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Hilary Allen

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2026-02-20
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2026-02-20
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  1. Well, John Maynard Keynes said that the markets can stay irrational longer than you and I can stay solvent, so I will never put a time frame on it. But all warning indicators are flashing red at the same time as we are pulling back all regulatory apparatus. So I think it's safe to say we're on the brink of a crisis.

    2026-02-20 · Masters in Business · How AI Could Freeze Progress with Hilary Allen · IDENTIFIED FROM THE TRANSCRIPT · source

  2. Honestly, I'm not sure that there's much because the world was very different 2020 to 25 years ago. You know, I always just invested in Index funds basically, and you know, and that worked out frankly great for really well. The challenge is, and I study financial crises,

    2026-02-20 · Masters in Business · How AI Could Freeze Progress with Hilary Allen · IDENTIFIED FROM THE TRANSCRIPT · source

  3. It's a really hard time for them, and I talk to my students a lot about the careers, and things are the ground is shifting under our feet, and in this time of uncertainty, it's really hard to figure out what to do. So I would recommend investing in the fundamentals. And I think it's hard to do when AI is being pushed, but becoming a good communicator, learning how to write and speak to people clearly will never, I think, go out of fashion. And investing in relationships. Again, we're in this time where everything is sort of becoming technologized and atomized, et cetera. But in my career, having good relationships with people, and I'm pretty sure you'll agree with this, has been one of the most successful things that has helped me along the way. And so just investing in personal relationships, I think, is always good advice.

    2026-02-20 · Masters in Business · How AI Could Freeze Progress with Hilary Allen · IDENTIFIED FROM THE TRANSCRIPT · source

  4. The parable of the sower Octavia Butler. I also have always had a soft spot for really good children's literature. So Philip Pullman's Dark Materials trilogy is one of my favorites. And right now I'm reading with my kids Catherine Rundell's books, Impossible Creatures and The Poison King, and they're just so good. And then work-wise, I've just started Jacob Silverman's Gilded Rage, which is very much on point for the conversation we're having.

    2026-02-20 · Masters in Business · How AI Could Freeze Progress with Hilary Allen · IDENTIFIED FROM THE TRANSCRIPT · source

  5. Oh, I was an English lip major, so I have many favorites. I'm very into the dystopian track, so handmaids tale 1994. I just finished the parable of the sower in that vein, which was.

    2026-02-20 · Masters in Business · How AI Could Freeze Progress with Hilary Allen · IDENTIFIED FROM THE TRANSCRIPT · source

  6. So my first mentor is probably my first law firm partner boss in Australia, Stephen Kavanaugh. And I had thought I was going to be an IP lawyer. And he was just a wonderful person to work for. It was a time when the law had just changed in Australia, and he really was willing to hear what I had to say about this new law. And so it was just, I just felt very invested in. And that was lovely. And then I think as an academic, Patricia McCoy, who I adore, sort of, I have had a very non-traditional path to academia. I had more practice experience than is usually the case. I had fewer of the bells and whistles credentials that people usually have. And again, she just saw in me someone who was really passionate about preventing financial crises, about sort of systemic risk, and sort of was willing to look through the fact that I wasn't as polished as most of the other people trying to enter academia and support me. And I was very grateful for that.

    2026-02-20 · Masters in Business · How AI Could Freeze Progress with Hilary Allen · IDENTIFIED FROM THE TRANSCRIPT · source

  7. When we hear certain stories, it's very difficult to budge ourselves and be contrarian. And as I was saying earlier, so you sort of need a collective tipping point where people start to question it so you don't feel like an outlier or the norm when you start to question these things. And so I think there's a role for media here. I think there's a role for education. Unfortunately, the people who benefit from technosolutionism also know this and have a very big media presence and invest a lot in education. So it's an uphill battle to start talking about these things differently. But ultimately we are all human and it's nicer to believe that something will succeed than that it will fail. I mean, you might not think I'd be much fun at cocktail parties, although I am.

    2026-02-20 · Masters in Business · How AI Could Freeze Progress with Hilary Allen · IDENTIFIED FROM THE TRANSCRIPT · source

  8. So, I mean, part of it is that we're humans, and humans have often sort of Been snowed by things that are flashy and shiny and exciting. I mean, that's just very much the human condition. Some of the stuff I talk about in the book that I really enjoyed working on was the cognitive psychology aspects of it.

