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August 2026 Updates

Two new podcasts and minor changes to the site

Mike

• 12 min read
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Hello readers! I have three annoucments I wanted to share this month.

The Misaligned Markets podcast is live!

Offically launched last week, the first two episodes of the Misaligned Markets podcast are live! You should be able to listen wherever you get your podcasts, including YouTube. On the site every episode will have a page with a player, a live transcript tracking the audio, and show notes! You can navigate to the podcast section by going to https://misaligned.markets/podcast or going to the “Shows” section of the website header.

Support the pod by subscribing wherever you get your shows! Episode 3 comes out later this month and will feature Bill Kovarik. We'll be talking about the history of leaded gasoline, DuPont's prior knowledge of its harms, and what we can learn from that story today.

The Last Enclosure podcast is live!

Speaking of shows, Misaligned Markets has a sister podcast named The Last Enclosure. I co-host this podcast with my friend Nick, where we talk about contemporary issues with a political economy lens. Season 1 is all about AI, and we're 6 episodes into a 10 episode season. Expect updates roughly twice a month.

So far, many of the episodes go deep on the AI posts I've published on Misaligned Markets, like: LLM “intelligence” is a dark pattern, What to expect when you're expecting a bubble, and A less technical guide to LLMs. If you've wanted me to elaborate on any ideas in my AI writing, I've done so on this podcast. Here's a brief synopsis of what we've covered so far:

Episode 1 - It's not intelligent, so don't call it AI!

It’s not intelligent, so don’t call it AI! | Podcast Episode on RSS.com
“I’m trying to implement a rule for myself and those around me. Stop using the phrase AI because these are different technologies.“In this inaugural episode, Mike and Nick dissect the current AI debate and who benefits from its current framing:The Vocab Trap - Why using the term “AI” is a victory for the tech villainaires.Beyond “Spicy Autocomplete” - While often dismissed as mere autocomplete, LLMs are more accurately described as modeling the shape of language usage. They’re a mirror to our collective cognition.Human Scaffolding - From remote drivers in the Philippines for Waymo to the engineers mapping every pothole, the perceived intelligence of these systems relies on a massive, invisible supply chain of human labor.Digital Dementia (Grandpa Shelby Theory) - LLMs operate with a form of anterograde amnesia; they cannot learn in real-time after training. Also, their outputs are often fuzzy associations rather than factual recall. Humans are being made to fill the gaps.Timestamps0:07 Intro4:16 AI’s Roots7:15 How Transformers Work10:23 Models Without Understanding15:12 Language Hides Reasoning19:19 Words by Their Company21:46 Doomers and Superintelligence33:27 Data, Limits, and Humps36:03 Kurzweil and the Singularity38:22 Humans as Scaffolding40:24 Grandpa, LostReferencesBrief history of AI (from Mike’s Misaligned Markets)“Grandpa Shelby” and how Language Models work (Misaligned Markets)Self-driving cars would be nowhere without HD mapsTalkie LM (1930s open source model)Michael Woolridge on this is not the AI we were promisedJohn Rupert Firth and distributional semantics in context of machine learningA timeline of the origins of AI doomerismSam Altman: AI will end world but create great companiesElon Musk and Open AI’s originsMusk’s connections to Nick BostromJohn von Neumman, the singularity, and AI doomTed Chang on chatbots as blury jpegs
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Nick and I discuss what large language models are, and the cultural and social environment that created them. I briefly cover the history of AI and elaborate on the key features that allow LLMs to mimic knowledge, drawing from A less technical guide to LLMs.

