michael-dean-k/

1. A HYPE TERM: "Permanent underclass" is a dramatic mutation of an old term: class inequality. "Underclass" was coined in 1963 (Gunnar Mydral in Challenge to Affluence) and captured the anxiety of automation destroying common jobs. Now that AI is here in a real way, we can't help but imagine the irreversible evisceration of all jobs. When people say "you have 2-3 years to escape the permanent underclass," they mean that this is your last chance to build wealth, because in post AGI-economics, humans don't have economic relevance anymore. Employers employ agents (and eventually robots) instead. And so what will we do with all the meat bodies? The speculation has shades of darkness that start with mass employment, and spiral into feudalism, slavery, and even genocide. The uncertainty is real, but it gets delirious, and often ignores history, and also the many self-stabilizing mechanisms that get triggered on route to a collapse.
2. MIDDLE CLASS ANOMALY: The real fear here is "the collapse of the middle class," which sounds like a news headline. But separate from AI, my generation is certainly already feeling it. My wife's grandfather was a painter (of houses) and got a million-dollar house (in today's terms) for $10,000. Now people are saying $100k/yr is the new poverty line. While this certainly feels like "the system has screwed us," middle classes are an anomaly, and a mass middle-class—what we had post WW2—is extremely rare. They existed in Athens, Rome, Byzantium, etc. but they were often in isolated cities (ie: Florence at 70,000 people), compared to the Han China Dynasty (100,000,000 people in a two-tier system). The total number of human-years in a middle class is probably around 5%. The relative size of our middle class is even more rare: pre-Industrialization, it was 10-30% of society, where ours is 50-70%. And finally, a middle class rarely persists: it either disintegrates back into an two-tier king/serf system, or, it's forced to transform it's method of work.
3. FROM WORK TO PERSONAL WORKFORCE: AI will force a change in how next generation's middle class works: from employment to entrepreneurship. I think this is the unspoken tension between elites (who are not concerned with the future being filled with new opportunities), and the normal person (who have never earned a dollar outside of a W2 job). Entrepreneurship is maybe the greatest force for class mobility. This is where "new money" comes from. A poor person could become a billionaire if they know how to work the OS of the market. That is an anomaly and not going away! What's changing though is the economic mobility of non-entrepreneurs. The rising tide is reversing (92% of children born in 1940 earned more than their parents, and it's shifting the other way now), and the rapid automation of jobs via AI certainly won't help. I personally don't doubt that most jobs will get automated away, because I run a small business and I don't have the financial abundance to hire humans at the price they need. I've hired graphic designers, editors, and almost software designers, but found that today's AI models were able to do equal or better work, for a fraction of the cost, and are way more nimble to evolve with my evolving needs. Won't every rational business make this tradeoff? The consolation is that the "end of the work," brings a new era where every person has a personal workforce. It may be hard to find a job, but for $100/month you'll have 10-100 agents on hand, and so do you have a vision? So, no, no one will be in a permanent underclass, so long as they can succeed as an entrepreneur. It's as if the rise of AI has taken the startup/entrepreneur model of Silicon Valley, which once was and still is a minority, and scaled that up to become the new paradigm of work. That is better than nothing, but the odds aren't good. Only 0.05% of startups get funding, maybe 20% get a return; small businesses—the more likely path for the average person—also only have a 20% survival rate after 20 years. So again it's not the decimation of a middle class, but a contraction of the rare post-war middle class (and most middle-classes do emerge after wars) from 60% down to the historical norm of 20%.
4. REVOLUTION UNLIKELY: The relative size of the lower class isn't necessarily associated with unemployment or risk of revolution. Consider how Mexico has ~70% lower class but only 3% unemployment. I guess the important question for stability in America is if, after AI automation, gig jobs can sustain people who lose their current jobs. 10-20% unemployment would lead to political instability, and 20-30% would create the situation where a revolution could form. If you read Tocqueville (or Brinton or Goldstone, who I haven't read), he says that beyond economics, a few things are required for revolution: an under-utilized but educated youth, elite extraction during widespread suffering, failed reform attempts, defection of intellectuals, coordination capacity... we seem to have all of these. He also notes that revolutions don't come from a collapse of the middle class, but from a perceived sense of being excluded from a new economic order (ie: massive gains from AI, hoarded by a few companies). But Tocqueville also says that the original American Revolution succeeded because we were able to retreat to open space, where the French Revolution failed because it was an open clash within the territory of the aristocracy. If there were a revolution here, it would almost definitely be thwarted, considering NSA surveillance, military power, geographic dispersion, and how most conflict is absorbed into left-right political feuds instead of up-down class feuds. So instead of class war, what's more likely in America is political warfare (underway), which in the worst case leads to authoritarian capture and state fragmentation. A civil war is a distraction from a revolution. The eeriness of all this is that it's right on schedule according to the Strauss-Howe theory; they mapped revolutions going back in 80 years cycles (American Revolution > Civil War > WW2), and predicted 2026 as a crisis that would spawn the next world order.
