Don’t Player Hate, Participate: Why AI Pessimism Is a Luxury Belief
Don’t Player Hate, Participate: Why AI Pessimism Is a Luxury Belief
A 300-year-old economic argument explains why the smartest people in the room are the most scared of AI. Plus: Anthropic’s S-1, Alberta said no, BC said yes...
I fixed the sink…
That’s the whole story, honestly.
There was a drip under the kitchen sink, I took a photo of it, asked the thing what I was looking at, and then I fixed the thing. No plumber. I know that confirms a few priors about me, but I bring it up because that little win did more to change how I feel about this technology than any essay I’ve read.
You can sit around complaining about AI. You can keep telling everybody that software is dead. Or you can actually participate. Learn how to use the technology. Pay attention to the companies benefiting from it. And when the stock market starts rewarding those companies, don’t be afraid to own them.
The tape
Rough month. The market stopped trading AI and started trading AI against the cost of money, and both can and are true at once. The 10-year has spent most of October above 5% and closed Tuesday a hair under it. Midterms are next Tuesday. Everybody is nervous and nobody can tell you exactly why, which is usually what nervous looks like.
Then Anthropic filed its S-1 on Monday. Press reports have it raising around $100 billion at a valuation near $2 trillion, which would make it the biggest IPO ever.
Revenue in 2025 was $4.6 billion. Revenue in the second quarter of 2026 alone was $11.6 billion. Third quarter, by the company’s own math, was about $16.8 billion. Nobody has grown like this before. Revenue per employee is over $6.6 million. Ninety percent of their code is now written by their own model.
Two things I pulled out of it.
First, this company spends most of its compute on research and training, not on serving you and me. The CFO has said that publicly. The part that serves customers is extremely profitable. The part that builds the next model is where the money goes. Which tells you that for the next 12 to 18 months, demand for chips and power isn’t slowing down, because you only stay in this race by spending.
Second, the market is right to be twitchy about the multiple. Growth slowed from roughly 147% quarter over quarter to about 45% in Q3, and that’s a real slowdown, not just big numbers getting bigger. OpenAI shipped a model in September that matched or beat theirs and some of the revenue followed. The harness turned out to be less sticky than people hoped. Meanwhile, token prices keep falling and GPU rental prices keep rising, which is a strange thing to watch at the same time. SemiAnalysis has about 50 gigawatts of new data centre capacity coming online in 2027. When that lands, rental rates come down, and then we find out what intelligence actually costs.
My read:
Is that the aggregate demand across every model, open and closed, is the number that counts, and its really difficult to account for. Anthropic going public is the first time we get a clean look at any of it. I think that’s bullish for the sector short term and medium term.
The other datapoint from the week was Microsoft offering a voluntary exit package to about 60,000 people, roughly 27% of the company. Highest-paid workforce on earth.
That’s the efficiency showing up in the numbers, and it’s scary if you work there, and it’s exactly why we dedicated the rest of the show to Cognitive Mercantilism... say that fast 3 times.
Cognitive mercantilism, explained.
Venkatesh Rao published an essay on Saturday called Cognitive Mercantilism. I sent it to about 20 people. Mel had already read it… because of course she did.
I want to lay it out carefully because it’s the best frame I’ve found for why the loudest AI pessimists are the people with the most degrees or the most “intelligence”.
Mercantilism is what came before capitalism. From roughly 1500 to 1800, if you asked a king or a general or a landowner how an economy worked, they’d tell you something like this. Wealth is a fixed pile. It’s land, gold, silver, and the labour of the poor people who work that land. The point of policy is to grab more of the pile: more territory, a trade surplus, more bullion in the vault. My gain is your loss.
Rao’s twist, is that mercantilism was never the philosophy of merchants. It belonged to the aristocrats and the military and the people collecting rents. The actual traders and the people starting businesses were the ones pushing against it the entire time.
Capitalism from that push.
Under the surface, mercantilism needed four beliefs to hold:
Wealth is scarce and finite.
Ordinary people can’t be trusted with freedom. They’re unruly and need managing by their superiors.
Supply is everything. Control the productive stuff, charge high prices. Demand from the poor doesn’t count because the poor have nothing to spend.
Most people are only good for farming. With 80% of the population in the fields, that looked like the natural order of things.
What broke it was demand. Rao leans on the historian Joyce Appleby here. Capitalism wasn’t inevitable. It showed up when people discovered that wealth could be created and not only captured, and that ordinary people could also be customers of production. When a farmer could suddenly want tea and a clock and a window with glass in it, he worked more to get them. Days worked per year went from around 250 to 300. Nobody forced these ppl to work more... Desire did the persuading and the effort followed that desire. Markets got pulled into existence by the wanting.
Now swap the word “wealth” for “intelligence” and you have our modern ai conundrum.
Cognitive mercantilism treats intelligence as a fixed resource that lives in credentialed brains, to be hoarded, kept expensive, and handed out by approved custodians. And the same four beliefs apply here.
