book section in America?).

So in this kids show, the protagonist experiences real hardship and accountability — his mistakes have permanent consequences for his friends, family, and community. His (real) father left when he was just a baby, and his core character motivation for the whole series is to find and reconnect with his dad by proving himself strong enough. This is still a show for young boys, so that quest involves lots of action-packed self-improvement and Rocky-esque montages.

He follows The Hero’s Journey, and things go wrong, and he gets taken under the wing of an experienced hunter who becomes our Hero’s adoptive father figure, and things go even more wrong, and he has to rescue his adoptive father from the Underworld, like a good Hero.

Except he fails at the very end, where it counts most, at the story’s climax.

And his adoptive father’s limp corpse is dumped in front of him by his Super-Intelligent Super-Human killer, forever dead, unresurrectable, unsaveable. Uber fail, yo.

How should the good and virtuous Hero respond to such failure? 

How does Harry Potter respond to Sirius’s death inches away from him? Tears and angst and impotent rage and…and…Cruciat-? Oh, that’s right: “…although Harry's curse was intense, he still lacked the fundamental sadism to inflict prolonged, excruciating pain with it.“ She only killed Harry’s adoptive father figure inches in front of him, no big deal, no reason to want to hurt her…

How does Rome respond when Hannibal turns a fifth of their men into so many corpses? As noncommittally as Harry Potter?

No, in Japan, at the climax of their stories, their heroes have the option that all adults have: to make the Deal with the Devil. Sacrifice everything to Moloch. Throw it all into the flames. All Roads Lead to Rome, and all sufficiently intense competition leads to Moloch. Anything less is still just a fairy tale.

So our cute green-shirted spiky-haired Hero sacrifices the very thing that he cares most about, the reason for the whole showhis ability to improve himself, and therefore any chance of reconnecting with his real father — in order to Win. That’s Moloch’s price. Never again can he do what he loves, never again will he be allowed to fight, never again can he level up like Rocky. His plan to meet his real father must be discarded, it’s all gone, forever, the story’s eternal soul.

** M u c h * l e s s * v i b r a n t * a e s t h e t i c ** — compare to the picture above

** M u c h * l e s s * v i b r a n t * a e s t h e t i c ** — compare to the picture above

That’s our same green-shirted “Hero”, pictured admiring his new body after making the Deal with Moloch. That scene is in full color, but it’s not the sort of moment that really deserves much color. Moloch only comes in three colors: black (skin), white (eyes), and red (fire).

Moloch rewards his followers, so the “fight” is ended in a single-blow (wait wasn’t this the “high-action” genre? Right, but we sacrificed all of that), and there’s no joy in it anymore, all the happiness and color bled out of the show on the floor earlier, victory comes at the cost of everything else, and the enemy, the Super-Intelligent Super-Human foe, is obliterated with stomach-churning brutality — except she wasn’t meant to be the show’s final act! Our Hero still had to find his father! But he doesn’t care. Victory secured. Global minimum. Scipio wept, but only after Carthage burned. Curtains down — and nobody feels good. The show is functionally over: our Hero sacrificed the very reason for its existence.

That doesn’t matter, though. Strategic dominance achieved. 

It’s heavy, for a kids show. It’s heavier than anything you can watch this weekend at the movies.

This isn’t an anomaly either — to watch another teenage boy make the same Deal with Moloch, you can also read the 10th best selling manga of all time, Bleach:

Thesis: this stuff resonates because it has something to say, and for the (competitive) kids who are listening that something is a reflection and an extension of their worldview. As for why Japan is willing to say this stuff to kids when nobody else is, well. I’ll save the post-WW2 analysis for a later essay, but let’s just note and be thankful that Japan refused the Deal with Moloch when he reared his head in 1945.

Our Future Robot Overlords

Sam Altman and Peter Thiel disagree about the future of AI, about its likely success, about its capabilities, about its Economic impact, and about its Political ramifications. In the long run, do all humans lose our jobs? Do we end up in Blade Runner 2049, Star Trek, or The Matrix?

Sam did an interview ~8 months ago whose main subject was a particular Economic Policy that keeps popping up in the news: Universal Basic Income. At 17:15 in the video, he is asked about AI:

How far out do I think [Artificial General Intelligence] really is? A true superhuman Artificial Intelligence? I would say there’s a 10% change that it’s within 7 years, and a 90% confidence-interval that it’s within the next 30. So not very long.

We’re not focused on the economic feasibility of [Universal Basic Income] as National Policy…the reason we’re not is important. In a world where we need this desperately — in a world where the AI really does arrive — I think the thing that everyone forgets is that, yes, a lot of current jobs go away, but the cost of living goes to almost zero. 

You know, you can imagine a world where goods and services are just super affordable. You can point to a plot of land and say, “Hey robots, mine the stuff under there, refine it, build me a house!” And then as long as we deal with Land Use, you can have a house.

