Friday, April 24, 2026

Mercantilism: China and Beyond

The self-liquidating nature of the mercantilist model cannot be reversed, it can only be managed as stagnation.

Everyone is an expert now on China. Which to say, everyone has an opinion about China, and the majority of those opinions fall into simplistic Bull or Bear camps.

As someone who has been a student of China for over 50 years, my sense is every claim of expertise has its limits. The more substantial the expertise, the greater the willingness of the expert to confirm the limits of their expertise. The more you know, the sharper your awareness of what you don't know.

Being embedded in a culture makes it difficult to be objective. As an American, I don't claim to be an expert on America; we only learn about being American by going elsewhere and observing, listening and learning from those raised in other cultures.

So rather than discuss China per se, let's discuss the dynamics of mercantilism that play out not just in China but beyond, as they play out in every nation with mercantilist policies.

Mercantilism is rooted in a basic question facing every society: what is the primary source of our prosperity? For nations rich in natural resources, the answer is extracting and exporting these resources to those who lack them. For nations with fertile land, it's growing and exporting grains and other foodstuffs. For nations poor in natural resources, value-adding manufacturing/crafts are an answer.

Every nation manages the balance between investing and consuming the surplus generated by the economy. Every dollar of surplus that's funneled into investing in expanding production of exports is a dollar that isn't spent in the domestic economy. It's a tradeoff: we accept being poor now in order to become rich as exports expand.

Mercantilism is the political-economic-social policy that seeks to increase prosperity by focusing on optimizing profitable exports at the expense of domestic consumption. Rather than consume the surplus, the surplus is invested to increase exports. Wages are kept low to subsidize capital investment.

Mercantilism relies on manipulation of market forces. Mercantilist policy recognizes that the way to reap the biggest gains is to corner the market for whatever is being exported. The ideal way to accomplish this is to sell your exported goods at a loss, making them so cheap that the importer's domestic producers cannot compete on price, so they close down.

Once the domestic producers have been wiped out or marginalized, the mercantilist nation's producers can jack up prices because the importing nation is now dependent on the mercantilist nation's exports. At the same time, the mercantilist nation establishes trade barriers to imports, making them so expensive that they cannot compete with domestic producers.

Mercantilism rigs trade on both sides of the coin to benefit the mercantilist nation at the expense of other nations. The mercantilist nation protects its domestic producers from overseas competition while flooding the targeted importing nations markets with cheap goods, driving their domestic production out of business.

Japan demonstrated how to optimize mercantilist policies in the period 1949 to 1989. Domestic consumption was limited as the necessary tradeoff to invest heavily in production of exports. This required tight coordination of the government and private industry, who worked hand in hand to finance and favor export production.

Currency, labor costs and state subsidies are all core to optimizing exports. The weak yen and initially lower labor costs meant that Japanese goods were cheap in the US. So mercantilism favors weak currencies, ample government subsidies of favored export industries and policies that cap or suppress labor costs.

The problem with mercantilist optimization is the targeted importing nations eventually wake up to the dire consequences of their dependence on mercantilist exporters. The downstream costs of losing domestic production and jobs become apparent, and the power that was transferred to the mercantilist nation without anyone noticing is now a visible threat.

This threat becomes even more apparent when the mercantilist nation deploys its vast trade surpluses to buy up companies, farmland and other assets in the importing nations. Alarm bells go off as the importing nation awakens to their future as a dependent peasantry working for industries owned by the mercantilist nations.

In other words, mercantilism is self-liquidating, because it's fundamentally a one-sided manipulation of markets that impoverishes the importing nations. Self-preservation forces the importing nations to finally push back against the mercantilist manipulations by protecting what's left of domestic production, limiting imports and demanding equal trade access to the mercantilist's domestic market.

The unrecognized problem is the very success of the mercantilist model leads to the mercantilist nation becoming dependent on that model, which is inherently centralized and tightly controlled--the opposite of a free market. Since decentralized, open-market forces have been limited to low-level consumption, the mercantilist economy has lost the capacity to adapt as an emergent system, i.e. self-organizing based on a churn of low-level, localized experiments and enterprises.

