On October 7th I reviewed the first 30 minutes of the Bill Gates interview on The Ezra Klein Show dated September 30th. Two of my observations about Gates were 1) “expressing his fear that human beings with free will in the private sector are more dangerous than their counterparts in government” and 2) “the natural incentives of voluntary trade are insufficient and inferior to the forced incentives of compliance and prison.”
The rationalization for his opinions was, “this is the most dangerous thing that humans have ever gone near.” It is fair to say that I am not qualified to assess the opportunities or dangers of large language models with access to a global database of human knowledge and the perfect memory of hyper-scale data centers, but I do believe that Gates’ economic and political reasoning is terribly flawed.
Evidence for his economic thinking began with:
“Medical claims, which is a very AI capable task, then Pettigrew, who has very few human employees will come in and change the pricing model for that industry.” (29:45)
Pettigrew is a medical billing services company in South Carolina that manages accounts receivable and customer service centers for hospitals, insurance companies and physician practices. Gates’ complaint is that an efficiently managed company has the ability to lower costs and prices will force people out of jobs. Heavens!
Demand Elasticity
Bear in mind, this is what myopic bureaucrats, countless pundits, economic development agencies and nearly every President and Congressman do - starting with their own jobs. In effect, Gates and company are pandering to the “protect American jobs” crowd - without regard to the nature of employment, innovation, competition, and efficiency that creates all of the wealth that creates all jobs in the first place.
That is a big deal, but nearly no one you talk to understands this basic economic principle: money is production, money follows production - and money goes nowhere else.
At the same time, it is easy to get lost in the economic jargon that pundits and politicians like to use to sound smart. And Klein’s interview with Gates is a good example:
“The two counter arguments I’ve heard people make on this, one is that you have a Jevon’s Paradox effect where the cheaper and more widespread availability of this kind of intelligence leads to a massive increase in the demand.” (29:55)
The old Jevons Paradox, eh?
William Stanley Jevons was a 19th century English economist and the concept states that when a valuable resource is used more efficiently, the overall demand for that resource will increase. The paradox is that if you need less of it, such as the gasoline your car demands with a more efficient engine, you will use less gasoline. But in the aggregate of a nation’s economy, the demand for and the consumption of gasoline will increase because efficiency reduces costs and prices if prices are elastic.
Gates picks up on this concept of economic price elasticity, but he does it as the demand corollary:
“Jevons is just referring to the fact that parts of the economy are subject to demand elasticity.” (31:00).
If these terms are familiar to you, it’s natural to think “what’s the big deal?” But here, Gates reveals himself. His big complaint is that there are sectors of the economy that have inelastic demand. His premise is that repetitive industrial labor is good for a society that is advancing beyond the industrial revolution of the 19th and 20th centuries.
Besides medical billing, another example Gates used was tire manufacturers. The demand for automobile tires will not increase if tire durability is increased by AI assisted production methods. Another was that retail orders on Amazon will not increase if Amazon distribution centers become more efficient with robotics. That is demand inelasticity and those companies and their investors must be made to pay, by golly.
Or in Gates words,
“As soon as you complete the entire task, it doesn’t matter that there is demand elasticity. That goes into the token budget. It doesn’t go into the human salary budget . . . Once you cross the reliability threshold, both white collar and humanized robots, you’ve destroyed jobs and you leave no high ground.” (31:00).
The implication is that government enforcers own the high ground whose foundation is the frozen intelligence of machinery.
No doubt, AI agents seem like uncharted territory, but so did the spinning jenny when the world was lit only by fire. In fact, there were countless new career opportunities supporting the jenny: factory operatives, millwrights, machine builders, bleachers and dyers, cotton merchants, dock workers, shippers, and clerks. And imagine the countless new careers spawned by the invention of the steam engine - and then industrial robotics.
The exact numbers of new jobs is impossible to define - as the division of labor becomes more specialized, the complexity of supply networks grows exponentially.
The important economics lesson lost on Gates and nearly everyone you talk to, including every economist who shills for “public policy” remedies, is that efficiency lowers prices that frees money to spend on other goods and services or gets saved and invested for the production of future goods and services that will be the catalyst for these new jobs.
Its Different This Time
If Jevons has his own paradox, I guess Bill Gates wants one of his own. The man at the forefront of guiding electrons across silicon wafers does not believe you are able to guide your destiny across newly manufactured discovery time.
