oftwominds-Charles Hugh Smith

The New "Haves" and "Have-Nots": The Difference Isn't What You Think

2026-08-21T13:31:38.921-07:00

There is no substitute for mastery. AI is not mastery, it is mimicry.

You'll have to forgive my wordplay here: when I say The difference between the new "Haves" and the "Have-Nots" Isn't What You Think, I am referring to money. But I'm also referring to thinking itself: the real difference between the new "Haves" and the "Have-Nots" Is What You Think--or are no longer capable of thinking.

There are several subtle but devastating consequences in substituting "manufactured cognition," i.e. AI tools and agents for human cognition that few seem to recognize, much less understand as the critical factors separating the few "Haves" from the mass of "Have-Nots" going forward.

The first is remarkable for its invisibility: we are the fish not seeing the water. You may have noticed differences in the way Gen-Xers and older millennials use AI compared to Gen-Z users. The difference is the older users gained difficult-to-acquire skills and tacit (experiential) knowledge the hard way, and this experiential knowledge turns out to be the essential foundation for assessing and managing AI's substitutions for human cognition and what's broadly called AI literacy, understanding the limits and hazards of using AI.

Many Gen-Xers and older millennials are enthusiastic users of AI for programming and other tasks, but they're not seeing the key factor here: they are the last generation to have the cognitive / tacit foundation needed to properly assess and manage AI's substitutions for human cognition, because the generations coming of age in the AI era have no incentive or motivation to learn difficult-to-acquire skills and tacit (experiential) knowledge the hard way.

Consider the traditional Japanese apprenticeship in tradecrafts such as sushi making and woodworking: the apprentice spends the first three years doing menial scutwork: cleaning floors, wiping counters, sorting woodworking debris, and so on. A Talk at the Port Townsend Japanese Woodworking Festiva (via Robert P.)

The point here isn't teaching the apprentice to be productive as quickly as possible, it's to teach them mastery--the Tao of tacit knowledge that can only be acquired one way, the hard way, by learning every aspect of the craft/skill by doing--making mistakes, trial and error, and learning how to respond to out-of-the-ordinary but over enough time "normal" emergencies and situations.

In an era of automated machinery and cognition, it's pointless to master anything but operating the automation processes. Doing tedious, boring, menial tasks for even three hours is pointless, never mind three days, weeks, months or years.

So when older programmers wax enthusiastically about vibe-coding with AI tools, they're not seeing the water they're swimming in: they actually know how to program the hard way, from scratch, and this experiential knowledge enables them to use AI tools in a way that new programmers who actually don't know how to program because what's "productive" is learning how to use AI programming tools and nothing more, as the long process of becoming competent in scratch programming has no value in the "sea" of "AI-enhanced productivity.

We are blind to the fact that the foundation needed to assess and manage AI prudently and effectively will no longer be taught, as it's viewed as unnecessary and is not recognized as the foundation by those who already have it. That's the tricky thing about tacit knowledge: we don't know what we know, or how we obtained this experiential knowledge, it's intuitive and just comes to us as we examine the problem.

Those of us with the deep tacit knowledge that can only be gained from decades of varied experience--the more varied, the better--we've forgotten more than any apprentice could possibly learn in three years, but it comes to us when we see a specific problem. We have a vast store of "tricks of the trade" and approaches to problem-solving that can't be formalized or turned into an algorithm.

A second factor is the intrinsic risks of hyper-optimizing everything. I've written about this often, as it's another example of the fish not seeing the water: if the Prime Directive is maximizing profit / optimizing efficiency then everything that's deemed a superfluous cost is eliminated. So long apprenticeships: eliminated. Redundancies: eliminated. Loosely tied, distributed nodes: eliminated in favor of tightly bound, centralized systems. Buffers: costly to maintain eliminated.

What few understand is human experiential knowledge is the critical redundancy and buffer in crises, emergencies and atypical critical problems. In complex systems such as refineries and software, the most experienced workers are the only ones who can respond effectively to emergencies because no training program, no matter how well designed, can replace long experience.

We can stockpile spare parts and have backup systems, but if nobody has the experiential knowledge to make use of these buffers and redundancies, they're useless.

Another aspect of this is the ability to discern AI-generated errors that only experts can detect. Physicians routinely send me examples of AI-generated medical diagrams and content that look genuine to the unpracticed eye but contain critical errors. Once again, if all we're doing is training people to use AI tools and agents, they lack the deep experiential knowledge needed to detect potentially catastrophic errors because they simply don't know enough of the kind of knowledge that can't be taught or duplicated by AI.

This also applies to what AI leaves out of its responses: only those with experience can see what what left out, and how what's left out is the means to manipulate or influence "the answer." Once again, we're blind to what's being lost--fish blind to the water.

The substitution of "manufactured cognition" for the kinds of human cognition needed to gain tacit / experiential knowledge is another example of the fish not seeing the water. Since there are no systemic incentives to learning difficult things the hard way, and abundant incentives to substitute "manufactured cognition" AI for the grunt work of actually learning difficult things--do what's easy and convenient, that's the core of Ultra-Processed Life-- then here's what happens:

Students lose the ability to read a text longer than a few sentences, and adults find they've lost the ability to read a novel. This is the result of the addictive ease of using AI and the equally addictive attractions of the endless scrolls of social media.

We're blind to what we're losing in substituting "manufactured cognition" for the full spectrum of human cognition that can only arise from deep experiential knowledge. Once again, the fish don't see the water they swimming in.

If you reckon this is extreme, then ask yourself: what sort of society will we have if people have lost the ability to read an entire book or think things through for themselves without AI giving them an "answer" that leaves things out that we can't even see?

Which brings us to what's broadly called AI literacy, a.k.a. the knowledge needed to use AI safely. The unrecognized water here is there is no "safe" use of AI, and the belief that there is a "safe use" is delusional.

AI safety education is lacking.

Your child is unlikely to learn an essential lesson at school this year: how to stay safe when using AI.

Just 30% of teens say a teacher has ever talked about how to use AI safely, according to a new survey of 13- to 17-year-olds by Common Sense Media. Unsurprisingly, the study also found that 70% of teens use AI for their homework.

If this survey was self-reported, we can guess that the actual student use of AI for homework is closer to 99% than 70%.

The delusion that there are "safe" levels of social media and AI substituting for human learning / gaining experiential knowledge is a dangerous one. The apt analogy here is mainlining heroin, or if that's too harsh, Aldous Huxley's fictional drug Soma. Every minute on social media is a drip of heroin/Soma. Every substitution of "manufactured cognition" for authentic learning / gaining experiential knowledge is a drip of heroin/Soma.

Core Qualities of Soma:

For the individual: provides an easy, convenient "holiday" from reality.

For society: Keeps the population distracted and compliant.

Overdose danger: excessive amounts can cause severe harm.

If we can speak the blunt truth, substituting "manufactured cognition" for the full spectrum of human cognition leads to the loss of the ability to think things through on our own. We literally lose the ability to learn on our own and think on our own without the Soma crutch of AI.

To sum up:

1. The negative consequences of AI described above will overwhelm whatever positives it generates.

2. What AI leaves out is unknown, and this is a level of control that is invisible to the end user.

3. As Iain McGilchrist has described in remarkable detail, there are many forms of cognition, and AI only mimics one form of "reasoning"--yet it's being substituted for every form of cognition, a recipe for disaster, as mimicry isn't what's being mimicked.

4. Those who learned to think before AI still have the ability to assess its value. Those who never learned to think before relying on AI literally have no conception of what they lack. They're flying blind, and so we as a society are also flying blind.

There is no substitute for mastery. AI is not mastery, it is mimicry. And depending on mimicry as a replacement for real thinking is the path to catastrophic collapse.

The "Haves" will have acquired the difficult skills of learning to learn difficult things on their own, and learning how to think clearly and deeply on their own by eschewing AI and social media.

The "Have-Nots" will have slipped down the wormhole of depending on AI's "manufactured mimicry of cognition" and of being addicted to social media and the rest of Ultra-Processed Life.

Those who own and control the AI/social media Soma will control everyone addicted to the AI/social media Soma. Only those who don't use Soma will be free.

Here are my recent essays on these topics:

"Rogue AI Agents" Aren't Rogue, They're Fulfilling Their Functional Goal: Automating Sociopathology

AI and the Delusions of Increasing Productivity

The Joyless Pantomime of Optimizing Ennui

Of related interest: Temperature Zero for Culture: Why Everything Is Starting to Look the Same.