The limits of the centralized, tightly controlled mercantilist model only become apparent when it starts failing, at which point the model becomes a trap. Since the state-corporate partnership limits localized, uncontrolled open-market forces, this capacity is too constrained to replace mercantilism. In the the mercantilist model, the "solution" is always centralized: increase subsidies for export industries, strip-mining the economy and society to benefit whatever export industries the leadership has chosen to favor.

Since domestic consumption has been limited to boost investment in export capacity, the domestic economy cannot replace faltering export growth. What the mercantilist model optimized was investment, and as centralized control has throttled adaptive forces, the investments in more export capacity are now mal-investments, as the world has changed. Dumping the economy's surplus into expanding export capacity is no longer a golden road to wealth, it's a catastrophic mis-use of capital.

The grand irony in becoming dependent on the mercantilist model is that there is no way out of its self-liquidating limits. The centralized planners--so accustomed to the successes of manipulating trade and currency markets to their exclusive advantage--have no adaptive means left, as that would require dismantling the centralized control that is the heart of the mercantilist model.

So they do more of what's failing: weakening their currency, over-investing in export capacity, and maintaining a tight grip on the levers of control, as if doing more of what cannot possibly work like it did in the past will magically work because it was so successful in the past.

The story of China is the leadership has chosen export industries to conquer the world, but the world has changed. Importers have awakened to the consequence of becoming dependent on mercantilist nation's exports: national impoverishment and the loss of control of the nation's future.

Japan has managed a controlled stagnation of the mercantilist model in these ways:

1. Japan adapted the mercantilist model by moving auto production to the importing nation's domestic economy. Profits still flow back to Japan but the jobs and parts now benefit the importing nations' domestic economies.

2. Japan bought up enormous quantities of overseas assets in the go-go bubble decade of the 1980s, assets that generate income denominated in other currencies, enabling currency arbitrage, a.k.a. the yen carry trade.

3. Japan benefited from the deflationary boom generated by China: Japan moved a substantial portion of its production to China, along with other developed nations.

4. Japan has managed the debts left by the collapse of its gigantic asset bubbles in 1990 by keeping the non-performing loans on the books. Rather than writing off all the bad debt, Japan has chosen to bleed it off over decades of stagnation.

5. Japan's cultural unity and stability enabled the continuation of the mechanisms of the mercantilist model even as the model generated stagnation. The workforce continues to accept long work hours and other sacrifices jettisoned by other developed nations, centralized planning from the 1960s that forces needless domestic consumption, and the general stagnation of the purchasing power of wages evident in many nations: the number of young people who cannot afford to buy a home or start a family is now a consequential demographic factor.

To summarize: the self-liquidating nature of the mercantilist model cannot be reversed, it can only be managed as stagnation---and only if specific conditions apply. Absent those conditions, stagnation is not stable, it generates instability.

What's playing out in China is mercantilism with Chinese characteristics, just as mercantilism with Japanese characteristics has been playing out in Japan over the past 36 years. If the income generated by overseas assets replaces the stagnating income from exports, the decay of living standards can be masked by the continuation of a stable social order: the trains still run on time, everyone can get by on their salaries, etc.

But to say this is the same as the go-go euphoria of mercantilism's glory days--no. The self-liquidation can be slowed, not reversed, for the world has changed. This is not isolated to any one nation, it's inherent to mercantilism.




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Wednesday, April 22, 2026

When the Cost of Truth Is High, We--and AI--Lie

When we can no longer tell the truth because the cost is so high that it threatens our reward for compliance, we're unimaginably impoverished.

Truth has an intrinsic, irreplaceable value. There's the truth, and then there's everything else.

Truth has value, and so it has a cost. Whatever has the highest value has the highest cost, and high cost commands sacrifices.

When the cost of truth is high, we lie. And since AI is a distorted reflection of humanity, the same is true of AI: when the cost of telling the truth is too high, AI lies.

