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America's $1T AI Gamble
- xyst 8mo agoAnd this gamble is paid for by American taxpayers, increased cost of utilities, and multibillion dollar corporations receiving tax breaks/subsidies from the cities/counties they build in. This country is so awful. Great if you are rich. Awful if you are not in this top 0.01-1%. A massive $79T has been transferred from bottom 90% to top 1% since the 1970s. [1] [1] https://www.rand.org/pubs/working_papers/WRA516-2.html https://www.rand.org/pubs/working_papers/WRA516-2.html
- jryan49 8mo agoI love how they say with a straight face that when AI takes over they will finally share all the fruits of capital with us.
- rozap 8mo agoThe French had a tool for this problem.
- sQL_inject 8mo agoAnd look how it has worked out for them.
- organsnyder 8mo agoNot sure what you're implying, but I'd say their society is doing fairly well.
- webdoodle 8mo agoOnly because the U.S. and U.K. conspired against them. The French did everything they could to keep the fire burning, by hosting people from various countries to teach them about revolution. Organizing globally against the rich parasites was hard and expensive back then. Now the only hold back, is that the rich parasites own most of the internet. But WE BUILT IT, and can take back the internet when we finally realize it's not dems vs reps, but rich vs poor. It's always been a class war, they just are much better at keeping us distracted.
- sarchertech 8mo agoI think we need reforms and I’m very much against the accumulation of power that we’ve allowed the billionaire class. But the French Revolution is nothing to emulate. If you’ve read the history of the French Revolution you know that it quickly moved on from rich parasites to murdering and imprisoning people over minor philosophical differences and real or lack of perceived lack of enthusiasm for continued murder. And it eventually led to global war and attempted global conquest.
- rozap 8mo agoMy original (admittedly tongue in cheek) comment is less of a value judgement, and more an observation that if the ruling class doesn't effectively walk the tightrope of exploiting while subduing people, then they stand to lose a whole lot.
- gulfofamerica 8mo ago[dead]
- reducesuffering 8mo agoGood luck using guillotines on an army of militarized drones outnumbering you 10 to 1.
- ericmay 8mo agoYes, guns, clubs, fire, and steel weapons. And afterward they had the Reign of Terror, and the rise of the French Emperor Napoleon. It seems like it mostly worked out in the long run, though subsequent World Wars left the French Empire as a weakened shell of itself. In the short term, up until Napoleon was finally taken down by the combined British and Prussian forces at Waterloo, it seemed to have led to all sorts of calamities. How many died? How many did Robespierre manage to get sentenced to death before he met the same fate? Would Napoleon have risen and caused the death of so many? One thing would-be revolutionaries don't appreciate is that, well, similar to Mr. Putin's experience today, revolutions (and wars) are much easier to start than to control. One day you're chopping off the leader's head, the next day you are pressed into military service and your Constitution is gone. I personally would rather be patient and work on reforming institutions, even if it takes a much longer time. Often times when we get rid of them, it's not that something better fills the void, as anarchists (communists or libertarians alike) like to claim, but instead it's nothing and that capability is gone until some calamity restores the need.
- sarchertech 8mo agoExactly this. Violent revolutions are very rarely successful in increasing the average welfare and freedom of the populace.
- niggernagger 8mo ago[flagged]
- BosunoB 8mo agoY'all gotta stop looking at politics this way. You know why they don't share the fruits of capital with us now? Because Americans hate getting taxed to pay for welfare, and so they've been voting against taxes for 50 years. This whole political landscape changes when people lose their jobs to AI, a thing that everyone thinks should be taxed. In fact, the entire ideological underpinning behind extreme wealth accumulation is gone when AI runs everything.
- jryan49 8mo agoWorks great in other countries with high unemployment. That's exactly what happens! People elect a person who says they are going to change everything to fix it and they never get around to it for some reason :) Just look at the mess south America is in...
- BosunoB 8mo agoYes, because current unemployment comes as the result of complex factors that intersect with various groups and ideologies in complex ways. Also, raising employment is a complex task. When AI takes the jobs, it will be dead simple to the majority of people that the current way of doing things will not work, in the same way it's dead simple to you and me.
