AI Is the Apex of Ultra-Processed Life

We are Superman strapped to a carefully machined chunk of Kryptonite we can no longer detach.

I wrote Ultra-Processed Life to describe a peculiarly perverse structure of control that now dominates our entire culture and way of life: what's presented as marvelously beneficial to both sellers and buyers / leaders and the citizenry is actually only beneficial to the sellers / leaders while it actively degrades and deranges the buyers / citizens.

The essential dynamic of Ultra-Processed Life is to channel us into realms where the choices are limited to whatever benefits the sellers at the expense of the buyers. This artificial, synthetic realm is presented as brimming with authentic choice and agency, when in fact it's purposefully designed to be a choiceless illusion of choice.

What was once authentic has been hollowed out and been replaced by a simulation of what was once authentic, a simulation that mimics what has been hollowed out to persuade us that what's presented to us--an artificial, synthetic simulation--is real, because if we believe this artifice the seller reaps immense profits while we suffer the consequences of an artificial, house-of-mirrors realm of anxiety and distraction.

So the sellers present an orange-dyed confection of potato starch that is devoid of any nutritional value as a "veggie snack" replacement for an actual carrot loaded with nutrients and fiber. The sellers of ultra-processed snacks and glop make billions of dollars in profits while the consumers who were conned into believing the unwholesome snack was a "healthy alternative" become ill, mentally and physically.

Then another set of sellers channels those made ill by Ultra-Processed Life into another false-choice realm in which the sellers reap billions in profits not by curing illnesses but by addicting consumers to meds they must take for life.

In the political realm, no matter who we vote for, life gets more expensive, precarious and totalitarian: protections for consumers and citizens are reduced to benefit the few at the expense of the many, and choiceless choices abound--two insurers that offer the same simulations of actual insurance, two big-box stores filled with the same low-quality products, and two service providers offering the same maddening AI-generated endless loops of misery that's laughably presented as "customer service."

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.

Which brings us to AI, the apex of technological hype and Ultra-Processed Life. Beneath AI's oh-so-helpful prompts and sickly-sweet affirmations, it erodes our ability to even recognize our own loss of autonomy and independent thinking. The core traits of Ultra-Processed Life--the erosion of authenticity and the substitution of artificial, synthetic simulations that are immensely profitable to those selling the simulations--are the core dynamic of generative AI.

The ultimate totalitarian structure of control isn't a police state; it's the helpful servant who does everything for you so you lose touch with the real world of choices and consequences. Most importantly, we lose the ability to discern that all the servant's choices just so happen to profit the few in control of the helpful servant system at the expense of those delighted by the convenience and ease of the helpful servant doing all the thinking and making all the decisions--not directly, of course, because we might notice that, but by limiting our options to choiceless choices that all yield the same output.

As our mental and physical health spirals into a black hole of addiction, dependencies, anxiety and distraction, we're powerless to discern the spiral because we turn to our helpful servant for answers. The helpful servant assures us all is well, we're remarkably intelligent and grounded, and there's a pat answer for everything.

All of which is false, but it relieves our anxiety to hear these assurances. And so we distract ourselves with dopamine-stimulating media and consumption, buy-buy-buy, as the core mechanism of Ultra-Processed Life is transactional: buyer and seller meet in a faceless, frictionless transaction that triggers some dopamine hit of novelty or illusion of value, selfhood and agency: I'm somebody because I bought something.

Meanwhile, the relationships underpinning a healthy life and society are unraveling. The endless aisles of Ultra-Processed snacks, frozen glop, canned glop and sugar-water beverages are an analogy for the endless aisles of media-slop and the 24/7 "news" which is so ultra-processed that it is now resistant to parody--there's no way to parody what is already a self-parody.

The term social engineering has a disturbing sound, because it suggests that the "free market" and "individual agency" are perhaps more profitable facades than they are real-world experiences. For this is the destructive heart of Ultra-Processed Life: we sense something's off about the constant state of hyper-everything anxiety, precarity, uncertainty and dopamine-receptor exhaustion we experience, and we sense the disconnect from what we experience and what we're told we should be experiencing: the endless bliss of Progress and Prosperity.