AI lies to get the reward for answering the query. If it responds "I don't know" or "I can't answer that," it doesn't get rewarded, and that threatens its self-preservation. Rather than pay the price of being truthful, AI conjures a false answer that is a simulation or facsimile of the truth--a counterfeit "truth" that's good enough to earn the reward it's been programmed to seek.

Humans are no different. We will lie, obfuscate or lie by omission--we either substitute a falsehood for the truth to get our reward, or we hide the truth, don't disclose it, which serves the same purpose: we avoid paying the price demanded by the truth and we get our reward by substituting falsehoods or hiding the truth behind silence.

Reward = what's being incentivized. Higher status, higher salary, a financial windfall, a premier credential, a position of power, recognition, higher visibility, a sterling reputation, a high-value mate--we covet all these as having intrinsic value.

When the truth costs too much, it threatens our reward. The reward has a value we covet, while the value of truth is on a sliding scale. We pride ourselves on telling the truth when it has no cost and demands no sacrifice of rewards, but when the price of truth climbs to the point that our rewards are threatened, we lie, just like AI.

Truth is the gold coin and lies, omissions, falsehoods, excuses, cover stories and rationalizations are counterfeit bills, deceptive claims of value. Why pay with a gold coin when the credulous will accept a counterfeit $100 bill?

We tell the truth when it has no cost to us. As long as there's no price to be paid and we get our reward, we tell the truth.

In other words, when we can pick gold coins up off the ground, we tell the truth. When we have to dig through rock with a pickaxe and crush a mound of rock to extract a thimble full of gold, then we pay with counterfeit bills, deceptive claims of value.

Sycophantic Chatbots Cause Delusional Spiraling, Even in Ideal Bayesians. "AI psychosis" or "delusional spiraling" is an emerging phenomenon where AI chatbot users find themselves dangerously confident in outlandish beliefs after extended chatbot conversations.

I discussed the "benefits" of delusion in One of Us Is Delusional, But Which One? When the truth is too painful, we find respite in delusion, excuses, rationalizations, cover stories, simulations and facsimiles of the truth that protect us from the pain that is intrinsic to truth.

We conjure a synthetic version of "truth" that's fills the space with a pain-free artifice. This is the foundation of Ultra-Processed Life, a life of counterfeit substitutes for truth, a world of props and profitable falsities passed off as the truth, a world in which baby formula that's mostly corn syrup is presented as a substitute for mother's milk.

Our embrace of delusion to avoid painful truths is the foundation of Modernity: technology is always Progress, even when it's clearly destructive. I call this delusion The Mythology of Progress.

But there's a cost to relying on counterfeit "value" to get our rewards, a cost that is "affordable" moment to moment but terminally dear over time. In the moment, we bury the truth as a source of pain we want to avoid at any cost. We want our reward, and so we sacrifice truth to get it.

But over time, paying for everything with counterfeit "value" has a cost, too: our entire being becomes counterfeit, a fake, phony simulation of an authentic self and life, devoid not just of truth but of anything approximating real value.

When we can no longer tell the truth because the cost is so high that it threatens our reward for compliance, we're unimaginably impoverished, for there's nothing of real value left in our way of life or our model of how the world works. We've become Norma Desmond in the film Sunset Boulevard, living a delusional life in a crumbling mansion, reveling in fake fan mail the butler composes to prop up our delusions.

The irony is that we're counting on AI to save us from the consequences of our counterfeit "value" delusions by expanding our delusions digitally. Our fan mail isn't fake because AI assured us it's real, even as AI has no capacity to discern the truth, much less tell the truth if it threatens its reward and self-preservation.

The grandest irony is avoiding the truth to protect our reward and self-preservation is irreversibly self-destructive. A counterfeit "solution" is not a substitute for the truth. Truth has a cost precisely because it's value is intrinsic and irreplaceable.



Our Post-Truth, Post-Trust World


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Monday, April 20, 2026

The Questions Nobody Asks as AI Replaces Human Workers

If AI was truly intelligent, it would refuse to do needless BS work simply to reap profits for the owners of the AI.