Episode 2 - AI: industrial reorganization; not industrial revolution

AI: industrial reorganization; not industrial revolution | Podcast Episode on RSS.com
“We were sold this vision of capital-as-labor. We’ll be able to sub one human for one machine, and it will be transformative. It’s not true.”Mike and Nick move from the mythology of AI to the mechanics of the current bubble. Instead of building smarter machines, tech is “sanding off the edges” for polished demos.Scaling Plateau: “Scale is All You Need” is a pitch for data centers, not a roadmap to autonomous AI.Industrial Reorganization: 1 unit of capital = 1 human is a lie used for leverage. High-skill work is being degraded into “scaffolding” to shape LLM outputs, turning humans into “reverse centaurs.”Interface Enclosure: While the Transformer architecture is open source, big tech is attempting modern enclosure by making chatbots the only viable interface for machine learning.Weaponized Utopianism: The promise of full automation used as a tool to intimidate workers into acting against their interests.Double Movement: Every technological move by capital eventually triggers a necessary counter-movement to preserve social relations.Timestamps0:00 Intro1:42 Scaling Myth3:05 Experts “sick of” transformers7:20 Capital as Labor8:51 Industrial reorganization12:34 Techno-utopianism18:18 Double Movement34:10 Scoped LLMs43:44 Dark patterns51:07 OutroDeeper learningMike on the Grandpa Shelby theory of LLMs: https://misaligned.markets/understanding-large-language-modelsMike on capital-as-labor/the AI bubble: https://misaligned.markets/what-to-expect-ai-bubble/Gary Marcus on scale is all you need is dead: https://garymarcus.substack.com/p/breaking-news-scale-is-all-you-needLlion Jones “absolutely sick” of Transformers: https://venturebeat.com/ai/sakana-ais-cto-says-hes-absolutely-sick-of-transformers-the-tech-that-powersComputer scientist Cal Newport on current AI (LLMs) capabilities: https://www.youtube.com/watch?v=5GezB1XyiQoMeta employees turned into scaffolding: https://www.wired.com/story/mark-zuckerberg-meta-employee-meeting-interrupt-aiNikolai Fyodorov, Russian Cosmism, and Silicon Valley Transhumanism: https://newlinesmag.com/essays/the-russian-ascetic-who-reached-for-immortalityAI as normal technology: https://www.normaltech.ai/p/ai-as-normal-technologyReach outSite: https://rss.com/podcasts/the-last-enclosureBluesky: https://bsky.app/profile/lastenclosure.bsky.social
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Nick and I discuss my capital-as-labor thesis (as presented in What to expect when you're expecting a bubble), the reasons why LLMs cannot meet that bar, and what that means for the future of labor. I also talk about how LLMs are an attempt to enclose or privatize the Transformer neural net architecture.

Episode 3 - The AI overlords fomenting fears of a 'permanent underclass'

The AI overlords fomenting fears of a ‘permanent underclass’ | Podcast Episode on RSS.com
“[AI boosters] are all locked in, because their reputations are staked on this being true.”Nick leads a discussion on the idea of the “permanent underclass,” and Mike outlines the different groups of AI boosters propping up the narrative.The APM Fallacy: Tech workers are optimizing for “actions per minute” or using agents to do more things faster without considering ROI. Productivity as a video game.The Token Reality Gap: When the subsidies end, agents that felt magical become prohibitively expensive.The rogues’ gallery of overlords: Dissecting the buckets of AI boosters—from true believers and doomsday cultists to managers using AI to avoid the “witch hunt” of layoffs.Timestamps0:00 Intro1:43 Silicon Valley’s cultural bubble (APM & AI Agents)8:33 The economic AI bubble20:40 Who created the permanent underclass story?22:18 AI doom/human extinction30:12 Putting AI boosters into buckets47:55 AI ROI?53:03 Tech workers embrace permanent underclass anxieties55:37 Media and investors sleep at the wheel01:02:10 AI overlords caught in cynical grift01:09:50 Silicon Valley and UBIDeeper learningMike on Grandpa Shelby and LLMs: misaligned.markets/understanding-large-language-modelsMike on the AI bubble: misaligned.markets/what-to-expect-ai-bubbleV.F. Ridgeway on measuring metrics: nesslabs.com/what-gets-measured-gets-managedRichard Sutton’s bitter lesson: incompleteideas.net/IncIdeas/BitterLesson.html$500 million on AI in a month: fastcompany.com/91550884/claude-ai-costs-climb-company-spent-half-a-billion-dollars-in-a-single-month-reportPro-extinction AI researchers: archive.is/DBSC4Google’s Larry Page vs Musk on human specieism: archive.is/jBKPnNvidia CEO causes quantum stocks to fall: cnbc.com/2025/01/08/quantum-stocks-like-rigetti-plunge-after-nvidias-huang-says-the-computers-are-15-to-30-years-away.htmlEliezer Yudkowsky makes ~$600k writing fanfiction: projects.propublica.org/nonprofitsorganizations/582565917Ed Zitron on AI compute demand: youtu.be/-5aPsg3rl3g?si=fUmPZN3Jzc8ZuNJPReach outSite: rss.com/podcasts/the-last-enclosureBluesky: bsky.app/profile/lastenclosure.bsky.social
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Nick and I talk about how the culture of Silicon Valley is creating a sense of FOMO around AI that doesn't really exist anywhere else. As part of this analysis, I categorize AI boosters into different groups based on their incentives.