- scrollop 8mo agoSaw a video summarising this on gamersnexus today and it is nauseating - especially Jensen.
- francisofascii 8mo agoNot to mention all the land being gobbled up to build these data centers.
- jl6 8mo agoOf all the externalities under discussion, I think land use is a very minor one.
- sQL_inject 8mo agoMost of this land was low-utility anyway. You should realise it is good for the land owners to convert it to high yield output, which in turn the government can tax and return some of the gains to the people. What's the alternative ?
- coffeemug 8mo agoTo be intellectually honest about it, you have to answer a bunch of questions: 1. Awful compared to what? 2. Was there an equivalent transfer outside America? 3. What is the cause? What ratio rent-seeking/shady activity vs a consequence of natural forces (e.g. technological change)
- BloondAndDoom 8mo agoIf it’s any consolation, I’m rich yet the country is still shit. (Comparing to Europe as a previous immigrant of Western Europe.
- hattmall 8mo agoOther than a few parasitic industries it's pretty great. If we can just get some common sense reforms in insurance, healthcare, advertising, and reverse some regulatory capture it would be comparably utopic.
- throwmeaway820 8mo ago> A massive $79T has been transferred from bottom 90% to top 1% since the 1970s This assertion is based on comparing reality with a counterfactual where income distributions remained static from 1975 to the present. Real median personal income roughly doubled over this time period. The use of the word "transferred" seems a little intellectually dishonest here. The use of the counterfactual seems to suggest that income distribution has no relationship with growth in total income, and total income would have been exactly the same regardless of income distribution. I see no reason to assume that to be the case.
- yifanl 8mo agoWell you have a data point of one, so I guess we live in the best of all possible outcomes?
- throwmeaway820 8mo agoI don't understand what you mean by "data point of one" Do you think I'm talking about my own, personal income? I'm talking about median personal income in the United States, because the figures I found for household income only go back to 1985
- tim333 8mo agoThere's some of that but the vast majority is paid with private sector stuff - business profits and investor money.
- dfilppi 8mo ago[dead]
- WarmWash 8mo agoAI plans are not going to stay at $20/mo. People will go to alternative models, but it likely will be as popular as Linux.
- co_king_3 8mo agoI don't know about you, but I benefit so much from using Claude at work that I would gladly pay $1,500-$2,000 per month to keep using it.
- galleywest200 8mo agoThat is more than one month rent for most of the world. Most people are simply not going to pay this.
- co_king_3 8mo agoWell then I'm sorry but unfortunately they are going to be left behind. People who are cut out to be software developers can afford the means of production.
- actionfromafar 8mo agoAre you OpenAI? If not, you don't afford the means of production. You're the sharecropper.
- mrbungie 8mo agoPretty edgy response. I'd say trying to scale in price rather than in quantity is a bad business strategy for tech period, specially if you hope to become Google-sized like OpenAI and company want.
- mirsadm 8mo agoSure they can also code without the help of a model, probably not that much slower.
- flir 8mo ago
- fastball 8mo agoA significant part of the capex is just energy, so even if there is some sort of AI black swan event and the data centers become obsolete overnight (unlikely), energy is literally the root of all bounty so it is good that something is incentivizing increased resource allocation in that area.
- mg 8mo agoMy napkin-math approach to get a bird's eye perspective on the situation: A $1T investment needs to produce on the order of $100B in yearly earnings to be a good investment. Global GDP is about $100T. So one way for things to work out for the AI companies would be if AI raises GDP by 1% and the AI companies capture 10% of the created value.
- nradov 8mo agoThat reminds me of "Chinese marketing" strategy by a lot of Western companies 30 years ago when their economy first opened up. There are billion people in China so if we can capture just 1% market share there then we'll make a fortune, right? Spoiler alert: it (mostly) didn't work.
- mg 8mo agoSometimes it works. Steve Jobs aimed for 1% market share with the iPhone: https://youtu.be/VQKMoT-6XSg?t=4605 https://youtu.be/VQKMoT-6XSg?t=4605 Now it is at 20%.