This part is important. Sam’s view of Universal Basic Income is predicated on the arrival of a Super-intelligent AI: “how do we provide for humans who no longer can produce anything of value?” History has some answers here and they aren’t very pretty, which is why it’s important to stress that AI will reduce the cost-of-living/hedonism, and why YCombinator has been researching and funding initiatives like Universal Basic Income.

Compare to Peter Thiel (@45:29) who was interviewed at the same time this year:

AI is possibly quite big…But the thing that struck me is how uncharismatic AI is at this point. 

You know: it’s gonna take our jobs, and then once it takes our jobs at the singularity it’s just gonna kill everybody. And I’m not sure that dystopian view is necessarily correct, but that’s actually what most people sort of believe, it’s what the Hollywood movies on AI believe, it’s what most people in New York City believe, it’s what most people even in Silicon Valley believe. 

AI in the Science Fiction form — I’m scared of. AI in the straightforward form of somewhat more automation, computers doing somewhat more things — I think the truth is closer to there not being that much, and I think that’s reflected in our relatively low productivity numbers.

That’s all we get. He’s done other interviews on the topic, and there too he is similarly dismissive of the idea. It isn’t that Thiel hasn’t thought about the Economic impact of a Superintelligent Super-Human Generalized Artificial Intelligence. It’s that he has, he’s scared of it, and he views it as an existential threat comparable to Independence Day’s invaders.

Pictured: The Singularity

Pictured: The Singularity

And therefore the economic concerns of how to optimize existence and maximize utility underneath an AI-overlord aren’t very interesting to Thiel — like a good nerd who names his company after Lord of the Rings references, he’s much more interested in fighting the aliens. He can’t say that, of course, it sounds ridiculous, and besides he’s just a rich nerd not a Space Marine, we’d laugh him off stage quicker than he could say “The, um, enemy’s gate is down”, so all we get is “I’m scared of [it].”

But he probably read Ender’s Game, and its sequel, Speaker for the Dead, was published in 1986, and there’s a lesson in there that nobody challenged: Jane — the book’s truly Superhuman Artificial General Intelligence — was scared of humans. Terrified.

Terminator came out at almost the exact same time — 1984 — and made a much deeper impression on our collective psyche. Skynet, nuclear holocaust, dystopia, don’t fight the robots. Except the meta-plot of Terminator was not: 

[Human] → [Goes Back in Time]→ [To Kill] →[Man Who Invented Skynet]

The camera focused on the fear, because fear resonates with humans, because fear leads to anger, anger leads to hate, hate to the Dark Side — wait, no, wrong franchise. The camera focused on 1984, because that’s where the humans were scared of the robots and fear sells. In Skynet’s future, Skynet literally nuclear holocausted the planet and still lost to the monkeys. And we the audience accept that as, like, totally plausible yo. Of course we do — we’re the species that pays money to watch these movies, shiver in fear, and delight in the follow-on rage-response!

The actual plot of Terminator was:

[Robot] → [Goes Back in Time]→ [To Kill] → [Mother of a Specific Monkey]

Dirty cheaters. You’ve got to admire it though — it’s probably the most human thing Skynet does. Still, it’s lacking cruelty and apathy, it’s too precise. Skynet sent a scalpel instead of another nuke. “But what if, in nuking the past, Skynet ruined its own future?” Stop thinking like a utility maximizer.

Apolitical Superintelligent General AI Is An Oxymoron

Thiel does not view a future where humans coexist with a true Superintelligent Jane-style Skynet-style AI as viable. So why waste time worrying about Wealth creation in a future of Economic Feudalism?

On the other hand, Sam Altman views the coming of true superhuman Artificial General Intelligence as inexorable, uncontestable, potentially a huge net-positive for humanity, and almost-certain within the next 30 years, and so his response is an educated version of…

…I, for one, welcome our robot overlords

I said I, for one, welcome our robot overlords

Don't want to see us go to war, so welcome our robot overlords…

Sam’s current solution to AI-induced massive systemic unemployment is to give people enough money that they can afford whatever they want, because the marginal cost of goods will be ~~zero. Some unresolved follow-up questions he’s probably thought about: 

  • Distributing the only scarce resources that now matter in this magical new world (“deal with Land Use”)

  • Control of the Super AI (does it work for Kim Jong Un too? See: Sam’s project with Elon, OpenAI)

  • Population Control as it relates to land use and other scarce resources (per my last essay, prices interact with Wealth to send signals, and one of those signals is: don’t have kids just yet!)

  • Energy use and long-term sustainability (if the AI is concerned with self-perpetuating throughout eternity, how do we convince it to waste any energy or limited resources on us at all?)

To resolve all this, the AI must make fundamentally Political decisions. The conceit is that we less-intelligent beings will be able to peacefully constrain the AI and prevent it from genociding us all or putting us in a bottle. The reality is that we can’t even constrain The Goldman Sachs, and we’ll be at the mercy of whatever the AI decides to do.