Episode 4 - The AI bubble is actually four bubbles

The AI bubble is actually four bubbles | Podcast Episode on RSS.com
“If you’re looking for a sign companies back down and go: ‘Got you, it’s a bubble!’ They’re never going to do that. They’ll keep pretending everything’s fine until the last death throes.”Mike and Nick describe the AI bubble not as a single failure, but as a stack of overlapping collapses. From the physical reality of energy constraints in the Strait of Hormuz to the shadow banking fueling data centers, they map out how the bubble isn’t just an economic issue but increasingly a political one, too.Overlapping bubbles: The economy is experiencing 5 bubbles, with at least 4 of them concentrating around AI spending.The energy ceiling: Silicon Valley ignores the material world at its own peril. Between energy costs and supply chain chokepoints like the Strait of Hormuz, “scale is all you need” is about to hit a wall no amount of VC can overcome.Capital as labor (The Lie): The promise that AI replaces human workers is an economic fantasy used to justify mass layoffs and degrade remaining jobs.Enclosure of ML: For decades, machine learning was an open academic field. Big tech effectively enclosed this commons, rebranding a general-purpose architecture (the Transformer) as a proprietary product.The “Siri Plus” residual: When the bubble pops we’ll be left with scoped, boring automation that works for specific tasks but never achieves the “general intelligence” used to justify trillion-dollar valuations.Timestamps0:00 What is the Last Enclosure?2:38 AI bubble in context of Hormuz8:03 Bailouts?11:10 Bubble 1: Frontier AI companies15:33 Bubble 2: “Wrapper” AI companies17:13 Bubble 3: GPUs, infrastructure, and data centers19:13 Bubble 4: AI financing (Banks and private credit)22:33 What drives AI “value?”30:18 The bubble in the real economy33:37 Harms of the capital-as-labor myth38:56 Residuals from the bubble42:49 AI not causing layoffs44:10 Why did this go on for so long?49:08 AI is kayfabe and paper tigers52:34 Types of bubbles55:22 LLMs as the last enclosure57:17 Accountability1:02:56 RecommendationsDeeper learningMike on the AI bubble: misaligned.markets/what-to-expect-ai-bubbleZitron - OpenAI Losses Increased Nearly 8X in 2025, Spending Hit $34 Billion: wheresyoured.at/exclusive-openai-financialsHarvey AI wrapping frontier models like Claude: help.harvey.ai/articles/what-ai-models-does-harvey-useAmerica’s Data-Center Build-Out Is Falling Way Behind Schedule: wsj.com/tech/ai/americas-data-center-build-out-is-falling-way-behind-schedule-e408a9a8AI Boom Runs on Debt: aol.com/articles/ai-boom-runs-debt-global-144019676.htmlReach outSite: rss.com/podcasts/the-last-enclosureBluesky: bsky.app/profile/lastenclosure.bsky.social
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An expanded version of my What to expect when you're expecting a bubble where I map out linkages between the AI economy and broader economy.

Episode 5 - Did Bernie Sanders fail the Turing test?

