Your electricity bill is skyrocketing — and techbros are to blame

The AI bubble and it’s possible disintegration gives us some pretty grim insights into the question of what happens when the richest people in the world rebuild the economy in a way that it no longer needs working people, but still expects them to pay their bills.

Reuters reported this week that China’s AI and semiconductor stock boom has suffered a sudden and staggering reversal: their STAR50 index of Beijing’s AI and chip champions (like our NASDAQ) has plunged 40 percent in less than four months, wiping out roughly $480 billion in market value.

Their robotics company Unitree, whose IPO just three months ago was oversubscribed 8,000 times by Chinese small investors and has lost half its value. Dong Baozhen, a Beijing fund manager, told Reuters:

“And now we see the bubble bursting.”

The same day (Monday) here in America Microsoft offered voluntary buyouts to 60,000 employees, about 27 percent of its global workforce, as it’s planning to replace them with AI. And when Anthropic (Claude) filed to go public they disclosed an $80.7 billion net loss and some $657 billion in infrastructure deals with companies including Microsoft, Amazon, and SpaceX; fully $498 billion of that is noncancelable even if the company never uses the computing capacity it’s reserved.

Things got even weirder on Wednesday, when Microsoft and Alphabet reported some striking “earnings” numbers. Alphabet burned through $9.1 billion in free cash flow for the second straight quarter. NPR’s 1A tallied up Monday’s AI deals alone at roughly $235 billion, nearly one percent of American GDP, all in just one single day.

While Wall Street has been pouring massive sums into AI companies, data centers, chips, and power infrastructure, Economist Dean Baker reports at his weekly AI Bubble Monitor that CoreWeave’s debt (the company rents computing power to the AI giants) is now considered so deep in junk bond territory that they’re having to pay 16% interest on their long-term debt to get investors to bite.

In 1965, Intel co-founder Gordon Moore postulated that every two years the number of transistors in an integrated circuit would double. Not only was his “Moore’s Law” right, but as the power of digital hardware increases, costs also reliably drop by a similar factor.

Most of today’s frenzy of data center and power plant construction is based on the current state of the AI chip-and-software art, but Moore’s Law dictates that over time — and not a lot of time, probably just a matter of months or years at the most — the size and power needs of these AI data centers will decrease exponentially.

Already, entire buildings filled with computers are on the verge of being replaced by a single “wafer” disc that will carry the computing power of billions of today’s red-hot chips. The Wall Street Journal broke the news with an article titled and subtitled:

“The Microchip Era Is About to End. The future is in wafers. Data centers will be the size of a box, not vast energy-hogging structures.”

Author George Gilder noted we’re not just on the verge of the breakthrough; it’s nearly in production:

“Cerebras of Palo Alto, Calif., used the concept in its WSE-3 wafer-scale engine. The WSE-3 boasts some four trillion transistors—14 times as many as Nvidia’s Blackwell chip—with 7,000 times the memory bandwidth. Cerebras inscribed the memory directly on to the wafer rather than relegating it to distant chips and chiplets in high-bandwidth memory mazes. The company stacked up its wafer-scale engines 16-fold, thereby reducing a data center to a small box with 64 trillion transistors.”

A data center — a 700,000 square-foot building drawing gigiwatts of electricity and chugging millions of gallons of water for cooling — replaced by “a small box” that could be powered by rooftop solar and a good battery bank.

Meanwhile, multiple companies have rolled out AI products that can run on a desktop PC, eliminating the need for data centers altogether. Perplexity introduced one just last month with the headline:

“Perplexity Computer now runs fully local on Mac”

Ya think that may have an impact on our economy?

Places booming today as AI and other data facilities and the power plants and transmission lines to feed them are being built — if Moore’s Law applies to data centers as it has proven to apply to all things digital from computers to cell phones to TVs and satellites — will soon look like Flint, Michigan when Reagan’s free trade policies began to seriously bite in the 1990s.

It sure looks like we’re seeing a repeat of previous bubbles and bursts ranging from Dutch tulips to the 19th century railroads to this century’s dot-com and home mortgage collapses. And the people running the show seem just fine with creating a world where the rich get mindbogglingly richer while working people and 401k investors are out on the street.

JD Vance’s sugar daddy, Peter Thiel, wrote in a 2009 essay for the Cato Institute that “I no longer believe that freedom and democracy are compatible.” Marc Andreesen, the billionaire who helped Elon recruit young men for DOGE to take apart our government, complained on a podcast this year that government workers have both civil service protections and public-sector unions, giving them “two layers of insulation against ever getting fired.”

Unions, of course, are actual democracy in the workplace that generations of workers have literally fought and died for, but these guys don’t seem to appreciate or even understand that.

Meanwhile, OpenAI CEO Sam Altman wrote in a 2021 essay that as AI advances, “even more power will shift from labor to capital.” His warning points out how easily AI could dramatically increase the power of people who own businesses and tech while gutting the bargaining power of people who work for a living.

And, indeed, that’s already happening. Like Microsoft this week, Amazon has cut roughly 30,000 corporate jobs since last October, all after CEO Andy Jassy warned his employees that AI would “reduce our total corporate workforce.” One AI-related layoff tracker counts nearly 119,000 layoffs so far this year tied explicitly to AI automation, roughly four and a half times last year’s total.