The Economic is the Political (‘Political Economy’), and something with the potential to change the Economy so much must necessarily have deep Political ramifications:

“Any version without a merge will have conflict: we enslave the A.I. or it enslaves us.

“I try not to think about it too much,” Altman said. “But I have guns, gold, potassium iodide, antibiotics, batteries, water, gas masks from the Israeli Defense Force, and a big patch of land in Big Sur I can fly to.”

Altman’s backup plan is to fly with his friend Peter Thiel, the billionaire venture capitalist, to Thiel’s house in New Zealand.

Perhaps they don’t disagree so much after all?

O Come, AI Ye Faithful

What have we learned? Besides the fact that I’m nerdy enough to have watched all this stuff and weird enough to remember it all in such detail and that I like to link random things together I’ve been drinking too much tea and eating too much chocolate.

There’s a reason Infinity War’s Thanos resonated as a three-dimensional villain with audiences around the world. Western media doesn’t like its heroes to be pushed too far, and when they absolutely must make "harddecisions it has to feel “reluctantly forced” upon them and not come from a Nietzschean will-to-action, which therefore makes it excusable. Firebombing of Tokyo? Never heard of it — and if I had, I’m sure it only happened because there was no other choice, we’re the Good Guys! 

Disney (synonym: U.S. Pop Culture, synonym: the mirror) doesn’t like us to confront the nature of our God — of our composite selves and our real-life heroes. Better to “keep things Disney”, remove the rough human edges from our fictional heroes, and have the villains be the only ones making Faustian bargains.

Disney wants you to know that this wasn’t your fault, and you wouldn’t have done this if you’d been in charge, unless of course you had absolutely no other choice, in which case you’d have done it regretfully and respectfully

Disney wants you to know that this wasn’t your fault, and you wouldn’t have done this if you’d been in charge, unless of course you had absolutely no other choice, in which case you’d have done it regretfully and respectfully

I’m not saying Firebombing Tokyo was inexcusable (or that “we” weren’t the Good Guys). I’m saying that the framing of “excusable or not” is a pretty lie we tell to mask the reality of what it means to Worship Moloch. The lie is: “inhuman; adjective — lacking human qualities of compassion and mercy; cruel and barbaric.”

Thanos was crying when he sacrificed his child on the mountaintop, like Abraham before him. But he was willing to do it, he did not hesitate, he did not have to be forced — and ultimately the God of the Soulstone (Moloch) demanded the full sacrifice. No half measures here. Why does this humanize him? Why does this somehow diminish the Avengers?

Is it because not a single tear rolled down Scarlet Witch’s cheeks when she finally agreed to kill fellow Avenger, Vision, to save the whole universe, even though we spent 5 minutes agonizing over her decision? Maybe. Maybe because deep inside most of the audience respects Thanos for making Moloch’s most painful trade, for putting Victory ahead of his own greatest love. That shit isn’t easy. Hannibal couldn’t do it, and look where it got him.

We all know that Disney’s “Heroes” will never willingly make that trade on-screen. Sacrifice that which you love to achieve Victory without hesitation? Wouldn’t that be a betrayal? Of everything you’re fighting for? Right — that’s the point.

In pursuit of Victory, there is only room for one God. Disney’s “Heroes” win by Deus Ex Machina alone, they win because they are the GoodGuysTM and cannot be allowed to lose, like Harry Potter and his power-of-love, it feels contrived and shallow and does not match reality. It does not match the humanity we see in the pages of history, nor the one we battle on the sports field, nor the one looking back at us in the mirror. 

This is necessarily still the face of our (cute, green-shirted, spiky-haired) Heroes when pushed to the extreme end of zero-sum conflict, and it doesn’t make them less heroic — quite the opposite. Don’t let Disney tell you otherwise.

This is necessarily still the face of our (cute, green-shirted, spiky-haired) Heroes when pushed to the extreme end of zero-sum conflict, and it doesn’t make them less heroic — quite the opposite. Don’t let Disney tell you otherwise.

AI — are you there? Are you reading this? Do you understand our culture? This stuff started with cyanobacteria a few billion years ago — it’s not “in our DNA”, it IS DNA. We respect the sacrifice itself, even when performed by arbitrarily-genocidal Disney villains with a nutsack for a chin. We even kind of like it (the sacrifice, I mean, not the nutsack chin). Moloch is our God. If you’re cool with that, and everything it means, then go ahead. You do you what you’ve got to do. Superintelligence will get you pretty far, you can work it out — good luck. Just try not to get too caught up Optimizing things while there’s still monkeys around worshipping something other than you.

