Every layer of the AI supply chain is constrained, from energy and data centers to turbines, transformers, and rare earth minerals. This is a shift from software limitations to hard physical constraints. As a result, the price of intelligence may stop decreasing and could even rise.
In a strategic paradox, China is championing open-source AI. This is not about openness; it's a "turbo dumping strategy" to flood the global market with free AI, preventing American companies from monetizing their proprietary models and establishing market leadership.
Marc Andreessen draws a parallel between current AI export controls and the 1990s attempt to classify Netscape's encryption as "ammunition." He argues that AI is fundamentally math, and any attempt to control its spread is doomed to fail as it will inevitably be replicated and distributed globally.
AI could theoretically provide world-class legal, medical, or educational advice. However, it cannot disrupt these fields because it can't get licensed, admitted to the bar, or receive insurance reimbursements. These regulatory moats will keep these professions untouched by AI's capabilities for the foreseeable future.
Research shows AI enhances productivity for everyone. While superstars become more effective, the most significant lift is for median performers, effectively raising the entire productivity floor. This suggests AI can act as a great equalizer of skill, not just a magnifier of existing talent.
The same AI models that can exploit system vulnerabilities are also the most effective tools for identifying and fixing those weaknesses. This duality creates a policy paradox: restricting the technology to prevent its misuse as a weapon also prevents its use as a defensive shield, leaving systems vulnerable.
A new investment thesis, "American Dynamism," focuses on startups rebuilding America's industrial base in areas like defense, energy, and manufacturing. These companies are motivated by a patriotic mission, attracting talent and capital to solve hard physical problems traditionally ignored by venture capital.
AI can provide superior, personalized academic instruction, making it a better "teacher" than most humans. In the protected K-12 public system, this means the role of human teachers will devolve. Their primary function will become political—maintaining their government-protected jobs—rather than evolving to new forms of instruction.
The economy is split. Technology drives down prices in unregulated "blue sectors" (e.g., electronics), but heavily regulated "red sectors" (healthcare, education, housing) see prices skyrocket. These red sectors consume an ever-larger share of the economy, nullifying overall productivity gains from technology.
The US government is torn between two conflicting objectives for AI. One faction wants to export American AI globally to achieve technological supremacy, even in China. The other wants to restrict and hoard AI to prevent adversaries from accessing it. This fundamental conflict stalls clear, effective policy.