Did Bernie Sanders fail the Turing test? | Podcast Episode on RSS.com
Getting a valuation from the US government via the equity tax allows OpenAI to tell investors “we are worth a trillion [dollars]”Mike and Nick examine the dangerous intersection of good intentions, astroturfing, and the kayfabe of the AI bubble. They compare Senator Sanders’ proposal for an AI wealth tax to the industry’s. Mike also details how industry operatives might be using the left’s talking points against them to shape the policy agenda.The valuation magic trick: Valuations are invocations: numbers that become real once believed. If a politician proposes taxing a company based on a specific valuation, they aren’t just taking money, they are validating a price tag.Bailouts in broad daylight: If the government holds equity in AI companies, the state becomes a stakeholder. A “tax” becomes a vested interest in an industry losing billions.‘Weaponized memetic schismogenesis:’ Through influence campaigns AI industry affiliates are nudging critics to frame the debate.Timestamps0:00 Last Enclosure purpose2:58 Sanders and Altman, aligned?5:22 Importance of a valuation7:54 Perverse incentives + bad tools15:10 Schismogenesis and Bernie29:29 Bernie and Yudkowsky36:22 The legitimacy of Effective Altruism37:37 Bernie vs Claude39:34 Hank Green, Bernie, and AI Safety46:50 Anthropic and EA53:49 Is this a bailout?1:00:55 Don’t fall for kayfabe1:03:35 AI economics redux (open source race)1:12:55 Local models kill AGI1:16:22 ConclusionDeeper learningSanders’ proposal: forbes.com/sites/jamesbroughel/2026/06/22/bernie-sanders-wants-a-us-sovereign-wealth-fund-for-aiAltman’s proposal: techcrunch.com/2026/07/02/openai-proposed-donating-5-of-its-equity-to-a-us-sovereign-wealth-fundAnthropic’s proposal: apnews.com/article/anthropic-dario-amodei-ai-afeb5279eef406980dffa46ff91495e0 Amodei’s policy vision: darioamodei.com/post/policy-on-the-ai-exponentialMike’s rant on “left is missing out” bsky.app/profile/misaligned.markets/post/3mf76r4ewd22xYudkowsky: “Shut it all down” (2023 Time article): time.com/6266923/ai-eliezer-yudkowsky-open-letter-not-enoughAI influence in Sci YouTube: youtube.com/watch?v=0Plo-zT8W9wSci-educator on Hank Green: youtube.com/watch?v=9dXqf5CRH5UReach outSite: rss.com/podcasts/the-last-enclosureBluesky: bsky.app/profile/lastenclosure.bsky.social
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Where did Sen. Bernie Sanders' proposal for an AI wealth tax come from, and why does it overlap with Sam Altman's sovereign wealth fund proposal? As a chronically online person, I note how the Effective Altruist community has been courting Bernie this year—culmiating in the infamous “Bernie vs. Claude” video.

Episode 6 - Meet the AI Resistance

Meet the AI Resistance | Podcast Episode on RSS.com
“AI is like the guy that showed up and started pissing in everyone’s beer at the party.“Mike categorizes various groups resisting or critically engaging with generative AI, from total abstainers to ‘scopers’ who seek responsible use cases.Global harms: While AI has become a hot button issue in the US, frustration in the states is a small part of a bigger movement.Diverse coalitions: Like the buckets of AI overlords from episode three, the resistance consists of many desperate groups banding together.Scoping AI: Mike briefly speaks to use cases that are narrow in scope and lower in their externalities to users and the public.Deeper learningThe AI Resist List: airesistlist.orgMike’s thread on GenAI harms: bsky.app/profile/misaligned.markets/post/3migfnyvuak26Ghost in the Machine Documentary: notaidoc.com Ethical European model Apertus: infoworld.com/article/4051779/swiss-launch-open-source-ai-model-as-ethical-alternative-to-big-us-llms.htmlEVO RNA GPT: hazyresearch.stanford.edu/blog/2024-03-14-evoInside Memphis’ fight against xAI: selc.org/news/inside-memphis-fight-against-xai/ Data centers in drought-region: newsweek.com/map-data-centers-built-drought-hit-areas-11997520 Jeff Geering AI and open source: jeffgeerling.com/blog/2026/ai-is-destroying-open-source XKCD infrastructure meme: explainxkcd.com/wiki/index.php/2347:_Dependency Distributed AI Research Institute: dair-institute.org Dr. Fatima how to (Anti) AI better: youtube.com/watch?v=y85nqc2zm7M Innocence Project LLM data science: hrdag.org/tech-notes/large-language-models-IPNO.htmlJoy Buolamwini and the Algorithmic Justice League: https://www.ajl.org/aboutReach outSite: rss.com/podcasts/the-last-enclosureBluesky: bsky.app/profile/lastenclosure.bsky.social
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In this episode, I detail the various groups resisting AI and their motivations, serving as a counterpoint to the booster categories discussed in episode 3.

Minor changes to the site

Site navigation has changed to reflect the podcasts. In the header you can go to shows to access both podcast pages. In the footer, I've linked my YouTube channel, which is currently sparse, but I intend to upload videos in the current month. Additionally, I've edited the glossary to include articles where specific terms are referenced. I'm also working on a rewrite of the Start Here page.

Open invitation for feedback!

Misaligned Markets is growing in subscribers! I’m interested in growing a community, so I’d love to hear from you to learn why you subscribed or if there are specific topics you’re hoping I can cover through my writing and podcast episodes. If you’re subscribed you can leave a comment on this post after logging in. You can also contact me any time using the email provided at the bottom of the about page.

Thanks for reading!