The (real) dead economy theory

I think you are confusing Charles Stross with Cory Doctorow

Ideological capture is an often socially enforced prison

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.

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.

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 degree 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.

> 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.

"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.

“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?