Intelligence is scarce.
Regular people can’t be trusted with powerful tools.
Supply of that resource is everything, so we MUST “control the frontier” because its too dangerous.
And most people are only good for whatever they’re doing now.
And who holds this cognitive worldview today? It sure as heck isn’t the plumbers. It’s the people who spent their lives going to school, hoarding intellegence so they could sell it at a higher price. These folks tend to have their entire identity and income wrapped up in owning intelligence and selling it. Doctors, lawyers, consultants, advisors, academics, the media, and yes, the fronteir labs themselves. So it follows that the technocrats building this think it’s the end of the world. They’re the aristocrats in this story. A technology that makes intelligence cheap and abundant hits them exactly where mercantilism hit the landowners in 1780. They’re losing control of their scarce thing.
An electrician who started using it to bid jobs and write invoices and run his own estimating does not see it that way. He sees a tool that let him do something he couldn’t do last year. Those two people are not going to agree about AI, and it’s not because one of them is ignorant.
Mel put it in economics terms. Think of a production possibility frontier, the curve of everything an economy can make with the resources it has. Most policy is arguing about where on the curve to sit. This moves the curve. That’s a different kind of thing.
She also made a point I’ve been chewing on since our chat...
Opposition to AI is turning into a luxury belief, the same way being anti-energy did. If you already have enough wealth and security that you don’t need more, you may struggle to understand why anyone would want a tool that helps them get more. And every society needs an elite of some kind. The thing capitalism does well, and the thing this technology does well, is lower the barrier to becoming one.
A few caveats we should point out.
The Engels’ Pause was real. Between 1800 and 1840 output per worker in Britain rose something like 46% while real wages rose about 12%. The gap went to the people who owned the machines. The handloom weavers didn’t get retrained, they got wiped out. Wages only caught up when the technology spread into enough industries to create new work and when the institutions changed: unions got legalized, the vote got extended, the Corn Laws got repealed. If people today believe the gains will flow to five companies while they eat the disruption, their pessimism is rational, not ignorant. The honest path to optimism runs through access to cheap tools, ownership of the companies that benefit, and real support through the transition.
And the question people ask themselves matters. “Will this take my job?” is a mercantilist question. This question assumes there is a fixed amount of work to fight over.
I think the better question is “what can I want now that I couldn’t before?” That’s the question that turned subsistence farmers into consumers, and I think it’s the one that turns knowledge workers from producers of intelligence into directors of it. People hate losing an identity. But i’d be willing to bet that people would be much more open to gaining one.
Rao ends the piece with:
We may be at the beginning of a shift as big as farming to industry, from a world where 80% of human brains are busy with subsistence cognition to one where 95% are free to go satisfy wants nobody has even thought of yet.
The most important thing about the agricultural revolution wasn’t that farming got more efficient. It’s that most people got to stop farming.
The political theatre
Alberta voted and 74.9% said stay. Not close.
The other nine questions were close... The five on immigration and public services all passed with between 52% and 58%. The four on the Constitution, picking our own judges, abolishing the Senate, opting out of federal programs with the money, provincial law winning in provincial areas, all failed, with yes between 42% and 47%.
Mel’s read is that no question got a decisive answer except the one everybody was watching, and that calling the people who voted yes on one through nine names is bad politics, because there’s a lot of them and they’re spread across NDP ridings too. I don’t have much to push back on. We’re not polarized, or we are, depending on which chart you look at. Either way the conversation isn’t over.
BC is the one I was actually excited about.
David Eby called an election two years early because the Conservatives had just dumped their leader and he figured he’d catch them on the ground. Instead they won a majority, 64 of 93 seats on about 48% of the vote. Eby’s out. Lorne Doerkson is premier-designate, and he’s already on record supporting Pacific Link and a second pipeline to the coast.
Two more things. Bill C-264 was debated in the House Wednesday. It’s a Conservative private member’s bill to repeal the tanker ban on the north coast, and Poilievre wrote to Carney on Monday asking him to support it. Between that and the Impact Assessment Act heading back to the Supreme Court, the two pieces of legislation that have done the most to keep Canadian energy in the ground are both in play. If you’re an Albertan, that’s about as good as a fall gets.
Canada - its time to build
Every country in the world wants compute, and compute wants energy, and energy is Canada’s biggest export. I don’t think it’s an accident that the map just went blue from the Pacific to Quebec with one orange spot in Manitoba.
Mel’s version is Maslow: no voter in history has voted against their economic interest to the point of undermining their own food and shelter, and governments that forgot the base of the pyramid are finding this out the hard way.
Capitalism is doing what it does. When enough people want something, the system gives it what it needs.
So don’t player hate. Participate. Fix the sink.
Nothing here is investment advice. I own positions in some of the companies and sectors discussed and those positions change without notice. Do your own work.
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