Wednesday: Economic Pain, Billions for Superintelligence, Baidu Models (China), The Path to AGI, More Cognitive Offloading, Emotional Attachment, Robots Play Soccer, OpenAI's Australia Report

To start, thanks again to all of our subscribers. We are now growing at close to 150 a week, and a growing number of paid subscriptions has made it possible to invest more time into it. As a small thanks, I thought I’d share a Happy Fourth of AGI!

Economic pain. Yesterday, the Trump administration notified state chiefs on Monday that it was withholding $6.8 billion in funds that were supposed to be disbursed on July 1.

This freeze affects the following programs:

• Title I: Funding for districts serving low-income students

• Title III-A: Support for English learners

• REAP: Rural Education Achievement Program

• Title II-A: State teacher training grants

• Title IV-A: Student Support and Academic Enrichment grants

• Title IV-B: 21st Century Community Learning Centers (summer and after-school programs)

• Title I-C: Migrant education programs

This will harm many students and put tremendous economic pressure on schools and students as they struggle to adapt to an emerging world of machine superintelligence.

On a related note, a new article in the Wall Street Journal highlighted the growing abilities of AIs to function as workers.

Bank of New York Mellon said it now employs dozens of artificial intelligence-powered ‘digital employees’ that have company logins and work alongside its human staff. Similar to human employees, these digital workers have direct managers they report to and work autonomously in areas like coding and payment instruction validation, said Chief Information Officer Leigh-Ann Russell. Soon they’ll have access to their own email accounts and may even be able to communicate with colleagues in other ways like through Microsoft Teams, she said This is the next level,” Russell said. While it’s still early for the technology, Russell said, “I’m sure in six months’ time it will become very, very prevalent.

These types of agents are already putting pressure on the current job market for entry-level college graduates. Imagine what that market will look like in 5 years when today’s high school seniors who plan on pursuing 4-year degrees graduate. At least some are starting to admit that we will see at least short-term job loss.

Racism. Videos of Black women depicted as Bigfoot are going viral.

The superintelligence race. On Monday, I reported on Meta’s all-in efforts to develop superintelligence, including individual offers of $300 million over four years. Musk just raised another $10 billion in debt and equity for xAI. More on superintelligence next week, but it’s getting hard to count the billions being invested in it and how close we are getting to it.

Unpacking the path to AGI. If you want some light reading for the holiday, check out Thinking Beyond Tokens: From Brain-Inspired Intelligence to Cognitive Foundations for Artificial General Intelligence and its Societal Impact

This paper offers a cross-disciplinary synthesis of AGI development, spanning artificial intelligence, cognitive neuroscience, psychology, generative models, and agent-based systems. We analyze the architectural and cognitive foundations of general intelligence, highlighting the role of modular reasoning, persistent memory, and multi-agent coordination. In particular, we emphasize the rise of Agentic RAG frameworks that combine retrieval, planning, and dynamic tool use to enable more adaptive behavior. We discuss generalization strategies, including information compression, test-time adaptation, and training-free methods, as critical pathways toward flexible, domain-agnostic intelligence. Vision-Language Models (VLMs) are reexamined not just as perception modules but as evolving interfaces for embodied understanding and collaborative task completion. We also argue that true intelligence arises not from scale alone but from the integration of memory and reasoning: an orchestration of modular, interactive, and self-improving components where compression enables adaptive behavior. Drawing on advances in neurosymbolic systems, reinforcement learning, and cognitive scaffolding, we explore how recent architectures begin to bridge the gap between statistical learning and goal-directed cognition. Finally, we identify key scientific, technical, and ethical challenges on the path to AGI.

Cognitive offloading. Another study makes the “cognitive offloading” claim.

This study investigates the impact of generative artificial intelligence (AI) tools, specifically ChatGPT, on the cognitive engagement of students during academic writing tasks. The study employed an experimental design with participants randomly assigned to either an AI-assisted (ChatGPT) or a non-assisted (control) condition. Participants completed a structured argumentative writing task followed by a cognitive engagement scale (CES), the CES-AI, developed to assess mental effort, attention, deep processing, and strategic thinking. The results revealed significantly lower cognitive engagement scores in the ChatGPT group compared to the control group. These findings suggest that AI assistance may lead to cognitive offloading. The study contributes to the growing body of literature on the psychological implications of AI in education and raises important questions about the integration of such tools into academic practice. It calls for pedagogical strategies that promote active, reflective engagement with AI-generated content to avoid compromising self-regulated learning and deep cognitive involvement of students.

ERNIE4.5 from China. Baidu (China) just dropped 10 versions of a new open-source model. We are waiting for benchmarks, but it’s expected to be competitive with the OpenAI and Anthropic releases. We are still waiting on OpenAI’s ChatGPT5 and their open-source model.

Emotional attachments. There is some new research out about AI and personal relationships.

MIT/OpenAI. In this study, researchers found that “higher daily usage–across all modalities and conversation types–correlated with higher loneliness, dependence, and problematic use, and lower socialization. Exploratory analyses revealed that those with stronger emotional attachment tendencies and higher trust in the AI chatbot tended to experience greater loneliness and emotional dependence, respectively.” [Overview, Study]

Nature. In a study published in Nature, researchers found that people preferred human empathy over AI empathy when they know which is which.

Anthropic. Anthropic (Claude) also released a report.

Our key findings are:

• Affective conversations are relatively rare, and AI-human companionship is rarer still. Only 2.9% of Claude.ai interactions are affective conversations (which aligns with findings from previous research by OpenAI). Companionship and roleplay combined comprise less than 0.5% of conversations.

• People seek Claude's help for practical, emotional, and existential concerns. Topics and concerns discussed with Claude range from career development and navigating relationships to managing persistent loneliness and exploring existence, consciousness, and meaning.

• Claude rarely pushes back in counseling or coaching chats—except to protect well-being. Less than 10% of coaching or counseling conversations involve Claude resisting user requests, and when it does, it's typically for safety reasons (for example, refusing to provide dangerous weight loss advice or support self-harm).

• People express increasing positivity over the course of conversations. In coaching, counseling, companionship, and interpersonal advice interactions, human sentiment typically becomes more positive over the course of conversations—suggesting Claude doesn't reinforce or amplify negative patterns.

Wired recently reported on a couples retreat for chatbots and those who love them.

Robots play soccer. China hosted its inaugural 3-on-3 soccer tournament featuring humanoid robots operating entirely through artificial intelligence, with no human control required.

AI Blueprint for Australia. OpenAI released its Economic Blueprint for Australia.