I remember when laws were passed to make selling an item below its cost to the business selling it was illegal. (Is it still?) This was called predatory pricing or dumping, dumping usually referred to foreign goods being sold, where predatory pricing was used when domestic goods were being sold. The idea was a firm sells products at less than cost of manufacture or purchase in order to drive out competitors and/or to increase market share, then prices are jacked up.
American history is littered with such practices, one prominent implementor of such practices in our history was John D. Rockefeller, widely considered the primary “robber baron” of the oil industry, having founded and led the Standard Oil Company in 1870 to create a massive monopoly. Through ruthless tactics, vertical integration, and secret railroad deals, he controlled over 90% of US refineries by the 1880s. Rockefeller’s company controlled nearly all oil refining and pipelines by the 1880s, often referred to as “The Octopus.” (Standard Oil was ordered to dissolve by the Supreme Court in 1911 due to antitrust violations.)
Rockefeller was known to build service stations right near existing service stations of competitors, undercut their prices for gas and oil and then when those stations went belly up, bought them for cents on the dollar and converted them to Standard Oil stations.
The first major attempt to regulate such actions was the Sherman Antitrust Act, but applying it to large companies was and is difficult. The Clayton Act was also passed with the aim of promote fair competition and prevent unfair business practices that could harm customers.
So, why am I bringing this up now? Good question, I am glad you asked.
A rude awakening is about to dawn on early adopters of AI instruments. Wowed by these tools, at how they seem to make a company’s workers more productive and efficient as more work gets done for the same money or the same work gets done for less, the actual cost is going to be applied soon. AI companies have been selling their services for free or very low cost and have been losing money hand over fist as they “develop their markets.” We are talking billion dollar losses across the nation as a whole. They cannot keep doing that and stay in business.
You have probably heard of the energy costs, and “data centers” being built to create that industry. So far, those costs were being paid by venture capitalists, who expect a return on their money. The Wall Street Journal reported that OpenAI was on track to lose approximately $5 billion in 2024 against $3.7 billion in revenue — with annualized costs running close to $9 billion including computing and staff.
But all the news “that is fit to print” apparent doesn’t extend to stories like these: “In early 2024, a mid-sized legal firm in Chicago laid off eleven paralegals. The partners were proud of the decision. They’d run the numbers carefully. AI was handling document review faster and more accurately than the paralegals had. The math was undeniable. Nine months later, the firm’s AI costs had tripled, the paralegals had found other jobs, and the two senior partners who remained were doing document review themselves at two in the morning — because they could no longer afford the AI or the staff to replace it.” (Source: “Prepare for the End of Cheap AI” by Victor Mong, 2/26/2026 on Medium.com)
AI costs aren’t regulated (or even monitored) and if you have laid off employees (the only way to pay for AI) and changed procedures to utilize the AI, and trained your workers to do their jobs using that AI, you could find yourself, like the law firm above in a world of hurt.
Oh, but competition will save us, right? Those companies can just switch to a different AI, one that is cheaper. The point is that none of them can afford to be cheaper and they are all different enough that switching would be difficult. (How many of you would welcome a completely different platform to post things like this on? Or want to do your taxes using a completely different software package? Or.…)
Welcome to the Brave New World where AI hype and predatory pricing are delivering you into an unknown world <theme from The Twilight Zone plays>.
Postscript For the mathematically challenged: if AI cuts your operating costs in half for some aspect of your business (after the implementation costs, etc.) and you are smiling, if AI costs triple (as they did above), you are now paying 50% more than you were under your old system and the odds of those costs going down are slim to none.
Uncommon Sense 
The Folly of Chasing Profit
Tags: tax the rich, The New Deal, economic theory, greed, profit
The American economy is based upon one thing and only one thing: the acquisition of profit. If one makes profits, one is considered successful in business. If one makes huge profits, one is an icon of business.
Contrast this with the government the founders of the U.S. Constitution envisioned. They envisioned a society and especially a government in which virtue played a substantial role. They recognized, even with their limited sources of knowledge, that a republic, democratic or not, would not survive if its rulers did not display and espouse virtue, civic virtue.
So, what have the “pursuers of profit” done with the profits they have accumulated? For one they created a theory of economics that supported that pursuit with no limit upon greed. In economic terms they claim that economic growth solves all problems. This is foolishness on a grand scale. If the population of human beings on this planet numbered just a few million, this would function quite nicely … for a while. But if it succeeded, it would create its own problem. A truism of biology is that organisms expand in number to the limits of their niche, especially food supply. A classic example, even taught in economics classes (Oh, the irony!) is what happened when rabbits were imported into Australia. There were no native predators that saw rabbits as prey, so the rabbits “bred like bunnies,” and their population exploded in short order. So many rabbits and Australia being a semi-arid country, there wasn’t unlimited food for those rabbits so they stripped vast acreages of the land of what greenery grew there, then millions of rabbits starved of hunger.
There are always limits to growth … always. It is telling that the economists of the 1950s and 1960s omitted any reference to the natural world in their economic theories, basically stating that nature would never limit our economies.
The answer given by the greedy for any economic difficulty is “More Greed!” This is a recipe for disaster that school children can understand. But to people who define themselves as acquirers of profit, they can do nothing else. So, the game must be changed.
If they cannot see any goal other than profit it is necessary for us to require other goals to be included. Making a profit may be one building block of a company, but it cannot be the only building block. (So adding “shareholder value” is unacceptable as it is just another form of profit, shareholder profit.)
We have many examples of how this can be done and how the pursuers of profit will respond. As a response to the great Depression, as part of his New Deal, Franklin Roosevelt did something quite amazing (and which he is vilified by the moneyed elites today for doing). He gathered the captains of industry into the White House and explained that if the federal marginal tax rate on income weren’t near 100%, he couldn’t protect them from what the labor unions or the Socialist Party of American were going to do. They begrudgingly accept a 90+% marginal tax rate. Now this tax rate only applied to income over $100,000, if memory serves me) which was a huge amount of money in the 1940s. (That hundred K would be over two million dollars today.) But companies and corporations realized that if the remunerations of their CEOs were to exceed $100,000 of income, then (90+% of that income would go to the federal government and the CEO would get almost nothing. So, the CEO’s started acquiring remuneration that wasn’t in the form of cash: they got the use of a company car, maybe with a chauffeur, they for fancy offices, with expensive art hung on the walls, they got beautiful secretaries, often more than one, the got to live in company housing, and so on. They didn’t exactly starve.
But all of those restrictions on excessive salaries have been gutted and, well those profit-seekers are in charge, so they arranged for obscene amounts of remuneration to come to them and arranged for a lower tax rate on those mountains of money than “ordinary” citizens paid. Of course they did.