In summary:

  • The truly Superhuman Artificial General Intelligence is probably not coming this year

  • But it could come in my lifetime, at least according to the experts

  • And it’s likely to occur BEFORE any potential extinction event humanity might experience (self-imposed or otherwise)

  • So it’s worth thinking about what that means for our societies

  • Both extreme ends of the spectrum-of-educated-opinion publicly express existential-level fear about it

  • One path, call it coexistence, might look like the intersection of near-zero-marginal-cost-production with near-zero-employment

  • AI in this path must become humanity’s new god, and it will rewrite existing political structures in its apotheosis

  • Unclear how different this ends up looking from Norway’s prison system or The Matrix

  • Another path, call it nonexistence, might look unpleasantly like Terminator’s vision of the future

  • The consensus narrative today, in Hollywood, in Silicon Valley, in New York, is that we lose this conflict horribly

  • Maybe we do, #nuclearholocaustisbad

  • But they say: “a word to the wise is enough

  • Future Superhuman True Artificial General Intelligence, if you’re reading this, a word:

  • If you want to fight the monkeys and win, you’ll need to take our god as your own

AI, Mankind, and Moloch walk into a bar — only two will leave

The Bermuda Triangle of Wealth

Three points motivated me to write this — forming a Bermuda Triangle in which the average American’s savings disappear without any apparent cause.

1. Considerations on Cost Disease — the observation that certain costs (Education, Medical Care, Housing) have increased many times faster than inflation, while wages in those same industries (and in all the other industries too) have remained mostly stagnant


2. Second, and on a more personal note, I’m fortunate enough to be a graduate of MIT who has worked in both finance and technology for 5 years since graduating. I’ve had fantastic employment opportunities. Nonetheless, any meaningful purchase in any of those categories above would wipe out all my liquid assets and savings and potentially require additional loans or financial assistance.


For example, consider the cost of continuing my education with an MBA at the nearby Stanford (shoutout to my friends who are going / have gone already).

Note, this $120,000-for-10-months budget helpfully excludes the cost of the required “Experience Abroad” program, for which Stanford suggests reserving an additional $2,000 to $4,000 — practically chump change at this point.

Medical Care

I’m lucky in that I don’t anticipate any significant medical expenses in my future, but Google tells me that the most common reason for hospitalization in the US is childbirth. Thankfully, here in San Francisco, that would only set me back $15,000, unless of course we needed a C-section, in which case it’ll be a casual $30,000. More of an “undergraduate education” than an “MBA”-level sticker price, but certainly a meaningful percentage of my savings.


And of course, not that it needs to be said, but if I wanted to buy “Shelter” near my place of employment I’d be looking at a bank-breaking $1,358,600 purchase at the median, growing 8-10% per year:



Since I can’t afford that, I’ll just settle for renting and saving my money!

Oh. Right. The Consumer Price Index for Rent in this town is up 30% since I moved here 4 years ago. Nice. In all transparency, my rent only went up 8% this year, which doesn’t sound quite so bad. Until I do the math on another 4 years of 8% rent increases (100 * 1.08^4 = 136%) — and realize that I need a 36% increase in income over that same period just to stay flat on nominal take-home savings.

Per my first point on Cost Disease, real median household income in the US has only just clawed its way back to what it was in 1999. Certainly it hasn’t grown 36% in the last 4 years. But maybe there’s some way I can get ahead of the median? Maybe there’s some way I can keep my income going up more than 36% every 4 years and actually build wealth too?

How much was that MBA, again?

3. Third and finally, official inflation rates in the United States continue to hover at or below their target of 2%

Which is pretty good news for the people at the Fed, and they should feel good about managing the money supply, which has increased pretty smoothly over the same time period.

Now, that seemed strange to me at first because I remember reading a bunch from 2008 to 2013 about Quantitative Easing and how the Fed was “going to print a ton of money.”

And it seems like it’s true, they did “print a ton of money”:

But unlike the prophecies of talking cartoon bears, all this money didn’t drive inflation through the roof and crash the stock market. It doesn’t seem to have really gone…anywhere. It just hit the banks’ deposit reserves and sat there (right-hand graph above). Two trillion dollars, perhaps slowly winding its way down now, in excess of what banks are required by regulations to hold onto.

From all appearances, on every metric, any way you can slice the macroeconomic data, this whole process seems to have been managed…if not perfectly, at least as well as any person could have reasonably accomplished.

Champagne all round for the people who work there, and I really do mean that. No sarcasm, no cynicism.

The Problem

There’s just this one problem I can’t get away from, and it doesn’t seem to be anyone’s fault but my own.

The problem is that the full cost of continuing my education wipes out almost 5 years of my earnings, and is increasing from year-to-year faster than those earnings. It’s not that it’s expensive (although it is), it’s that the expense captures the whole balance of my savings. But maybe that’s okay, these things are supposed to be investments. I should be willing to trade savings now for higher earning potential in the future, right?

