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They Are Sacrificing the Economy on the Altar of a Machine God
The AI bubble is about to pop
I.
Technological bubbles are misunderstood. If you asked any person on the street for a concise definition, you may get something like this: “A bubble happens when excitement and speculation push tech company valuations far beyond their real economic value; eventually reality catches up and the bubble bursts.” Maybe not any person on the street, but anyway, to the extent that it is a simplification, the description is accurate.
The problem comes when we over-interpret the unspoken implications: A bubble, it is often believed, spawns out of thin air; there’s nothing of value hiding inside but a void made out of lies and vaporware waiting to fall upon the world like a heavy rain. But that’s rarely the case. Bubbles are simply an unhealthy extension of the real value lying at the center. There is a “kernel of truth,” as OpenAI CEO Sam Altman, the modern “Bubble Man” par excellence, told The Verge.
Investors buy (belief) and then buy (money) that kernel of truth — out of a common greed but also out of an unusual sensibility toward optimistic types — and redirect the flow of money until it floods the sector and the bubble implodes, killing most of them in the process, but preparing the soil so the few winners can thrive in the subsequent period of blooming progress and tangible value. That happened with canals, then railways, then domains. If history books are to be trusted — AI bros…