5. PROPHETS OF REDISTRIBUTION: So if there is massive job loss and social strife, but no potential for revolution, how will the elites respond? The cynical view is that they will retreat into their already-constructed drone-protected bunkers and let the mess sort itself out. The optimistic view is that the entrepreneurs who are triggering the AI revolution are actually problem solvers at heart, and once or if the AI race is ever "over," they will be unimaginably wealthy and eager to play the role of utopian planners to restructure society in their image. Will elites side with the common man? It's happened. Voltaire was a French intellectual who died a decade before the French Revolution, but through his salons he injected ideas of equality, liberty, and reason into the aristocracy. It was like a Trojan Horse, because the elites became enamored with ideas that undermine aristocracy without realizing, and so they were quick to defect and enable the revolution. In terms of the Strauss-How cycle, Voltaire was a Second Turning "awakening prophet" that laid the spiritual grounding for the Fourth Turning of that time. The parallel to our time is the 1960s, where counter-cultural ideas about communal living, redistribution, and the end of work were forged; and also the very fabric of computing, the Internet, and AI all came out of the consciousness revolution—the sway of egalitarian-minded intellectuals could determine how the elite allocate their trillions. What we're facing is something like a crisis in capitalism. If the market is left to its own terms, with everyone on Polymarket "trading the madness," then it could turn Landian (re: Nick Land's vision for markets as inhuman alienating forces). Or, hyper-capitalism pushed to it's limits just turns into Marxism, and the counter-cultural ethos of the 60s gets fully mainstreamed (it's already in progress: hitchhiking turned to Uber, free love to Tinder, pad crashing to AirBnB, freak foods to Whole Foods).
6. PAID TO SCROLL: But who will be doing the redistribution and why? I'm skeptical of a "universal basic income," which implies a world government (if you take "universal" seriously). Each country will have different policies on distribution (aka: welfare). We'll likely see a range of implementation, some being highly dysfunctional welfare states, and others being prototypes of a modern democratic socialism. Realistically though, governments will only have the means to redistribute any wealth if they seize and nationalize the AI companies (which Palantir's Karp is suggesting needs to happen). But if we go the way of The Sovereign Individual (where Thiel wrote the forward), it means that companies will replace governments, and lead us to a kind of lawless "anarcho-capitalism." And so in this model, what would elites do? Bunkers or philanthropy? Will Anthropic be anthropic? (We already know OpenAI didn't live up to their name). I think there's a more practical middle, where companies will be incentivized to provide "UBI" themselves. Assuming everything doesn't collapse into a singleton-powered mono-corp, there will still be 3-10 big companies competing, but now with massive budgets. What they used to spend on employees is now automated for a fraction of the cost, and so they might chose to re-allocate that budget to paying citizens, or really, their users. Attention is the last scarce resource, and so by paying users to lock in to their platforms (using their feeds, apps, cars, etc.), they hold that advantage over their competitors. I know that sounds extremely circular, but is not the current AI economy already circular? Is NVIDIA not paying OpenAI to buy their chips? And so why wouldn't OpenAI pay users to pay for their AGI?
7. NOT SERFS, BUT HIPPIES: If AGI/ASI does bring upon all the sci-fi advances we dream of, then we could see a dramatic cost collapse in everything: materials, medicine, food, energy. It could be trivial for a company to provide all the basic luxuries of living for little or no cost, but in exchange for loyalty. So to bring this back to the permanent underclass: the elite-backed companies, in order to prevent revolution and to beat competitors, could be rationally incentivized to offer a luxury quality of life to its users. What's strange though is that it's luxury without mobility. Meaning, the average person could be provided a sweet apartment and unlimited Grubhub, in exchange not for labor, but loyalty. They might not have the discretionary freedom to do things outside of what's in "the contract" (rings of indentured servitude, but with air conditioning!). ie: Your plan might include a free train and bus pass, but if you want to fly to Europe, you need to grind at gig work for 6 months to get actual money, since the plan offers only amenities. Different communes, I mean... companies... will offer different deals, and if one offers a yearly international vacation (possible by some fuel breakthrough), the others will follow. The citizen will have the freedom to pledge freely, which would make this not like socialism, but the first ever manifestation of communism. We confuse those terms: socialism is when all power is absorbed by the state, where communism is actually stateless and decentralized. North Korea, the USSR, and Maoist China were not communist, but socialist. Communism was Marx's ideal, and he would've never conceived that the path to the first instance of communism was through hyper-capitalism (though of course an alien bastardized version that he would probably hate). And to bring this back to the spirit of the 1960s, heavily anchored in communal ideas: the "permanent underclass," will be a lot less like being a serf and a lot more like being a hippy. Except more like a state-sponsored, highly-surveilled, find-your-meaning-through-our-menu-of-options hippies, with of course competing hippy factions, the permaculturists, the hedonists, the transhumanists, the bloboids, the transcendentalists, the academics, but shared among all of them is a new identity that is decorrelated with their economic value, and more anchored to new social systems of vainglory that are hard to imagine.