“Innovation in the past . . . you’ll employ a lot of people there. You don’t have that in the broad economy. People who say there will be net additional jobs, I don’t understand what they’re thinking. They must not understand the pace of improvement we’re on.” (32:40)
In other words, it’s different this time. Machines doing heavy and repetitive labor was good when there was demand elasticity, but with AI? To Gates? Not so much. Most people are unable to realize new opportunities and maximize their creative talents. It seems too few of us have the will to develop our productive and creative talents, so the State must protect us from those who do.
Here, Klein feeds him more rope with the second counterargument referenced above:
“The other, which is an argument from Alex Imas . . . that you will have this sort of an explosion in the relational sector, that one thing that happens that when people get wealthier . . . is that they all of a sudden get a lot more human help, right?” (33:10).
Klein is making a critically important point: what happens “when people get wealthier.” They buy more stuff, or they save and invest more, or they buy more stuff and invest more. That accelerates wealth creation and specialization - and if Gates doesn’t understand what they’re thinking, that’s his business. I am going to learn what Alex Imas is thinking - and let you know at a later date what I discover.
In the meantime, the consequence of Klein’s comment was put into concrete terms by finance journalist John Tamny in his favorite book of his own authorship titled, The End of Work - Why Your Passion Can Become Your Job:
Without technological progress, your odds of finding work that matches your unique skills and intelligence would be greatly reduced . . . It’s clear that workers go to where inequality is steepest because that’s where the opportunity is.
This is what Gates is deciding for you: the likelihood of you having a passion and turning it into your livelihood:
“Believe me, the labor intensity of wealth is down super dramatically . . . Name a blue collar profession that is subject to Jevon’s Paradox, or do you not care about blue collar?” (33:40)
Does Gates really believe that everyone employed in a “blue collar profession” is maximizing their unique skills and intelligence?
The Ultimate Resource
No, but in this exchange with Klein about 20th century manufacturing jobs becoming automated, moving to less developed societies that are better suited, and America becoming a more of a service economy, Gates replied:
“Yeah, human cognition became the scarce element. It’s always about scarce elements. Once you replace human cognition as a scarce element, in fact, you blow it away in terms of working 24 hours a day, reading more, knowing every language, there is no scarcity that you’re moving up to.” (34:35)
It seems Gates is fearful of the new realms of specialization that he did not invent himself. In my October 5, 2025 review of Tamny’s book, I summarize a few of his observations this way:
“Tamny shines his spotlight on fame and fortune from knowledge in highly specialized professions that were unimaginable a century ago and names a few: athletics coach, sports journalist, country musician, television producer, celebrity chef, stand-up comic, racquet stringer, golf caddy and professional gamer.” In other words, it is Gates who does not seem to “care about the blue collar.”
Of course, the above is a tiny, representative sample of the specialties for which people have a passion that became career choices. And I am no more qualified than anyone else to define the next decade of new specialties that will become reality. But I can say with certainty there will be countless new opportunities because of that which Gates complained about: knowledge retrieved in any language 24 hours per day. It’s a beautiful thing - especially if you have rational principles.
Apparently, Gates believes that Amazon warehouse jobs that didn’t exist twenty years ago need to be frozen in place for the next twenty years because of demand inelasticity. Selfish consumers are the cause, the money they spend and invest on other goods and services is not relevant, and the State must do what they like to do most - manipulate aggregate demand.
In the meantime, you can refer to Chapter Eight of The Moneyball Method titled Be Your Own Hero, study the Site Map on page 182 - and ask yourself the same questions I asked the audience on Sunday October 18, 2026 at the Irreplaceable Spark Conference in Austin, Texas:
“What do you like to do? How does that make you feel? Why is it important? What else would you like to do? When would you like to have that? Or do that? How much do you think it will cost?
In other words, it IS different this time, but only if you apply the entrepreneurial mindset to your financial life of saving, spending and investing: create the vision, take calculated risks, learn from experience, and measure success. Or as I challenged the audience in the conclusion to my talk:
“Think for yourself along rational lines. Declare independence from the common wisdom. Take ownership of your life through the lens of money.”
Look out for Part III of my review of the Klein-Gates interview in the next several days.
Good piece, Mark. In my opinion, Bill Gates showed his true colors during the pandemic. He’s the worst kind of altruist, the worst kind of sycophant in his relationship to government. Good job calling him out!