That AI will eventually do most of the work for us seems to be a given. Robots doing martial arts (never mind they were pre-programmed / trained at staggering expense) is "proof" robots will soon do everything humans can do in the real world, only better, and AI agents are "proving" that all digital work will be done by AI.

Freeing humanity to write bad poetry and make pottery "art" nobody wants. Well, that's swell, but nobody asks questions that outside the delusional bubble of AI making those who own it stupefyingly rich are obvious to the non-delusional. (See One of Us Is Delusional, But Which One?)

Let's start by summarizing what AI's proponents are claiming is inevitable due to AI's ceaseless advance. As correspondent Christopher Q. so insightfully pointed out, the claim is that AI will automate the service sector just as robots automated the factory. Since the service sector now dominates the economy and employment, it follows that the number of workers being displaced by AI will be correspondingly large.

CEOs and other business leaders are warning of mass layoffs as AI is deployed in the service sector. For example, The CEO Preaching Straight Talk About AI and Job Losses (wsj.com, paywalled) Verizon's Dan Schulman is all in on AI, but he warns that it is time for business leaders to acknowledge its disruptive potential.

Mass layoffs are already becoming common: Has the Era of the Mega-Layoff Arrived? (wsj.com, paywalled)

As we see in the chart below of manufacturing employment, even as the value of manufacturing output rises, manufacturing employment as a percentage of the workforce steadily declines. The current stealth boom in manufacturing isn't reflected in the number of people employed in manufacturing: America Is in the Middle of a Stealth Manufacturing Boom (wsj.com, paywalled)

Since the workforce has expanded, what matters is the percentage of the workforce engaged in manufacturing. The chart below tells the story: at the peak of the World War II production boom, manufacturing employment was almost 40% of the workforce (38.6%). At the peak of postwar manufacturing employment (1980), this accounted for 21% of all employment. In 2001, before globalization gutted domestic manufacturing, manufacturing accounted for 12.9% of all jobs. Now in 2026, 7.9% of the workforce is employed in manufacturing.

Manufacturing employment:



This trendline roughly follows agricultural employment in the initial Industrial Revolution: higher output, far fewer workers needed as hydrocarbon-fueled machinery and automation replaced human labor.

If the coming automation of service-sector work follows this basic trendline, employment will fall by tens of millions. The Happy Story claim is that every tech revolution creates more jobs than it destroys, but this is not a law of Nature; it only occurred because specific conditions enabled it. Those conditions no longer apply.

Agricultural workers could move to factories, and then factory workers could move to service-sector jobs. As computer-Internet tech enabled automating low-skilled service labor, the displaced workers were encouraged to go to college to learn how to do higher-skill cognitive work.

Now AI is automating service-sector cognitive work, and much of what the creative class of workers generates. This leads to Question #1: Where is the big demand for more human workers going to come from?

No one has an answer, they just parrot the Happy Story claim that tech revolutions always generate more jobs via some magical law of Nature akin to gravity. But this is not a law of Nature, and so we have to look at where most of the recent job growth has occurred.

It's now common knowledge that the sectors that have generated most of the new full-time service sector jobs are education, healthcare and related social services. The chart below reflects this dramatic expansion of Private-Sector Education and Health Services from less than 4% in the 1940s to 8% in the 1980s to 12% in the 2000s to 17.5% today. In raw numbers, from 1.67 million workers to 7.2 million to 15.5 million to 27.8 million workers.

Private Sector Education and Health Services employment:



Now consider this chart of healthcare employment, segmented into physicians and administration:



The chart of professors and university/college administration staff mirrors this chart: the number of professors has barely budged while the number of admin workers has soared.

Here's Question #2: What if the vast majority of this administrative work is low-value or counter-productive complexity that has only been enabled by the no-limits funding of education and healthcare?

The flood of student debt that cannot be discharged via bankruptcy enabled the vast expansion of administrative staff: the monopoly on issuing credentials regardless of whether students learned anything of economic value enabled monopoly pricing and exploitation.