Revolutionary tax proposal #1: anything above $100m/year is taxed at 90%, but in exchange for political equity in the country (ie: delegation and voting). It formalizes lobbying and makes it transparent. To prevent the rich from steering the country too hard in their favor, there can be provisions where legislators, citizens, and oligarchs have checks and balances. Ie: to put it kidishly simple, each can have a 33% stake in directing that taxation. Another way to think of it is forced investment in pre-approved pro-American funds, companies, etc.

TBF: I have little sense of what I'm talking about in these matters. But the general context behind this is that power dynamics organically took control of the country and defied the spirit of the founding architecture. I assume there are many examples on how the Constitution and it's amendments dit not protect the original vision. And so the principal is to understand how power actually moves and work with it; don't kill it or shun it, but formalize it into legal structures, make it transparent, and then force it to comply with specific standards that muzzle and channel it's wolf power.

I got charged $4,500 for a band-aid.

For that price I could’ve bought 90,000 band-aids on Amazon (two for each person in my NYC neighborhood), but emergency room band-aids must be of a different substance.

A month ago we cut my newborn daughter’s finger with a nail clipper and it wouldn't stop bleeding for an hour. The on-call pediatrician—who was naturally grumpy since it was after midnight—insisted we go to the ER, and after 5 hours in the waiting room, the bleeding stopped right before we were called in. After one minute with the doctor and five with the nurse (most of it small talk about islands in Greece), we left with a band-aid on a dry scab. I assumed it would be an expensive lesson, a few hundred dollars to breathe hospital air, but we were charged a whole family’s round-trip tickets to Athens.

What's weirder than American private healthcare is how used to it everyone is. A family member said, “well, it was March, so you didn’t hit your deductible yet.” I’m willing to pay the $577 for the emotional labor of fixing a boo boo, but the remaining mystery, the $3,923 on yesterday’s mail bill, feels beyond reason. I’ll be requesting an itemized breakdown to call their bluff, and if they don’t bring it down to a normal but still ridiculous level ($500 for a band-aid—10,000x above market price) I will evade the debt collectors until they tank my credit and jail me.

What we have is much worse than a king. Another round of protests erupted, another round of the “no kings” thing. These irk me, not because I am a Trump supporter, but because I think we’re being deceived and misdirected from the real, much worse, problem. A king is a known thing. An easy target. What I mean is, there are centuries of histories of kings gone rogue, with examples of the populace exgorging them in different fashions. The idea that America is sick from a single leader (at this point really just a Great British Monarch, a representational figure head with little actual sway), is an idea that misunderstands the shadowy geopolitical forces that have recently been coming to light. It’s like we are obsessed with a gross-looking mole, when really we have a late stage cancer, have no idea, and most importantly, really don’t want to accept it.

I guess you could say I’ve taken the democracy black pill, as in, we haven’t had a real democracy for quite some time. Of course, socially and symbolically and historically, we do. In some respects, we are the center of the universe in terms of democracy. But in terms of power, all those virtues are more so shields for aggression. The US, Russia, China, Iran, despite the rhetoric, are all more similar than dissimilar, in the sense that they act from selfish geopolitical interest, more than anything else. This is “geopolitical realism.” No country is a representation of their citizens. No one really cares about sovereignty. When things get desperate, inalienable human rights are optional. The US is just the most theatrical in pretending it does. I guess this is Foucault's idea? It all just really comes down to power?