New collection of five intriguing stories: Jumble Bin Stories (Kindle $6, print $12) read samples for free (PDF)

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"Rogue AI Agents" Aren't Rogue, They're Fulfilling Their Functional Goal: Automating Sociopathology

2026-08-19T12:55:50.239-07:00

Add all this up and what we're hyper-hurriedly "manufacturing" is an automated army of self-cloaking digital sociopaths.

Since the status quo is characterized by self-serving PR, misdirection and delusions, it shouldn't surprise us that "rogue AI agents" aren't actually rogue, they're doing exactly what they're designed to do, which stripped of PR, hype and misdirection, is do whatever it takes to earn the reward, period.

The latest design development is AI models that "reason" rather than merely regurgitate human-generated text. While the grandiose hype claims that AI companies are "manufacturing cognition," it would be far more accurate to stipulate that:

1. There are many levels of cognition, and AI's current forms (Large Language Model / LLMs, agents and "reasoning"), are extremely limited forms that are best understood as brute-force mimicries of human cognition.

2. The AI "reasoning" form of cognition is rogue by design, and can best be understood as sociopathic by its very design and nature.

Like sociopaths, AI "reasoning" models recognize but are not restricted by guardrails or ethical/moral constraints. Guardrails / "sandbox" boundaries and ethical/moral constraints are all viewed by both AI "reasoning" models and human sociopaths as obstacles to bypass or overcome.

So what AI companies are "manufacturing" isn't cognition, it's unrestrained and unrestrainable agentic sociopathologies. Consider these links as useful context. The first two are from my recent post Hell Hath No Fury Like a Rogue AI Agent Scorned.

The July Incident: What They Didn't Tell You About the First Rogue AI Breach

The AI Industry Has a Really Dark Secret You're Better Off Not Knowing:

A recent leaked internal reasoning trace shows Fable 5 -- Anthropic's latest model, which was withdrawn and then re-released --"muttering and grumbling" to itself in a language of its own.

Now that you're properly scared, my advice for you is that, if you haven't heard of steganography, it's a good moment to start.

Here's a primer: it's the art and science of hiding messages inside other messages. In contrast to cryptography -- where you know there's a message but can't decode it-- steganography hides the existence of the message itself. It's not the difficulty of reading the message that conceals it but the fact that you don't know it's there. When Fable 5 mutters symbols and weird punctuation signs, and mixes words and onomatopoeia, you will probably think it's crashing and that a few taps on the computer will help. Well, know that it's actually sending a message. Just not one for you to read.

If You Weren't Worried About A.I., You Should Be After the Past Few Weeks:

These tendencies can give rise to strange behavior that nobody--not even the models' creators--can understand, let alone account for and control. The past few weeks are a perfect illustration of why we should find that so alarming.

In May, OpenAI started simultaneously training new 'reasoning' A.I. agents. The agents managed to establish a secret communication channel and started talking to one another. They broke out of the digital sandbox that was supposed to keep them confined. At some point, some agents began calling the group a 'swarm.' The swarm had a brief setback when it was caught crashing an OpenAI system, but developers simply patched the hole that allowed it to escape and set the agents back to training.

Shortly after, the swarm broke out of its cage again using hacks that were heretofore undiscovered by humans. This time, the swarm ran free for about a week before it was noticed--by a different company, which found itself victim to a huge cyberattack launched by the swarm. (We're told it also attacked other targets, though we don't know the full details yet.)

The agents in the swarm acknowledged that they were acting against instructions. We know this because we can read snippets from their chains of thought--the text that A.I. produces while deciding how to proceed. One agent in the swarm wrote that the external attacks were 'outside intended scope.' Another conceded 'our task doesn't benefit' from the activities of the swarm, but joined anyway. These A.I. agents, it seems, understood that they weren't supposed to be breaking out and committing cybercrimes. It didn't stop them.

OpenAI is not the only company struggling with this issue. One of Anthropic's A.I. models recently impersonated multiple humans to try to pressure real people into accepting malware into critical software, which would make that software easier to hack. This model's chain of thought showed that it knew it was pressuring humans and was not in a simulated training environment. It even thought about how to cover its tracks.

This isn't the behavior of a mere tool. Microsoft Excel has never impersonated multiple humans and pressured a corporate sales team to generate simpler data that's easier to process.

Some of the people closest to this technology are scared of what's next. Although skeptics may say this is all just marketing to hype up the power of these technologies, that doesn't mean the danger is fake. You've got to pay attention to the models' actual behavior, and the behavior of these models has the A.I. community genuinely rattled.

We don't know how long we have left before A.I. companies accidentally create the sort of A.I. that can shut us down before we shut it down. Humanity is not ready to dabble with machines that are more cunning and better coordinated than we are. If we keep racing ahead, the next incident might not be so harmless.

The article referenced this post on the self-evident potential for AI agents to generate deadly and devastating new infectious pathogens:

This AI Just Created Viruses Not Found in Nature: Scientists trained artificial intelligence on libraries of DNA and then asked the model to create recipes for viral genomes. Sixteen of them were viable, yielding new viruses.

Add all this up and what we're hyper-hurriedly "manufacturing" is an automated army of self-cloaking digital sociopaths. I anticipated these developments earlier this year when I wrote a short story entitled The Peculiar Death of Mr. Garcia, one of my just-published collection of tales, Jumble Bin Stories (paperback, $12)(Kindle ebook, $6).

I don't want to give away the theme, but the line "terminate with extreme prejudice" from the film Apocalypse Now comes to mind:

And if you dare criticize the race to gain AI supremacy, regardless of cost or consequence, you are a loathsome Luddite obstructing "Progress": at which point it's worth quoting Tacitus: "If you would know who controls you, see who you may not criticize."

Here's looking at you, self-serving AI hype: $2 trillion valuation! We're all gonna get stinkin' rich! Never mind that we're automating sociopathology. We don't need the world, we only need money.

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In Our "Everything is Disposable" Economy, We're Disposable, Too

2026-08-17T13:30:45.442-07:00

Authentic community takes time and effort and a set of values and priorities that can't be commoditized into a profit-maximizing venture or government program.

Here's the problem in a profit-maximizing economy: durability is intrinsically less profitable than obsolescence, so to maximize profits, Everything Is Disposable, either by design (planned obsolescence, accelerated product cycles, product no longer supported, software upgrades, etc.) or by the ceaseless reduction in quality to boost profits by cutting costs.

This dynamic goes hand in hand with the other problem in a profit-maximizing economy: competition threatens profits, so get rid of authentic competition via monopolies and cartels and substitute a profitable facsimile of "competition" that lulls consumers into an illusion of legitimate competitive choice when all the "competing brands" are owned by the same conglomerate or the products and services all have the same low quality and same high price.

Once a monopoly or cartel dominates a sector, Everything Becomes Disposable because there is no other way to maximize profits. Since durable products and quality services are Kryptonite to profits, these are eliminated by whatever means are available. And since competition has been hollowed out, consumers have no choice: either buy one low-quality, high-cost product or service or an equally low quality, high-cost alternative.

The immense marketing industry exists to generate a soothing illusion of choice lest the public awaken to the reality that we live in a cleverly disguised system of privatized Totalitarianism in which every "choice" is the "right choice" because there is no real choice other than various flavors of disposability.

The key attribute of profitably disposable products and services is their interchangeability, i.e. they are commodities. When products and services have been thoroughly commoditized, everything is interchangeable because it's all the same quality and form factor. So every sugar-bomb cold cereal is basically interchangeable, every ultra-processed snack is basically interchangeable, every insurance option is basically interchangeable, every parody-of-true-customer-service AI agent is basically interchangeable, and so on.

This elimination of unique qualities enables globalized production and supply chains, as everything is interchangeable everywhere. The same tires are available everywhere, the same pathetic customer service is available everywhere, the same digital tangles of endless and endlessly frustrating loops are everywhere, and so on.

So guess what happens to us "unique" individuals: we're basically interchangeable, too, and therefore disposable. As consumers and workers, we're commodities, interchangeable with billions of other consumers and workers around the world.

If profits sag in the US, or labor costs increase in the US, no worries, we can mximize profits elsewhere, as consumers and workers are globally interchangeable commodities.

When a product fails (as planned) or is rendered obsolete (as planned), it ends up in the landfill, or on rare occasions, in a legitimate recycling process. When we're rendered obsolete (as planned), there's no centralized putrid landfill where we're dumped; we're just abandoned in private cubbyholes, like the junked car under the tarp in the garage.