    2026-02-20 · Masters in Business · How AI Could Freeze Progress with Hilary Allen · IDENTIFIED FROM THE TRANSCRIPT · source

  9. Illuminated that they just can't do a lot of the things that they're going to do. But that's so counter to how we typically talk about technologies that it sort of, it feels a bit weird to talk like that. And you're going against societal norms in a way. And so one of the things that I really wanted to do with this is to start making it easier to talk about these things critically, to be not such an outlier, to express your frustrations. And I think we're actually having a moment like that about AI, because so many people really hate it.

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  10. Well, so that's the thing with this technosolutionism. It presumes that everything is a tech problem waiting to be solved. It doesn't even countenance the possibility that there may not be a technological solution for what you want to do, that the technology you want may not be able to do the thing you want it to do. And when you have that sort of collective sense that I think we have now, that if we throw enough money at any technology, it can solve any problem we give it. You can see how people get so susceptible to being sort of drawn into the stories that outright con people like Elizabeth Holmes might be telling, but also the stories that were being told about AI right now and about crypto. The more you know about these technologies, the less impressive they seem and the more clearly it becomes

    2026-02-20 · Masters in Business · How AI Could Freeze Progress with Hilary Allen · IDENTIFIED FROM THE TRANSCRIPT · source

  11. Solve all our problems. And when we get into this mindset where we think that if we throw enough money at technology, it can solve anything and it will always be the best solutions. We end up squeezing pouches with a machine that we could squeeze with our bare hands and a joke that I try and make in the book is like with AI, we may be better off squeezing things with our bare minds.

    2026-02-20 · Masters in Business · How AI Could Freeze Progress with Hilary Allen · IDENTIFIED FROM THE TRANSCRIPT · source

  12. The reason why I love this as a metaphor is it really gets at this technosolutionism, which is one of the concepts that I'm really coming for in this book. Technosolutionism is this idea that everything in our world can be reduced into a technology problem. And that the only reason we haven't solved certain things is because we haven't spent enough time and money on developing the technology. And what that does is it sort of flattens problems into It gets rid of the human messiness. It flattens problems. It ignores domain expertise. People who've been working in particular fields for a long time and know a lot of non-tech stuff. It sort of dismisses their expertise. And sadly, you know, there's just this magic associated with technology at this point. And as I said, I'm not anti-technology. A lot of it's gray. But it doesn't deserve the level of sort of magical deference that we give it. It can't.

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  13. And what it did was it squeezed these juice pouches. The problem was that people could just squeeze the boot juice pouches with their bare hands and get all the juices.

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  14. So Gusero is just my favorite metaphor for all of this. So, for those of you who are unfamiliar with the gift that is Jusero, basically this was a machine that cost hundreds of dollars. It was Wi-Fi enabled.

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  15. No, I'm just saying that if someone was trying to work out the end of one of these things, there wouldn't even be office furniture you could sell to pay the lawyers.

    2026-02-20 · Masters in Business · How AI Could Freeze Progress with Hilary Allen · IDENTIFIED FROM THE TRANSCRIPT · source

  16. But both of them are essentially Ponzis in the sense that there's nothing backing them. The only reason they have value is because someone else might buy them from you. If they choose not to, it could go to zero. And actually, someone put it to me this way. It's not that they could go to zero. They could go to less than zero because they don't even have any assets that could be used to administer a winding up, right? And that's expensive. You're going to get the lawyers and the courts and everybody involved.

    2026-02-20 · Masters in Business · How AI Could Freeze Progress with Hilary Allen · IDENTIFIED FROM THE TRANSCRIPT · source

  17. It's a solution in search of a problem. I mean, essentially, even so Bitcoin often is seen as the most credible of these because it's been around the longest and has the largest. It's Bitcoin.

    2026-02-20 · Masters in Business · How AI Could Freeze Progress with Hilary Allen · IDENTIFIED FROM THE TRANSCRIPT · source

  18. In the case of the Bitcoin blockchain, just a few individuals, in the case of the Ethereum blockchain, it's the Ethereum Foundation, they're not regulated at all. They have no obligation to invest in cybersecurity, to invest in getting their blockchains up and running again. Should something go wrong? You're really sort of, as I sometimes say, YOLOing operational risk with regards to these blockchains. And so If you want smartchain functionality, don't use a blockchain.

