I wouldn’t necessarily expect gains in productivity due to IT improvements. Productivity growth had been mediocre since the 1970s. I understand the term is Solow’s Paradox.
We are seeing from governments more and more desperation moves. Here in Canada we’ve seen governments banking on electric cars and pledging $50 billion in subsidies to various industrialists, some of whom have already gone bust.
One important point is that it takes electricity to run AI and electric cars, and we just don’t have it. People are acting like electricity is cheap and easy to produce. It isn’t. So these ideas are doomed to begin with.
I actually think the AI Bubble Pop itself won't be so catastrophic as feared - contrary to past bubbles, the investments are not highly leveraged but rather Big Tech having saved loads of cash on hand, with the incentive and pressure to invest it somewhere. As Peter Thiel constantly preaches, AI is pretty much the only game in town, so there is nowhere else for that cash to go. So the financial fallout will probably be less than the 2008 crisis, as far as immediate direct effects.
But the long term prognosis suggests secular stagnation and decline, as it may be the last bubble
If AI disappoints in productivity gains, the trends making economic productivity and thus long term per capita growth stagnate, namely the complete uselessness of the modern research apparatus
and comprehensive crowding out of private innovation and entrepreneurship from debt and rising effective tax rates, will sink in to make the situation terminal.
Well said. I dearly wish I thought our elites had a backup plan but... I don't think they have a backup plan.
I wouldn’t necessarily expect gains in productivity due to IT improvements. Productivity growth had been mediocre since the 1970s. I understand the term is Solow’s Paradox.
We are seeing from governments more and more desperation moves. Here in Canada we’ve seen governments banking on electric cars and pledging $50 billion in subsidies to various industrialists, some of whom have already gone bust.
One important point is that it takes electricity to run AI and electric cars, and we just don’t have it. People are acting like electricity is cheap and easy to produce. It isn’t. So these ideas are doomed to begin with.
very good article
TY
Excellent article, glad you liked the Schopenhauer essay!
Thanks!
Completely agree
https://philomaticalgorhythms.substack.com/p/stargate-is-a-colossal-waste-of-money
https://philomaticalgorhythms.substack.com/p/psa-ai-will-not-take-your-job-and
I actually think the AI Bubble Pop itself won't be so catastrophic as feared - contrary to past bubbles, the investments are not highly leveraged but rather Big Tech having saved loads of cash on hand, with the incentive and pressure to invest it somewhere. As Peter Thiel constantly preaches, AI is pretty much the only game in town, so there is nowhere else for that cash to go. So the financial fallout will probably be less than the 2008 crisis, as far as immediate direct effects.
But the long term prognosis suggests secular stagnation and decline, as it may be the last bubble
https://charleshughsmith.substack.com/p/is-this-the-last-bubble-224
If AI disappoints in productivity gains, the trends making economic productivity and thus long term per capita growth stagnate, namely the complete uselessness of the modern research apparatus
https://www.aeaweb.org/articles?id=10.1257/aer.20180338
and comprehensive crowding out of private innovation and entrepreneurship from debt and rising effective tax rates, will sink in to make the situation terminal.