I was among those enthralled by the US AI industry boom out of…
By @tmod ·
I was among those enthralled by the US AI industry boom out of nowhere, and I do see value in the technology to do many things, but I don't understand the poker-style ALL IN the craze has generated. It's sapped venture capital, it's savaged the labor market, it's upended everything from hiring processes to automated tellers. But was it worth betting everything on it economically?
The truth is it's hiding a shadow depression happening now. Millions of jobs lost in only a few years, not over a generation like we saw with the automobile industry, steel industry and other economic transitions, but more like an economic depression. How this happen with record stock markets? The answer lies in the problem statement. Companies are cutting costs to meet the numbers, not by creating new profit. The cutting can only go so far before impacting operations.
The current excuse being used is "AI" but if that's the truth, then you would expect to see huge gains in net margins and profitability as an immediate impact, but that hasn't happened broadly, so costs have to be cut. So, what does all this mean? We are at the beginning of a long road of financial reckoning with AI. So much confidence has been put into the industry it impacts pension funds, market indexes, and obviously millions of jobs. There is no path to profitability in this sector and the cascade of financial failures coming are in the trillions, not billions like the Enron days.