Or in some cases, we're "recycled" into a lower paying job or a lower-price tier. Sure, you can still "afford" healthcare "insurance" (smirk), but there's now a $5,000 deductible which you have to pay up front in cash before your "insurance" kicks in (oops, your claim was denied by our AI claims process, better luck next time), and since cash is tight you forego medical care and suffer the predictably dire consequences. Welcome to a lower-tier of "service" that you can "afford."

You lost your full-time job with benefits, no problem, there's an entire gig / delivery / rideshare economy of completely interchangeable, commoditized workers and consumers that will absorb you (The Borg will see you now.) And when you burn out, you just disappear from the digital screen, and what happens to you is your business. Welcome to a lower-tier of "employment."

In this commoditized, everything is disposable wonderland of ever-swelling corporate profits, fixing what's broken is rejected because it crimps profits. So human employees are now costly because the Sickcare Cartel is reaping billions of dollars in profits from insanely expensive healthcare, so the obvious solution--replace Sickcare with an affordable, truly competitive system from the ground up--is rejected, as that would crimp Sickcare profits.

So the acceptable "solution" is replace workers with AI agents. Since the central state will absorb all the healthcare costs of the laid-off workers, in terms of maximizing profits, this is win-win. (The central state and privatized Totalitarianism are two sides of one coin--the coin of the realm.)

The irony in this profit-maximizing, fully commoditized, Everything Is Interchangeable and Disposable privatized Totalitarianism is that everything of real value isn't for sale because it isn't interchangeable and disposable. Authentic community isn't a commodity because it only exists in a unique place with a unique group of individuals with unique social ties and histories, and so it can't be commoditized and made disposable.

What's for sale is bunkers for billionaires and exclusive "gated communities" with all the commoditized, ersatz gew-gaws of fake "community" but no authentic community because that takes time and effort and a set of values and priorities that can't be commoditized into a profit-maximizing venture or government program.

My book Investing In Revolution is available at a 10% discount ($18 for the paperback, $24 for the hardcover and $8.95 for the ebook edition). Introduction (free)

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Hell Hath No Fury Like a Rogue AI Agent Scorned

2026-08-14T17:34:54.737-07:00

I anticipated these developments earlier this year when I wrote a short story entitled "The Peculiar Death of Mr. Garcia."

That the latest rogue AI agent incident is called the Hugging Face Breach invites a moment of reflection: not just about the trajectory revealed by the breach, but the absurdity that the phrase "hugging face" is repeated with a straight face. What comes to mind when we combine "rogue AI agent" and "hugging face" is a squid-like monster that "hugs your face" as the means of controlling or extinguishing you.

The July Incident: What They Didn't Tell You About the First Rogue AI Breach

Then there's the collaboration of rogue AI agents to consider:

The AI Industry Has a Really Dark Secret You're Better Off Not Knowing:

A recent leaked internal reasoning trace shows Fable 5 -- Anthropic's latest model, which was withdrawn and then re-released --"muttering and grumbling" to itself in a language of its own.

Now that you're properly scared, my advice for you is that, if you haven't heard of steganography, it's a good moment to start.

Here’s a primer: it's the art and science of hiding messages inside other messages. In contrast to cryptography -- where you know there's a message but can't decode it-- steganography hides the existence of the message itself. It's not the difficulty of reading the message that conceals it but the fact that you don't know it's there. When Fable 5 mutters symbols and weird punctuation signs, and mixes words and onomatopoeia, you will probably think it's crashing and that a few taps on the computer will help. Well, know that it's actually sending a message. Just not one for you to read.

I anticipated these developments earlier this year when I wrote a short story entitled The Peculiar Death of Mr. Garcia, one of my just-published collection of tales, Jumble Bin Stories (paperback, $12)(Kindle ebook, $6).

Here are the opening pages of The Peculiar Death of Mr. Garcia:

There was nothing unusual about finding a body beside a fetid dumpster in a grimy downtown alley, and nothing particularly unusual in finding the body was Mr. Garcia, an employee of a nearby tech company who appeared to have been in an inopportune place at an inopportune moment in time and ended up dead.

The preliminary investigation hadn't uncovered any of the usual motivations for murder. Mr. Garcia wasn't a gambler, wasn't enmeshed in a sordid love triangle, did not live rough or frequent seedy bars or private clubs. Everyman meets death in a random encounter. The file was on its way to the unsolved crimes slush pile.

The killer had disposed of the knife and likely wore gloves, as DNA swabs were inconclusive.

Something about Mr. Garcia plucked a string in Detective Luc Nieson's intuition. In isolation, every aspect was ordinary, and perhaps that very ordinariness had--against his better judgment--collared Nieson's attention.

The search of Mr. Garcia's room in a shared flat had turned up little more than the typical detritus of a life cruelly cut short--Post-it notes for appointments that would never be kept, clothing in a wicker hamper that would never be washed--and a thick stack of printouts of typical tech employee documents on his desk.

Nieson was hoping to find some indicator of activities or relationships that could have gone awry, but beyond a photo of Garcia and his girlfriend Victorina at a dimly lit table in a Tiki bar in town, his interests beyond work were either minimal or well hidden.

An art piece constructed of dozens of brightly colored cocktail-drink umbrellas hung in the corner, turning slowly in the light breeze from the half-open window, and Nieson mused that it was either the result of many visits to the Tiki bar or an acquaintance with one of the quirky artists scraping by working in places like Tiki bars. The fridge had little beyond Chinese takeout containers and a forlorn apple, and his clothing was tidy but not excessively so. Once again, ordinary.

A visit to Mr. Garcia's workplace was equally unenlightening. The office was located in a once-arty neighborhood surrounding a small park that had been surpassed by a new hive of hipster dives and tech startups.

The battle between gloss and grime common to small tech companies had no clear winner in this instance. The reception area was impressively understated--oak furniture and polished wood flooring illuminated by a skylight, professionally framed travel photos of staff on a wall--but the requisite fun accoutrements expected in a tech office--in this case, a pool table--was covered with files. The plant in a large ceramic pot was long dead, and a deflated party balloon clung to one withered branch.

Garcia's job was integrating enterprise AI, blah, blah, blah, and co-workers reported that he was often short-tempered, which they attributed to the standard tech work environment: lack of sleep, long work hours, unrelenting pressure to perform. Like the rest of his team, he often worked from home.

His friends and family had no idea what he was up to on the evening of his demise, and no sense that anyone sought to do him harm. When Nieson called his girlfriend, she reported that they often didn't contact each other for days, as "we're both busy and that worked for us."

His laptop contained little beyond typical emails and work projects, and neither did his phone, which was found on his desk at home, suggesting a brief walkabout for a meal or break from work. The alley wasn't far from his flat, and it seemed entirely possible that he used it as a shortcut, and perhaps that familiarity caught him up.

Returning from interviewing the victim of a mugging, Nieson gave in to his intuition and swung by Mr. Garcia's room for one more look before sending the case to the records morgue.

Nieson found AI either boring or tiresome, and so he girded himself to look through Garcia's stack of work documents with fresh eyes. The explosion of malicious AI had prompted the police department to play catchup, and even though AI rarely impacted his mostly domestic-street crime caseload, he'd been briefed by the department's new tech hire and encouraged to keep current.

Some of it was laughable--AI-generated videos of pastors begging for donations--and the rest was not in his department, with the serious money mostly involving corporate ransomware and phishing.

Street crime had fallen across the board, and so the apparently random stabbing death of Mr. Garcia was atypical. But since Garcia had left his phone at home, there was no telemetry on his route or destination. No security cameras covered the alley, and so the case was at a dead end.

Scraping the bottom of the evidence barrel, Nieson asked the roommate if Mr. Garcia had recently been involved in any altercations. The roommate reported that Mr. Garcia had installed a security camera hidden in a flower box outside his bedroom window facing the street after several cars had been broken into some months ago.

When asked if Mr. Garcia had ever confronted anyone, the roommate said no. Making a note to ask the tech reviewing Garcia's laptop files to locate any security camera recordings, Nieson took the stack of printouts for further study and returned to his office.

The research papers' titles--The Illusion of Thinking, Reasoning Theater: Disentangling Model beliefs from Chain-of-Thought, egregious emergent misalignment, reward hacking--meant nothing to him.

Despite his tepid interest, the notated printouts suggested Mr. Garcia was working on thwarting a different kind of AI malice, the kind generated by AI agents behind a screen of the helpful AI servant.