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  19. Well, first of all, smart contracts can work without a blockchain. Smart contracts predate blockchains. They can run on all kinds of databases. So if you want that kind of functionality and it has pros and cons, and I've written about this a ton, you can have that without a blockchain. The reason why you don't want to have it on a blockchain, and this is something that does not get anywhere near the attention it needs, is that there's all kinds of operational risks associated with the blockchains themselves. So blockchains are software. They are maintained by

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  20. They're very popular, for example, with all kinds of drug cartels, and they're good for sanctions evasion Also very good if you want to gamble in crypto and you want to use it as sort of a cash management tool in between crypto investments, kind of like a money market mutual fund in your brokerage account for parking funds in between crypto gambling. But they've really never had any utility in any big way as a legal payments mechanism.

    2026-02-20 · Masters in Business · How AI Could Freeze Progress with Hilary Allen · IDENTIFIED FROM THE TRANSCRIPT · source

  21. PayPal from the beginning was flaunting quite aggressively the banking laws because only banks are allowed to accept deposits and people were keeping money in their PayPal wallets and for all the world that looks like keeping a deposit Peter Thiel from the beginning was very aggressive on the lobbying to make sure that that was not considered deposit taking. Early on there were multiple states that were investigating it because they thought it was the unlawful taking of deposits. He lobbied heavily in Congress and lobbied heavily at the FDIC and ultimately, you know, That worked. And so I think that has sort of been the prototype, that blitz scaling prototype. I think people perhaps underestimate the degree to which blitz scaling is really about playing it on an unlevel legal playing field

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  22. I think, yeah, I mean, my knowledge of this comes primarily from reading Max Trafkin's book, which I highly recommend, but that's my understanding too. And so they are a payments technology. I too struggle to sort of understand what they offer that... Credit card doesn't in many ways. One thing they are though is they are sort of the UR regulatory arbitrage story in fintech, right? So, you know, I've said so much of fintech is actually about arbitraging the law rather than technological superiority.

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  23. So, this is really an interesting story, and I learned a whole lot about this in research for this book by reading Max Chafkin's book, The Contrarian, about Peter Thiel, in the beginning of PayPal. And in fact, the idea for PayPal Came from the same place that the idea for crypto has come from, which is this technolibertarian idea of we don't like regulation, we don't like central banks, we would like to have private money, and we would like technology to help us have private money. And PayPal wasn't the only one of these kinds of startups back in the early dot-com bubble. PayPal, I think.

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  24. Between the optimists and the realists is badly out of whack because we give so much deference to the stories about innovation, about disruption, about how technology can solve problems that have been with us for centuries. We can magically get rid of intermediaries now with blockchain technology, apparently. Well, that was one of the...

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  25. They're not that new, right? As I said, you know, we've got fintech lending, has a lot of the things that we didn't like about payday lending, right? Why shouldn't the laws from payday lending apply? Crypto basically, I mean, the crypto markets for all the world look like the stocks and bonds in the unregulated markets of the 1920s. We saw how that ended. They ended in such a spectacular crash that we ended up with the securities laws. Why shouldn't they apply? What's so different? So this construction of novelty is something that is done intentionally as a narrative. Now, I fully appreciate that we need the optimists in this world who are going to try new things. And I say that very early on in the book. The people who, these stories are useful because they attract funding to new things. So I'm not saying we should do away with it completely. My argument is that the yin and yang, the balance.

    2026-02-20 · Masters in Business · How AI Could Freeze Progress with Hilary Allen · IDENTIFIED FROM THE TRANSCRIPT · source

  26. Quibble away. There's this idea that the law is a barrier to innovation because law is old and innovation is new and the law couldn't possibly have contemplated the innovation. The story about the innovation is what makes it new, right? Most of the things that we're seeing in the fintech space.

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  27. Do things a little differently. But, you know, there's no real formula that you can take away from that as to what disruptive is in the eye of the beholder.