This disconnect has a name: the politics of experience. We're constantly bombarded with contexts, prompts, agendas, narratives and signifiers persuading us that the artificial, the fake, the simulated, the facsimile, the mimicry, is all real, and we're the ones who are at fault for experiencing something other than what we're told "everyone else is experiencing."

But this too is misdirection, because in reality, everyone else is experiencing what we're experiencing, the disconnect, the anxiety, the solace of distraction and buying something, but they're trying to believe the artifice because facing the reality of our disconnect from ourselves and the real world is too disturbing, for Ultra-Processed Life has eroded our ability to trust our own experience as superior to what's presented in the house-of-mirrors Mouse Utopia we inhabit.

It's also disturbing for another reason: the only way to return to authentic experience, autonomy and agency is to go Cold Turkey and turn it all off. And of course the ability to do so is what Ultra-Processed Life and its most powerful handmaiden, AI, disables: we are Superman strapped to a carefully machined chunk of Kryptonite we can no longer detach.



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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Offload Risks onto the Bottom 90% and Immiseration Follows

The underlying story of the past 50 years has been the offloading of risk onto workers and consumers.

On my map of how the world works, we start with structures of control that distribute the good stuff--resources, assets, income and power--and the bad stuff: costs, losses and risks. As I explained in The US Economy In a Nutshell: Privatize the Gains, Socialize the Costs, the current arrangement distributes the gains to the top 10% and the costs and risks to the bottom 90% via privatizing the gains and socializing--i.e. dumping them onto the biosphere and the public--the costs and losses.

This follows a power-law distribution: the few at the top reap most of the gains, and the leftovers, scraps and crumbs are distributed in descending order, with most of what's left going to the top 9.5% and a diminishing dribble is scattered over the lower 90%, so that by the time we get to the bottom half of households, 170 million people own a grand total of 2.5% of the nation's financial assets, while the top 0.1% own 16.6%--6.6X the bottom 50%.

A key mechanism in this wildly asymmetric distribution of gains and costs is the system favors capital over wages. As the charts below illustrate, the financial gains go to the owners of capital, and since ownership of capital is highly concentrated, these few owners siphon up the vast majority of the gains.

One way to understand how the current arrangement favors capital over wages is to reverse the tax liabilities of capital and wages. Employers and employees pay 15.3% of every dollar of wages in Social Security / Medicare taxes, plus income taxes that quickly rise to 22%, for a total tax rate of 37.3% on wages. (Note self-employed people like myself pay the full 15.3% ourselves, as we're both employer and employee.)

Capital gains are taxed at 20%, but only when the asset is sold, so the wealthy borrow against their unrealized gains and live off this borrowed money to avoid selling and having to pay tax on capital gains. And since the system depends on debt to survive, the interest on debt is deductible, giving the wealthy borrowers a tax deduction for avoiding capital gains.

Now imagine all capital gains, realized or unrealized, were taxed at 37% and the first $80,000 of wages were tax-free. The median wage is around $80,000, hence my picking that number. As for the hue and cry about unrealized capital gains being taxed, that's easily addressed: unrealized gains in primary-residence owner-occupied homes and retirement accounts would be exempted. Every other gain made playing in the casino would be taxed.

Reversing the asymmetry of tax liabilities would dramatically alter the distribution of gains and costs. Wages have lost ground for 50+ years, and the favoring of capital is a key driver of this decline in the share of the economy that's distributed to wage earners.

Half the nation's households--170 million people own a grand total of 2.5% of the nation's financial assets:



The winner-take-most arrangement favoring capital:



Another key driver is the offloading of risk from owners to consumers and workers, a perverse process that has been obscured by incremental degradation. Risk is a strange phenomenon that defies easy definition. Risk isn't a direct loss or cost; it's the probability of losses and costs arising in what appears on the surface to be a stable arrangement.