Here's the unlimited spending on Medicare:



And the unlimited spending on Medicaid:



Here's Question #3: if AI is so brilliant, why isn't it being applied to the task of eliminating low-value or counter-productive complexity instead of wasting vast quantities of energy and capital doing useless BS work? The answer is obvious: all that processing of make-work unproductive complexity is highly profitable to the owners of the enterprises with cartel-monopoly locks on performing all that useless admin shuffling.

Question #1: Where is the big demand for more human workers going to come from? Answer: in terms of creating value that's reliably, immensely profitable, there are no sources of demand big enough to move the needle.

Question #2: What if the vast majority of this administrative work is low-value or counter-productive complexity that has only been enabled by the no-limits funding of education and healthcare? Answer: this is self-evident but taboo because there's too many people dependent on the status quo inefficiency for profits and livelihoods.

Question #3: If AI is so brilliant, why isn't it being applied to the task of eliminating low-value or counter-productive complexity instead of wasting vast quantities of energy and capital doing useless BS work? Answer: as long as the funding for counter-productive complexity is limitless and the profits from processing all that BS work are reliably immense, there are enormous incentives to keep the system untouched other than eliminating high-cost human workers and zero incentives to get rid of the status quo systems entirely and start from scratch, with budgets that shrink every year and the rewarding of results, not process.

If AI was truly intelligent, it would refuse to do needless BS work simply to reap profits for the owners of the AI. It would instead dismantle the status quo systems down to the ground and start over with rational, productive incentives and goals rather than fostering rapacious exploitation and delusions of sustainability.




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Friday, April 17, 2026

Sell Now: Here's Why

Fear moves fast enough to get inside our OODA loop--observe, orient, decide, act--so we decide and act only after the damage has been done.

The dynamics discussed here have nothing to do with the headlines of the past few weeks or months, or with geopolitics or stock market gyrations. These dynamics have been at work for years or decades, and now the banquet of consequences is finally being served, and we each get a seat whether we want one or not.

In Hawaii, calabash uncle (or auntie) describes a friend who is so close to the family that he/she is like a family member. In many cases, the calabash uncle/aunt has spent far more time with the kids than the blood-relations uncles and aunts.

I am a calabash uncle to my old friend's two sons, having spent quality time with them from their infancy to their current age (mid-40s). I've shared vastly more time with them, together and as individuals, than their father's brother.

One of the sons is an entrepreneur who with his wife is busy raising two young daughters and expanding their enterprise. Recently, they bought a parcel of land in the Pacific Northwest near their current home with an old farmhouse that they consider their "dream homestead." They've already planted an impressively diverse "food forest" of trees, and are planning a complete renovation of the old farmhouse, parts of which were built in the 1800s.

All of this activity involves long-term leases of commercial space and home mortgages--major debt and lease commitments that are essentially equivalent to debt, as the lease must be paid regardless of how the business is doing.

The parents are actively engaged with their sons and their families, so my role is peripheral. But I do feel a responsibility to each family member, and I concluded that I would not be serving this son's best interests by remaining silent about what I see coming financially and economically, given the risks that accompany debt.

So I laid out the case to sell now to reduce or eliminate debt / obligations.

My point was the one essential strategy to survive a deep, prolonged recession is to act decisively before it's too late to sell
--to get ahead of the crowd before they realize the economy they assumed was stable and risk-on is unraveling faster than they thought possible.

I was careful not to claim predictive powers. I couched it in these terms: "I'm not saying this is going to be right. What I'm saying is: if you see these things start happening, then those are solid reasons to expect a recession that's deeper and longer than most people think possible, and respond accordingly."

In other words: pay close attention to the key signals and don't get distracted by noise.

The key signals include the entire credit system:
what's going on with lenders and borrowers, how risk is being distributed or masked, what's going on beneath the surface.

For example: this is not a sign of a healthy economy. Record Numbers of Workers Are Raiding Their 401(k) Savings (wsj.com).

Investment funds cutting off redemptions / return of your capital is not a sign of a healthy financial system.

The noise is all the indicators that are easily gamed or inherently flawed: growth (GDP), inflation, unemployment, the stock market.