My simplistic assessment of what’s happened is that we were unable to turn off the war machine after WW2. All sorts of emergency measures went in place to enter the war, like massive defense production and intelligence agencies. Those never stopped. They tried, and failed, and Truman warned us. Pair this with Israeli intelligence, and you get the whole Epstein situation. What I’m getting at is that Trump has not acted so differently from the last many US presidents, possibly since Kennedy. We are the paranoid police force of the world, now dangerously neglecting domestic matters. Trump campaigned on defying this machine, on putting American first, and it’s obvious he’s unable to do so; either he was lying, or he found the limits of his own power in the face of more powerful oligarchs, or both. Realistically, he was Chief Dick of one oligarch faction, thinking he could take down another oligarch faction, and failed.

Trump spent the last two decades criticizing a potential war with Iran. I think he knows that this extended conflict will tank his ratings, and the Republican’s chance in the 2026 midterms. Iran was political suicide for him, and he knew that (which maybe explains rumors of his meltdowns behind the scenes). When we see him speaking about the war, lying and flip-flopping and saying whatever he says, those are words of an actor who has no other option now to defend what the callmakers are doing, to control the optics in the least damaging way possible. The seams in the shtick are showing.

So all I’m saying is that the “madman in the White House” is not the primary concern; it’s theatre, and conveniently timed. Trump is the perfect scapegoat, and you could imagine that the geopolitical financiers behind everything saw him as the perfect fall guy, an unignoarble, reasonable explanation for a coming rupture/rapture/reset. If you were a cabal trying to elect some asshole to go down in history for killing America, is there a louder asshole than Trump? What we have is worse than a king, because it’s acephalous, a shadow thing, transnational, unsuspecting, hiding in plain sight, etc. It has such a conglomeration of capital, resources, power, and it’s so distributed and entrenched that there’s no obvious way of bringing it down. We are dealing not with a king, but something more like the shadow monster from Stranger Things.

I realize this sounds like a conspiracy theory, and that’s because it is. We are in the Age of Conspiracy. Ockham’s razor is proving insufficient. The simplest explanations aren't holding up anymore. It seems there are layers and layers of abstractions and lies, all of which are very hard to make sense of, but what were fringe ideas in 2012 are, now in 2026, proving to be true, and as extreme as we thought. This should not be surprising though. Whenever there is a power asymmetry, there is naturally a scheme for those in power to construct narratives, fibs, facades and viels to maintain order among their subjects. Conspiring is a method of peacekeeping. Parents do this. Companies do this. Would governments not?

Why am I so engaged with the news these days? I think it’s part of a deeper desire to update my world model. There is no doubt, massive change. Geopolitical, economic, technological. And as abstract as those things usually are, it feels like some sort of shift that, in 2-3 years time, wil have an effect on my life. Of course, for many people in the world, it’s hitting them now. But similar to how COVID spared no one, it feels like your model of where things are going will directly effect your preparedness.

But this feels more existential; safety/security are actually on the line. And so that’s an anxious kind of thought, that the tectonic plates under your reality are shifting, and it’s not some recreational yearning to re-skill and recalibrate, but a mandatory thing.

And so to make sense, what do you do, go on X? That’s a total cesspool. New media is worse than the old gatekept media. And so, where I think I want to take this, is to build my own systems to sift through and aggregate information, and to build my own UI to do this. Even a simple Claude prompt, “what happened in Iran in the last 4 hours” is so much better than X. It’s stripped of sensationalism, and reading is just a less triggering medium. Bias aside, it’s at least free from people who are intentionally trying to deceive you for virality. There is a clout-chasing incentive, paired with actually turbulent times, which makes algorithmic news something like a schizophrenia filter.

And so what are these questions, these underlying uncertainties that are triggering a model change? How will anyone make income with the rise of AGI-3 and eventually ASI? How do I exist online and avoid hyper-surveillance and cyber-sabotage? Where in the world can I live to build a better future for my daughter, one where colleges doesn’t exist, jobs don’t exist, and where quality of life actually depends on nationalized social systems? A weird future. And weird to consider the fall of America, a kind of reverse migration, where, because of a confluence events, it might not be a place to raise a family in 1-2 generations down the line.

And so practically, this is resulting in things like: (a) applying for EU citizenship, (b) setting up AI agents for my business, and (c) considering cybersecurity, new ways to protect, share, and collaborate on writing (ie: how do you build an audience if the commons are polluted?). This is all very disorienting; it's hard to continue with business as usual when you become open to this scale of change.