'GET THE HELL OUT OF THE WAY': McDowell SCORCHES Newsom over AI executive order

Key Concepts

• A.I. New Deal: A term used by the Wall Street Journal editorial board to describe Governor Gavin Newsom’s executive order, which seeks to expand government oversight of A.I. and establish social safety nets for displaced workers.
• Technological Displacement: The fear that artificial intelligence will render human labor obsolete, leading to mass unemployment.
• New Business Formation: The economic theory that technological adoption acts as a catalyst for creating new industries and job roles rather than merely eliminating existing ones.
• Compute/Energy Constraints: The physical and logistical limitations—specifically the lack of available energy and computing power—that prevent the immediate, widespread replacement of human workers by A.I.

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1. Governor Newsom’s Executive Order

California Governor Gavin Newsom has issued an executive order aimed at increasing government oversight of the A.I. sector. The order mandates that the state government review how corporations are integrating A.I. into their operations and explore potential compensation frameworks for workers whose jobs may be displaced by the technology. Critics, including the Wall Street Journal editorial board, characterize this as an "A.I. New Deal," arguing that it is a preemptive move to expand government control and social welfare programs before the industry has fully matured or become profitable.

2. Economic Data vs. Political Narrative

The discussion highlights a significant disconnect between the political narrative of "A.I. as a job-killer" and empirical economic data:

• Healthcare Example: Since the introduction of A.I. in medical imaging, the cost of CAT scans has decreased by 70%, leading to a tripling in the volume of scans performed. Contrary to displacement fears, the number of radiologists has actually increased.
• Software Engineering: Citing David Sacks and data from Indeed, the panel noted that the rise of coding-assisted A.I. tools (like Claude Code) has led to a massive increase in demand for software engineers. A.I. has expanded the number of viable business applications, thereby increasing the need for human developers to manage and implement these systems.
• Business Formation: Evidence suggests that sectors adopting A.I. are experiencing accelerated rates of new business formation, which serves as a job-creation engine.

3. Arguments Against Government Intervention

The panel presented several arguments against the current regulatory approach:

• Preemptive Regulation: Critics argue that politicians are attempting to stifle an industry that is not yet fully public or profitable. Dagen McDowell stated, "We don't need your New Deal. We need you to get the hell out of the way."
• Socialist Messaging: Some participants argued that Newsom is using A.I. as a "scapegoat" to introduce socialist principles, such as Universal Basic Income (UBI), under the guise of protecting workers from a "big bad monster" that may not materialize.
• European Comparison: There is a concern that excessive government safety nets will incentivize a lack of productivity, mirroring economic stagnation observed in some European models.

4. Technical and Logistical Realities

A key point raised is that the "A.I. apocalypse" is physically impossible in the near term due to infrastructure limitations:

• Energy and Compute: There is currently insufficient energy capacity and computing infrastructure in the United States to support the mass replacement of human workers with A.I. chatbots.
• Corporate Reality: The transition to A.I. is a slow, calculated corporate process. Companies must perform cost-benefit analyses, and the current state of technology does not support an overnight replacement of the workforce.

5. Synthesis and Conclusion

The consensus among the participants is that while there are legitimate societal concerns regarding A.I.—particularly regarding its impact on social interaction—the economic fear-mongering is largely unfounded. The panel suggests that the focus should be on the productive potential of A.I. to help workers "rise up" through increased efficiency and new business opportunities. The primary takeaway is that government intervention, framed as a "safety net," may actually hinder the innovation necessary to realize these economic benefits, and that the physical constraints of the current energy grid make the threat of immediate, total job displacement a logistical impossibility.