Cory Doctorow: What Kind of Bubble is AI?
Of course AI is a bubble. It has all the hallmarks of a classic tech bubble. Pick up a rental car at SFO and drive in either direction on the 101 – north to San Francisco, south to Palo Alto – and …
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Tech bubbles come in two varieties: The ones that leave something behind, and the ones that leave nothing behind. Sometimes, it can be hard to guess what kind of bubble you’re living through until it pops and you find out the hard way.
Contrast that bubble with, say, cryptocurrency/NFTs, or the complex financial derivatives that led up to the 2008 financial crisis. These crises left behind very little reusable residue.
The 2008 financial crisis was not the result of a "tech" bubble.
Eh. Financial instruments are an invention, and they can shape advances as readily as any electronic innovations. Joint-stock companies contributed to the age of sail as much as ship's clocks and other navigation tools. That gimmick is ultimately why stock exchanges have been high-tech digital affairs (with quite a lot of analog interfaces) since before microchips.
Enron claimed to have some vague new means of lowering costs, acquiring revenue, and making the line go up. It would have been transformative for the power industry if it wasn't straight-up fraud.
The 2008 lending crisis was halfway between those. It was a new strategy that turned crappy lending into worthwhile lending... in theory. And it relied on a ton of data. Too bad it was cyclical bullshit.
The 2008 crisis was a result of predatory lending practices and mortgage backed securities that were full of subprime mortgages and other toxic assets, and a burst real estate bubble. I don't think it was a tech bubble like the dotcom bust.
Enron claimed to have some vague new means of lowering costs, acquiring revenue, and making the line go up. It would have been transformative for the power industry if it wasn’t straight-up fraud.
Well, they were gaming the rules in the California energy market. They were doing shit like causing blackouts so they could price gouge.
Right, and also just making shit up. Enron's executives literally could not describe how they made so much money. The secret ingredient was crime.
The 2008 crisis was at least somewhat rooted in reality. It was a risk management strategy that - in theory - let them lend out a looot more money, by being less likely to lose money, even if they gained less per-dollar. But of course every single asshole involved cranked up their flour-to-sawdust ratio and promised nothing could possibly go wrong.
I think it's worth including finance shenanigans alongside tech bubbles, because even if finance isn't tech, tech bubbles are absofuckinglutely just another finance shenanigan. The dot-com bubble didn't burst because people stopped using the web. It was all about obscene sums of money being thrown at stupid ideas. Some of those stupid ideas worked! If not for the investor-class expectation that you turn the crank and get ten dollars for one dollar, we'd simply describe the period as one of naive experimentation. Better environments would allow people to try their big stupid ideas using their own money, or mundane business loans, instead of trying to attract millions and promise billions.
It's only a bubble because greedy idiots pump it up. Without that, failures are still news, but they don't become a historical event.
Thanks for your pedantic, useless gotcha analysis.
You're welcome.
