alt Hacker NewsThe real question is whether the boom is, economically, a mistake.
If AI is here to stay, as a thing that permanently increases productivity, then AI buying up all the electricians and network engineers is a (correct) signal. People will take courses in those things and try to get a piece of the winnings. Same with those memory chips that they are gobbling up, it just tells everyone where to make a living.
If it's a flash in a pan, and it turns out to be empty promises, then all those people are wasting their time.
What we really want to ask ourselves is whether our economy is set up to mostly get things right, or it is wastefully searching.
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In 2024, global GDP was $111 trillion.[1] Investing 1 or 2 % of that to improve global productivity via AI does not seem exaggerated to me.
They still gotta figure out how their consumers will get the cash to consume. Toss all the developers and a largish cohort of well-paid people head towards the dole.
I know that all investments have risk, but this is one risky gamble.
US$700 billion could build a lot of infrastructure, housing, or manufacturing capacity.
There's one additional question we could have here, which is "is AI here to stay and is it net-positive, or does it have significant negative externalities"
> What we really want to ask ourselves is whether our economy is set up to mostly get things right, or it is wastefully searching.
We've so far found two ways in recent memory that our economy massively fails when it comes to externalities.
Global Warming continues to get worse, and we cannot globally coordinate to stop it when the markets keep saying "no, produce more oil, make more CO2, it makes _our_ stock go up until the planet eventually dies, but our current stock value is more important than the nebulous entire planet's CO2".
Ads and addiction to gambling games, tiktok, etc also are a negative externality where the company doing the advertising or making the gambling game gains profit, but at the expense of effectively robbing money from those with worse impulse control and gambling problems.
Even if the market votes that AI will successfully extract enough money to be "here to stay", I think that doesn't necessarily mean the market is getting things right nor that it necessarily increases productivity.
Gambling doesn't increase productivity, but the market around kalshi and sports betting sure indicates it's on the rise lately.
AI could be here to stay and "chase a career as an electrician helping build datacenters" could also be a mistake. The construction level could plateau or decline without a bubble popping.
That's why it can't just be a market signal "go become an electrician" when the feedback loop is so slow. It's a social/governmental issue. If you make careers require expensive up-front investment largely shouldered by the individuals, you not only will be slow to react but you'll also end up with scores of people who "correctly" followed the signals right up until the signals went away.
I suspect a lot of this is due to large amounts of liquidity sloshing around looking for returns. We are still dealing with the consequences of the ZIRP (Zero Interest Rate Policy) and QE (Quantitative Easing) where money to support the economy through the Great Financial Crisis and Covid was largely funneled in to the top, causing the 'everything bubble'. The rich got (a lot) richer, and now have to find something to do with that wealth. The immeasurable returns promised by LLMs (in return for biblical amounts of investment) fits that bill very well.
Your comment doesn't say anything
If
"The real question is whether the boom is, economically, a mistake."
The answer to this is two part:
1. Have we seen an increase in capability over the last couple of years? The answer here is clearly yes.
2. Do we think that this increase will continue? This is unknown. It seems so, but we don't know and these firms are clearly betting that it will.
1a. Do we think that with existing capability that there is tremendous latent demand? If so the buildout is still rational if progress stops.
> People will take courses in those things and try to get a piece of the winnings.
The problem is boom-bust cycles. Electricians will always be in demand but it takes about 3 years to properly train even a "normal" residential electrician - add easily 2-3 years on top to work on the really nasty stuff aka 50 kV and above.
No matter what, the growth of AI is too rapid and cannot be sustained. Even if the supposed benefits of AI all come true - the level of growth cannot be upheld because everything else suffers.
> What we really want to ask ourselves is whether our economy is set up to mostly get things right, or it is wastefully searching.
I can’t speak to the economy as a whole, but the tech economy has a long history of bubbles and scams. Some huge successes, too—but gets it wrong more often than it gets it right.
> If AI is here to stay, as a thing that permanently increases productivity,
Thing is, I am still waiting to see where it increases productivity aside from some extremely small niches like speech to text and summarizing some small text very fast.
"If X is here to stay, as a thing that permanently increases productivity" - matches a lot of different X. Maintaining persons health increases productivity. Good education increases productivity. What is playing out now is completely different - it is both irresistible lust for omniscient power provided by this technology ("mirror mirror on the wall, who has recently thought bad things about me?"), and the dread of someone else wielding it.
Plus, it makes natural moat against masses of normal (i.e. poor) people, because requires a spaceship to run. Finally intelligence can also be controlled by capital the way it was meant to, joining information, creativity, means of production, communication and such things