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  28. And that is sort of the font of a lot of the rhetoric and narrative that we get out of Silicon Valley that ultimately is there to attract funding, yes, but also to procure legal treatment that facilitates what they want to do, it actually creates often an unlevel legal playing field where you have the incumbents who have to comply with all the laws, and then the disruptors, as you say, who don't have to comply with all the laws and can succeed on that basis even if their product isn't superior in the way we would typically expect a disruptor's product to be. So, yeah, I mean, disruptive innovation goes back to Clayton Christensen and then the innovator's dilemma, this sense that if you stay still and just make good products, you'll be out-competed by someone who is trying to

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  29. Sure. I mean, I think at the heart of all this is innovation speak, and innovation worship, right? When we alluded to that earlier, this sense that anything that is innovative is inherently good and must therefore be permitted at all costs.

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  30. I have strong feelings about this as an educator because if these tools are worth their salt, Shouldn't take our students long to figure out how to use them, right? Right So, why are we bringing them into education where what they really need to learn is how to spot hallucinations, how to think critically, so that if they are going to use these tools later, they can use them to the best of their abilities. This whole arms race sense of, well, they need to use them in school so they don't get left behind. I'm like, it didn't take long to learn how to Google. They'll be fine.

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  31. I've heard that too, but I don't think these tools are that hard to use, right? I mean, that's a failure on the part of the AI companies if they're so hard to use, right? It wasn't hard to use Google search.

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  32. Think Cory Doctorow, who does a lot of work in the tech space, has a great quote on this that I'm going to butcher a little, not say it quite as well as he does it, but he said, the AI can't do your job, but the AI salesman can convince your boss to replace you with AI that can't do your job, right? So I think you're right that there is at this moment I mean, it's also hard to say how much of this is AI washing as opposed to real AI displacement, right? The economy's not in a great place right now. People don't want to hire anyway. It looks a lot better if you say, well, we're not hiring because we're replacing them with AI than just we're having a rough time. We're not hiring.

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  33. No, and so then I'm worried about those young lawyers getting sued for malpractice because they missed something that the AI generated, but they were never even given the opportunity to learn how to spot it themselves.

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  34. And it's always easier to get things right when you do it yourself than when you're reviewing someone else. I mean, when we were lawyers, we used to, that's why you want to have the pen on contracts. You want to hide things from the other side. And now it's the AI hiding stuff from you. And I worry that especially with younger lawyers coming up through the ranks who are encouraged to rely on these tools from the beginning who won't actually develop the skills because you don't learn well when you sort of don't process it yourself. So if you spent your whole career using AI, you're not going to be able to spot the problems in the AI. And you can have the skill.

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  35. So, this is why I think it's so important to disaggregate the different kinds of AI because that is not sort of LLM-based AI. And as I said, some of those tools are great. I can't weigh in on medical imaging and things like that. So it may very well be the case. What I'm talking about is what if you've got a doctor... Coming up with instructions for a care plan for their patients. And they let the AI do it, right? If there's a mistake there, they're much less likely to catch it if the AI, because you know how things go, you'll be expected to look at more of these because you're not generating them yourself.

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  36. Exactly. And so even in these sort of reasonably low stakes customer service interactions, there's reason to be really worried about inaccuracy. Now you start dialing up to things to medical advice, legal advice. It's just you can't rely on them. And I worry that we're putting people in a very difficult position because it's a lot easier to get something right when you write it yourself than it is to find mistakes in something someone else has put together.

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  37. Why is the profitability narrative is not true, right? Because the only place where you can just put this content out and just leave it there is in very low stakes places, right? Where it doesn't matter if you get something wrong. But even things that you wouldn't think are such a big deal have proved to be quite high stakes. So Air Canada had a chat bot that told a customer that if they wanted to apply for a bereavement discount for a flight, they could do that after their flight was done. Now, that's not Air Canada's policy. You had to do it in advance. And so this customer tried to get their refund after the fact. And Air Canada said, well, the chatbot got it wrong. Too bad so sad for you.

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  38. Yeah, I mean, I think those kinds of concerns have been expressed very much in the cultural context. If we disincentivize creators from making new music and new art, is this it? Are we stuck with what we've got, with something like the law, one of the challenges is that these large language models They don't get updated on a day-to-day basis. There's sort of a stop point and then they don't know, well, they don't know anything, but they don't have the data from after a certain date. So that's a limitation. But the thing I worry most about with the law. Is that you have to be able to spot the hallucinations or you're going to get yourself in very big trouble? And I think this is true for a lot of different fields. And this is, again, just to digress a little.