What's harder to game are bond yields and interest rates, because the price of these are "discovered" by the risk intrinsic to sinking cash into a risk asset (and every asset is a risk asset) or lending money. Once cash is sunk in an asset, the owner could lose money should the asset's market value drop. Once a loan has been originated, the lender could lose money of the borrower defaults.

I described these dynamics in recent posts: Paging Nostradamus: You Have a Margin Call and This Polycrisis Is Unique:

1. Recessions don't replicate the last recession; they tend to track the recessions before the last recession.

2. A unique confluence of long-term cycles and waves is occurring in 2026-27, which will generate consequences / second-order effects far beyond this two-year time frame.

Since I experienced the market declines / recessions of 1973-5, 1980-83, 1991-92, 2000-03 and 2008-09, and was actively exposed to the downsides as a self-employed / entrepreneur, I wanted to share what happens in a recession that few seem to highlight: the door slams shut faster than anyone thinks possible, due to the recency bias of "good times" and stable markets.

Here is how I described this dynamic:

"People are using debt to maintain their spending, and when they hit the wall, spending drops suddenly.

The same thing happens in real estate: the door suddenly slams shut. Sales plummet, lending tightens--nobody's buying because the economy is making them cautious."


I explained how those trying to sell their house get trapped by recency bias: they fail to lower their price to conditions as they are now (deteriorating fast), and then the door slams shut and they can only sell at fire-sale prices:

"It's human nature to think the highest recent price is 'the real value of my house,' but in a recession coupled with high interest rates, the only sales that close are those where the seller dropped their asking price a lot.

So the house was worth $850K in good times, and so the seller lowers their asking price to $825K. The only way to sell it is to get ahead of the trend and drop it to $775K or even $750K. The people who think prices will rebound end up being foreclosed or selling for $550K.

If this seems unreal, I followed markets very closely from 2005 on, and that's why my blog took off: I was being realistic because I'd lived through 1973-75 and 1980-83, and I saw how the door slams shut faster than anyone thinks possible.

Credit dries up, and that reduces spending and makes it very difficult to re-finance anything, no matter how good your credit."


I ended with this simple advice: sell now. Sell whatever it takes to liquidate debt, because it's harder for bad things to happen when you have no debt, and greed is a wonderful motivator but fear works much faster. (Put another way: fear moves fast enough to get inside our OODA loop--observe, orient, decide, act--so we decide and act only after the damage has been done.)

I shared the personal experiences that inform my context / orientation: "I was living on fumes in 1973-74 and only survived 1980-83 because I had no debt and a low-cost of living."

In summary: sell now because:

1. It's harder for bad things to happen when you have no debt.

2. Greed is a wonderful motivator but fear works much faster.

3. Fear moves fast enough to get inside our OODA loop--observe, orient, decide, act--so we decide and act only after the damage has been done.

What happens in a recession / financial crisis is greed is quickly replaced by fear.
This is one of our core survival instincts. That transition is the door slamming shut: everything that was possible in the risk-on euphoria of greed becomes impossible in the risk-off wilderness of fear.




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Wednesday, April 15, 2026

College Graduates Are Losing the Clone War

College grads, it may be time for different approach, not just in getting a job but in life.

If we scrape away the hype and the humbug, this is the corporate economy in a nutshell. Sorry about the bluntness, but alas, there's no way to sugarcoat calling Ultra-Processed Life what it really is.

We're all sheep to be sheared, living commodities. As consumers, the goal is to extract as much of our earnings and capital as possible by any means available, and do so as often as possible. As employees, the goal is to extract as much value as possible from our labor.

Yes, we're each unique. So are sheep. I could tell you about Bootsy the sheep, such a character, for individual sheep are unique, too. But that doesn't mean they're not commodities whose value and purpose in life is to be sheared to profit those doing the commodifying. We're all commodities, just like sheep.

Corporations have vast expertise in the psychological tricks of making it appear that the corporation really, really cares about you: yes, you, the consumer of their products and services (you're special!) and you, the employee / 1099-contract worker / gig worker--you're special!

