OpenAI's GPT-5 Flop, AI's Unlimited Market, China's Big Advantage, Rise in Socialism, Housing Crisis

Overview

This episode dives into the underwhelming release of OpenAI's GPT-5, the evolving AI landscape, China's strategic advantages, the rise of socialism in the U.S., and the implications of tariffs and energy policies. The discussion also critiques Apple's innovation strategy and concludes with summer reading recommendations.

Notable Quotes

- Socialism will sweep over this nation, I fear. And I think it's a cancer. - David Friedberg, on the growing appeal of socialism in the U.S.

- It almost feels like Apple is trying to lose. - Gavin Baker, on Apple's lackluster AI strategy.

- If things take a downturn, the backlash will be a lot stronger than anything we can say about socialism’s failures. - Ben Shapiro, on the potential consequences of economic instability.

🧠 GPT-5 and AI's Evolution

- GPT-5's release was met with disappointment due to benchmark saturation and underwhelming performance compared to competitors like Grok 4. David Friedberg highlighted its user experience upgrade, which auto-selects the best model for tasks, as a significant improvement.

- Gavin Baker noted OpenAI's strong product focus but questioned whether diminishing returns in large language models are setting in.

- The panel discussed AI's total addressable market (TAM), with Jason Calacanis estimating a $5-10 trillion TAM for business applications. Phil Deutch emphasized AI's transformative impact on energy demands, citing Anthropic's call for 50 gigawatts of power in the next three years.

🇨🇳 China's Strategic Advantage

- China's rapid solar energy expansion and AI investments were highlighted as key advantages. Phil Deutch noted China's ability to scale nuclear and hydro projects, while David Friedberg pointed out their manufacturing edge in drone warfare.

- The panel debated whether the U.S. is in an existential AI race with China. Ben Shapiro argued that China's use of tools like TikTok as psy-ops underscores the stakes, while David Friedberg suggested AI could be a shared platform rather than a zero-sum game.

- Gavin Baker emphasized the importance of rule of law for sustained innovation, contrasting China's centralized control with the U.S.'s entrepreneurial ecosystem.

📉 Tariffs and Economic Experimentation

- The U.S. has raised $125 billion in tariff revenue so far in 2025, with projections of $200-500 billion by year-end. Ben Shapiro critiqued the ad hoc nature of Trump's tariff strategy, calling it a short-term win but potentially destabilizing long-term.

- Tariffs on India and Switzerland were discussed, with Phil Deutch questioning their impact on globalization and energy costs. Gavin Baker saw value in running the tariff experiment to test its efficacy.

- The panel warned of unintended consequences, including inflation and reduced global trade, while acknowledging the potential for reshoring and revenue generation.

🍎 Apple's Buybacks and Innovation Stagnation

- Apple has spent $700 billion on stock buybacks over the past decade, raising questions about missed opportunities in R&D and product innovation. Gavin Baker criticized Apple's failure in AI, particularly Siri's decline, calling it astonishing.

- David Friedberg defended Apple's long-term resilience, citing its history of late but successful market entries. However, Ben Shapiro and others expressed skepticism about Apple's current trajectory.

- The panel speculated on Apple's potential in augmented reality and energy management but noted a lack of visible progress.

📚 Summer Reading and Recommendations

- Ben Shapiro recommended the Netflix series Department Q for its engaging cold case narratives.

- Gavin Baker highlighted the post-apocalyptic fantasy series Moonfall by James Rollins.

- David Friedberg shared his mixed feelings about Andy Weir's Project Hail Mary.

- Phil Deutch praised Walter Isaacson's biography of Elon Musk and the HBO series The Penguin.

- Jason Calacanis recommended biographies, including All About Me by Mel Brooks and Who Knew by Barry Diller, as well as the design-focused Monocle magazine.