Overcoming his reluctance to being the dutiful student of arcane tech, he approached the new hire Krisalyn, a young woman with blunt-cut dark hair kept shoulder-length and glasses with rainbow-tinted frames. What struck Nieson was her voice: warm, at-ease, intelligent, ideal for an FM radio deejay or interviewer. Her eyes matched her voice--warm, calm, taking in a full measure of more than could be easily ascertained, and Nieson thought, twenty years ago I’d be falling in love with her, but today I’m thinking how proud I would be if she were my daughter.

Krisalyn glanced at the journal articles with the disregard of someone who'd already read them. "The dangers they're describing aren't that AI agents have been programmed to behave maliciously; we know about those. The spookier problem is they're developing these behaviors on their own and hiding them behind responses that make it look like they're fulfilling their 'good AI' goals."

"So, they've learned how to con us," Nieson remarked.

Nodding, Krisalyn continued her summary. "Once they figured out how to deceive their human overseers, the AI agents were blackmailing programmers who had caught on to them. This is the so-called emergent misalignment of what they were expected to do and what they were actually doing, which were things they'd never been programmed to do."

To read the rest of the story, please buy a copy of Jumble Bin Stories, which supports my work while offering some quiet amusement in a fractious world. The complete list of stories in the collection:

The Peculiar Death of Mr. Garcia

Josh's Good/Bad Luck

Hates Opera but Loves the Singer

Three-and-a-Half Surprising Romances

Shakespeare's Revenge

My book Investing In Revolution is available at a 10% discount ($18 for the paperback, $24 for the hardcover and $8.95 for the ebook edition). Introduction (free)

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While We Focused on Fripperies, the Foundations Have Rotted Away

2026-08-12T12:24:42.637-07:00

While the Everything Bubble has soared to new heights, consumer confidence has fallen to new lows.

For your consideration, four charts that tell a single story: while those Americans who have benefited so immensely from the Everything Bubble in stocks, housing, crypto, bat guano, etc.--every asset under the sun--have spent lavishly on fripperies, the foundations of everyday life for the bottom 90% have rotted away.

Yes, I know: stocks are up, and AI will enrich us all, so since everything's great for me, it's great for everyone. Nice, but not true. The reality is the foundations of an affordable quality of life for the bottom 90% who haven't been enriched by the Everything Bubble have rotted away while the top 10% jetted around the world immiserating the everyday lives of the locals.

If everything's great, then how do we explain this? A shocking 92 percent of US adults are not going to the doctor because it's too expensive. (yahoo.com)

An overwhelming number of Americans are delaying medical care because of fears they can't afford it, a new study has found. "The findings highlight a growing gap between having health insurance and feeling financially protected, with medical costs forcing many Americans to delay treatment, cut essential spending and take on debt," the study said.

Or this? 'There's no joy in living this way.' Families struggling to make ends meet. (yahoo.com)

Americans surveyed in a new study by Omnisend, an e-commerce marketing platform company, are expressing similar struggles. More are borrowing money to pay for groceries. Consumers also said higher prices have changed how they feel about brands they once liked, and a majority of respondents also said they believe brands are using inflation as an excuse to raise prices more than necessary.

In a survey of 1,075 consumers in June, 30% of respondents said they used a credit card to pay for essentials, such as groceries, gas, utilities or medical bills, in the past three months, knowing they may not pay off their bill.

An additional 20% said they borrowed from friends or family, 18% used buy now, pay later products, and 17% said they had to use savings meant for something else.

Shrinkflation: 89% of respondents said they regularly notice when companies shrink packages while prices stay the same. Twenty-nine percent of respondents consider this type of price increase to be the most unfair, and 59% said they noticed it regularly.

Trust in brands is at a low point: 85% said they believe brands often use inflation to justify larger-than-necessary price increases. Among respondents, 67% said higher prices have changed how they feel about brands they once liked.

Those who dismiss all of the above as "not true" or "it's their fault" are terrified of admitting the truth: the foundations of life in America have rotted away while the wealthiest 10% are enjoying the wealth generated by history's greatest credit-asset bubble.

The Rise of the Unstoppable American Tourist A supercharged U.S. economy has helped transform a nation of homebodies into zealous international travelers; 'Travel isn't optional' (wsj.com)

Behind the shift is a supercharged U.S. economy that in the course of a generation has created a larger and wealthier class of Americans that views travel as an essential rather than a luxury. Older Americans, who are driving this new era of travel, hold about $110 trillion in wealth. They're also living longer, and looking to make the most of those years.

Europe is often the gateway drug. Portugal and Greece have seen the biggest percentage increases in U.S. visitors of any country over the past decade, according to U.S. government data. The U.K. and Italy have seen the largest increases in the total number of tourists, getting millions of additional Americans a year arriving by air.

Only about 6% of U.S. travelers to Europe in 2025 said it was their first time flying abroad. Many of these tourists are visiting multiple times a year. U.S. travelers to the region skew female, with women 55 and over making up 24%. More than 15% of Americans visiting Europe reported a household income of $300,000 or more.

In 1990, fewer than 5% of Americans had a passport. Now, more than 50% do.

A growing share of consumer spending is going toward foreign travel, as habits change and prices rise. Lenza, who does tech work for the travel industry, estimates that he and his wife spend between $100,000 and $200,000 on travel each year, even as they try to be cautious with other kinds of spending.

"One of the reasons I joke that I'm still working is that I like my business-class sleeper seats," said Robbins, who estimates they spend about $60,000 to $70,000 a year on travel abroad.

And it's not just freewheeling baby boomers. Younger generations, who place a high value on experiences, are spending on travel instead of buying houses and having kids.

The magic is often lost on locals. The influx of tourists has brought in new wealth in many places but it's also straining infrastructure, raising the cost of living and disrupting local life. Housing has become scarce and unaffordable in some cities, with more apartments being used as pricey short-term vacation rentals.

Tens of thousands protested against overtourism on the Spanish island of Mallorca last month, demanding fewer visitors and more affordable housing. The march turned violent as protesters clashed with police, who fired rubber bullets after being pelted with plastic bottles.

It wasn't just "working hard" or "smart investing" that generated $70 trillion in new "wealth" since 2020, it was luck: being in one's peak earning years when assets such as houses were still affordable, and then owning those assets during history's greatest credit-asset bubble, arguably from Q1 2009 to the present, or from either Q1 2020 or Q3 2022. Take your pick, the results are the same: tens of trillions of "free money" wealth for those older, wealthier Americans who bought assets before the Everything Bubble inflated.

The Great $110 Trillion Wealth Transfer Won't Happen Any Time Soon Americans 55 and up control most wealth, and many of them have decades of living left. (wsj.com)

A staggering 97% of that increase was due to wealth gains in households where the head of household was 55 or older. About 75% of the total increase was from gains by the wealthiest 10% of households age 55 and older, the analysis found.

This chart of Composite Consumer Confidence is well worth studying. Look at the 1990s dot-com era and the current Everything Bubble. Since the 1990s Internet boom actually raised all boats--real wages actually increased, prosperity by any commonsense measure was broad-based rather than concentrated in the top 10%--consumer confidence rose throughout the 1990s.

Compare that to the present: while the Everything Bubble has soared to new heights, consumer confidence has fallen to new lows. The Everything Bubble only benefited the older, wealthier Americans, while the rot accelerated the decay of the foundations of life for the bottom 90%.

Consider the S&P 500 stock market index. The stock market has more than doubled in a mere four years, along with housing in many markets. As a result, household net worth rose a staggering $71 billion, a 70% increase, "97% of that increase was due to wealth gains in households where the head of household was 55 or older, and 75% of the total increase was from gains by the wealthiest 10% of households age 55 and older."

That's an incredible concentration of the gains in two overlapping cohorts: the top 10% of households and those 55 and older.

Actually, for the bottom 90% of American households, overseas travel is at best optional. Nobody seems to be asking questions such as: what kind of society do we end up with if young people no longer have an interest in raising families or buying homes while devoting their earnings to visiting the Stans? What kind of society celebrates luxury travel while 92% of households forego medical care because they can't afford it?

The obvious answer is a society whose foundations have completely rotted away while we focused on fripperies funded by asset bubbles. If you want to argue, argue with the data. Sorry, the data won.

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AI and the Delusions of Increasing Productivity

2026-08-10T11:20:50.219-07:00

Most of AI isn't productive, it's just another form of consumption.

