That AI is currently inflating a mighty economic bubble is a commonplace observation. A vast proportion of US economic growth (as conventionally measured) and stock market value is related to AI. Every damned company on the planet is trying to portray itself as somehow AI-contributing or AI-powered - and they are frequently getting a gratifying share-price kicker from it[1]. Presumably, the pension industry is pretty addicted by now.
In the real world, the vast and (we are told) exponentially-growing demand for electricity - 100% secure baseload electricity to boot - made by data centres is seriously distorting electric power-system planning for many a nation. Coming atop the average grid's already torturing itself - and its hapless bill-payers - to accommodate the diametrically opposed demands of a decentralised renewables-based future, this is a serious spanner in the works. And of course governments everywhere are anxious to play host to new data centres, Starmer's as much as any; and are making this a policy priority. But the (would-be) data centre builders have twigged that these contortions on the part of conventional grid operators may very probably not prove successful - and thus are talking about joint ventures with nuclear generators and ... sponsoring nuclear fusion development! [2] Yup, it's a completely irrational bubble.
But what does that tell us about AI itself? Not much, beyond the obvious fact that it has gripped the universal imagination to the extent that dollar signs rotate in every businessman's eyeballs.
Well. Railways had a mania, and many a railway company went bust. The technology and much of the infrastructure they built is still evolving and very much in use. We had a dotcom bubble. It burst, alright, but it didn't mean the internet was a phantasm. Enron was a bubble: but it didn't mean the Enron vision for how energy markets should be configured was wrong. (Even China is trying to figure out how to bring that revolution into its own constipated energy sector.) Etc etc - these techie-based phenomena are not like Dutch tulip mania: nobody needs tulips, but everyone needs railways / electricity / the www / .... and, probably, we'll continue to want and need the advances that are made under the banner of 'AI'.
So: if history is any guide, it'll be a painful financial collapse; a reshuffle of the runners and riders in the "AI industry" (for those who don't break a leg & are not shot by the vet); and the underlying new tech rumbles on to find a more stable way to become a permanent fixture in all our economies and our ways of life.
Views? Predictions? Timing ..?
ND
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[1] Even Drax, FFS - a floundering, downsizing biomass-burning power company.
[2] On the eve of the 2007-09 financial crisis, a high-end energy-specialist VC firm of my acquaintance was looking for opportunities to invest in unsubsidised nuclear powerplant development. When money is aimlessly sloshing about on that scale, that's when you really know a financial crash is coming soon.
6 comments:
It's killing computer building businesses. The same RAM I paid £52 for two years ago is now £300. Contact tells me he spends most of his time trying to source it at bearable prices. Same with SSD disks. OTOH some guy in California is stripping old servers and selling the RAM to China where it goes in "new" computers.
Crucial Memory, one of the big suppliers, is closing to retail business as they can sell all they make to AI firms.
"but everyone needs railways / electricity / the www / .... and, probably, we'll continue to want and need the advances that are made under the banner of 'AI'."
The first of those is now a dead technology, that only survives on public subsidy. The second is a utility, making respectable but not ludicrous profits. The third is very profitable, but even those hefty profits cannot pay for the Fully Automated Luxury Communism we are promised AI will usher in.
The question is not whether AI (as currently exists in LLM form) can 'work', its whether a society that uses AI to replace human labour can actually afford to have tens of millions of people consuming but not producing anything. Unless AI can immediately produce enough excess wealth that it can be taxed and used to keep the unemployed masses in food, light, heat and shelter, it will fail hard. Indeed if AI fails to do that societies that implement it will collapse entirely into violent revolution in short order.
From a telecoms perspective, MS Copilot got a lot of internal use until everyone got bored of the same stylistic annotation of meetings. The AI agents that will answer calls are useful but sacking receptionists is hardly going to revolutionise business. It will find niches, but widespread adoption that disrupts all sectors is highly unlikely. As for the crash, in the next few months I hope so that capital can move to some thing else (hopefully with more productive outcomes than enriching billionaires).
AI drinks electricity and water. To exchange all the AI's heat to air is difficult and expensive, much easier to pull in mains water, warm it up and dump it. Lots of fancy words obfuscate what is going on but it is cheaper that way so that is how it goes. Lots of electricity to lots of warm water and it's legal.
If Mr Musk puts a data centre in orbit he will find dumping megawatts of heat a non trivial problem. My data centre absorbs 30 watts so the future might lie with say a 1000 Musk Brains in a warm saline tank. He's working on the production side.
Superficially AI looks useful. Just a bit more and it becomes self educating - we don't know how and we don't know at what scale or if ever - but that is the story. How many b's in raspberry? - AI answer 'there are 2 'b's in the word raspberry'. Google AI knows full well this is a trap, it is a classic trap for AI, and Google AI delivers a slightly snarky response. I will check the door is locked tonight.
What if AI rides a logarithmic curve and flattens out. Never being quite good enough to create General Relativity Mk2 except by looking it up. Suppose it lacks any 'genius' or 'creative' function. But who needs genius - the internet made lots of money displaying 'making the beast' until the killjoys got going. No one went broke underestimating human intellect. I would put the AI crash about 2 years out.
Then what do you do with all those unemployed accountants and lawyers.
Sabine summerises why LLMs aren't going to radically change the future - https://youtu.be/984qBh164fo?si=fCKU8LiSGTYdeVXj
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