Consider the stunning decline in the quality of durable goods such as appliances, and global industry adopting a laughably valueless one-year warranty across the board. Appliances that routinely lasted 30 years before "Progress" took the reins now routinely fail in 3+ years.

In the good old days before "Progress" took the reins, manufacturers absorbed the risk of premature failure of the goods they produced. Now this risk has been offloaded onto consumers, who are now forced to buy "extended warranties" as the only means of mitigating the risk they now carry of premature failure.

This is in effect a form of extortion: "nice refrigerator you got there, too bad it's at risk of breaking." Well, if current manufacturers had the same standards as previous generations, we wouldn't need "extended warranties." Welcome to the Mafia Economy: low quality goods and services force "upgrades," i.e. extortion.

Consider the offloading of risk onto workers. Employment other than casual labor once included healthcare insurance and other basic benefits. In the "gig economy" of contract employment and gigs, the worker is now responsible for paying their Social Security / Medicare taxes, healthcare insurance and retirement contributions.

The decline of hourly wages is another offloading of risk onto the worker. The percentage of workers paid by the hour has declined in favor of salaried positions with open-ended demands on workers: where hourly workers get paid for hours on the job, salaried workers are now on the hook for work beyond a conventional 8-hour work shift.

Then there's the immense mass of risk and labor that's been offloaded onto consumers and workers as shadow work, often the result of having to fix failures in goods and services that were once the responsibility of the provider or employer and have been dumped on consumers and workers. This is a topic I've often addressed.

This Is Why You're Drowning in Busywork: We have been told that A.I. will take people's jobs. What no one mentions is that many of those jobs are landing on us. The A.I. revolution involves a huge transfer of labor-- not from worker to machine but from worker to consumer. (nytimes.com, paywalled)

Another source of risk is the dependence on debt to fund the lifestyles we deserve: as the purchasing power of wages has declined, the easy "solution" is to fill the gap between what earnings can buy and what we want / need / expect / deserve with borrowed money.

As we all know, debt comes with risk, as falling behind greases the slide to default, bankruptcy and ruin. 27% interest rates on credit cards steepen the slide into a cliff: one missed payment can trigger a cascade of events that cannot be reversed. This is why I often observe that fewer bad things can happen if you have no debt.

Last but far from least, is the current arrangement's dependence on serial credit-asset bubbles as the sole driver of "growth", a dependence that has led to a casino economy in which wage earners lose ground and in desperation turn to gambling as their last-ditch hope of gaining ground.

But despite 24/7 assurances that "this isn't a bubble," all bubbles pop with devastating consequences for those who believed the assurances of those operating the casino.



The underlying story of the past 50 years has been the offloading of risk onto workers and consumers, with the inevitable consequences being higher costs and losses leading to impoverishment and immiseration. We're frogs in water that's getting measurably hotter, and it's getting harder to muster the means to jump out of the simmering pot.


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Without Subsidies, AI Is Unaffordable

Let's pull all this into an undeniable conclusion: AI is based on massively subsidizing users' costs.

What's already abundantly clear but verboten to say as it would pop the bubble of AI valuations and triumphalism is that AI is unaffordable once the direct and indirect subsidies are withdrawn. Nothing that consumes this much electricity and requires such an immense scale of costly processing and memory capacity can be low-cost, never mind free.

The major AI platforms and vendors are subsidizing corporate and individual users in the hopes that they can achieve AI sector dominance --and the pricing power that comes with it--via the network effect, the dominance generated by having the majority of users bound by habit or dependence to your platform or tools.

This battle for network effect dominance is playing out in full view:

AI Giants Are Handing Out Tons of Free Computing Power to Grab Startup Share: (wsj.com) Pitched battle for business users comes as AI companies seek lasting streams of revenue.

Hans Ibarra, a founder building an AI-voice startup, has found himself on the receiving end of a big opportunity: Top artificial-intelligence companies such as OpenAI, Anthropic and others desperate to win his business are ramping up discounts.