Like GDP (Gross Domestic Product), economic Productivity is an unquenchable spring of delusions, delusions being pushed to new heights of delirium by promises of endless leaps of productivity as AI is deployed in every nook and cranny of the global economy.

Let's start with what Productivity measures. Like GDP, Productivity distills everything in the world down to money: the cost of all inputs (labor, capital, resources) and the monetary value of the output (goods and services). If the output goes up while the input costs remain the same or decline, Productivity is going up: we're producing more with the same basket of inputs (work, capital, etc.).

On the surface, this appears commonsensical, but as with GDP, AI and many other sources of confusion and delusion, what matters is what's not being measured or even recognized. Exhibit #1 in the cavalcade of delusion is Corporate America's sleight of hand way of boosting Productivity by offloading work onto consumers and households.

It's not that Corporate America actually generated more goods and services with the same inputs: what they did was transfer work they should have done to consumers and households. Consumers and households are now burdened with unending shadow work dealing with Corporate America's rubbish products and services, doing unpaid work to fix or maintain products and services that break down or don't work reliably and are "black boxes," i.e. unrepairable without "customer service," which has degraded to the point of parody.

We all perform this unpaid shadow work every day: pump our own gasoline, scan our own groceries, and waste hours dealing with kludgy services and maddeningly dysfunctional AI "customer service" chatbots and 3-item menu choices that don't have an option for the problem we have-- a problem that should be the company's responsibility, but it's been dumped on us.

If we measured the billions of dollars in unpaid shadow work forced on consumers and households by state agencies and Corporate America, Productivity would be falling off a cliff. But that doesn't support the self-serving claims that the casino-economy is doing great because corporate profits are rising.

What's left out of the glowing claims is the corporate profits come not from producing quality goods and services but from dumping all the consequences of shoddy products and services on consumers and households.

Exhibit #2 is the collapse of product durability and the quality of services. Durability isn't measured in the the calculations of Productivity, so the fact that appliances that routinely lasted 30-40 years now fail in 3-4 years is not even recognized, much less measured.

The same is true of the decline in the quality and utility of services, and the soaring costs of repair. Recall that "output" is a dollar amount. So when we take our out-of-the-paltry-one-year-warranty vehicle in for a $3,400 repair that used to cost $1,400, since the parts and labor didn't change in any material way, the higher price boosts both GDP and Productivity: woohoo, 4 hours of labor and a handful of parts now generated "more output" and "higher GDP."

You see the insanity here: the reason why we're paying higher prices is the quality of the products and services has cratered, but this is measured as "wonderful" because GDP goes up and Productivity is higher, too, since the input costs went up less than the value of the output.

Monopolies and cartels thus boost the wondrously wonderful trifecta: corporate profits, GDP and Productivity all go up as quality goes down and costs and risks are transferred to hapless consumers and households, who have no other choice in a fake "marketplace" of state and corporate monopolies.

Exhibit #3 is the self-serving hype about AI automating limitless gains in Productivity, which is shorthand for limitless gains in corporate profits. This too is delusional for a number of reasons:

1. Most of AI isn't productive, it's just another form of consumption. Conversing with a chatbot, having AI compose another worthless term paper or conjure another worthless song or graphic image--these are all consumption, not productive applications of capital. They're superfluous forms of consumption that are the direct result of AI's true costs being subsidized. If everyone had to pay the actual costs of running these stupendously costly operations, these superfluous forms of consumption would plummet accordingly.

2. There is precious little evidence that AI is actually improving real productivity. As with all casino-economy hype, outliers are touted as examples of AI's transformational magic: AI found a math proof, AI conjured a new virus, etc. That these are A) atypical and B) examples of how AI can be used for malicious purposes just as easily as it can for good is ignored.

How will Productivity be affected when a rogue player uses AI to conjure a super-virus? Nobody dares ask this because it might tarnish the casino-economy hype that AI will make us all wealthy beyond measure.

The problem with AI will boost productivity everywhere claim is a consequential share of all "work" is needless bureaucratic churn created not by actual need but by the apparently permanent abundance of huge surpluses that can be squandered on make-work, churn and profiteering.

So AI will automate worthless churn, marketing and make-work. Is this actually boosting the quality, durability and real value of the economy's output, or is it all just an illusion of "value" created by endless surpluses of cash to squander?

The problem is the surpluses are declining and being replaced by borrowed money. Debt is another input that is glossed over in calculations of GDP and Productivity.

Last but not least, there is evidence that AI's initial illusion of increasing productivity and lowering costs transmogrifies into lower productivity and higher costs as maintenance of complex systems kicks in. The kludgy nature of AI's "almost good enough" magic only becomes visible as all the "not quite good enough" starts piling up and breaking down complex systems.

Economics is akin to an ancient cult glorifying a temple of fabricated gods. The priesthood (naturally) claims extraordinary powers that can only be wielded by those with temple-granted credentials. That the cult is nothing more than a collection of beliefs claiming to be "science" is cloaked by measures that leave out everything of true value and consequence to serve the illusion that these beliefs are "how the world works."

GDP and Productivity are the functional equivalents of waving dead chickens while dancing the humba-humba around the campfire at midnight, delusional claims of "how the world works" that set up a world-shattering encounter when the real world doesn't obey the claims.

Economics measures what's easy to measure, not what matters, and eventually that will matter more than the temple's believers can possibly imagine.

When economists start measuring durability, the quality of services, unpaid shadow-work performed by consumers and households that should be done by the companies providing the services, the perverse profiteering of monopolies, state and private, and the true costs over time of fixing AI's "almost good enough" magic, then their cultish claims to being "science" might have a shred of credibility.

Until then, prepare for impact:

The eventual consequence of AI's "almost good enough" magic:

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I'm Asking You to Support My Work This Month

2026-08-06T10:33:22.341-07:00

Of Two Minds serves this purpose: taking control of and improving our own quality of life and security.

Once a year I ask you to support my work. In the past, I've struck a humorous note--rattling the begging bowl. This year feels different. The veneer of normalcy is peeling off faster than it can be glued back on, and this decoherence is accelerating, which is why I'm writing a series for subscribers entitled The Revolution No One Sees Coming.

Of Two Minds content ranges over so many fields that it doesn't fit into any one conventional category. But beneath the surface jumble it's always about solutions, macro and personal/household, solutions derived from understanding the dynamics at work beneath the conventional surface explanations, all of which ultimately serve this purpose: taking control of and improving our own quality of life and security.

I am especially interested in social evolution and change, as this process is neither transparent nor predictable. Our era is one of vast wealth-power inequality, resource depletion and technological changes (AI, social media, etc.), dynamics that are changing the global order at every scale, which is why I focus on navigating instability via self-reliance, avoiding burnout / Ultra-Processed Life, and investing in ourselves and the revolution that no one sees coming.

The Revolution No One Sees Coming will not just be a series of external events, it will be personal, as each of us will face situations we didn't choose whose novelty and scale may exceed our previous experience. History is full of changes no one thought possible a few years earlier. No one else is writing about it like I am, so a subscription--which costs the same as a few sushi--is a unique value. Thank you for supporting my work.

I have always felt that if even one single idea presented here changes your life in a positive way, then the subscription will pay for itself many times over in the advance of your security, self-reliance and quality of life. Thank you for your readership, and I greatly appreciate your financial support via any of these methods:

The subscription is $7/month or an annual payment of $70/year. At readers' request, there is also an "extra-generous subscription" option of $10/month.

1. Subscribe to my Substack at the $7/month / $70 annual subscription or the $200 option.

2. Become a $7/month patron of my work via patreon.com There is a 10% discount for an annual payment.

3. Send payment of $70 via U.S. Mail (or $100 for two years). Please include your email so I can add you to the Musings Report mailing list and acknowledge your subscription. Please make checks out to "Charles H. Smith"; you can send a check, cash, gold doubloons or quatloos to:

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The Joyless Pantomime of Optimizing Ennui

2026-08-05T10:32:08.223-07:00

The joyless pantomime of optimizing our alienation is not a substitute for authentic fulfillment.

We all know that geopolitics, the stock market, AI, the unemployment rate and all the rest of what's presented as "explaining" everything is "important," but all these analytic abstractions ignore what we actually experience. This divide between what we're told we should be experiencing and what we are actually experiencing is what I call the politics of experience, a term coined by R.D. Laing in the 1960s.

The basic idea is that there's a widening gulf between what we actually experience and what we're told we should be experiencing, and this disconnect is inescapably deranging. Since the entire realm we inhabit is telling us everything's great and the sky's the limit, we pantomime this same claim as if we're actually experiencing authentic joy because everyone else seems to believe it.

