Has value broken? Stalwart signals are looking funky. Electricity trades at negative prices while grids collapse from surplus; university credentials lose worth as trade apprenticeships command premiums; private equityâs titans turn to retail money.
Do these inversions reflect random noise, temporary disruptions in otherwise stable systems? Or are they symptoms of something more profound: a revaluation crisis that challenges how we price the future itself?
Frankly, itâs a big odd when abundance creates crisis and scarcity drives prosperity. Perhaps our fundamental economic grammarâthat language of supply, demand, and equilibrium weâve trusted since Adam Smithâis out of date.
Look at higher education. A new Gallup poll reveals that only 35% of Americans now view college [ link ] as âvery important,â down from 75% in 2010. Is this mere anti-intellectualism? Or a rational response to a labor market being hollowed out by precarious work, post-COVID fatigue, climate doomerism or automation? In the UK, PwC cut graduate recruitment by a third [ link ]. The CEO of British placement agency Reed advises students to consider manual labour over degrees [ link ]. Some may believe that the credential that once guaranteed middle-class stabilityâsteady employment, home ownership, upward mobilityânow delivers neither certainty nor wages sufficient to offset its cost.
Franceâs pension system is baffling. Pensioners now earn more than working-age adults [ link ]. Brits appear keen to follow Parisâ lead, the retired receiving an income boost [ link ] that beats both GDP growth and inflation. This is at best a violation of the intergenerational contract that underpins modern welfare states. At worst, itâs a consumptive gerontocracy that feeds on its young.
These inversions extend deep into our financial markets. Private equity, once the apex of sophisticated capital allocation [ link ], has turned to courting retail investors to access their 401(k) accounts. Why? Because the industry needs fresh capital to sustain its model. Private equity cannot sell its companies; exits have crashed to two-year lows [ link ]. This isnât charity; itâs plumbing. With IPO windows grudging, M&A selective, and continuation funds propping up timeworn assets, managers are widening the intake pipe while the outflow remains tight. That is why the smartest money in the room needs the dumbest. The math no longer works: cheap debt has gone, but lofty valuations remain.
The technology sector is not immune to this inversion. Memory prices have surged 15-20% on AI demand [ link ], while data center equipment lead times have tripledâgenerators now take 100 weeks to deliver versus 30 weeks in 2019. Training a single frontier model, such as Grok 4, consumes $490 million and 310 gigawatt-hours (GWh) of electricity, and produces 150,000 tons of CO2. Remember the old sharing economy hagiography: Uber is a taxi company that doesnât own its own cars; Airbnb is a hotel business that doesnât own its own properties; and so on. Well, today you canât be an sofware company without owning your own nuclear power station [ link ]!
Software is no longer eating the world; it is demanding a new world.
Meanwhile, our energy system, built on the language of shortages, waste and efficiency, desperately needs a new vocabulary. Electricity prices regularly hit negative territory during peak solar hours across Texas, California, and much of Europe. Weâre far from the blackouts of the 1970s. Weâve achieved energy abundance so profound that we literally canât give it away. But the trinity of storage, transmission, and market design remains trapped in twentieth-century assumptions.
In Spain five months ago, this abundance triggered catastrophe [ link ]. As solar flooded the grid with free terawatts during noon peaks, automatic protection systems severed entire regions from the network. Millions lost power. The grid collapsed not from shortage but from surplusâa profusion of the very electricity it was built to deliver.
Inside out and upside down
These inversions arenât random. They reflect three fundamental shifts in how value operates in an exponential age:
First, weâre using yesterdayâs model to price tomorrowâs future. Call it temporal dislocation. Universities offer degrees as if 20th-century returns persist, ignoring how credential premiums have fragmented and the changing nature of the skills employers will ned. Pension systems bank on demographic pyramids that have flattened into columns. Their tidy assumptions strain against longer lives and thinner cohorts, creating fiscal strain today and political rupture tomorrow.
Second, weâre trapped by scarcity thinking. While intelligence and even energy trend toward abundance, our eyes are fixed on temporary bottlenecks: compute and specialized equipment. Yet our pricing mechanisms havenât adjusted. We subsidize scarcity (fossil fuels) while penalizing abundance (renewable oversupply). Scarcity thinking is colliding with abundance reality.
Third comes the breakdown of value capture itself. The mechanisms that once efficiently allocated resources and rewards are breaking down. Nvidia captures more value than a thousand software companies. Aging populations get more from the state than the young. Energy abundance shatters the scarcity logic underlying our grids. The plumbing weâve created to connect value creation to value capture are buckling, if not broken.
The question isnât whether these inversions will continueâthey will accelerate. The question is how our institutions will adapt and whether they will do it fast enough before something really breaks. Can universities reinvent before becoming monasteries? Can pension systems restructure before imploding? Can energy markets embrace abundance before strangling it? Can private equity find new models before retail investors discover theyâre the exit liquidity?
Value isnât what something costs. Nor is it the returns it delivered yesterday. Itâs how much the problem it solves tomorrow is worth. And tomorrow's problems look nothing like todayâs.
The French pensioners, the high school graduands, the private equity partners, the negative electricity pricesâtheyâre all sending the same message: The old maps no longer match the territory. Time to draw new ones.
Azeem
P.S. Donât forget to read our framework for understanding the AI investment boom [ link ].