A "bet" implies there's a risk of losing if it doesn't play out. As far as the individuals in the Govt and the involved companies are concerned, there is no risk for them. It's not their money, and the individuals will come out much better off regardless of outcome. It is simply a good investment.
I wonder about Japan and Europe these days. Back in the 80s, when Japan was pursuing the "Fifth-Generation Computers", EU and US scrambled to compete with Japan. Like, it was a big deal for strategists and decision-making high-level politicians of that era.
Now in 2020s, it seems only China is tailing US and in turn, US is wary of China. What gives?
The counterfactual was never "cutting pensions and medicare". That wasn't on the table and no government would ever commit suicide and pass it. It was either, spend until the economy completely collapses under the weight of debt and hyperinflation, or do exactly the same thing but pray for a miracle while doing so.
> It could be a while before the boost comes. ... There is another problem. If the productivity boost from AI is large enough to change any country’s fiscal arithmetic profoundly, vast job disruption is probably coming too, meaning more spending on unemployed workers (see United States section). Income may also shift from labour to capital, which is more lightly taxed. Should AI prompt an arms race, countries will also need more defence spending.
What a load of crap. Most of the AI investment by governments is defense spending and it's been happening for years.
This whole article's premise is trying to rearrange the reasons for the large amount of spending and muddy waters. This isn't a bet on economic growth. This is purely a capabilities arms race and the cold war never ended.
The stock market is still business as usual. This spending is all coming from taxes and private equity mostly detached from those investments. The scaremongering about employment is a red herring. We all know it doesn't work that well. It doesn't matter. The only real losers are those trying to run a business too cheaply with AI. They tend to be the same startups always expected to lose anyway.
I'd argue (almost)every party in the economy is making a dangerous bet on the AI boom. Capex is great for boosting the economy, but eventually the debt that funded said capex comes due..combine that with the depreciation of the underlying assets(chips, buildings, etc.) and I don't see how this doesn't destroy balance sheets wholesale.
12 comments
[ 0.63 ms ] story [ 22.3 ms ] threadWhat governments do (which is the actual content of the article) is betting on economic growth to exceed the growing debt.
Now in 2020s, it seems only China is tailing US and in turn, US is wary of China. What gives?
The counterfactual was never "cutting pensions and medicare". That wasn't on the table and no government would ever commit suicide and pass it. It was either, spend until the economy completely collapses under the weight of debt and hyperinflation, or do exactly the same thing but pray for a miracle while doing so.
So, we're doing the second one.
What a load of crap. Most of the AI investment by governments is defense spending and it's been happening for years.
This whole article's premise is trying to rearrange the reasons for the large amount of spending and muddy waters. This isn't a bet on economic growth. This is purely a capabilities arms race and the cold war never ended.
The stock market is still business as usual. This spending is all coming from taxes and private equity mostly detached from those investments. The scaremongering about employment is a red herring. We all know it doesn't work that well. It doesn't matter. The only real losers are those trying to run a business too cheaply with AI. They tend to be the same startups always expected to lose anyway.