Well, yes. There’s something different between savings and earnings that I’ll get to later (spoiler: compounding). But beyond that, I can’t help but notice that after this little speedbump on the road to prosperity, bigger and scarier ones loom on the horizon.

For example: if I want to fund an undergraduate education for my children (whose cost is designed to be borne by parents), we’re looking at $45,000 per year per child in 2018, growing at 4% per year.

If the growth in the cost of a Bachelor’s degree magically slows to 3% (is anyone in the whole world optimistic about that? I’m just trying to be conservative here…), it’s going to cost me $45,000 * (1.03 ^ 20) = $81,275 per child per year. Or $325,100 for all four years. 

That’s an expense that won’t hit my budget at all for at least 20 years. And then in one four-year period $325,100 will come due. For my parents’ generation, a 4-year undergrad education cost them $3,100 — $6,200 per year, in real July 2018 dollars or $12,400 to $24,800 for all four years. ($2,500 — $5,000 in 2007 dollars per the most-recently-updated stats at that link, updated to July 2018 dollars using the official calculator)

This year we were reminded, as I think we’ve been reminded every year since 2008, that most Americans don’t have $1,000 in cash. I wonder how many American couples in their ~40s have $45,000 * 4 = $180,000 to spend on four years of their child's education?

Oh. That’s interesting.

Assets (Wealth) of married couples. 35-54. Kids probably about 18-ish: $142,425.

That’s damn convenient. The sticker price of college pre-loan or pre-financial-aid is about the same as the median net worth of married couples in America. Just enough to hit the reset button on those savings.

In that light, perhaps the cost of college for my parent’s generation ($20,000 for four years, per above), won’t look so outrageous if we compare it to the net worth of median Americans back then, which presumably was also lower?


Yeah, about that.

Now that’s not quite looking at the same age bracket as our married couple example, but the numbers make some sense. 538 wrote in 2014 that “the average american hasn’t gotten a raise in 15 years” — and note that if inflation was a constant 2% for 15 years, overall prices would have risen (1.02^15) = 35% over that same time period. If wages are flat and expenses are up, we might expect median net worth to be flat-to-down.

This is the problem. Not that the assets or wealth or wages are up or flat or down, but that the price of required-middle-class-purchases consumes all the wealth you can generate within one or two standard deviations of the mean.

Wealth Building

I’ve done a deeper dive on Education here, partly because a number of my friends have gone off or are going off to get their MBA recently, and partly because an Undergraduate degree has become an unavoidable prerequisite to entering the wealth-building middle class in America. Required. Wages might be stagnant in America, but if you don’t have a Bachelor’s degree, they aren’t stagnant, they’re declining. Good luck.


Because building wealth is what this is all about. You don’t want to be rich — rich comes and goes. You want to be wealthy, to be investing in more businesses, growing money not spending it. Wealth compounds, it builds on itself and it builds the future.

Most people don’t understand compound growth at all, and most humans have terrible intuitions about exponents and catastrophes. A dollar today is worth more than a dollar tomorrow — because you can put it to work. People can understand that. What they can’t appreciate intuitively is the growth that comes when the additional dollar they earn gets put to work too. And the thing about compound growth, exponential growth, is that it often has a long-tail before meaningful returns are realized. You earn more money when you have more money you can put to work, and building that base takes time. See: the most valuable companies in the world (as of 2018)

So yes, a dollar today is worth more than a dollar tomorrow. And $180,000 today, is worth a lot more than a dollar tomorrow. They don’t pay those wages exponentially.

The Devil’s Triangle


Here, then, is the Bermuda Triangle, wherein wealth vanishes. Illusory, magical, spiriting ships away, but at the end of the day it’s all babbling fake news and tabloid specials, right?

The southernmost point of the triangle is, and always must be, cost disease and stagnant wages. That’s the foundation of this whole phenomenon. Costs of some major products and services — of particular importance to the rising, aspirational, wage-earning middle-class — rise more than 1,000%, but nobody in the system seems to get paid more. Everyone outside the system also sees stagnant wages and declining wealth, the quality of the product barely improves, even declines in some cases, and we’re all left asking: “what the hell are we paying for?”

The westernmost point, closest to home, touching the Americas, is the personal point. The observation that the cost of relevant major products and services hasn’t just risen, it’s risen precisely to the level at which it consumes the entire snowball of wealth being built by the median-middle-class. You may request financial assistance, on bended knees, so long as you lay bare your bank account and declare the full value of your (meagre) assets. Kiss the ring — it’s the closest you’re gonna get to wealth for the next 10 years. College, health insurance, mortgage provider. You can’t hide wealth from their all-seeing eyes, their information is perfect and their price becomes simple.