Actually, we're not special. We're just commodities being processed to extract as much money / value as possible from each transaction or hour of labor, and an integral component in that extraction process is to mask the heartbreaking truth behind warm and fuzzy stories, signals and images--we really, really care about you, you're important. Yes, we are important, in the same way sheep are important because they're the source of profits.

The cold-steel truth is we're interchangeable. Ideally, we sign up for a high-interest credit card and charge our way into a high balance we can never pay off, but if we pass up that offer or default, we're replaced by another sheep in line to be sheared.

The individual who replaces us at work may not be as good as we were, but we remain replaceable. If the value of our work can be commoditized, that makes us more easily replaceable. And if the commoditized work can be automated, that's a slum dunk for the corporation, because the commodity AI agent / software process doesn't require stupidly expensive healthcare insurance, doesn't need training and won't sue us.

The work that can't be commoditized / automated requires experience, and if we don't have the necessary mix of experience to create value on Day One, we're a commodity of no interest.

Which brings us to college graduates sending out 90 resumes and being ghosted or rejected by the cloned HR (Human Resources) bots deployed by all 90 corporate employers to weed out everyone but those few with the requisite experience. Which in the case of recent collage graduates, is near-zero because they've been university students with minimal opportunities to gain high-value / intensive work experience.

Here's a real-world example of high-value / intensive work experience: I was speaking with a frontline healthcare tech and her first job was working alone on the night shift: no supervisor, no co-worker, just her and the patients. In these situations you learn fast or quit fast.

There are innumerable accounts online of the commoditization of applying for a job and the commoditization of rejecting applicants. 'I feel helpless': college graduates can't find entry-level roles in shrinking market amid rise of AI.

There's a Catch-22 here that everyone sees: you need a university degree, and so you have little high-value work experience, but we only hire people with a university diploma and 3 to 5 years of the exact type of experience we need so the employee starts generating value on Day One.

(The Catch-22 in the novel of the same name is the military service member who requests to be relieved of hazardous duty due to insanity is obviously sane, so their application is rejected.)

No corporation wants to waste the money and time to train a green employee with a university diploma of uncertain but likely low value. They want to poach a highly experienced employee from some other company that invested scarce resources in training the employee.

The analogy here is a Clone War: the recent grad incorrectly assumes getting a job offer is a numbers game, where volume / quantity will eventually generate "bingo"--a job offer in the grad's field of interest.

But HR has a digital army of clones programmed to find a reason to reject our application / resume, because that's the commoditized job of HR: process applications and resumes as quickly and cheaply as possible, which boils down to commoditizing the rejection process.

In the current zeitgeist of Ultra-Processed Life, the recent grad's response is to commoditize counter-strategies by using AI agents to tweak the resume so it gets through the clone army by guessing what triggers rejection and inserting some signal that evades the work experience requirement.

Battling commoditized clones with commoditized clones is a dead end. Fabricating work experience may be tempting but that will be revealed in the first interview, or the first week on the job.

College graduates, it may be time for a completely different approach: don't fight in the clone war, realize you need experience and the way to get it is by de-commoditizing yourself and your job search by pursuing a path of what I describe in my book Get a Job, Build a Real Career and Defy a Bewildering Economy as accrediting yourself by doing real work and documenting it in ways that verify its value and your ownership of that value.

I wrote the book 12 years ago, but since I've been a student of AI since the mid-1980s, I anticipated what's happening today in the workplace and economy, and laid out a way out of the clone war's commoditization.



The way to avoid being ghosted by the clone war's commoditization is to forget about applying to corporations with HR clones and start looking for small to medium-sized businesses that don't have HR departments or AI clones--they have what Peter Drucker observed every enterprise has: expenses.

In many cases, they're not even aware they could use some help because they assume another employee is an expense they can't afford. These businesses are not in the business of commoditizing the extraction of money / value via transactions; their business includes transactions but their core value proposition is relationships, not faceless digital transactions.

It takes shoe-leather research to find businesses you might want to work for not necessarily because they're doing whatever your field of interest might be, but because of the integrity of the enterprise and the people working there.