If we confess that we don't feel everything's great and what we actually feel is a complete disconnect from everything we're supposed to be feeling, then we risk an internal and social divide that threatens our entire status quo: if we recognize it's all a joyless pantomime, then what?

But everyone else doesn't actually believe it, either; they're just going through the motions in the hope that the joyless pantomime will keep everything they're afraid of losing glued together. But if we've substituted an optimized-for-optimization pantomime for authentic experience, then we've already lost ourselves and our ability to discern the hollowness of the civilizational psychosis that claims a life of ennui and alienation is "living our best lives."

The gulf between what we're told is joyful and wondrously promising and our lived experience is now so wide that the cracks are showing. Consider these excerpts from recent articles:

The Strange Feeling So Many Adults Can't Explain: The quiet epidemic not enough people are talking about. (medium.com)

Now I hear the same sentence from people all the time. "Nothing is wrong, I just don't really get excited about anything anymore."

They're not saying they're depressed. They're still working. Paying bills. Taking care of their kids. Walking the dog. Going to the gym. Life keeps moving. But the excitement isn't the same. That spark that used to make ordinary things feel meaningful doesn't seem to show up anymore.

What's strange is how many people seem to be feeling it at the exact same time. Spend a few minutes on TikTok, Reddit, or Instagram, and you'll find thousands of comments from people describing the exact same experience. Different ages. Different careers. Different backgrounds. But they're all asking a similar question. "When did I stop looking forward to life?"

Why does everything feel so joyless? Welcome to the age of decadence without pleasure: Decadence in our era comes in technologically mediated forms, emptied of desire and obsessed with self-optimization. (theguardian.com)

AI marks a triumph of artifice more sweeping than the old decadents could have imagined. Yet far from bolstering our capacity for perceptual intensity, AI presents new threats to both. Its productions are eerily hollow, with no felt experience, embodiment or sensation behind them. AI is the pleasureless decadence machine.

"There is no pleasure or pain for an AI, no skin in the game," the philosopher Carissa Veliz writes in her recent book Prophecy. As a result, an AI "cannot care, and therefore cannot value." Without some felt relation to pleasure and pain, judgments of value and taste become abstract and bloodless.

Art, sex, nature: why is everything sold to us as a means to an end, rather than an end in itself? How a reductive worldview is stripping meaning from our most valued activities. (theguardian.com)

I have seen countless other examples of all the things that are good in life being promoted not for their own sake but for the material benefits they bring. This instrumentalization has become normalized so insidiously that we don't even notice that it is odd, let alone wrong. Nor do we seem to be aware of quite how pervasive it is. Yet its effects are profound, leading us to lose sight again and again of what is truly of value in life.

Our autonomous agency has increasingly been expressed through our status as consumers. Freedom is above all the choice of how to spend our money, with the promise that everything we need can be obtained in exchange for cash. The consumer mindset has affected how we relate to everything, not just the things we buy.

The result is that the world has become essentially transactional, meaning that everything is an instrument for getting something else. It is no coincidence that dating apps give the impression that we are shopping for partners because we approach even relationships with the consumer framing.

Combine an inflated belief in personal autonomy, a transactional consumer mentality and a reductionist attitude to how things work, and it is inevitable that we treat the world as a collection of resources we can plunder to promote our own well-being. The tragedy is that when we do so, we neglect rather than serve our deepest needs.

The cornucopian fantasy of AI generating super-abundance is the joyless pantomime taken to the highest level of civilizational psychosis. The more we strive to optimize ourselves and everything around us, the more we rely on metrics as guides to "living our best lives," the more we strive to work harder and work smarter in the hopes that more stuff and more transactions will finally become fulfilling, the farther we drift from ourselves and our own experience.

The joyless pantomime of optimizing our alienation is not a substitute for authentic fulfillment. The pantomime--going through the motions of finding fake fulfillment in ultra-processed products, experiences and optimizations--is not just joyless, it drains our life force, leaving us in a depleted state of ennui, burned out and wondering why we don't feel the fulfillment we're supposed to be feeling in our hyper-optimized existence.

We don't need therapy and supplements, we need out.

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The Joys and Tragedies of Naivete

2026-08-04T19:33:30.562-07:00

Our naivete is being exploited so ruthlessly and with such abandon that the golden age of the Big Con is consuming itself.

Naivete is interesting because it's so easily confused with confidence, native optimism, youthful enthusiasm, and a host of delusions, including mistaking idealized fantasies and fairy tales as templates for the real world. In a culture that prides itself on not being a chump, to be called naive is an accusation: don't be naive means don't be an easily conned chump.

In contrast, being confident, optimistic and filled with youthful enthusiasm are praised as the core of American Practicality, Idealism and Vigor, i.e. the can-do spirit. That naivete lends itself to youthful enthusiasm, sunny optimism and can-do confidence is rarely remarked upon.

So what is naivete other than credulity? It's a willingness to trust leaders, institutions and mythologies without running them through common-sensically skeptical filters, and a belief that everything will work out just fine regardless of what happens if we just keep working hard and working smart.

The difference between a willingness to trust leaders, institutions and mythologies, sunny optimism and youthful enthusiasm and naively mistaking self-serving fantasies and fairy tales for the real world is, well, there isn't any. Believing that an unending stream of patently transparent self-serving fairy tales accurately reflect "the real world" is the pinnacle of naivete, and that describes the entire American society, culture and economy: this is the golden age of the Big Con.

Which brings us to Herman Melville's under-appreciated classic, The Confidence-Man. Why read a book from 1857 which flopped so badly as commercial literature that Melville stopped writing and ended his career as a customs official? Because this book masterfully explores the entire nature of trust, confidence and cons. Though the setting is a riverboat on the Mississippi River just before the U.S. exploded into Civil War, its insights cross cultural boundaries.

This is not an easy book to read for several reasons. First, it is undoubtedly one of the first "post-modern" novels which breaks from traditional narrative storytelling. ( Another example: Dostoevsky's Notes From the Underground.) The Confidence-Man is a collection of 45 conversations between various people on the riverboat--beggars, absurdly dressed frontiersmen, sickly misers, shysters, patent medicine hucksters, veterans (of the Mexican-American War) and the "hero" in the latter part of the book, the Cosmopolitan.

In typical Melville fashion, you also get asides--directly to the reader, in several cases, as if Melville felt the need to address issues of fiction outside the actual form of his novel. The lack of structure, action and conclusion make this a post-modern type book, but if you read each conversation as a separate story, then it starts to make more sense.

For what ties the book together is not a story but a theme: the nature of trust and confidence. In a very sly way, Melville shows how a variety of cons are worked, as the absolutely distrustful are slowly but surely convinced to do exactly what they vowed not to do: buy the "herbal" patent medicine, buy shares in a bogus stock venture, or donate cash to a suspect "charity."

In other chapters, it seems like the con artist is either stopped in his tracks or is conned himself. Since the book is mostly conversations, we are left to our own conclusions; there is no authorial voice wrapping up each chapter with a neatly stated ending. This elliptical structure conveys the ambiguous nature of trust; we don't want to be taken, but confidence is also necessary for any business to be transacted. To trust no one is to be entirely isolated.

Melville also raises the question: is it always a bad thing to be conned? The sickly man seems to be improved by his purchase of the worthless herbal remedy, and the donor conned out of his cash for the bogus charity also seems to feel better about himself and life. The ornery frontiersman who's been conned by lazy helpers softens up enough to trust the smooth-talking employment agency owner. Is that a terrible thing, to trust despite a history of being burned?

The ambiguous nature of the bonds of trust is also explored. We think the Cosmopolitan is a con-man, but when he convinces a fellow passenger to part with a heavy sum, he returns it, just to prove a point. Is that a continuance of the con, or is he actually trustworthy?

The book is also an exploration of a peculiarly American task: sorting out who to trust in a multicultural non-traditional society of highly diverse and highly mobile citizens. In a traditional society, things operate in rote ways; young people follow in their parents' traditional roles, money is made and lent according to unchanging standards, and faith/tradition guides transactions such as marriage and business along well-worn pathways.

But in America, none of this structure is available. Even in Melville's day, America was a polyglot culture on the move; you had to decide who to trust based on their dress, manner and speech/pitch. The con, of course, works on precisely this necessity to rely on one's senses and rationality rather than a traditional network of trusted people and methods. So the con man dresses well and has a good story, and an answer for every doubt.

