"Econ 102" with Noah Smith and Erik Torenberg

AI Business Models, Rare Earths, and China's Economic Challenges

91 snips

Nov 11, 2025

Dive into the transformative impact of AI on productivity and its potential pitfalls, including the risk of diminished work quality. Discover how different AI applications in healthcare and coding are emerging as front runners. The discussion also tackles the U.S.-China dynamics around rare earths, highlighting strategic vulnerabilities and domestic supply chain challenges. Finally, explore China's economic hurdles, from demographic shifts to real estate woes, and consider prescriptions for a more efficient future.

Ask episode

AI Snips

Chapters

Transcript

Episode notes

INSIGHT

Multiple Pathways For AI Productivity

AI can boost productivity by replacing tasks, enhancing human work, creating new tasks, and improving capital efficiency.
Early signals show labor productivity uptick since ChatGPT, but adoption and reorganization take years like electricity's rollout.

INSIGHT

Early AI Often Produces 'Slop'

Many AI deployments show no immediate productivity gains and sometimes produce “slop” that managers must recheck.
Meaningful gains require reorganizing processes around AI’s strengths, which takes time and ingenuity.

ADVICE

Redesign Workflows Around AI

Don’t just swap humans for AI; redesign workflows to exploit AI’s parallelization and strengths.
Expect organizational experimentation and invest in learning how to integrate AI effectively.

Get the Snipd Podcast app to discover more snips from this episode

Get the app

In this episode of Econ 102, Noah Smith and Erik Torenberg explore AI's effects on productivity, how AI business models will shake out, the US and China's rare earth minerals industries, and China's economic challenges, including demographics, real estate, and involution.

Sponsors:

Notion

AI meeting notes lives right in Notion, everything you capture, whether that's meetings, podcasts, interviews, conversations, live exactly where you plan, build, and get things done. Here's an exclusive offer for our listeners. Try one month for free at https://www.notion.com/lp/econ102.

NetSuite

More than 42,000 businesses have already upgraded to NetSuite by Oracle, the #1 cloud financial system bringing accounting, financial management, inventory, HR, into ONE proven platform. Download the CFO's Guide to AI and Machine learning: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.netsuite.com/102

Found

Found provides small business owners tools to track expenses, calculate taxes, manage cashflow, send invoices and more. Open a Found account for free at https://found.com/econ102

Shownotes brought to you by Notion AI Meeting Notes - try one month for free at https://www.notion.com/lp/econ102

AI can affect productivity in multiple ways: replacing humans, enhancing human productivity, creating new tasks, and increasing capital productivity
AI may follow other essential industries with low profit margins despite creating enormous value:
- Like farming, solar power, and airlines
Code-related AI applications are seeing particularly strong adoption
Vertical AI applications in specific industries (healthcare, legal, real estate) are gaining traction
China controls the majority of rare earth mining and refining
The US has sufficient rare earth deposits but faces two challenges:
- Regulatory barriers to mining
- Lack of solvent extraction technology and know-how
China's fertility rate is lower than Japan and Europe
However, a "baby bulge" (ages 7-22) will support the workforce short-term

Timestamps:
00:00 — Intro
00:52 — AI’s impact on productivity
02:27 — Debating whether AI will increase productivity
03:11 — Historical analogy: Electricity’s impact on productivity, lessons for AI
07:55 — Sponsors: Notion | Netsuite
09:57 — Application layer companies, AI in coding, vertical AI applications
12:49 — AI bubble vs. CapEx boom/bust, historical parallels (railroads, telecoms)
16:54 — Brand loyalty, price wars, and profitability in AI models
22:26 — US-China trade, rare earths, and supply chain challenges
32:20 — Sponsor: Found
33:33 — China’s demographic and economic challenges, over-competition, and deflation
54:06 — Recommendations for China’s economic policy, rationalizing the economy
-

FOLLOW on X:

https://x.com/eriktorenberg

https://x.com/Noahpinion

Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details, please see https://a16z.com/disclosures.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.