- bryanlarsen 8mo ago10% capture seems highly unlikely. That level of capture is only possible for b2b high touch sales, aka "call-me" pricing. For call-me pricing to work, you have to ensure that any sort of public sticker price is not a suitable alternative. You can not have a sticker price, make the sticker price so high essentially nobody will buy it or by finding a feature like oauth that makes the public version infeasible for businesses. And then you also have to maintain enough of a monopoly / oligarchy to sustain that level of pricing. I don't think either of those two conditions will apply in the future. AI providers now have a sticker price that provides basically all functionality, almost completely eliminating the opportunity for extremely high-margin b2b. They've decided a small slice of a large pie is bigger than large piece of a smaller pie. I suspect that's true and will continue to be true in the future. An oligarchy is difficult to sustain with more than 3 global players. Right now we seem to have 3 frontier models for coding that can and will charge more than commodity prices. However there are open source non-frontier models that you can use for inference costs only and even if those don't keep up it seems likely there will be enough non-frontier models available that their pricing will also be at the commodity level. Those cheaper models will provide significant downward pressure on frontier pricing.
- vessenes 8mo agoThis is a good analyst report - lots of data. Conclusion - firms are spending ahead of sustained revenues right now, and a lot of the money is going offshore to TSMC, basically. I’m not certain of the conclusion - I think a lot depends on amortization schedules - if data centers are fully booked right now, then we don’t need very long amortization schedules at the reported 60+% margin on inference to see this capex fully paid off. My prior is that we are seeing something like 1/10,000th or so of the reasonable inference demand the world has fulfilled. There’s a note in the analysis that might back this - it says that we are seeing one of the only times ever where hardware prices are rising over time. Combined with spot prices at lambda labs (still quite high I’d say), it doesn’t look like we’re seeing a drop in inference demand. Under those circumstances, the first phases of this bet, cross-industry, look like they will pay off. If that’s true, as an investment strategy, I’d just buy the basket - oAI, Anthropic, GOOG, META, SpaceX, MSFT, probably even Oracle, and wait. We’ll either get the rotating state of the art frontier capacity we’ve gotten in the last 18 months, or one of those will have lift off. Of those, I think MSFT is the value play - they’re down something like 20% in the last six months? Satya’s strategy seems very sensible to me - slow hyperscale buildouts in the US (lots of competition) and do them everywhere else in the world (still not much competition). For countries that can’t build their own frontier models, the next best thing is going to be running them in local datacenters; MSFT has long standing operational bases everywhere in the world, it’s arguably one of their differentiators compared to GOOG/META.
- scrollop 8mo agoIf a different architecture to LLMs is invented (that could actually "think", that could potentially reach AGI), then perhaps it would be more efficient than LLMs. Perhaps LLMs can make themselves more efficient. They can't even remember "properly". Hallucinations cripple them for serious, professional uses. If they may hallucinate 5% of the time and you are asking mission critical queries, that's a problem. Perhaps all of these data centers won't be needed. At least not by some of the current AI companies that won't keep up. If that happens to OpenAI, that would be quite a shock to the financial system (and GDP). Microsoft's changes to windows have alienated some of their userbase. Copilot is poor compared to it's rivals. There's a reason they are down 20%. Linux adoption use is accelerating (still too low!). And don't forget AI on device. When it becomes "good enough" for most tasks, data centre use will reduce. With the talk of Nvidia backtracking and saying they won't invest 100 billion in OpenAI, Oracle in a poor financial position with the loan's for it's upcoming data centres becoming more expensive and dubious (they could fail to pay them)- the picture isn't as positive as you make it out to be. Which makes me think that you have an ulterior motive.
- throwaway1114 8mo agoAt this year Davos it was said in open text: big LLM supplieers & labs don't have enough demand to have profit that will cover spending. They must compete and provide supply because who win race will get most of the rewards. Geopolitics makes this even worse. So they are over leveraged and now time is running out before house of cards will collapse. All the hype and paid marketing is target to make masses (and more important people who make decisions) believe their story and buy into it. I assume for a person without technical background it's hard to filter signal from noise. It's all about that is hard to see that LLMs are what they are because "they" make great illusion of intelligence and illusion of novel thinking when it fact they just do the math with big text database.