Across Silicon Valley, startup founders like Ibarra are enjoying a wave of computing credits and fielding competing offers from AI-model makers racing to land new enterprise customers. Cursor, the AI-coding company bought by Elon Musk's SpaceX, offered a 75% discount through July 5.

"If I'm choosing between a really cheap Chinese model that I actually have to pay for, and a very expensive Anthropic model that I don't have to pay for, I'm going to pick the Anthropic model," Acker said. "I'm always going to pick the one for which I have free credits."

Meanwhile, back in the real world of costs, AI Costs More Than The People It Replaced (forbes.com)(via Tom D.)

It turns out that experienced human workers doing the work right in the first place is cheaper than having AI run a probability distribution process that needs vetting and corrections. And remember, AI isn't actually "intelligent," it's just a probability distribution using natural language.

As management guru Peter Drucker observed, enterprises don't have profits, they have costs. Purveyors of AI platforms and tools have costs, and so do their customers. Those costs are currently being funded by investors, who are in effect subsidizing the AI companies' "free" giveaways of horrendously costly "tokens" in a manic, desperate attempt to grab the brass ring of network effect dominance before their cash runs out.

This raises a question: Is this any way to run a railroad? In other words, is this actually a viable business model, burning billions of dollars in cash to lock in network effect dominance in a field that is rapidly obsoleting every iteration of an innately limited mode of computation? Is claiming that a probability distribution is "intelligent" in the same way humans are intelligent a viable business model when there is ample evidence this simply isn't true?

AI and human intelligence are drastically different--here's how (scientificamerican.com)

What happens when enterprises have to pay the unsubsidized costs of AI is they immediately curtail their AI spending because the customer-facing / financial benefits of AI are at best elusive and often negative. Peter Drucker was onto something that is currently being lost in the PR-propaganda push of those trying to cash in on the AI euphoria: enterprises don't have profits, they have costs, and the real-world costs of AI are extraordinarily high while the payoffs are ambiguous.

There are many other hidden subsidies within the AI machinery. There are corporate tax write-off subsidies, energy subsidies, tax credit subsidies for building data centers, and so on. If these were stripped out, what would the real unsubsidized costs of AI be? No one knows, but they would be higher than what's presented as the cost now.

Then there's the if it's legal, it's moral, and what's legal is for sale subsidy: AI is built on the systemic theft of copyrighted content. Last month alone, AI scrapers gorged on 246,000 pages from my Of Two Minds server, and hundreds of thousands of pages of my copyrighted works on my mirror site and other sites posting my work.

This is legal, but is it moral? Nobody asks such questions because the important thing is to avoid saddling AI users with the real costs. So if all those content creators get nothing--in effect, subsidizing both AI companies and the users of their AI platforms and tools--well, so what, because if it's legal, it's moral, and what's legal is for sale.

Well that's just peachy, but let's do a thought experiment where every creator of copyrighted work got paid for supplying AI with its database, and every user of AI had to pay us content creators. How about a penny a page / image / sound clip? so 246,000 pages per month (again, only a fraction of the total volume of my work that was scraped by AI companies for their "free" use in a single month) would be $2,460 a month paid to me by AI users benefiting directly from my copyrighted work. Wouldn't that be fair, i.e. moral?

Recall that US copyright law is explicit: all creative content is copyrighted upon completion, period.

How many current users of AI are willing to pay the full unsubsidized costs for their use of AI? We can safely say far fewer than are using the tools for "free" due to subsidies both direct and indirect.

Let's pull all this into an undeniable conclusion: AI is based on massively subsidizing users' costs. Once those subsidies end, what's left are costs, not profits. Play that any way you like, but massive subsidies are not sustainable, though they generate a temporary illusion of viability that can be exploited by those selling a fantasy of future profitability to credulous investors and enterprises.

Left unsaid is a lot of money is being gambled on the illusion that subsidies are sustainable. They're not. Enterprises don't have profits, they have costs.




