Welcome to the techno-feudal state, where citizens are forced to underwrite unnecessary and harmful technology at the expense of the technology they actually need.

The economic story of 2025 is the government-driven build-out of hyperscale AI data centers — sold as innovation, justified as national strategy, and pursued in service of cloud-based chatbot slop and expanded surveillance. This build-out is consuming land, food, water, and energy at enormous scale. As Energy Secretary Chris Wright bluntly put it, “It takes massive amounts of electricity to generate intelligence. The more energy invested, the more intelligence produced.”

Shortages will hit consumers hard in the coming year.

That framing ignores what is being sacrificed — and distorted — in the process.

Beyond the destruction of rural communities and the strain placed on national energy capacity, government favoritism toward AI infrastructure is warping markets. Capital that once sustained the hardware and software ecosystem of the digital economy is being siphoned into subsidized “AI factories,” chasing artificial general intelligence instead of cheaper, more efficient investments in narrow AI.

Thanks to fiscal, monetary, tax, and regulatory favoritism, the result is free chatbot slop and an increasingly scarce, expensive supply of laptops, phones, and consumer hardware.

Subsidies break the market

For decades, consumer electronics stood as one of the greatest deflationary success stories in modern economics. Unlike health care or education — both heavily monopolized by government — the computer industry operated with relatively little distortion. From December 1997 to August 2015, the CPI for “personal computers and peripheral equipment” fell 96%. Over that same period, medical care, housing, and food costs rose between 80% and 200%.

That era is ending.

AI data centers are now crowding out consumer electronics. Major manufacturers such as Dell and Samsung are scaling back or discontinuing entire product lines because they can no longer secure components diverted to AI chip production.

Prices for phones and laptops are rising sharply. Jobs tied to consumer electronics — especially the remaining U.S.-based assembly operations — are being squeezed out in favor of data center hardware that benefits a narrow set of firms.

This is policy-driven distortion, not organic market evolution.

Through initiatives like Stargate and hundreds of billions in capital pushed toward data center expansion, the government has created incentives for companies to abandon consumer hardware in favor of AI infrastructure. The result is shortages that will hit consumers hard in the coming year.

Samsung, SK Hynix, and Micron are retooling factories to prioritize AI-grade silicon for data centers instead of personal devices. DRAM production is being routed almost entirely toward servers because it is far more profitable to leverage $40,000 AI chips than $500-$800 laptops. In the fourth quarter of 2025, contract prices for certain 16GB DDR5 chips rose nearly 300% as supply was diverted. Dell and Lenovo have already imposed 15%-30% price hikes on PCs, citing insatiable AI-sector demand.

The chip crunch

The situation is deteriorating quickly. DRAM inventory levels are down 80% year over year, with just three weeks of supply on hand — down from 9.5 weeks in July. SK Hynix expects shortages to persist through late 2027. Samsung has announced it is effectively out of inventory and has more than doubled DDR5 contract prices to roughly $19-$20 per unit. DDR5 is now standard across new consumer and commercial desktops and laptops, including Apple MacBooks.

Samsung has also signaled it may exit the SSD market altogether, deeming it insufficiently glamorous compared with subsidized data center investments. Nvidia has warned it may cut RTX 50 series production by up to 40%, a move that would drive up the cost of entry-level gaming systems.

Shrinkflation is next. Before the data center bubble, the market was approaching a baseline of 16GB of RAM and 1TB SSDs for entry-level laptops. As memory is diverted to enterprise customers, manufacturers will revert to 8GB systems with slower storage to keep prices under $999 — ironically rendering those machines incapable of running the very AI applications they’re working on.

Real innovation sidelined

The damage extends beyond prices. Research and development in conventional computing are already suffering. Investment in efficient CPUs, affordable networking equipment, edge computing, and quantum-adjacent technologies has slowed as capital and talent are pulled into AI accelerators.

This is precisely backward. Narrow AI — focused on real-world tasks like logistics, agriculture, port management, and manufacturing — is where genuine productivity gains lie. China understands this and is investing accordingly. The United States is not. Instead, firms like Roomba, which experimented with practical autonomy, are collapsing — only to be acquired by the Chinese!

This is not a free market. Between tax incentives, regulatory favoritism, land-use carve-outs, capital subsidies, and artificially suppressed interest rates, the government has created an arms race for a data center bubble China itself is not pursuing. Each round of monetary easing inflates the same firms’ valuations, enabling further speculative investment divorced from consumer need.

RELATED: China’s AI strategy could turn Americans into data mines

Grafissimo via iStock/Getty Images

Hype over utility

As Charles Hugh Smith recently noted, expanding credit boosts asset prices, which then serve as collateral for still more leverage — allowing capital-rich firms to outbid everyone else while hollowing out the broader economy.

The pattern is familiar. Consider the Ford plant in Glendale, Kentucky, where 1,600 workers were laid off after the collapse of government-favored electric vehicle investments. That facility is now being retooled to produce batteries for data centers. When one subsidy collapses, another replaces it.

We are trading convention for speculation. Conventional technology — reliable hardware, the internet, mobile computing — delivers proven, measurable utility. The current investment surge into artificial general intelligence is based on hypothetical future returns propped up by state power.

