[fsckboy]

>infrastructure beyond the company

consider all the companies in a market and those that feed that market to be one virtual mega company, add up all the valuations and revenue streams, costs, etc and aggregate all the investors into one. Nothing changes about the picture I drew. We simplify models to make the real world understandable.

>negative impact ripples through the economy due to misallocation of resources

free or relatively free financial markets are the only way, the best way, the ne plus ultra of ways we know to allocate capital, we have no better way than for the owner of the capital and the reapers of the loss or reward to make a considered opinion that is risk "impedance" matched. By definition, the market does not "misallocate" capital, it optimally allocates it.

your theory is that we could somehow know the future, but that's a fallacy.

[Retric]

> one virtual mega company

Free market efficiency is inherently tied to having multiple companies. Treating the entire economy as a single company gives nonsensical results because it fundamentally differs from what actually occurs. You might as well compare the economy to a game of tick tack toe, inherent complexity isn’t something you can simplify it has meaningful consequences.

Your ideas like many other ideas are simply wrong.

> could somehow know the future

Perfect accuracy isn’t the only possibility here, there’s levels of error.

Our system involves intermediaries between the actual owners of capital and the allocation of that capital who have very different incentives. When the worst possibility is missing a bonus there’s little difference between losing 10% of an investors money and 100%. That results in inefficiency through the misalignment of incentives.

That is actually true, and thus there’s no way to gloss over that truth without simply being wrong.

[fsckboy]

>Treating the entire economy as a single company gives nonsensical results

trust me bub, I've studied much more econ than you. If a competitive market sets the prices (check, that's what is happening), and you want to analyze statistics of a sector (check, that's what we are doing), you can take those competitive prices as "given" and hold them constant, and consolidate the assets of in industry into one virtual entity. No claims were being made about competition, the claim is that "it is validate to consolidate statistic of what you are trying to study.

"how much did the AI sector make last year? how much will it make next year?" is not answered by running a simulation of competitive marketplace with production functions.

>>could somehow know the future

>Perfect accuracy isn’t the only possibility here, there’s levels of error.

if you deviate from the market's prediction of the future, you are increasing your levels of error; why do that?

[Retric]

> I've studied much more econ than you.

Then try and justify why you say shit this clueless:

> how much will it make next year?" is not answered by running a simulation of competitive marketplace with production functions.

Profits next year very much depend on the number of companies involved 1 vs 100 is not going to give the same results. Like I hope you realize how false what you just said was. Because if you actually believe this there’s literally no point in talking with you.

[fsckboy]

>That’s an overly simplified model. AI companies spending results in infrastructure beyond the company such as manufacturing capacity, power lines, software systems, and even individual expertise.

in a competitive marketplace, economic profit will go to zero. so whether an AI company buy or rents outside infrastructure, or builds it itself doesn't matter, it makes no difference. Therefore, if your argument is "outside infrastructure X", you can see the meaning of that by looking at "assume the company bought up the whole industry including outside infrastructure, then go back and look what I said and it still applies" A company monopolizing outside infrastructure for its own use would not abuse its monopoly against itself, but even if it did, makes no difference the extra profit and extra loss would balance out. Would it abuse its monopoly against downstream customers? if we use the existing market prices unchanged in our example, that is analyzing the case where it does not, which is the case that is comparable to the current situation.

or to put it another way, let's say these are all publicly traded companies competing. What if I told you "hey, i've investigated the ownership of all these public shares, guess what, Elon Musk owns them all, he owns every share of every company in AI, and all the infrastructure suppliers. Does that change the analysis from what we see in the marketplace? no, it doesn't. You want to draw a bigger circle around more affected parties, the suppliers to the infrastructure suppliers: OK, Elon owns those too it turns out.

nobody is analyzing the future here, we're talking about the case of AI going bust, not trying to predict AI going bust.

if were were going to project the future, we still would not do it with a simulation using functions to model companies to try to come up with meaningful profit numbers, we would project profits (and costs and revenues) based on margins of similar industries

[Retric]

> in a competitive marketplace … current situation.

Lots of words to say you don’t understand what you’re talking about.

At the most simple level monopolies extract profits through raising prices above that of a competitive market. This price increase reduces total sales even as it drives up profits.

