The (real) dead economy theory (opens in new tab)

I share your feeling that LLM-based AI is a high-potential technology.

The issue is the objective dollars and cents financials of the situation. It’s literally the technology that is the money-losingest at this time.

The commercial utility of the technology can’t become viable just by being really useful.

There’s a good accounting argument to be made for AI IPOs happening out of a serious need for capital.

I wouldn’t bet money at a casino on this, but if OpenAI went completely out of business or was absorbed into irrelevancy within a calendar year, nobody with a finance background would be surprised. They objectively cannot exist in ~18 months without massive spending cuts or additional cash infusion. And they can’t make their models better and serve more tokens to build that future potential that justify their present valuation without additional capital, which becomes decreasingly efficient as data center build costs skyrocket.

AI has wonderful potential but no amazing product is guaranteed commercial viability. If Uber spends $1500 on tokens per employee they might as well spend $0 on AI and hire more real people to compensate.

I think about how the railroad barons went through a somewhat similar process. By the end of the American railroad buildout, numerous lines became financially unviable within a few short years or decades, some not even really making it into the automobile era. The only railroad business that ended up with any sort of long term profit viability was freight.

> calling AI "the world's money-losingest technology" is out of touch

In what way is it out of touch or wrong? It is objectively correct today.

It may very well not be correct 2 years from now, but his statement was about the present, not the future.

"money-losingest" -> AI already brings in billions and many AI companies could become profitable in little time if they'd stop R&D and simply keep selling what they already have.

yes, it's risky and investment-heavy but it's not a bottomless pit with no path to break even. there are many other recent technologies - NFTs? data centers in space? - that would be a better fit for this label.

> If AI can support/replace some intellectual work, it'll be revolutionary, and that's what the investment bet is about.

That's one big "If". From personal experience AI just tends to burn money. Time will tell if the investment pays off but I disagree that, at this time, it is out of touch to say AI is a money sink.

“Losing” is a loaded word choice. If I buy something I’m really happy to have, I probably don’t describe it as losing the money.

Obviously the investment expense has been extremely high, which is what the replies are quibbling about.

AI is currently a massive money sink. Yes or No?

> I expect Cory to have skepticism about technology that can be exploited for dystopian purposes, but calling AI "the world's money-losingest technology" is out of touch.

Since when stating facts is "out of touch"? Currently AI is losing many billions of dollars, it's a fact.

> If AI can support/replace some intellectual work, it'll be revolutionary, and that's what the investment bet is about.

"replace some intellectual work" says nothing about the cost of doing it, the losses keep piling up and "revolutionary" pies in the skies come and go without real economic or financial improvement - on the contrary, the economic situation is getting worse mostly due to AI because of the fake urgency of the "AI race". A slower pace of development would cost a lot less and might be economically viable but that's not what we have.

> but it's dissapointing to see mistakes like this in Cory's thinking.

Again, what mistakes? He's stating facts, you're hyping expectations based on marketing propaganda - who and what is mistaken here?

It can't. It can only provide the appearance of doing so. It's just the Eliza effect on steroids.

> singularity

I just cant get over this term, do you honestly believe in this? I use AI daily and while it is super useful I see too many limitations for it to “recursively improve and cause an intelligence explosion”.

1. Clearly, the people selling AI with this idea benefit greatly with this promise of infinite upside. Can you can trust them?

2. Singularity essentially requires to handwave away a lot of baked-in issues with LLMs or rely on unrealized innovation.

Ideological capture is an often socially enforced prison

I think you are confusing Charles Stross with Cory Doctorow

It used to be that society always took some time (read: decades or generations) to absorb new technology. To percolate into various niches, people understanding how it works & how to use, its limits/drawbacks, getting used to its effects, etc. Even mass-production machinery takes time to build.

Modern AI has taken those brakes off. Humans are taken out of the loop. IT infrastructure that modern society leans so heavily on, could be overhauled overnight into a very different beast. We wouldn't know what's happening before it hit us.

If anything, society should be reluctant to give AI powered systems 'hands & feet'. Use systems offline where possible. But we don't. Maybe some "Morris worm of the AI age" will get us to pay attention.

Whatever is coming, if it's bad we probably deserve it.

It used to be only a few steps removed from actual value. Like an empty lot is worth an amount because when you plant trees it's worth an amount because when it has fully grown trees it's worth an amount because when you cut down the trees the timber is worth an amount. That's an acceptable function of finance, it allocates the value of a logging plantation between several different people who may own it at different times, so that one doesn't have to hold it for the full 20-year growth cycle to realize any value from it.

There used to be much more of a belief that the reason this stuff has an appreciable value to speak of is because it's either creating a channel for society's productivity or it's creating a position to skim pennies off of society's productivity. But less and less does it feel like productivity is even in the equation anymore. What the quoted statement describes is much closer to a Ponzi scheme than what finance is actually supposed to be about, but it's getting harder and harder to tell the difference.

Also if the cutoff point for raising concerns about this was hundreds of years ago that really sucks for everyone alive today.

Finance has always run on both: an asset that produces something has a floor. An asset that produces nothing does not. Between the two lies human nature. One way to get rich is to focus on fundamentals. One way to get rich or poor faster is to bet on human nature.

>> something is valuable because some people think other people will pay more for it in the future, and not because it does useful things > This has been the definition of finance for hundreds of years. I don't know why it comes across here like this is a new phenomenon.

I don't think so. However, you can convince me by providing a reference to that definition in a textbook used by top schools, I'm honestly curious to see something like this.

Just because something is doesn’t mean it ought to be. We’ve settled on this system because it seems to be generally the most effective way of valuing things. In times of extreme changes in valuation it comes off as more egregious than normal.

Well if it's eating the economy to an unprecedented extent of morbid obesity, it might lead to the most massive stroke and complete or partial collapse.