AI and States, Taxing Labor vs. Capital, and a Looming Financial Disaster?

Welcome to the official launch of the Draft/Deliberative podcast! We have a name (ok, the same one — but we’re sticking with it), three wide-ranging topics, and our first guest(!) coming later this week to discuss what’s happening in the private credit market and the implications. AI and the Labor Market: What States Can Do NowLast week brought another breaking development about the rapid progress of AI. Anthropic announced that its Mythos model is so powerful — and such a potential security threat — that the company is not releasing it to the public. Experts were quick to point out that it’s hard to parse the extent to which what we’re hearing about Mythos is real vs. a publicity stunt. But the news has heightened concerns about how quickly AI could transform the labor market. OpenAI entered the debate with its take on industrial policy in the AI age in a report that we found both interesting and frustrating. We wanted to spend some time breaking through the noise and focusing on what states can actually do right now to prepare for AI’s potential impacts. We may not be prepared to respond to a major labor market disruption driven by AI or otherwise, but states can take action by focusing on what we already know are best practices for strong workforce policies. We talked through where to focus: your education system (that’s where the money and leverage really are), labor market data quality, and work-based learning models like registered apprenticeships. We also got into why adaptability may be the most important skill of the moment — and why, counterintuitively, the liberal arts might be having a moment.Why We Tax Work More Than WealthIt’s tax season, which means it’s a good time to revisit a question that’s been on our minds: why does the U.S. tax income from work at a higher rate than income from investments? We take a look at the history, going back 100 years to Andrew Mellon — U.S. Treasury Secretary in the 1920s and one of the wealthiest men in America. Mellon is a hero of tax-cutting conservatives and libertarian, but his views were more complicated than often presented. He even argued in a 1924 book that wages should be taxed more lightly than investment income. But he oversaw the development of a system that does the opposite — particularly at the highest levels of income. We’re still living with those policy choices today. We talked through what that means — particularly as more workers shift to 1099 arrangements and building wealth through a paycheck becomes harder.Coming Up: Turmoil in the Private Credit MarketsWe’re bringing in our first guest for this one — Michael Hardaway, former aide to President Obama and House Democratic Leader Hakeem Jeffries. The topic: private credit markets and the “shadow banking” sector. While we may not be looking at a 2008-level crisis, the issue has lots of implications for retirement accounts and everyday investors. Later this week, we’ll get into what’s actually happening — and what can be done about it.Show Link: SpotifyMore soon! Joanna & CyrusAnd thanks to Olivia Bortner for video editing support This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joannamikulski.substack.com