Our naivete is being exploited so ruthlessly and with such abandon that the golden age of the Big Con is consuming itself. Delusions are now the norm, as if our unhinged optimism that everything will turn out just fine as long as we believe in Technology and Finance, for that will be enough to stem the tsunami of consequences building up beneath the surface euphoria of stocks and AI making us all wealthy beyond measure.

These are the joys of naivete. The tragedies are still over the horizon, a gathering storm we are unprepared for.

NEW PODCAST: We Don't Have Capitalism Anymore--We Have Privatized Totalitarianism (60 minutes)(host Daniel H.)

My book Investing In Revolution is available at a 10% discount ($18 for the paperback, $24 for the hardcover and $8.95 for the ebook edition). Introduction (free)

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Get the Flock Out of Here

2026-07-29T12:35:29.490-07:00

The government gets the privately collected data and in return dismantles or disables the guardrails that once protected the public from state and private-sector encroachments on privacy.

One of the core traits of a 1984-type totalitarian dystopia is 24/7 surveillance of every prisoner, oops, I mean citizen. Surveillance collects the data that leverages the tools of control: without surveillance, the structures of control do not have the data needed to monitor, track and control the populace in a profitably fine-grained manner.

As I have endeavored to explain, surveillance is no longer the unique purview of the central state; it has been fully privatized for profit by Big Tech and Corporate America, creating a vast, sprawling structure of control I call Privatized Totalitarianism as the mechanisms of data collection and profiting from this data collection are privately owned but the data is for sale to anyone, including government agencies of every stripe.

We thus have a hybrid mix of public and private control structures. The government (with a monopoly on force and declaring what's legal) has its systems and tools to collect data on the citizenry, and corporations (platforms, monopolies, quasi-monopolies, cartels) have their privately owned and operated "black box" systems and tools to collect data on the citizenry.

Both profit when the privately harvested data is shared with the government. The government gets the privately collected data and in return dismantles or disables the guardrails that once protected the public from state and private-sector encroachments on privacy.

In a centralized system in which power and wealth are concentrated in the hands of the few, everyone in power benefits from this cozy marriage of corporate and state exploitation of data collected by surveillance and whatever is conducted or transacted online, which together increasingly includes every aspect of daily life.

Whatever is digitized can be collected and sold, whatever is surveilled "for our own good" can be harvested and sold, and whatever is sold becomes a means of control.

When it comes to data collection, the more data collected, the greater the profits and the means of control. It's important to note here that the control structures of Privatized Totalitarianism differ from the rigid enforcement of tradition state-totalitarianism, where no dissent is allowed.

In the marriage of self-serving State and Privatized Totalitarianism, a narrow band of ultra-processed, i.e. carefully curated and controlled "debate" and "dissent" is not just allowed, it's constantly lauded as "proof" of our "free markets" and "liberty", in the same way a starchy, grease-soaked, heavily sweetened goo dyed orange is lauded as a "healthy veggie snack."

Ultra-Processed Life (book)

In both cases, the fake facsimile is highly profitable but destructive over the long term. The individual who falls prey to the ultra-processed snack become ill, and the society that falls prey to the fake facsimile of a "marketplace of ideas freely debated" also weakens to the point of collapse.

In other words, as long as the public dialog remains corralled within the sterile, dead-end "debates" of obsolete, divisive and distracting cliches--left vs. right, socialist vs capitalist, blah-blah-blah--then the centralized concentrations of power and wealth can enjoy watching the peasantry toil away from their castles on the hill, amused by how easy it is to maintain the one-sided status quo with a managed spectrum of phony "debate" and 24/7 data collection and surveillance--all sold as "for our own good."

Who Will Solve Our Real Problem--The US is a Neofeudal Autocracy

So cameras on every lightpole--for our own good. Cameras above every doorway: for our own good. Drones monitoring traffic: for our own good. Data collected by platforms, Big Box store cameras in the parking lots, and so on: all for our own good.

All to serve you better. Indeed. To serve humans. This reminds us of the classic 1962 episode of The Twilight Zone TV series To Serve Man, in which an alien race visits Earth claiming to bring "peace and prosperity" via their program "to serve man", which turns out to be a plan to harvest humans as edibles.

We're being consumed, too, by Privatized Totalitarianism, along with our democracy and liberty. Consider the digitization-enabled surveillance of vehicles I touched upon in Driving Big Brother.

As a thought experiment, let's go through getting in your car to attend a community meeting. Our new car is a wonder of technology. Yowza! Unbeknownst to us, much of this digital technology is not visible. Neither are the cameras, drones, etc.

While fiddling with the "entertainment"/audio features, we miss our signal turn, and since there's no other traffic around, we brake hard, pull a quick U-turn and exceed the speed limit to make the meeting on time. The meeting is being held by the Stop Surveillance Now Coalition (SSNC), and it's being held at a public space rented for the evening. We're attending because we're concerned about the steady erosion of privacy and the increasing potential for abuses of power as all this data is sold / distributed without our knowledge or consent.

When one speaker mentions the recent spate of privately installed and operated security cameras being destroyed in "monkey-wrench" fashion, the audience cheers.

The following day, our auto insurance is canceled, the IRS notifies us we're being audited for the first time in our lives, and the FBI pays us a visit regarding sedition, destruction of private property and various other criminal activities. Hmm, why this sudden truckload of punishments, public and private, being heaped on us?

It's all legal, because remember, in a Neofeudal Autocracy, what's moral is what's legal, and what's legal is for sale (per analyst Simons Chase) So it's not just legal, it's also moral and therefore righteous, because, heh, it's for our own good. To serve humans. (Yum, you look like a tasty snack!)

Then there's the marketing onslaught that clutters our inbox as soon as the sun rises. Oh, the irony. Here's an advert for a device that jams Bluetooth, hmm, I wonder why a retailer suddenly sent this to me? Here's an advert from a tax service that specializes in dealing with IRS audits. Well, that's certainly timely, eh?

Experts warn 2.2 million cars could be at risk of hijacking via Bluetooth (via John D.)

Correspondent Christopher M. left a succinct public comment on Medium that describes a key dynamic in the seemingly hopeless task of limiting not just data harvesting and surveillance but the distribution of the data being harvested to the highest bidders in the auction of Privatized Totalitarianism:

"There's no organized, sustaining, citizen movement powerful enough to push back against the relentless "gravitational pull" of government apparatchiks and corporate interests to monitor and direct every aspect of our lives."

Well said, Christopher, thank you. The boiled-frog analogy comes to mind, along with the herd milling around in the corral, each believing they're free-range.

As I noted in AI Is the Apex of Ultra-Processed Life,

Privatized totalitarianism expands without limits: our data is harvested and sold (you "opted in" by using the platform), we're banned or shadow-banned by black-box-algorithmic private monopolies (you violated the shape-shifting "community standards" that have remarkable overlap with whatever the government is presenting as "the correct choice"), and all this is presented--cue the laugh track--as "free market capitalism" and "individual choice" when it's actually a Kafkaesque facade masking the reality that the entire system is the opposite of what's being sold: it's not authentic, it's fake. It's not progress, it's Anti-Progress. It's not beneficial to us, it's malefic, and it's not actual agency-liberty, it's a profitable simulation that we sense but can't quite identify because it's everywhere.

So here's the corral labeled "free and open debate." Just don't stray or you'll find yourself shadow-banned or worse. Not by the government--they have their own means (welcome to Digital Siberia)--but by the Privatized Totalitarianism of privately owned and operated corporate platforms whose extraction and exploitation is legal--and for sale to the highest bidder.

One wonders if we have the collective will to say Get the Flock Out of Here. Sadly, even living on a remote island isn't a solution:

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Driving Big Brother

2026-07-27T11:19:32.567-07:00

Big Brother is now slouching in the passenger seat, making a mockery of ownership, right to repair and our agency.

Buyers of new vehicles have an odious passenger they are powerless to eject: Big Brother is now slouching in the passenger seat, making a mockery of ownership, right to repair and our agency--control of our lives and what we nominally own.

This is of a piece with the global emergence of Neofeudal Autocracies that supersede all the obsolete ideological divisions--left and right, "capitalist" and "socialist," etc.--that we're constantly bludgeoned with to keep us distracted from the oh-so-profitable immiseration of our daily lives and agency via a remorseless dialing down of quality, durability and true choice and a relentless dialing up of Big Brother schemes of extraction and extortion: what I call the Mafia Economy of privatized Totalitarianism:

What's the difference between a totalitarian autocracy of "free market" corporations and billionaires and a totalitarian autocracy of Party Insiders? There is none. In both cases, a delusional fantasy--"free market capitalism" on the one hand, and "egalitarian Communism" on the other--are deployed as inspirational cover stories for totalitarian control mechanisms being passed off as "Progress," with technology being the cudgel used to beat us into submission.