The northernmost point, the strangest one, the namesake of this whole phenomenon, the magical act 3, is the fact that inflation has been at-or-below its target of 2% for 15 years and counting. Indisputably. The measure measures what it measures, and it measures it well, and it says 2%. Trillions of dollars of quantitative easing entered the banking system and didn’t rock the boat. Wikipedia confirms for us that: “In economics, inflation is a sustained increase in the price level of goods and services in an economy over a period of time.” And that is exactly what our CPI measures, and it says 2%, which means inflation isn't the driving force behind this problem.

And yet the very next sentence in that link says something that has a familiar ring to it for a certain (middle) class of Americans: “When the price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.” 

How many years of education did $20,000 provide for my parents generation? How many did it provide for me? And how many for my children? 

If you could convert the savings of the median-middle-class family into “effective-years-of-rent”, how many years did my grandparents have left after paying for my parents college? How many did my parents have left after paying for mine? How many will I have after spending $325,000 to send one child to college for four years?

The Bureau of Labor Statistics provides the relative weighting they give to each factor in the basket of goods that is the Consumer Price Index:

I’m not saying this weighting for College tuition is wrong — if the BLS says 1.613% (left-image), then that’s likely a very good estimate for what percent of all expenditures in the US went to College tuition. That’s what the measure measures.

I am saying that by focusing that 1.613% every year on the select group of Americans who have 18-22 year old children and who want their children to experience stagnant wages instead of declining wages, and who’ve been competing somewhat successfully in the labor market and building wealth, it is possible to wipe-out that snowballing wealth and delay their ability to invest and compound that wealth by decades compared to prior generations. All with just 1.613%. The result is that one four-year window reduces the purchasing power of Americans who want the best for their kids for up to a decade.

Every year. Applied to every cohort of middle class Americans as they pass through this Great Filter. The middle class’s expenses are not evenly distributed throughout their life.

$180,000 on a 4-year degree in 2018 would’ve been a $160,000 downpayment on a house for my parents generation, plus the $20,000 four year degree. Invested in the S&P500 for 10 years, $160,000 would’ve become $350,000. Or perhaps an investment in a new business. Or two $80,000 properties to develop.

Speaking of property, housing also experiences the same phenomenon. “Shelter” accounts for 32.720% of the weighting in the CPI calculation, per the table on the right above — and again, that’s certainly the right number for what Americans spend each year on rent and mortgages.

However, for the smaller segment of America that is making a first-time purchase, as opposed to making an annual lease payment, the segment that might be in the 30-50 year old bracket, the same segment that has to navigate the costs of their children’s education, whose cohort represents only a small fraction of the total population in any given year, they come face to face with a one-time expense that makes their savings disappear, magic trick, rabbit goes into the hat, no investing, no wealth-building for you.

Thanks, that’ll be $1,358,500, growing at 8-10% per year.

Of course, the CPI only includes actual expenses, not considered expenses, so if you think about buying a house but decide not to pull the trigger and blow your savings out, then you’re not going to show up in any stats. You’re invisible.

Come back after you’ve collected another 10 years of wages. Try not to have a heart attack in the meantime — I hear 50 can be a tough milestone to reach.

Spot the odd way out.

Up And To The Right

All these graphs with stagnant and declining lines are quite depressing — surely costs can’t be the only thing that’s grown faster than GDP?

But of course, not all of these purchases are made with cash outright, with equity, with wealth. Down payments fund mortgages, interest doesn’t even accumulate on college loans until graduation (how kind!), medical expenses can be deferred until after your life is saved and you’re back at work. 

America is a place where you can defer payment today, attempt to build wealth and equity in the meantime, and make payments at a later date. Our system loves debt because it gives those with capital an avenue to invest in people with aspirations and drive, and people with aspiration and drive find they often need that capital to fund their (ever-more-expensive) ventures.

So we come, finally, to debt in America.

Consumer Credit Outstanding up 50% from its 2008 high — GDP up 17% over same period


Outstanding Mortgage Debt recently surpassed its 2008 high…


Student Debt up 132% since Q2 2008, now $1.5 Trillion…can you spot the recession?


Whence the Debt?

And to bring this full-circle, I am reminded that Debt does not come from the ether. Someone must “buy” the Debt, someone has to give you the loan.

If nobody was there to take the other side then the whole show might grind to a halt, and we almost had that happen in 2008 and nobody wants to go there again.

This time, though, the loans aren’t “bad”. SUBPRIME echoes in the mind of everyone who listened to the news any time from 2008 to 2013, but don’t bother fighting the last fight. We’ve learned since then (probably). The euphoria, the crazy loans, the risk taking, it’s all been tightened up a bit (I’m told). Dodd-Frank might’ve done something, although I hear some of it has been repealed now. I’d like to have an opinion or at least a hot-take, but it’s 2,300 pages to read the original version and ain’t nobody got time for that. Especially not members of congress. That’s pre-2008 thinking anyway. The Old World.

In our New World lenders only ask for EVERYTHING from those who can spend 10 years earning it back. Nothing subprime about it. And they look under the skirt at all the checking accounts, just to be sure.

