After the Bubble

When the bubble pops, AI companies fire people (up to everyone). Non-AI companies hire people back, because it becomes clear that AI won't do their job for them.

To your first point, yes we're moving slowly towards a more general awareness that most employees are paid market (replacement) rate, not their share of value generated. As the replacement rate drops, so will wages, even if the generated value skyrockets. Unsurprisingly, business owners and upper management love this.

To the second point, the race to the bottom won't be evenly distributed across all markets or market segments. A lot of AI-economy predictions focus on the idea that nothing else will change or be affected by second and third order dynamics, which is never the case with large disruptions. When something that was rare becomes common, something else that was common becomes rare.

No, it can still be a bubble when everybody knows it's a bubble. If the price is still going up, I may know it's a bubble, and still not get out, because I'm still making money. But it's a hair-trigger thing, where everybody gets more and more ready to run for the exits at the first sign of trouble.

There's many questions about the overall economics of AI, its value, is it overvalued, is it not, etc. but this is a very poor article I suspect made by someone with little to no financial or accounting knowledge with a strong "uh big tech bad" bias.

> When companies buy expensive stuff, for accounting purposes they pretend they haven’t spent the money; instead they “depreciate” it over a few years.

There's no pretending. It's accounting. When you buy an asset, you own it, it is now part of your balance sheet. You incur a cost when the value of the asset falls, i.e. it depreciates. If you spend 20k on a car you are not pretending to not having spent 20k by considering it an asset, you spent money but now you have something of similar value as an asset. Your cost is the depreciation as years go by and the car becomes less valuable. That's a very misleading way to put it.

> Management gets to pick your depreciation period, (...)

They don't. GAAP, IFRS, or whatever other accounting rules that apply to the company do. There's some degree of freedom in certain situations but it's not "management wants". And it's funny that the author thinks that companies in general are interested in defining longer useful lives when in most cases (this depends on other tax considerations) it's the opposite because while depreciation is a non-cash expense you can get real cash by reducing your taxable income and the sooner you get that money the better. There's some more nuance to this, tax vs accounting, how much freedom management has vs what is industry practice and auditors will allow you to do... my point is, again, "management gets to pick" is not an accurate representation of what goes on.

> It’s like this. The Big-Tech giants are insanely profitable but they don’t have enough money lying around to build the hundreds of billions of dollars worth of data centers the AI prophets say we’re going to need.

Actually they do, Meta is the one that has the least but it could still easily raise that money. Meta in this case just thinks it's a better deal to share risk with investors that at the moment have a very strong appetite to own these assets. Meta is actually paying a higher rate through these SPVs compared to funding them outright. Now, personally I don't know how I would feel about that deal in particular if I was an investor just because you need to dig a little deeper in their balance sheet to have a good snapshot of what is going on but it's not any trick, arguably it can make economic sense.

All, you have to do is wait. Seriously, just wait. if the tech deflationists are right, you'll get more cost effective memory every several years or decades at least.

In somehwere around 1999, my high school buddy, worked overtime shifts to afford a CPU he had waited forever to buy! Wait for it, it was a 1 GHZ CPU!