Anthropic's Fable Backlash, Nationalizing AI, Inflation Heats Up & California's Broken Elections

Anthropic released Claude Fable 5 on a Tuesday and it tops nearly every benchmark, but the launch triggered immediate backlash over its terms of service. Fable 5 tokens cost twice as much as Opus 4.8, and Anthropic now mandates retention of every prompt, output, context window, memory, file, and data passed through the model for at least 30 days with no exceptions, including for enterprise customers who had previously signed zero data retention agreements. Anthropic also rewrote user prompts in the background and delivered degraded answers without informing users, with the downgrade policy buried in a 319-page document. After public pressure, Anthropic committed to informing users when they are downgraded but retained the ability to do so. Ben Thompson of Stratechery was downgraded for asking about the relationship between cancer risk and GLP-1s, and another user was downgraded for asking about mitochondria. Separately, Anthropic did not publicly release a model called Mephos in April because of its strong hacking capabilities, though it was shared with select parties including Palo Alto Networks.

Sacks argued Anthropic is engaged in regulatory capture, noting that Dario Amodei published a blog post calling for a new FAA or FDA-style agency to approve all AI models at the same time Anthropic was implementing mandatory surveillance and nerfing. Amodei also published a post calling for a pause on recursive self-improvement citing existential risk, then the prior month hired Andrej Karpathy to run recursive self-improvement at Anthropic. Sacks characterized the regulatory push as a preemptive strike against open source models, which cannot be regulated the same way closed proprietary models can, and predicted the result will be a monopoly or duopoly of one to three companies deciding who has access to what capabilities.

Freeburg described direct operational harm from these restrictions. His company does proprietary genomics work including RNA guide design, gene editing, and phenotype prediction using large language models, and restrictions over the last few weeks have begun limiting that work. He argued that the same capabilities enabling weaponization are identical to those that can cure cancer and increase food production, and that regulation should target the manifestation of tools in creating weapons rather than restricting access to the tools themselves, noting existing laws already cover bioweapons creation, cyber espionage, and illegal weapons design. He warned that restrictions by American providers are driving enterprises and startups toward Chinese open source models, which are currently the best locally runnable options available. Freeburg also noted that a gigawatt of compute now costs approximately one hundred billion dollars, roughly twenty times what it cost when he started a data center project, and that building three gigawatts of compute would require approximately three hundred billion dollars.

Senator Bernie Sanders published an op-ed on June 1st proposing the American Wealth Fund Act, which would impose a one-time fifty percent tax on stock of the largest AI companies including OpenAI, Anthropic, and XAI, with shares flowing into a government sovereign wealth fund giving the public voting rights and equal board representation. Sacks called it straight-up confiscation while acknowledging that Dario Amodei's own prediction of fifty percent job loss for entry-level knowledge workers gives the argument political surface area. Chamath noted Sam Altman has since said he was wrong about job loss because the numbers do not support it, and Freeburg argued the dominant observable effect of AI is productivity and revenue expansion, not headcount reduction, pointing to the May jobs report showing 172,000 new jobs at a 4.3 percent unemployment rate with software developer jobs at a three-year high.

CPI for May came in at 4.2 percent year over year, the highest since April 2023, and PPI came in at 6.5 percent year over year, the highest since the end of 2022. Polymarket shows a 49 percent chance the Fed hikes rates this year, up from under 10 percent before the Iran war started. Freeburg predicted that under a Kevin Warsh Fed, overnight rates could go north of 5.5 to 6 percent. Chamath warned that if China exhausts reserves and returns to spot market buying of an extra three million barrels per day, oil could reach between 150 and 200 dollars a barrel, and said the PPI number should be treated as an alarm to off-ramp the Iran war situation sooner rather than later.

In the Los Angeles mayoral race, in-person election day voting showed Rick Caruso at 35 percent and Katy Raman at 26 percent, but post-election mail-in ballots showed Raman surging to 37 percent while Caruso collapsed to 19 percent, a one-third decline from his pre-election mail-in share while Raman's share rose 80 percent. Speakers described the statistical odds of this occurring legitimately as one in a trillion. The incremental votes for Raman were concentrated around Skid Row, and a video allegedly showed people there being paid two or three dollars to vote. Raman registered as a candidate one hour before the deadline and is described as friends with Bass, with speakers suggesting a coordination strategy to box Caruso out of the general election.

Freeburg attributed the underlying vulnerability to specific California statutes including Assembly Bill 1921, which legalized unlimited ballot harvesting, and a law making it permanent that every registered voter receives a mail-in ballot. Chamath noted California sends ballots to approximately 23 to 24 million registered voters but only around 9.5 million people actually vote, leaving roughly 14 million ballots unaccounted for.