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  39. But it won't. So these things are statistical engines, right? They can't check for accuracy because they don't understand accuracy as a concept There's no reasoning, it's literally the most statistically most likely word after the last word I gave you is this word. There is no way to make that care about accuracy because it's not a thinking machine. And I think there's increasing acceptance that these models have hit a wall and they are as accurate as they are going to get.

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  40. But that is not true, sadly. That's the pitch line, right? So these tools make a lot of mistakes. Even the very best ones. We've seen...

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  41. Old AI tools would just sort of classify something, put something in a group, or predict something. But now we have these tools that generate content, particularly text, but also video music, et cetera. And there are so many problems with this technology because it's being sold as technology that can replace humans, right? basically it's worth throwing trillions of dollars into this because of the productivity gains that we'll get by firing all the humans essentially is the story they're telling um first of all that would be great

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  42. Let me disaggregate it first because there's plenty of AI that there's nothing wrong with, right? So AI is not intelligent in any way, shape or form. That's a marketing term. What it is, is it's an applied statistical engine. You have an algorithm that looks for patterns in data and then acts accordingly. And that kind of technology has been around for a long time. For example, it's great for fraud detection in a bank for credit card transactions, for example. So that's an A plus use of AI. But the last few years, everybody has been pouring everything they've got into these LLM-based tools, these large language model-based tools. So these are tools that can

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  43. Well, right now, the obvious answer is a lot of the AI products, anything sort of, it's hard when you talk about AI because it's such an umbrella term for so many different things, right?

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  44. But in crypto, you're both, right? And so if you applied the securities laws to crypto, they would have to disaggregate and basically would probably destroy their business model. So what they wanted was a law that said, no, it's fine, crypto special, you do both. And so that really An industry that should have failed is again rising, being propped up all through this sort of aggressive political spending. And I mean, I've talked to people in Congress off the record who have said that they've only voted for these laws because they're afraid, that if they don't, that crypto industries will target them.

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  45. but not actually make them have to, for example, Coinbase combines the functions of a broker dealer and an exchange. That's not allowed in securities. You can see why there's all kinds of conflicts of interest that could be...

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  46. Crypto should have died many times already. Particularly it should have died in 2022 when we had the big crypto winter. At that time, particularly Andreessen Harrowitz, crypto had this huge war chest of funds that they had raised. And they stopped investing in crypto startups at that point because everything was maribund. But what they started using that money for was lobbying, political spending, and they really worked very hard on members of Congress to essentially create laws that would allow the crypto industry to keep doing what they're doing, which was not allowed under the securities laws as they were. So the whole business model was regulatory arbitrage. They wanted laws that would sort of give a patina of legitimacy and hopefully encourage institutional investment, attract more money to the space.

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  47. Yeah, so that's sort of the perverted part of this market logic, like survival of the fittest, because of all the subsidies that benefit venture capital, that doesn't really apply that logic anymore. Give us an example.

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  48. Because it's who gets to decide what more of what we want is. And if you look at who's funding the abundance agenda, it is the billionaires and the tech elite. And these are people who have really shown that they are quite willing to run roughshod of irregulations that are there to protect the public from harm if that enables them to profit. And so I am just skeptical that a movement that is funded by these people is really going to be prioritizing the kinds of projects that would benefit the economically precarious. I think it's more likely that it will be benefiting themselves and will lose protections for people with less voice that are currently in place.

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  49. But if you look at who is funding the abundance movement, they have conferences, etc., it is Andreessen Horowitz and other people from Silicon Valley. And it seems to be this attempt to essentially put a happier face on the deregulatory project that Silicon Valley is looking for to sort of make it seem kinder, gentler, and more progressive. Because the abundance movement is sort of in a nutshell is supposed to be, well, We shouldn't have artificial scarcity, we should build more of what we want. To do that, we should take away some of the roadblocks that are getting in our own way. And when you say it like that, it's sort of hard to disagree with.

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  50. Yeah, so this is something I get into a lot of conversations with people these days because I think there are some elements of the original sort of abundance agenda that are very appealing to people in terms of, for example, increasing housing capacity. And I do think that that is something that needs to happen and has to be done in the right way.

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