Gentle reminder that the cost of producing well-formatted graphs is much, much lower than it used to be. We grew up in a world where the mere existence of this graph would prove that someone put a great deal of effort into making it, and now it does not. I have no specific reason to doubt the information, but if you want to have reliable epistemic practices, you can no longer treat random graphs you find on social media as presumptively true.
Hyperscalers have already outspent most famous US megaprojects
21–30 of 296 posts
Re: Hyperscalers have already outspent most famous US megaprojects
#22[deleted]
Re: Hyperscalers have already outspent most famous US megaprojects
#23This seems like a total category error. The Railroads are the only example that actually seems comparable, in being an infrastructure build out that's mostly done by a variety of private companies. Examples of things that would be worth comparing to the datacenter boom are factory construction and utilities (electrification in the first half of the 20th century, running water, gas pipes.)
Fwiw, Railroads were the reason for some of the biggest bank collapses in history. Panic of 1873 was literally called "The Great Depression" (until a greater depression hit). 20 years later was the Panic of 1893. Both were due to over-investment and a bubble bursting, and they took out tons of banks and businesses.
We're seeing exactly the same thing with AI, as there is massive investment creating a bubble without a payoff. We know that the value will lower over time due to how software and hardware both gets more efficient and cheaper. And so far there's no evidence that all this investment has generated more profit for the users of AI. It's just a matter of time until people realize and the bubble bursts.
And when the bubble does burst, what's going to happen? Most of the investment is from private capital, not banks. We don't know where all that private capital is coming from, so we don't know what the externalities will be when it bursts. (As just one possibility: if it takes out the balance sheets of hyperscalers and tech unicorns, and they collapse, who's standing on top of them that collapses next? About half the S&P 500 - so 30% of US households' wealth - but also every business built on top of those mega-corps, and all the people they employ) Since it's not banks failing, they probably won't be bailed out, so the fallout will be immediate and uncushioned.
Re: Hyperscalers have already outspent most famous US megaprojects
#24Earlier quoted context omitted.
But doesn't that overstate it in the other direction? Talking about investments in proportion to GDP back when any estimate of GDP probably wasn't a good measure of total economic output? We're talking about the period before modern finance, before income taxes, back when most labor was agricultural... Did the average person shoulder the cost of railroads more than the average taxpayer today is shouldering the cost o…
That's the problem with going too far using "money" or "GDP" - you can roughly compare the WWII 45% of GDP spent with today - https://www.davemanuel.com/us-defense-spending-history-milit... because even by WWII much was "financialized" in such a way that it appears on GDP (though things like victory gardens, barter, etc would explicitly NOT be included without effort - maybe they do this?). As you get further and fur…
You don't even need to go that far back to run into issues, when I read Pride and Prejudice, I think Mr. Darcy was one of the richest people in England at around £10,000/year, but if you to calculate his wealth in today's terms it wasn't some outrageous sum (Wikipedia is telling me ~£800,000/year). The thing is that the economy was totally different back then -- labor cost practically nothing, but goods like furniture for instance were really expensive and would be handed down for generations.
With £800K today, you may not even be able to afford the annual maintenance for his mansion and grounds. I knew somebody with a biggish yard in a small town and the garden was ~$40K/yr to maintain. Definitely not a Darcy estate either.
Thinking about it, an income of £800K is something like the interest on £10m.
Re: Hyperscalers have already outspent most famous US megaprojects
#25Re: Hyperscalers have already outspent most famous US megaprojects
#26Adjusted for inflation? edit - sorry, it is in fact adjusted, text is kinda hard to see
It literally says 'Inflation-adjusted costs' on the right side of the graph, right under the main title, FFS.
Re: Hyperscalers have already outspent most famous US megaprojects
#27This seems like a total category error. The Railroads are the only example that actually seems comparable, in being an infrastructure build out that's mostly done by a variety of private companies. Examples of things that would be worth comparing to the datacenter boom are factory construction and utilities (electrification in the first half of the 20th century, running water, gas pipes.)
The problem is that once built, railroads provided economic value right off the bat. I would love to hear about the economic value being generated by these LLMs. I think a couple years is enough time for us to start putting some actual numbers to the value provided.
Equating this buildout with LLMs is also a category error. Waymo (self-driving cars) depends on the same infrastructure, and there are a variety of other robotics programs which are actually functioning, you can see them in operation. They all require a lot of GPUs to train and run the models which operate the robotics.
Re: Hyperscalers have already outspent most famous US megaprojects
#28This tweet shows it as a percentage of US GDP: https://x.com/paulg/status/2045120274551423142 Makes it a little less dramatic. But also shows what a big **'n deal the railroads were!
The railroads and the interstate are arguably the biggest and broadest impact, especially in 2nd order effects (everything West of the Mississippi would be vastly different economically without them).
I am not an ai-booster, but I would not be surprised at AI having a similar enabling effect over the long term. My caveat being that I am not sure the massive data center race going on right now will be what makes it happen.
Re: Hyperscalers have already outspent most famous US megaprojects
#29Earlier quoted context omitted.
The other categorical error is that the American people paid the railroads a monumental subsidy to get the job done. We gave them almost 10% of the territory.
Given the size of some of these data centers, the incentives packages that local governments often give their developers, and the impact on the electric grid that can, in some cases, raise costs for other ratepayers, I'd say the comparison could be similar. The one Google's putting in KC North is 500 acres [0] and there were $10 billion in taxable revenue bonds put up by the Port Authority to help with the cost. This…
That's the opposite of a subsidy. KC stakes nothing of value and gets a defined revenue for the next 25 years.
Re: Hyperscalers have already outspent most famous US megaprojects
#30Earlier quoted context omitted.
Given the size of some of these data centers, the incentives packages that local governments often give their developers, and the impact on the electric grid that can, in some cases, raise costs for other ratepayers, I'd say the comparison could be similar. The one Google's putting in KC North is 500 acres [0] and there were $10 billion in taxable revenue bonds put up by the Port Authority to help with the cost. This…
That's the opposite of a subsidy. KC stakes nothing of value and gets a defined revenue for the next 25 years.
Then why would Google mess with the bonds at all?
Again, they have the cash to buy that land and develop it without any further consideration beyond permits and planning.