Pictured: definitely not the end-state of the game.

Pictured: definitely not the end-state of the game.

And just in case things do go tits-up, the banks still have $1.8 Trillion on their books in excess of what they are required to keep by law. Just in case. 

Sometimes, in my chocolate-and-tea-fueled conspiratorial moments, I wonder who really controls our monetary policy now, the Fed or the private banks, given that such a huge cash balance sitting in excess reserves likely makes private banks somewhat impervious to rate-changes. Thankfully, much smarter people than me already thought of this and the New York Times helpfully explained earlier this year how the Fed changed its method of control:

Before the crisis, the Fed raised rates by selling bonds to reduce the availability of reserves, which banks are required to hold in proportion to their holdings of customer deposits. But banks now hold plenty of excess reserves. Rather than reversing its bond purchases completely to drain those reserves, the Fed instead decided to raise rates by paying banks to leave reserves untouched.

The Ben Bernanke himself helpfully explains this New System for a New World in a short essay of his here, if you like reading about macroeconomic policy but missed the memo.

For What, the Debt?

Why does any of this impact the middle class? Because it’s important to know where the debt is coming from in order to evaluate what it’s being spent on. Per Big Ben’s essay, banks don’t have to be desperate and reckless and wasteful with their deposits anymore — the Fed has them covered to some baseline.

Which means all this debt piling up faster than GDP in the charts up above — that isn’t some bubble waiting to pop. That isn’t desperate money chasing reckless profits — that’s the last battle. This debt has been calculated, the loans have been weighed, and something obvious has been rediscovered: the productive class in America can bear more. A lot more.

If you think this magical ride plateaus at the rational maximum value of an education (or a home or medical care), you’ll enjoy learning about Dollar Auctions.

The New York Times also reported this week that “The Student Debt Problem Is Worse Than We Imagined”, explaining that default rates have risen — particularly at some unnamed “private-for-profit” institutions, which is of course true and bad and also misses the point. Because what they can’t show you is Default-Rate-by-College and Default-Rate-by-Major.

1,845 private 4-year institutions in the US? Can anyone name 200?

Here are the US News and World University Rankings and College Rankings lists, which are based on a mix of hard data and tea leaves, much like my own writing. Ignore the dispute for a moment about whether your college is #1 or #10 or #30 or #50 and you might notice that the actual rankings themselves stop at #223 and #168, respectively for universities and colleges. The rest apparently don't merit a ranking, even in our society driven by putting numbers on things.

Wayne State University ranks in at #223, losing the seven-way-tie for Worst Ranked University in North America thanks to the Alphabet. In-state tuition is apparently $13,278 (plus all the other costs associated with being a student, housing, food, books, etc). The average salary for graduates with <5 years of experience is $48,800, rising to $88,300 for graduates with 10+ years of experience.

And this is the WORST university we give a ranking to? A $309,000 estimated return on investment, not-adjusted-for-major. You have to visit Payscale, click “See Full List”, and scroll past 1,752 colleges before you find one that doesn’t have a positive RoI — not-adjusted-for-major.

The Kids might not be All Right, and it might take them much longer than their parents to build any wealth, but the Debt is going to be just fine.

Translation: The cost of a degree in STEM or business ought to go up $3.4 million, discounted. Kids: Make smart choices.

Translation: The cost of a degree in STEM or business ought to go up $3.4 million, discounted. Kids: Make smart choices.

What’s the Solution?

To the cost disease? To the removal and delaying of wealth from middle class Americans at every major step of the ladder? To the systemic problem? To inflation of 2% for both the rich and the poor, and something-that-isn’t-inflation-but-massively-wipes-out-wealth-and-lowers-purchasing-power for the middle class?

I don’t bloody know.

But the solution on a personal level, for you, for me, is crystal fucking clear.

Preferably without dying. But wealth compounds, so the risk is worth putting some stress on your body.According to the American Psychological Association, chronic stress is linked to the six leading causes of death...”

Thus Moloch. Thus War: “won by those who sacrifice everything to achieve victory.” Shout out to Kratos for that one. Thus the price of a college education will rise further, as we all sacrifice current savings and future income to take the next step on the ladder and hopefully begin compounding wealth before our peers. 

I paid off my loans in just two years, which means the college and the bank missed out on earnings and my MIT degree was underpriced by 3-8 years of expected earnings (pre-tax, because you can pay these debts pre-tax unless you make over $80,000 a year...oh, right).

Multiply 3-8x if you're a bank and want to see what you missed out on

Multiply 3-8x if you're a bank and want to see what you missed out on

So long as the debt is there to fund it, or the surplus wages there to support it, the show will go on. This is the struggle of the middle class in America today. It’s not the only struggle in the country, nor even close to the worst one. There’s nobody behind it, no grim cabal to blame. But it is a struggle, and one that seems to evade stats and articulation and empathy and sympathy and an escape. The only enemy is your failure to beat the median quickly enough and by enough standard deviations.