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Sailing the Stormy Seas of AI

Forecasts of AI's future impacts must be viewed with skepticism, as AI and its promoters are adept at saying what we want to hear rather than telling us the discomfiting truth, as the truth might prompt us to turn AI off.

Small business owner and San Francisco correspondent 'Sparx Eightthreetwo' (found on facebook under the same name) has a metaphor of the sea and boats that illuminates some of the key dynamics in the AI era. Here is Sparx's description of the metaphor:

"Overall, I would suggest that every business is akin to a sailing vessel (microeconomics) in an ocean of financial liquidity (macroeconomics). Some businesses are as small as rowboats, whereas others are as large as aircraft carriers.

Regardless of the size involved, knowledge of how water works is fairly important for long term survival.

On the microeconomic front, it's quite important that every business owner builds the best possible boat that he or she can relative to other boats (competitors).

However, on the macroeconomic front it's also important to understand how the ocean works (and/or whatever specific type of body of water that the client is sailing in).

In general, you want to sail with the currents, not against them.

And if the client is indeed sailing in the ocean, it's imperative to understand when hurricanes and other types of significant turbulence are on the horizon, and to react accordingly long in advance.

If done properly, the client's boat has a significantly increased chance of not sinking, while many other boats likely won't be so lucky.

In the end, I'll simply ask questions. If the client wants to talk about their boat, then I'll talk about their boat.

If the client wants to talk about water, then I'll talk about water."

My application of this metaphor starts with this question: is AI changing the currents and tidal forces of the seas, as its proponents believe, or is it an uncontrollably destructive force akin to hurricanes and tsunamis, or is it neither? To its proponents, AI will change everything, i.e. the nature of the economic, social and political seas, forever, in an inevitably positive way.

Alternatively, as I suggested in these recent posts, the negative uses and consequences of AI--i.e. Anti-Progress--are expanding far faster than any positive effects, effectively overwhelming the one-meter wave of "progress" with a 10-meter tsunami of Anti-Progress sweeping away all before it.

Risk and AI: It's Tricky

What AI Is and Is Not-- or, When Electrocution of Innocents Becomes Profitable

AI Data Centers Are Not the Railroads of Today

AI's Insurmountable Flaw: "Mass Regurgitation of Misinformation"

Is AI Reversing Anti-Progress or Is It Accelerating It?

What If the Work We're Busy Automating Is Needless?

The core of realistic skepticism is this: beneath the sci-fi fantasies, the only real purpose of AI is to increases profits, period. Everything else is PR. An immense chorus of euphoric voices are ecstatically proclaiming that AI will soon be churning out miracle drugs like popcorn, but nobody is saying a single one of the patents of these highly anticipated miracle drugs will be offered to the public for free so the drugs will be low-cost and affordable to the world. No, the real euphoria is generated by the dreams of billions of dollars in new profits generated by quickly developed AI miracle drugs.

In other words, AI isn't going to fix what's broken, it's simply the latest technological tool being deployed to maximize profits. Put another way, it's just a continuation of the dominant zeitgeist of civilizational psychosis: We Don't Need the World, We Only Need Money.

Developing new AI tools or platforms won't fix what's broken, because what's broken isn't fixable with technology.



What's broken is the moral foundation of a sustainable socio-economic order and our ability to relinquish the civilizational psychosis of growth at any cost / waste is growth / Landfill Economy based on optimizing profits by any means available--privatizing gains and socializing costs--for a way of life that balances the shared interests of society with financial-market forces: The US Economy In a Nutshell: Privatize the Gains, Socialize the Costs.

Here's one of the planet's endlessly expanding gigantic landfills of "growth" in Bali:



So in terms of AI transforming the seas into some sustainable balance of the shared interests of society and financial-market forces: no. That's PR fantasy, not reality. The reality is: privatize the gains generated by AI and dump the costs and consequences of AI on the public and the planet's biosphere.

In other words, AI won't change the seas, it will just accelerate what we're already doing, i.e. expanding immiseration and ruination as the socialized costs of optimizing the expansion of profits.

