Pessimist Economist Why He Think Future Looks BLEAK

**Patrick Bet-David** (0:00)
Where are you at, Steve, on the topic of what's happening right now with the wealth disparity? You know, we've always heard the same, rich get rich, poor get poor, right? I pulled up something yesterday when I was looking at it, when, you know, the last 50 years, who were the top five richest men in America, last 50 years? And one of the things I noticed is 50 years ago, the difference between first place and second place was, I don't know, 10%, okay? And it went to 20%, and then 25%.
Today, the difference between first place and second place is 300%.
And, you know, Ilan is at the top with 1.3, 1.4, which I have no problem with. I'm the capitalist. You and I may differ in this topic. But what role you think AI is going to play on accelerating, creating extremely wealthy people and a lot of people being left behind? And then, if that does end up happening, your position, maybe you're pro-AI, maybe you're optimistic that AI is going to do good for the economy. But what role you think AI is going to play the next 5 to 10 years? We're just seeing it right now. What do you think is going to happen?

**Steve** (1:10)
Well, first of all, I think there's going to be a bust.
This is a classic Berman bust cycle in capitalism, just like with railways back in the 19th century. So railways were a private technology when they first came in, and everybody thought they're going to make an absolute fortune out of railways. Railways, particularly in the UK, just crisscrossed everywhere. They all went bust, and you only had a handful of operators surviving, and then the state bought them up.

**Patrick Bet-David** (1:33)
How long did that take, by the way? How long from start to bust? What was the time?

**Steve** (1:38)
I can't recall. I haven't read the literature. Is it over 15 years?

**Patrick Bet-David** (1:43)
15 years.

**Steve** (1:44)
10 to 15 years.
AI is much faster than that. So we're seeing a huge buildup right now. From what I've seen in terms of the amount of revenue these companies are getting versus the cost they've got, their costs are 5 or 10 times the revenue.
In other words, they're losing large amounts of money. And so you're going to come up with only a few survivors coming out of this. And I think the cost of AI is going to increase quite dramatically as well. At the moment, people are using AI to make funny cartoons of their father-in-law or mother-in-law.
The days when that's a feasible...

**Patrick Bet-David** (2:13)
More mother-in-law is fun, but...

**Steve** (2:15)
More mother-in-law. I'll agree with that.
But we're going to get a boom and a bust. So we're getting a boom at the moment. The bust will come, I think, in the next one or two years. And then you're going to get a large collapse.
All the money that was put into it will be lost. Money will still be distributed in the system, of course, but it won't be in the hands of those who paid out for the data centers and so on. So I see that happening. With AI in general, I know that it's a long way from this being technologically feasible. But the thing which Musk is talking about, and I agree with him on this front, is that if we got to the stage where robots could replace humans, then there would be no capacity for workers, for anybody without capital, to get an income. So the only way to survive that is to have the income generated by the economy as a whole. And that means you get basically a universal, Musk calls it universal high income. But you have to create the money that enables people to buy because the vast majority of people won't have ownership of capital and they won't have the capacity to get unskilled jobs anymore anyway. The robots will have them. So if you're going to avoid the hunger games outcome, you have to give everybody enough money to be able to buy the goods being produced by these firms and live a comfortable life.
But I can't see that happening. I think we're gonna see climatic issues long before we get to that point.

**Patrick Bet-David** (3:38)
Let me, by the way, when is your birthday? What month is your birthday?

**Steve** (3:42)
March.

**Patrick Bet-David** (3:42)
Your March? Okay, early March, mid-March?

**Steve** (3:45)
Light.

**Patrick Bet-David** (3:46)
Okay.
So you're in Aries? Are you like after the 22nd?

**Steve** (3:51)
Yes, I'm there. Okay.

**Patrick Bet-David** (3:52)
So my dad's also the same as you, and it's funny just talking to you. I'm wondering, Wiring, how much of your own philosophies on economy and finance, how has it worked for you when it comes down to making investments with your own money?