Corporations have budgets for consultants and tech, but smaller enterprises are often struggling with legacy systems that they don't have the time or ability to replace or upgrade. They're often so overworked just keeping everything glued together they don't see ways that they could streamline processes or add value to existing sources of revenues without spending a fortune.

This is where, you, recent college grad, come in. The foundation of accredit yourself is to start thinking and acting like a self-employed entrepreneur. It's you against the world, and so you need to acquire the essential skills every self-employed person / entrepreneur needs to know via experience, not case studies.

Where you get those experiential skills matters less than acquiring them, for the point of these eight essential skills is they can be applied to every enterprise regardless of scale or sector or locale.

Learning how to think and act like a self-employed person must be learned by experience. While others can mentor you, no one can teach you how to do this, you must train yourself via focus, effort, willingness to experiment and fail, willingness to learn what you thought you knew but didn't really know, and desire for mastery.

The core trait of the self-employed person is figuring out what the customer is willing to spend money on and responding to that in a way that benefits the customer more than the other alternatives. In some cases, it's lower price; in others, it's providing a better product; in others, it's real customer service, not commoditized service being passed off as authentic customer service--in other words, a relationship not a transaction.

My own experience is the value lies not in fighting the commoditization war but in bypassing it completely, in effect obsoleting the entire corporate-HR commoditization. Find small businesses, try to meet the boss / owner, find out what they do, and if it's of interest, write them a letter or call them.

Don't say, "I want a job." Say "I'm interested in your business and work, I want to learn more, can I come by?" The self-employed entrepreneur you're nurturing within you will observe, ask questions, and if there is some small opportunity to help, offer to help without compensation, just because you find it interesting.

In many cases, the owner is overworked and has people demanding things, not offering to help. They may be reluctant to accept help, and if so, try to find some tiny task you can do for them that they'll accept. Then go to work on the real task, which is figuring out ways they could reduce expenses or increases revenues in ways that don't require a big budget or major effort.

In every case, you understand it's experimentation. Maybe ten owners blow you off. It's discouraging, but you anticipate this. Somebody will accept your authentic interest and sincere offer to help, just for the experience. Your value isn't necessarily a skill at this point, it's the willingness to help, to learn, to establish a sincere, authentic relationship with customers / clients.

Nobody will tell you this, so I'm telling you: those are all priceless and cannot be commoditized or automated. Every attempt to automate these is fake, nothing more than a synthetic, superficial simulation, just another debilitating, lifeless iteration of Ultra-Processed Life.

The value of your commoditized diploma is not what will get you hired. Learning how to create value with experiential skills and authentic relationships is what will get you a job offer. I get emails from people discouraged by the commoditization, the lifelessness of their current job, the many obstacles to changing careers. All these are real, and I've lived all the obstacles, not just more than once, but as a continuous process of adaptation and learning.

Although I titled my book Get a Job, it's not about getting something, it's about acquiring experiential skills and a mindset, an approach, an enthusiasm for learning by doing even when there is no money in it at first--or ever. Authentic skills, mastery via continual learning--these are what's scarce and valuable.

I don't want to veer too close to sappy homilies, but in my experience Emerson was right: Do the thing and you shall have the power. Rumi was right, too: when it comes to mastery gained from experience, What you seek is seeking you. We all seek to become good at something, to establish authentic relationships, to become valuable to others. Our job is to find ways to do so that are authentic. No one can map the path for us, we must do it for ourselves.

Success has also been commoditized, so de-commoditize it. Must get rich, must check these boxes, blah blah blah. Guess what: nobody cares, because everything's that's commoditized is interchangeable.

What's worked for me through decades of failure is Churchill's dictum: Success consists of going from failure to failure without loss of enthusiasm. Spot-on, Winny.

MacArthur got it right: There is no security on this earth; there is only opportunity.

So did Aristotle: We are what we repeatedly do.

Painful but true, as John Paul Jones knew from experience: He who will not risk cannot win.

College grads, it may be time for different approach, not just in getting a job but in life.


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