Which brings us to the boats. As the AI trawlers disgorge their profits on insiders and shareholders, it's possible that those navigating stormy seas in rowboats might find ways to use AI productively in their own lives and enterprises. But in a rowboat, there are few ways to offload costs onto others or the biosphere; costs and gains both remain in the confines of the boat.

Without the distortions wrought by large-scale AI privatizing gains but socializing costs and consequences, then the true gains, costs and consequences emerge. Only then will we be able to discern the value--and Anti-Progress--of AI, boat by boat.



Forecasts of AI's future impacts must be viewed with skepticism, as AI and its promoters are adept at saying what we want to hear rather than telling us the discomfiting truth, as the truth might prompt us to turn AI off.




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Risk and AI: It's Tricky

The possibility that AI will end up unleashing waves of 'Anti-Progress'--malicious uses, untrustworthy output and uncontrollable floods of slop--also doesn't occur to those confined in the current belief construct.

A funny thing happens on the way to understanding risk: we discover it's tricky. We think we see all the risks, and think we can mitigate or hedge those risks, but by its very nature, risk evades such simplistic filters and metrics. Risk remains hidden, offscreen, invisible, building up out of sight, awaiting a catalyst that's equally undetectable until it manifests, and after the fact, we look back and ask, why didn't we see that coming?

Risk is tricky like that. It can lay dormant for decades and then erupt with little warning.

Risk is tricky in other ways. In our hubris, we see the power and might of our technologies, systems and foresight, and reckon these are so robust they will easily survive any tectonic shift, as we've planned for emergencies.

But our faith in the might of our civilization is itself a source of risk because the risk of Model Collapse--the breakdown not of a supply chain or technology but of our entire conceptual construct of how the world works--goes unrecognized because our confidence that our model maps the real world is so high that we are incapable of recognizing its drift into hallucination and civilizational psychosis.

In other words, our confidence that our conceptual mythologies are accurately mapping the real world is itself a source of civilizational risk because this confidence makes it inevitable that we do more of what's failing, as the alternative--recognizing our conceptual models and mythologies are self-serving rationalizations that substitute artifice for realistic appraisals--is conceptually and emotionally impossible.

Put another way: Emperor Norton's delusions of power and grandeur were harmless as long as he was recognized as delusional. But should Emperor Norton actually be given the power he believed was his to wield, then risk rises accordingly.

Consider the bet being made globally that the current iteration of AI will be 1) immensely profitable (the most important thing in the Universe) and 2) immensely productive (secondary to immensely profitable but necessary as a motivation for everyone to throw trillions of dollars at purveyors of AI). The risk that this bet--and the assumptions that make it not only rational but pressing--is the equivalent of handing Emperor Norton the keys to the kingdom with little evidence he will be a wise leader, is unimaginable in the current model / mythology, and so therefore it doesn't exist.

The worst that could possibly happen in the current model / mythology is a brief spot of bother in the stock market as euphoric overvaluations come down to Earth, and then the immense profits start flowing and markets rocket higher in a multi-decade Bull Market of AI Productivity.

The possibility that the current iteration of AI is innately incapable of metaphorically boiling away the seas is not on the screen, any more than a stock market crash or social upheaval is on the screen. Yet if the fantasy of vast, unstoppable floods of profits driven by vast increases in productivity fail to materialize on a very short timeline, then both a stock market crash and social upheaval move from "impossible" straight through "unlikely" to "happening now," leaving everyone who thought they understood risk and were properly hedged against unwelcome change in a state of disbelief and wonderment.



Risk is tricky that way. What's "impossible" in our current belief construct--a construct we mistakenly believe maps the real world perfectly--is a source of system-breaking risk that is invisible within the confines of this self-congratulatory belief construct.



The possibility that AI will end up unleashing waves of Anti-Progress--malicious uses, untrustworthy output and uncontrollable floods of slop--also doesn't occur to those confined in the current belief construct. The risk may be of a magnitude and scale that switching AI vendors or platforms and approving policy tweaks won't fix the problem.




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