And now the robotics business is exploding, with AI built into local machines that can assemble cars, sew clothing, clean streets, and drive you around town. It’s opened an entirely new industry: outfitting humans with sensors to track their movements to train robots to replace them.

So, if machines replace our workers, who’s going to have enough money to buy the goods and services the machines are putting out?

I grew up in a union family; my dad worked in a tool-and-die shop in Lansing, Michigan and was able to raise 4 boys with a 3-bedroom home, a new car every few years, and had a decent retirement. Henry Ford increased his workers’ pay so they’d be able to buy the cars they were making.

This isn’t rocket science. Workers are also customers, taxpayers, homeowners, and parents; they’re the ultimate economic base of their communities. If AI destroys their purchasing power, we’re gnawing away at the foundation of America’s historic economic greatness.

We’ve seen versions of this before.

Reagan deregulated the Savings & Loan industry leading to predatory behavior that produced a massive crash; it cost taxpayers over $100 billion to clean up the mess (a trillion in today’s money). But Reagan also sent those banksters to prison: his regulators made more than 30,000 criminal referrals to the Justice Department, which won more than 1,000 felony convictions.

Since then, times have changed; it appears that the morbidly rich have acquired near-total immunity, no matter how badly they screw up things, because five corrupt Republicans on the Supreme Court legalized billionaires and corporations owning judges and politicians.

Congress and Bill Clinton deregulated our banks in the late 1990s and the bill came due in 2008 when it all fell apart and millions of Americans lost their homes, families watched retirement accounts evaporate, and workers who’d done absolutely nothing wrong lost their livelihoods.

Nepo-baby George W. Bush chose to hold nobody accountable, and even let the banksters keep their billion-dollar bonuses pulled out just before all the dominoes collapsed. He made zero criminal referrals against the big banks, in a crisis that was seventy times larger than Reagan’s S&L mess.

It appears that the AI gods tech bros think that’s the new normal and are betting on getting the same or better from the Trump regime. After all, in his first term he put “Foreclosure King” Steve Mnuchin, who’d thrown an estimated 36,000 Californians out of their homes during the 2008 crash, in charge of the entire economy as Treasury Secretary.

And this time the stakes are even larger than the banking system’s freeze-up; AI is now deeply entangled with America’s military, intelligence agencies, national security infrastructure, and the rivalry with China.

And in their arrogance, they’re saying the quiet part out loud: last November, OpenAI’s chief financial officer, Sarah Friar, told a Wall Street Journal conference that her company wanted a federal “backstop” for the financing behind its data centers. When a reporter asked whether she meant a government guarantee, she answered, “Exactly.”

And pouring gasoline on this particular bonfire, Trump’s One Big Beautiful Billionaire’s Bill lets these companies write off the full cost of their data center hardware the year they buy it rather than the normal depreciation schedules every other industry in America has to stick to.

Perhaps that’s because the Trump family is so well-invested now in this, and he’s depending on tech bro billions to keep Republicans in office; Elon alone is spending almost a half-billion so far this year to that end.

Meanwhile, ordinary Americans are already paying. Residential electricity prices rose 6.9 percent last year, more than double the inflation rate, and Goldman Sachs’ analysts say they expect data centers to drive a massive 40 percent of electricity demand growth through the end of the decade.

The 13 mid-Atlantic and Midwest states have been hit with $23 billion in consumer electricity prices increases through at least 2028, driven by AI data centers. A homeowner in Manassas, Virginia, opened a $281 electric bill in January, up from about $100 the month before.

If today’s boom goes bust, who’s going to be left stuck with the bills for the half-built transmission lines, data centers, and power plants? Apparently it won’t be the morbidly rich tech bro masters of the universe, any more than it was Bush’s billionaire bankers.

None of this is to diminish the power and importance of AI. But the internet was real, too, and look what happened in the 1999-2002 period when that industry took down people’s retirement accounts while creating billionaires out of Zuck, Bezos, and Gates.

In 1983, Reagan instructed his DOJ, FTC, and SEC to stop enforcing the Sherman Anti-Trust and other anti-monopoly laws, leading to a decade of “Mergers & Acquisitions Mania” as was documented in Michael Douglas’ “greed is good” movie, Wall Street.

Add that to Reagan decriminalizing share buybacks and you have the perfect storm of perverse incentives that end up with doors falling off airplanes, workers and communities being screwed, and a new low standard of crappy customer service — all fed by a lack of competition. And we see that consolidation now happening in AI.

This is what happens when the people who own the machines accumulate more economic — and, thus, political — power than the people who depend on wages. It’s the old question: “Is the economy here to serve us, or are we here to serve the small number of mostly white men who control the economy?”

The AI revolution is going to force that debate back into the open.

The ultimate betrayal will be if AI succeeds in making America vastly wealthier while leaving working Americans with less economic security, less political power, and with the bill for another generation of financial speculation wiping out our retirement accounts.

If that happens, we need to be ready to force the issue of the concentration of wealth and power that grew up around it. We failed with the internet giants in 2000 and the banksters in 2008. We need to prepare — politically and economically — for the next cycle of boom and bust that’s increasingly seeming inevitable.