No. of Recommendations: 9
You are "mixing metaphors" by conflating two (or maybe ten) issues.
First taxes. Back in the mists of time, people decided that by pooling resources they could address mutual problems much more effectively than each could do on their own. Sometimes these payments are called taxes, sometimes they are called insurance, sometimes they have fancier names. Simplistically, one of the primary functions of government is to coordinate these collections of funds and their use. We have multiple layers of government, each of which has been "assigned" responsibility to provide selected services - federal, state, local, HOAs, etc.
If one of those decides to cut services, the "people" must decide whether to change the politicians running that branch, assign the service to another layer or do without it (with that cut presumably lowering their taxes). Each layer would fight to have another layer be responsible for collecting the required funds as no politician, regardless of layer, wants to be the bearer of bad news that the taxes they are responsible for have to be raise.
Currently, the federal government is in the process of cutting income taxes as well as services and replacing the revenue with tariffs (which are, effectively, a sales tax on the consumer). If a service which people find is important, but has been cut, their options are still the same outlined above (and watch the game of "musical chairs" as local politicians try to doge raising taxes to replace the services cut by the federal government.
Crypto, in my opinion a branch of alchemy, seems to be creating something that people treat as money out of thin air (actually out of substantial use of electricity to power computers). Whether this is another blip in the pan as a short-time fad or not is dependent on whether governments support the idea. While politicians can be bought, it is important to recognize that this is not only a tool which is very beneficial to money launderers, but also can be an unexpected/unregulated source of liquidity which can cause significant inflation of asset prices beyond the control of government regulators (such as the Fed). The cryptocurrency is actually worth anything, depends on thee semi-religious belief that it is.
Now, to the reason for my post:
Whether you believed in religion or not, the Spanish Inquisition, the Salem witch trials, even the cynical usurping of the assets of the Knights Templar by the king of France (leaving us with Friday, the 13th as an unlucky day), were real and had temporal effects which lasted over a considerable period of time. The global use of electricity, whether caused by AI, cryptocurrency generation or use of EV's i rising exponentially and electrical grids which were created a century ago simply are not able to cope. While the users will be paying their concurrent bills, the system has to be beefed up and utilities will be able to recoup these capital expenses on the backs of their current customers.
So, while AI may be sexy, picking the long-term winners is challenging. On the other hand, it is pretty obvious that electrical utilities will be receiving more revenue (once they have finished pinging their customers to pay for their new build-outs) as well as electrical equipment manufacturers will benefit. While regulators can force utilities rates lower to prevent "excessive profits", over the long run, they should benefit. On the other hand, equipment expenses will be front-loaded and not held by regulation, but rather by competition. In addition, for some types of equipment, such as generators, there is a continuing stream of service revenue.
Another field which is bound to do well over the next five years (and longer) is the world's defense manufacturers. That's no secret and the cow has likely left the barn, but still worth thinking about (especially to track down subcontractors whose products are unique - Amphenol comes to mind, but there are dozens of these).
Now to AI.
This IS the real deal. So was the madness of the Dot.Com bubble. Those who chose Cisco, Amazon, E-Bay, Facebook and a handful of others made a fortune. Those who chose the vast majority of choices lost a fortune. It's pretty clear that this is going to follow the pharma model, with the "haves" (Apple, Amazon, Microsoft, X, Meta, for example) paying huge bucks to buy small, but unprofitable companies which have functionality they find useful. And a small handful of up-and-comers will fill new niches and become part of that pantheon. You probably have better odds in Las Vega than picking the winners at a good price.
That said, the big guys are spending billions of bucks to create tools that somehow they have to monetize. When you ask the Amazon AI for advice, expect it to give you a path which makes Amazon the most money, rather than pointing to the hidden bargain which would benefit you. Assume that Google Flights will somehow be compensated by those that are at the top of the list. If you want a "digital assistant" which prioritizes YOUR priorities, you may have to wait until one is vetted and then pay for it. (It still might not be perfect as its answers may, by definition, be derivatives of information garnered by utilizing AIs controlled by other firms.
The major challenge for society (or at least one of them) is that AIs can literally take the place of humans. I have, on occasion, while hearing repeatedly how import my call is, wished that an AI was handling the phones. In the foreseeable future, many professionals, from radiologists to lawyers to CPAs to engineers will find themselves on the bench. This will cause major upheavals because they would transition from being wage earners/tax payers to being on the dole. We, as a society would have to eliminate the stigma of being "unemployed" and feature "excess leisure time". The challenge is how to replace the lost tax revenue. At some point, someone will raise the idea of taxing major corporations on the basis of how many CPU chips they use or bandwidth or some other metric. But, by then, those firms will be so powerful as well as globally distributed to make that task incredibly difficult (just look at how rough it is to handle Tick Tock and multiply that by a thousand). So, yes, there is money to bee made by partial ownership (stocks) of AI firms, but ultimately "Human V 2.0" might make us wish for simpler times.
Jeff
