alt Hacker NewsWell, of course not. If you borrow a trillion dollars to build a 1¢ aspirin machine to compete with $1 generic aspirin, you are strongly incentivized to sell your aspirin for 99¢. We don’t see productivity gains, because approximately all of the gain is captured as revenue for AI companies.
It’s weird that this has to be spelled out for so many engineers and economists, but to be very clear: OpenAI et al wants your token spend to go to one-minus-epsilon of what you previously spent on payroll, and wants your productivity to go to one-plus-epsilon of what it previously was. If you want 10x productivity, spend 9.9x more on tokens.
They are in the business of enclosure and rent extraction, and any innovation that comes out of their research and development - regardless of how real an innovation it is - will be completely contained and bent totally towards that business. Any leakage of the innovation that you experience as a productivity boost is literally felt as lost profits by them.
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This ignores the supply side of the equation and just focuses on the demand side.
Of course every business wants to capture 99.9% of the value they offer, but competitive forces drive this down to an equilibrium.
Also, as an aside, I've noticed that there's a subset of people on hackernews who use 'weird' to describe any disagreement with their position. It's not 'weird' to have an opposing or different view and removing such language will make conversations on here more pleasant.
Not sure how productivity and rent capture are connected here.
1) If a firm spends $99k on compute to replace a $100k engineer and produces 5x the output, how is that not a 5x increase in aggregate labor productivity?
2) In your aspirin example, why wouldn't a competitor with an identical 1¢ machine sell it for 50¢ or 10¢ to take 100% of your business? You are either making the assumption that 1 company is owning the market and no models are useable beyond that one, or that all of the models that are in the front of the market have a cartel and fix the price, which is not true either looking at API costs.
This only works if you are the only one selling the machined aspirin. Or you build a cartel of apirin sellers to do some price fixing.
For the time being, my productivity has 100x'd for a fraction of what it would have taken to hire me only a few years ago.
Different with the open weight models though - they are a margin business. And openai etc have to compete with them too
This only happens in very mature industries. AI is obviously moving extremely quickly with lots of new entrants and moving parts. That's why all the model providers are losing money fighting for market share.
Once most of this debt is gone, whether through companies going bust or the debt being paid off or inflated away, AI will become cheap enough for frontier models that any productivity improvements will be visible in the user's bottom lines.
This doesn't apply to self hosted models though.
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Your argument falls apart pretty quickly when you consider that (1) open-weights model are a thing and (2) OpenAI and Anthropic are still losing money
1. If AI would bring great productivity but all that extra value is captured by closed-source model providers, then everyone would switch to open-weights models + bare metal servers, which would non-tech companies to capture most of the value. Your argument that there is great value in the use of AI, but it's all captured by OpenAI and Antrhopic falls flat on it's face here. The market would adapt quickly.
2. OpenAI and Anthropic are still losing money. Your argument is that 100$ of extra value is produced, but the closed-source model providers capture 99.9$ of that because they are "rent extractors". If you're right, and they capture 99.9 of the value created, that's a huge issue because they spend 150$ to create that value. If even after eating the whole (value creation) pie they're still unprofitable, that's the worst news for the AI industry.