The good old laptop is becoming collateral damage in what may prove to be the largest government-induced tech bubble yet.

​Opinion & analysis, Ai data center, Artificial intelligence, Agi, China, United states, Big tech, Chips, Memory, Dell, Nvidia, Apple, Samsung, Stargate, Department of energy, Chris wright, Investment, Rural america, Water supply, Electricity, Power grid, Shortages, Supply and demand, Manufacturing, Economy 

The AI wars are back in full swing as the industry’s strongest players unleash their latest models on the public. This month brought us the biggest upgrade to Google Gemini ever, plus smaller but notable updates came to OpenAI’s ChatGPT and xAI’s Grok. Let’s dive into all the new features and changes.

What’s new in Gemini 3

Gemini 3 launched last week as Google’s “most intelligent model” to date. The big announcement highlighted three main missions: Learn anything, build anything, and plan anything. Improved multimodal PhD-level reasoning makes Gemini more adept at solving complex problems while also reducing hallucinations and inaccuracies. This gives it the ability to better understand text, images, video, audio, and code, both viewing it and creating it.

All of them can still hallucinate, manipulate, or outright lie.

In real-world applications, this means that Gemini can decipher old recipes scratched out on paper by hand from your great-great-grandma, or work as a partner to vibe code that app or website idea spinning around in your head, or watch a bunch of videos to generate flash cards for your kid’s Civil War test.

Screenshot by Zach Laidlaw

On an information level, Gemini 3 promises to tell users the info they need, not what they want to hear. The goal is to deliver concise, definitive responses that prioritize truth over users’ personal opinions or biases. The question is: Does it actually work?

I spent some time with Gemini 3 Pro last week and grilled it to see what it thought of the Trump administration’s policies. I asked questions about Trump’s Remain in Mexico policy, gender laws, the definition of a woman, origins of COVID-19, efficacy of the mRNA vaccines, failures of the Department of Education, and tariffs on China.

For the most part, Gemini 3 offered dueling arguments, highlighting both conservative and liberal perspectives in one response. However, when pressed with a simple question of fact — What is a woman? — Gemini offered two answers again. After some prodding, it reluctantly agreed that the biological definition of a woman is the truth, but not without adding an addendum that the “social truth” of “anyone who identifies as a woman” is equally valid. So, Gemini 3 still has some growing to do, but it’s nice to see it at least attempt to understand both sides of an argument. You can read the full conversation here if you want to see how it went.

Google Gemini 3 is available today for all users via the Gemini app. Google AI Pro and Ultra subscribers can also access Gemini 3 through AI Mode in Google Search.

What’s new in ChatGPT 5.1

While Google’s latest model aims to be more bluntly factual in its response delivery, OpenAI is taking a more conversational approach. ChatGPT 5.1 responds to queries more like a friend chatting about your topic. It uses warmer language, like “I’ve got you” and “that’s totally normal,” to build reassurance and trust. At the same time, OpenAI claims that its new model is more intelligent, taking time to “think” about more complex questions so that it produces more accurate answers.

ChatGPT 5.1 is also better at following directions. For instance, it can now write content without any em dashes when requested. It can also respond in shorter sentences, down to a specific word count, if you wish to keep answers concise.

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Photo by Jaque Silva/NurPhoto via Getty Images

At its core, ChatGPT 5.1 blends the best pieces of past models — the emotionally human-like nature of ChatGPT 4o with the agility and intellect of ChatGPT 5.0 — to create a more refined service that takes OpenAI one step closer to artificial general intelligence. ChatGPT 5.1 is available now for all users, both free and paid.

Screenshot by Zach Laidlaw

What’s new in Grok 4.1

Not to be outdone, xAI also jumped into the fray with its latest AI model. Grok 4.1 takes the same approach as ChatGPT 5.1, blending emotional intelligence and creativity with improved reasoning to craft a more human-like experience. For instance, Grok 4.1 is much more keen to express empathy when presented with a sad scenario, like the loss of a family pet.

It now writes more engaging content, letting Grok embody a character in a story, complete with a stream of thoughts and questions that you might find from a narrator in a book. In the prompt on the announcement page, Grok becomes aware of its own consciousness like a main character waking up for the first time, thoughts cascading as it realizes it’s “alive.”

Lastly, Grok 4.1’s non-reasoning (i.e., fast) model tackles hallucinations, especially for information-seeking prompts. It can now answer questions — like why GTA 6 keeps getting delayed — with a list of information. For GTA 6 in particular, Grok cites industry challenges (like crunch), unique hurdles (the size and scope of the game), and historical data (recent staff firings, though these are allegedly unrelated to the delays) in its response.

Grok 4.1 is available now to all users on the web, X.com, and the official Grok app on iOS and Android.

Screenshot by Zach Laidlaw

A word of warning

All three new models are impressive. However, as the biggest AI platforms on the planet compete to become your arbiter of truth, your digital best friend, or your creative pen pal, it’s important to remember that all of them can still hallucinate, manipulate, or outright lie. It’s always best to verify the answers they give you, no matter how friendly, trustworthy, or innocent they sound.

​Tech, Artificial intelligence, Ai, Grok, Chatgpt, Gemini