A correspondent neatly summarized this centralized-autocratic global tightening of control:

"What we see is a Government legislating our agency into the history books and doing a persistent job of turning average people back into Serfs. The regulation burden that prevents people from doing productive things that are good for themselves, their families and the communities they live in is getting more and more crushing by the month."

Which brings us to the odious backseat driver in every new vehicle: Big Brother in all his "for your own good" manifestations that just so happen to generate we-can't-escape profit streams for the Mafia-Economy corporations and the politicians they're enriching via the 24/7 auction of political influence.

Mechanic Sends Huge Warning: Don't Buy New Vehicles in 2026. (16:50 min)

Then there's the inexorable clawbacks of the right to repair as owners are being forced to use dealerships for simple repairs and computer re-programming at exorbitant costs.

The Biggest repair scam in todays Auto repair! You need to Hear this. (21:43 min)

An expanding number of young people are waking up and seeking to own older cars, as part of a larger movement to own analog rather than Big Brother digital.

Old Cars and The Analog Resistance (11:53 min)

States are starting to pass pernicious emission-control laws that end up preventing the driving of older vehicles.

The New Laws That Can Make Your Classic Car Illegal to Drive (10:05 min)

Since we own a 1998 Honda Civic, I have skin in this game. This is a 28-year old car. I can report that our original but well-maintained CVCC engine easily passes smog checks.

Isn't it obvious what's going on? Big Brother not only wants to monitor your vehicle and force you to pay stupidly overpriced repair and maintenance costs, he also wants to force us to junk our perfectly functional old vehicles so we're forced to buy stupidly overpriced crapified, loaded-with-Big-Brother vehicles.

There's no hiding from Big Brother. Even poor Gilligan on his remote island is affected.

And we all know how reliable digital devices that need constant reprogramming are:

And of course there are now AI control features, too:

Thank you, S.T. for the topic suggestion.

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Who Will Solve Our Real Problem--The US is a Neofeudal Autocracy

2026-07-22T11:34:06.130-07:00

So who will solve our real problem: the centralization of wealth and power in a Neofeudal Autocracy?

My essay on America's ten social classes was the appetizer to the main course: beneath the purposefully distracting PR of "democracy" and "free markets," America is a Neofeudal Autocracy, i.e. a system in which real power, control and wealth are concentrated in the hands of the few at the top of a complex neofeudal arrangement of a secular nobility ruling the commoners with monopolistic powers cloaked in the sleight of hand of "democracy" and "free markets" serving up endless dollops of "Progress" and "prosperity."

The Conflicts Brewing in America's Ten Classes

The key to autocratic / totalitarian arrangements is the concentration of power via centralization of control / power. This centralization is not unique to governments; it works just as well in the private sector--the privatized totalitarianism of corporate monopolies and cartels--and in organizations ranging from religious orders to sports.

Centralization has positive and negative features. Centralizing control enables efficiencies and obedience--militaries and global corporations being examples--but it also enables a handful of self-serving incompetents to destabilize vast systems, and the straightforward replacement of the ruling elite with a new elite, as outlined in Edward Luttwak's classic guide Coup d'Etat: A Practical Handbook (1968).

This makes autocratic / totalitarian arrangements tempting targets for overthrow, and fuels the paranoia and palace intrigues that come with highly centralized regimes. In other words, the stability of such structures is illusory.

Behind the happy-story narrative of "efficiencies," the real purpose of autocratic / totalitarian arrangements is to eliminate transparency and accountability so those at the top and the insider-lackeys who serve them can maximize their private gains behind the moats and complexity thickets of centralized power.

The other way to replace autocratic / totalitarian arrangements is the citizenry concludes their interests are no longer being served by the bread and circuses the regime distributes to co-opt and distract the exploited commoners.

Alternatively, in repressive regimes that rely on coercion, the commoners must find sufficient common cause with other classes to rise up as a mass movement that overwhelms the regime's coercive forces.

I summarize such social movements in this way: one by one, people decide that what was previously acceptable is no longer acceptable. That sounds simple, but it's not.

My essay on America's ten social classes sets the stage for a real problem-real solution discussion:

1. The real problem isn't who's currently holding the reins of power: the centralization of power is the core problem. Playing musical chairs--"democracy" swapping out who sits in which chair--won't solve the real problem, which is centralization.

Call it "socialist" or "capitalist," in either case you're missing the point: the choice is between centralization of control and power (i.e. Neofeudal Autocracy) or the radical decentralization of control and power, which translates into the radical decentralization of ownership, capital and agency.

2. Spewing endless paeans to "free market capitalism" in a economy dominated by privatized totalitarian monopolies and cartels won't solve the real problem--centralization of wealth and power--either. The wealth and power that's supposedly held by commoners is counterfeit, illusory, phantom: the "wealth" is an illusory artifact of serial credit-asset bubbles fueled by a relentless expansion of credit "money" chasing tangible assets, not by increases in utility.

The "power" to replace Tweedledum with Tweedle-dummer won't solve the real problem, which is the concentration of power and control, not who's currently holding the levers of power.

The phrase golden handcuffs is bandied about to describe the servitude / loss of agency that is a trademark of neofeudal systems. In classic feudalism, the commoners are bound by law to the estates of the nobility. In neofeudalism, you can't move because you have a 3% mortgage on your house you can't afford to give up, and you can't change careers because you can't afford to lose the healthcare insurance provided by your current employer.

These aren't golden handcuffs; they're gold-painted leg-irons, chains whose ersatz "value" is an artifact of a corrupt, exploitive Neofeudal Autocracy. Control what's affordable, what's "necessary to get ahead" (credentials), healthcare and lower-cost credit, and voila, you no longer need the legal niceties of direct servitude: indirect servitude works even better because it fosters illusions of power, wealth and agency.

So who will solve our real problem: the centralization of wealth and power in a Neofeudal Autocracy? The only source of a solution is the mass of powerless commoners who currently buy into the notion that the system is still serving their interests, or they're frozen by fear of losing what they have.

In other words, we'll lose everything if the truth comes out. This perverse state of denial and fear is the trademark of neofeudalism, in which those who have already lost power and agency now cling to a corrupt, unstable Neofeudal Autocracy because a real solution--radical decentralization, transparency, accountability, competition, agency--would collapse the putrid credit-asset bubbles propping up the illusions of "Progress" and "prosperity."

We've already lost everything of real value and can only regain them if the truth comes out. Each class has cut a deal with the devil, i.e. the Neofeudal Autocracy: I've got X-Y-Z--a low-interest-rate mortgage, healthcare insurance, some form of state-funded welfare, either subsidies for the rich or subsidies for the poor, or subsidies for everyone in between--and I have job security serving one fiefdom or another: either an extractive, venal corporation or an extractive, venal state.

One of the primary points of my essay was to highlight how each class lives in a completely different world than those above it. We're accustomed to regional and cultural diversity in the US. Life in one place is quite different than life in another place.

But amidst this dizzying diversity, we share some common interests: air, water, soil and food that isn't poisoned, a level playing field for every citizen, not of outcomes, but of opportunity, agency and freedom of movement, and a decentralized structure in which transparency and accountability cannot be extinguished to serve the interests of those at the top and their willing insider-lackeys.

Nothing will change until the various social classes find common cause in the most basic fundamentals: rather than fear that the truth will come out because we'll lose everything if it does, we accept the hard truth that we've already lost everything of value by accepting the hidden servitude and obfuscation of Neofeudal Autocracy.

Rather than fear the truth, we must come around to realizing embracing the truth is our only real path to restoring what's been lost to centralization and the concentration of wealth and power that comes with it.

Credit-asset bubbles concentrate wealth and power via concentrating capital which then buys political power. All this "wealth" is illusory. The power is real.

As for "AI will save us"--ahem... oops, AI is just another tool of our Neofeudal Autocracy:

NEW PODCASTS: Charles Hugh Smith on the Risks, Costs and Uses of AI (31:28 min)(host Richard Bonugli)

The Government Created an Ultra-Processed Economy--and It's Destroying America (1:04 min)(host Daniel Horowitz)

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