As such the existence or non existence of a monopoly would change how much energy/etc AI was consuming among a host of other effects completely independent of how much utility it provided.

> nobody is analyzing the future here

That’s genuinely funny.

[fsckboy]

again, nothing that you are talking about has anything to do with the conversation I initiated. (IBM used to be a monopoly, now they're not. How much power did they do they use? we don't need economics, we just look at their power bill, it's that much, that's the impact they have on the power grid.)

if you want to sound like you know what you are talking about, don't talk about "total sales", you want to talk about quantity demanded at the market clearing price vs the monopoly price, and the effect that has on producer surplus.

and what is bad about a monopoly in economic terms is not that they extract a higher price and profit from their smaller number of customers (those customer choose to purchase the product because it's worth it to them), it's the dead weight loss which represents unmet demand which slows the economy overall

[dwb]

Keep peddling that capitalist realism. “There is no alternative!” The market may not misallocate capital, by definition, but it very clearly and routinely misallocates resources. Let me guess: you’re doing relatively well for yourself?

[fsckboy]

>Let me guess: you’re doing relatively well for yourself?

Let me guess, you sit down next to Kobe Bryant and start by saying you're going to tell him about winning basketball?

[dwb]

Are you saying that you’re right because you’re rich? The equity of the economy is not very similar at all to a game.

[fsckboy]

I know what i'm talking about, and you don't. That does not come from me being rich, it comes from me being raised as a far left-socialist, and being on the spectrum, and then studying economics and finance in graduate school and realizing what was true and what was wishing. Capitalism and free competitive markets solve exactly the problem that centrally planned economies are explicitly trying to solve but always fail to. Not only that but with predictable results. As you can now see, I not only have a heart and I have a brain, and I have education. And I have the inculcated capacity to read the socialism no matter how its hidden and between what lines.

you tried to dismiss me by saying "oh but you're doing well" as if that meant anything. You brought it up, not me, but inasmuch as it does means anything, it suggests I'm winning the race that you purport to be an expert at.

I do not come from wealth, my family is largely working class. I have grown my wealth dramatically because I understand how the market works. I didn't know a priori what would happen, I just took what they taught me in school and applied it with extreme discipline and without fear. Turns out that works.

>The equity of the economy is not very similar at all to a game

the economy is about efficiency, and supply meeting demand, and fair exchange of factors and products for pareto optimality. that is what equity should mean but it's not what you mean by it. Your equity lifts only some boats and at the cost of lowering and even sinking others. Nobody can prove except by simple observation that your equity does not in fact lift boats.

[dwb]

Hilarious; such ugly arrogance. Of course it “works” to the extent that you describe, otherwise we wouldn’t be in exactly the situation that I’m against. Where you came from doesn’t matter at all. The system is working for you so you are for it.

You assume too much, that I am going to argue for centrally planned economies or something. I never claimed or implied I was an expert, or to what degree I’m “winning the race” (what a horrible way to think about human society!). I think it’s either an absurd failure of imagination or simple invested ideology, that we have to have either hardcore “free” markets (free for who?) or strict Soviet-style planning (typically with the assumption that we have only the knowledge and technology from that period too, for some reason). I think we can do a lot better than both.

Your impressive-sounding words about efficiency quickly fall apart for anyone who has actually looked at the dirty end of capitalist processes. Inefficiencies abound; the market optimises for only money which a lot of the time is a stupidly poor abstraction of the stuff of life that actually matters. And that abstraction enables and justifies untold cruelty and exploitation.

If you were a sort of capitalist-pessimist, saying that you didn’t like it but this seemed to be the least-worst option, I’d think you were woefully unambitious, but at least some way understandable. But you arrogantly defend this system, and brag about how your massive brain managed to exploit it. Welcome to HN, I guess.

[fsckboy]

economic efficiency does not refer to productive effiency, it refers to having prices that allow people to make optimal purchase decisions, and whether competition ensures prices will reflect costs.

so, according to you, you are not arrogant, you just legitimately know what's best for everybody else, and you are virtuous to boot?

writing tip: take all the emotionally charged words out of your prose, they don't have the effect you think they do.