I. In the 1520s, Hernán Cortés conquered 10 million Aztecs with as few as 400 men (per some accounts), largely because he had superior technology (gunpowder, steel, armor, ships).
In the 1200s and 1300s, the Mongols crushed everyone in their path with better technology (stirrups and superior bows).
In the 19th Century, Britain brought China (a country 20 times larger) to its knees with superior technology (guns, cannons, steamships).
And – Ukraine is beating back a much larger Russia today with superior technology (drones).
The lesson is obvious – countries that fall behind in technology are extremely vulnerable.
II. In 1891, Pope Leo XIV warned that the Industrial Revolution would be horrible for society, harming and exploiting workers and widening inequality.
Bill Gurley recently reminded us of this on the All-In podcast, highlighting the enormous improvements we’ve seen since 1891 due to the technology and innovation that came with the Industrial Revolution.
- The average workweek has fallen to 34 hours from 60
- Real wages are now 8 to 10x higher
- Global GDP per capita has risen from $1,500 to $20,000
- U.S. child labor fell from 18% to 0%
- Workplace deaths have fallen by 40x
- Life expectancy has increased by 60%
- Global poverty fell from 75% of humans to under 10%
III. If the internet had been regulated like many politicians wanted in the 1990s, mortgage rates would be 10.5% instead of 6.5%.
This is because the internet has proven to be the biggest productivity boost (how much a worker produces in a set period) in the last 40 years. This is because communication, distribution, and information retrieval costs have collapsed to near zero. But for this massive gain in productivity, inflation rates would be far higher – and so would interest rates as a result.
IV. In what might be the biggest “own goal” in history, America strangled its nuclear energy industry in the 1970s and 1980s – based almost entirely on unfounded fears espoused by prominent people like Jane Fonda and Ralph Nader.
If it had been allowed to flourish unfettered, we would have far cheaper energy, a much stronger manufacturing sector, far lower emissions of all types, lower inflation, and … wait for it… lower rates. We’d also have likely seen fewer wars in oil-producing regions.
Why We Need Unrestricted AI and Data Centers
V. I bring all this up because there is so much mass panic about data centers and AI right now.
There are calls for strict regulations and controls, or worse, government ownership. And once again, even the Pope weighed in, calling for robust regulation and restrictions – making me think that Popes should stick to Poping, and stay out of economics.
I would worry about AI, but I am still too worried about the mass starvation that Paul Ehrlich promised me in the 1970s, about the nuclear plant meltdowns Jane Fonda promised me, about running out of oil in 1985, about the coming ice age, about acid rain, about ozone depletion, about the ocean rising over Florida, and about Y2k.
AI, no doubt, has its risks, but it will much more likely be a massive boost to productivity in ways that few people can begin to envision – much like the internet, but on steroids. This will solve deficit and inflation problems, and ….wait for it… bring down interest rates.
Lastly, if we don’t let AI develop at full speed without excessive government restrictions, other countries will.
And – we could very well end up like the Aztecs.
And yes, that would be bad for both the real estate and mortgage industries. Poor Montezuma couldn’t even give his house away once Cortés took over.
