Kansas and AI

Block announced that it’s cutting 40% of its workforce. It didn’t say it was replacing those people with GenAI. Not out loud. Jack Dorsey did say “I believe the majority of companies will reach the same conclusion and make similar structural changes.” Wall Street loved it, bidding up the share price by 24%. Which reminded me of Kansas in 2010.

The Kansas Experiment · As long as I can remember, a certain class of right-wing evangelists has preached that cutting taxes would stimulate business growth and everyone would come out ahead. There are a couple of problems with this theory. First, mainstream economists almost universally think it’s just wrong. Second, most of the people pushing it are rich and would benefit from the cuts.

Anyhow, in 2010 US Senator Sam Brownback won the race for governor of Kansas on what was then called the “Tea Party” program: Prosperity through tax cuts. Tea-party Republicans also won a large majority in the state legislature. Unsurprisingly they immediately did what they said they were going to do: Slashed a wide variety of taxes, some to zero.

The predicted prosperity failed to happen. The state government’s revenue plunged and it had to dig deep into rainy-day reserves just to keep the doors open. There were brutal cuts to policing, road repair, and schools. Also a nasty feedback loop: As the state’s fiscal position worsened, its credit rating fell and interest rates rose, leading to yet more brutal austerity measures.

Another result was that affluent Kansans made out like bandits; the cost of running the state was substantially transferred to the less financially fortunate.

In 2017, the legislature threw in their cards and repealed the tax cuts, overriding Brownback’s veto.

While this was a terrible experience for most Kansans, it is historically useful, because whenever you encounter a tax-cut nut (probably self-interestedly wealthy) you can say “But, Kansas!” Having said that, there are still plenty of those nuts, and they’ll tell you that the Kansas experiment failed because of one fine-tuning effort or another. That’s a position that’s hard to defend, though.

Sidebar: Trans oppression too ·

Before I move onto the AI angle, I gotta pause to acknowledge this week’s news story about the Kansas government’s vicious, brutal, and ignorant assault on trans people. To be clear, I think the shitty people who hate trans folk are aren’t necessarily the same shitty people as the shitty people who don’t want to contribute to the public good. But, something about Kansas seems to attract both flavors.

The GenAI experiment · The core value proposition of contemporary AI technology is exactly what Dorsey seems to think: Fire half your employees and profits will soar! If that’s true, the trillion dollars or so invested so far will seem like small potatoes. Since we don’t know if this will actually work, anyone who actually does it is conducting an experiment. Just like Sam Brownback did. Unsurprisingly, the investor class loves this experiment and is putting their money on it working.

To be fair, voices have been raised to argue that the tech sector is a special case: That following on feverish over-hiring during the Covid lockdown, they need to slash headcount anyhow, and are using AI as an excuse. For example John Gruber.

I personally am unconvinced, but even if they’re right, it’s irrelevant. The shareholding class won’t be able to see past that 24% payoff. So as of today, they’ll be yelling at every CEO on the planet to start pulling the mass-firing trigger. Or else.

I think I know how the experiment will turn out. Just like in Kansas, it’s not going to be fun.