AI and Debt Speculation: A Trip Down Memory Lane

I want to append this endorsement of AI from Elder Gerrit W. Gong with a very important lesson I learned from the life of Elder M. Russell Ballard. And I'm going to let Elder Ballard teach it in his own words:

Years ago when I was in business, I learned a very expensive lesson because I did not listen carefully to the counsel of my father, nor did I heed the promptings of the Spirit giving me guidance from my Heavenly Father. My father and I were in the automobile business, and the Ford Motor Company was looking for dealers to sell their new line of cars. Ford executives invited my father and me to a preview showing of what they thought would be a spectacularly successful product. When we saw the cars, my father, who had over 35 years’ experience in the business, cautioned me about becoming a dealer. However, the Ford sales personnel were very persuasive, and I chose to become Salt Lake City’s first—and actually last—Edsel dealer. And if you don’t know what an Edsel is, ask your grandpa. He will tell you that the Edsel was a spectacular failure.

It was a spectacular failure, and the Ford personnel who convinced the younger Ballard to invest knew it would be a failure before the cars ever came to Salt Lake City.

Ford knew the cars were destined to fail. From the branding to the assembly line to the show floor, they were all fulfillments on the core failure that market research had told the Ford Motor Company would become the reality before the car was ever built: it didn't need to exist. People didn't want the Edsel. They wanted smaller, cheaper cars. The company spent $300 million to develop and produce something that no one wanted to buy, the assembly line workers didn't want to build, and their own leadership was divided about producing. The recession of 1957 exacerbated the problem by forcing consumers to be less willing to spend unnecessary money, making it even harder for Edsels to establish their own market share. Quality control issues that began immediately from assembly line workers sabotaging the cars they didn't want to build sealed the Edsel's fate. They were completely abandoned by the early 1960s, making all the existing inventory completely worthless. The Ford Edsel is now the textbook example of how corporate nonsense produces failed investments.

Why would I bring this up in relation to AI?

You can be a member of the Church and make this kind of mistake. Your association with the Church and with the Lord will not prevent you from putting your faith and resources into something that will fail. And we have a demonstrated history of apostles being subject to these kinds of failed in our own history. No one likes to talk about it, but a huge reason for the apostasy in the early Church on that level was because of the colossal flop that was the Kirtland Safety Society. People invested everything they had into a bank that ended up being completely insolvent due to tragic amounts of mismanagement.

Corporate investment in AI is already beginning to dry up because there is a critical flaw in the current implementation. The technology consumes too many resources to be cost effective, doesn't produce results that justify the expense, and is having catastrophic consequences on the environment and the people who have to live near the data centers to facilitate it. The public will for the technology not to exist is increasing faster than the technology can actually make a profit. Humans don't want their labor automated, and the automated labor can't compete with human labor anyway in terms of results. It's cheaper and better for humans to continue doing the work that sustains our lives.

But let's say you don't believe that. Let's say you truly believe that AI is the technology of the future. What risk do you still need to be aware of?

Treating debt like it's Monopoly money.

That's what led to the stock market crash in 1929 and the financial collapse of 2008.

Keep in mind: that talk I mentioned above from Elder Ballard? He gave that talk in 2009. It was in response to people who were already in dire straits trying to find a quick fix to the housing bubble bursting, the "easy" way out. But there was no easy way out of the financial collapse that was 2008.

I joined the Church in 2006. I was there for the warnings from Church leaders about debt in general conference that I was too young and poor to understand. I barely understood what a mortgage was, let alone why anyone would take on the risk of getting a second one for things they didn't need. I was there to hear people referencing the warning from President Gordon B. Hinckley and others to get out of debt. There was an emphasis on food storage, thrift, having savings, and living within your means. These were formative and foundational to me as a member of the Church and as a young adult.

It makes me sad that young adults today aren't getting that same experience. I fear none of you have ever been cautioned about financial risk and overindulgence. No one in your life has explained what to do when the irresponsibility of those at the top causes financial destruction that will make your lives hard for the next decade as we go through the long and stupid process of economic recovery. You didn't live through government bailouts for banks and airlines in 2008 who were "too big to fail," the anger we all felt as our tax money was going to executives who CAUSED all of this harm while we all could barely afford to put food on the table, even when we didn't have the kinds of debt that caused this downfall. Everything became so expensive that survival was incredibly difficult... much like it is for you today.

I fear that the Church bankrolls so many of their operations through stocks and investments that the will to be honest about these kinds of realities have disappeared. They won't give you the counsel you actually need to survive financially in the world you live in, like they did for my generation, because it would negatively affect their portfolios too much. The ones who lived through the Great Depression have largely died out. President Oaks is the only one left who can claim that distinction and he has other priorities that don't include this.

All this to say: be careful about treating statements like these from general authorities as any kind of divine endorsement. I just passed my 20 year mark of my membership in the Church and I'll be honest with you all. You're not getting the warnings I expected Church leadership to be giving you for the financial realities we're all living under. My lived experience is telling me I've seen these circumstances before. And it would be wise for you to review the messages from the April 2009 general conference.

Our economy is being governed by industry leaders who don't care about the human costs of their financial decisions. You can't put ethical guardrails on products and services created by people who advocate for deregulation so they can be as unethical as possible. The best thing you can do is get out of debt, save money, and cut costs wherever you can.

We're at the phase of this process where governments and investors are dumping as much money into these debt-ridden industries as they possibly can to keep them from failing. The deregulation is advancing. The crash is on the horizon, regardless of what anyone says. Speculation and debt cannot create endless amounts of value. And since the Church leaders who are supposed to be warning you about this now aren't doing it, let's learn from the leadership who did. 

Follow their advice and I testify, from my own lived experience and the blessings of the Lord I've seen in my life, you will be protected from the financial storms that are coming. You will have the knowledge and experience you need to survive the economic collapse that follows this kind of greed and overindulgence in society.