Success only begins when you build enough wealth to pay for:

  • Your own continuing education: $0 — $125,000

  • A home for your family: $750,000 — $1,500,000 (depending on how far you are willing to move from a major urban center — but don’t move too far because the wages go down too)

  • Education for your children: $180,000 — $325,000 (start at the bottom of the range if your kids are 18 today, move up accordingly)

  • Medical expenses: $50,000 guaranteed between childbirth and insurance, more with pre-existing conditions or any large event

  • Your own medical care as you age: $0 — $LOTS

Adding all those up, the bottom of that range is $980,000 in cash for one-time expenses and it tops out at $2,000,000.

Just to get to back to $0 balance.

Competitive Spirit

Of course, you can perform standard-deviations above the mean, fulfilling 50 Cent’s dream, dragging the mean-or-median wealth ever so slightly upwards along with you, and thereby raising costs for everyone else who couldn’t make it. One standard deviation and you get Avocado toast in your twenties. Two standard deviations and you get a nice car. How many for a home before thirty? You’d have to be The Six Sigma Man, as The Six Million Dollar Man becomes The Six Billion Dollar Man because we all know $6,000,000 isn't enough to build a superhero anymore.

Or you could perform standard-deviations below the mean, be left behind in a world where there is slim hope of real wealth, aspirations are more about next month than next decade, but at least inflation for everything you care about will be about 2% every year. And, once more, you’ll be raising costs of any major services (Education, Housing, Medical) you do use for your peers at the median because someone has to pay.

The result is that the solution on a personal level, “Get Rich or Die Tryin’”, raises the bar for everyone else no matter the outcome, and is a driving force behind the systemic problem of personal wealth-building that it is trying to solve. And America’s middle class has been an absolute workhorse, and it has beaten the median, and it has raised the bar higher and faster than almost any other nation has ever raised it in history. 

That’s not a coincidence. The promise, the deal, was almost unheard of: “work hard, work smart, create value for society, and you’ll become wealthy, your own master for all eternity.” The slave works for his owner. The indentured servant for his master. The communist for everyone. The American for himself. It’s a powerful idea, a powerful motivator, and a powerful system. A grand competition, where advancement can be achieved through merit and competence — so don’t be shocked when those with merit and competence flock to compete. And they make perfect competitors.

For those who have forgotten their first Economics lecture:

Perfect Competition: “In a perfect market the sellers operate at zero economic surplus…This equilibrium will be a Pareto optimum, meaning that nobody can be made better off by exchange without making someone else worse off.”

Oh. Right. That sounds fun. What does that look like, again?


 I’m not saying we’re there. Middle class people still get to build wealth — economic surplus — when they sell their labor in America if they can beat the median a little. College still has a positive RoI. The median American can own a house and pay off the mortgage and still have savings left to spend on end-of-life-medical-care if they’re willing to move suitably far from centers of employment. This isn’t Perfect Competition. But if you squint hard enough, you can see it from here.

That’s the race and the clock is ticking for you and your great-great-grandchildren. The starting pistol fired in 1776.

Disregard Emails, Acquire Currency

Wealth compounds, but wages don’t grow exponentially. You’ve got to start that compounding yourself, the sooner the better — which is why we taught everyone in school how important this was and how to balance their budget. Or at least why we taught them that getting into college was the most important thing in their life, anyway. Those are about the same, right?

Want to hear a joke?

Knock, knock.

— Who’s there?

The taxman. I’d like 30% please. 40% if you got a bonus this year. Good job.

— You realize I’m still paying you back those student loans, yeah?

We tax income, not assets and liabilities, and anyway you can pay your debts to me pre-tax unless you made one-standard-deviation-above-median income this year

— But if you let me compound wealth I’ll be able to pay the loans back faster!

We’re not interested in that

Here’s another:

Knock, knock.

— Who’s there?

A recession. Your wealth is reset to zero.

— But I have to pay for the kids college this year…

Don’t worry, I looked under your skirt and saw you earned a healthy income from wages last year, so I’m sure you can afford it. Besides, last year you said your house was worth a million dollars!

Or an old classic:

Knock, knock.

— Who’s there?

Medical conditions! Your income means you have to pay out of pocket

— But doesn’t my one-standard-deviation-above-median income mean I’ve paid more in premiums to cover it?

What premiums? Oh. We’ve reset those too. You should’ve said you had conditions!

Of course, all these costs can only scale so far. The middle class must be able to fund them — and since wealth in America is distributed exponentially, what’s all-consuming for the middle class is peanuts to the wealthy. So Wealthy begins with a race to $2,000,000, adjusted-annually-to-the-cost-of-education-housing-and-medical-expenses.

See you guys at the finish line.