It’s pretty obvious where we’re heading, but let’s start with a quote from Cory Doctorow (emphasis mine):
[T]he AI bubble is driven by monopolists who’ve conquered their markets and have no more growth potential, desperate to convince investors that they can continue to grow by moving into some other sector, e.g. “pivot to video,” crypto, blockchain, NFTs, AI, and now “super-intelligence.”
Further: the topline growth that AI companies are selling comes from replacing most workers with AI, and re-tasking the surviving workers as AI babysitters (“humans in the loop”), which won’t work.
Finally: AI cannot do your job, but an AI salesman can 100% convince your boss to fire you and replace you with an AI that can’t do your job, and when the bubble bursts, the money-hemorrhaging “foundation models” will be shut off and we’ll lose the AI that can’t do your job, and you will be long gone, retrained or retired or “discouraged” and out of the labor market, and no one will do your job.
AI is the asbestos we are shoveling into the walls of our society and our descendants will be digging it out for generations.
There’s an interesting bit on top of it, in part quoted from a (paywalled) WSJ article:
That barely scratches the surface of the funny accounting in the AI bubble. Microsoft “invests” in OpenAI by giving the company free access to its servers. OpenAI reports this as a ten billion dollar investment, then redeems these “tokens” at Microsoft’s data-centers. Microsoft then books this as ten billion in revenue.
That’s par for the course in AI, where it’s normal for Nvidia to “invest” tens of billions in a data-center company, which then spends that investment buying Nvidia chips. The same chunk of money being energetically passed back and forth between these closely related companies, all of which claim it as investment, as an asset, or as revenue (or all three).
Also, there are a few other things—beyond this essay, beyond the Deutsche Bank warnings, beyond the Apollo alert that “equity investors are dramatically overexposed to AI”—that will feed into all is.
Namely, there will be repercussions in labor markets from the immigration restrictions; declining consumer spending in the light of layoffs; reduced investments in everything outside AI; the fallout from numerous bonkers tariffs; and the dismantling of consumer rights and the ACA that will hurt consumer spending even more. If all that doesn’t spell “impending recession,” I don’t know what does.
Yet, for the AI bubble burst, there’s a light at the end of the tunnel. Cory Doctorow again:
During my stay at Cornell, one of the people responsible for the university’s AI strategy asked me what I thought the university should be doing about AI. I told them that they should be planning to absorb the productive residue that will be left behind after the bubble bursts.
Plan for a future where you can buy GPUs for ten cents on the dollar, where there’s a buyer’s market for hiring skilled applied statisticians, and where there’s a ton of extremely promising open source models that have barely been optimized and have vast potential for improvement.
I’m generally optimistic that we can build amazing tools with GenAI technologies, and I’d love to be part of it.
But first, the Spire Must Fall.