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AI capex is so big that it's affecting economic statistics

(paulkedrosky.com)
346 points throw0101c | 2 comments | 18 Jul 25 19:59 UTC | HN request time: 0.426s | source
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jonas21 ◴[18 Jul 25 21:09 UTC] No.44609857[source]▶
I don't know... 1.2% of GDP just doesn't seem that extreme to me. Certainly nowhere near "eating the economy" level compared to other transformative technologies or programs like:

- Apollo program: 4%

- Railroads: 6% (mentioned by the author)

- Covid stimulus: 27%

- WW2 defense: 40%

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raincole ◴[18 Jul 25 21:18 UTC] No.44609942[source]▶
Yeah that's my first reaction to. 1.2% doesn't sound much. It's just people making headlines out of thin air. If it lists the water and energy consumption I might be more concerned.

Slightly off-topic, but ~9% of GDP is generated by "financial services" in the US. Personally I think it's a more alarming data point.

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giantg2 ◴[19 Jul 25 01:00 UTC] No.44611558[source]▶
Why is 9% for financial services bad? This should cover fees/interest from everything like loans, transactions, mortgages, advice, investing, etc. It doesn't seem that surprising to me that the systems that are the backbone for all the money operations that power the rest of the economy make up about 10%.
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dontlaugh ◴[19 Jul 25 02:43 UTC] No.44612103[source]▶
9% is very inefficient.
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wavemode ◴[19 Jul 25 03:16 UTC] No.44612265[source]▶
"Inefficient" implies the money is being burned or something. It's flowing into the pockets of people who work in the financial services industry, who then spend it on other things. The economy isn't zero-sum.

And the industry itself greases the wheels of other industries. In other words without financial services like lending and payment processing there would be less spending and investment overall, so other industries would shrink along with it.

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Retric ◴[19 Jul 25 04:40 UTC] No.44612655[source]▶
You’re falling for the broken window fallacy, it’s inefficient as demonstrated by automation reducing the percentage of the economy devoted to financial services without any negative effects.

Banking used to really suck. Walk into an old bank building and it looks empty with spaces for a dozen tellers never actually used, this is a good thing as nobody actually wants to stand in line at a bank. People have largely stopped using cash because swiping a card is just more pleasant.

Meanwhile payment networks (Visa, Mastercard) have over a 50% profit margin, that’s a huge loss for the US economy. Financial services dropping to 1% of the overall economy would represent a vast improvement over the current system.

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1. corimaith ◴[19 Jul 25 10:11 UTC] No.44614138[source]▶
Retail Banking =/= Finance. You cannot easily standardize let alone automate a corporate merger or raise capital from various sources due to unique individual characteristics of each company, that's why investment banks exist.

The Retail Bank's main function isn't providing cash either, it's keeping deposits which they loan out for profits. Whether you use cards or cash won't affect those margins.

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2. Retric ◴[19 Jul 25 15:13 UTC] No.44616174[source]▶
> You cannot easily standardize

While LLM’s are nowhere near this capacity today, it’s likely future AI systems will be able to handle such complexities just fine. Competition + automation means the financial sector really is on a long term decline. Some things aren’t automated due to customer preference, but preferences change over time.

> The Retail Bank's main function isn't providing cash either, it's keeping deposits which they loan out for profits. Whether you use cards or cash won't affect those margins.

The margins on loans have decreased significantly as shown by much lower effective interest rates relative to inflation.

The effort associated with loans have been reduced significantly as credit checks, automated repayment, etc have reduced the risks and overhead. Competition between banks means their profits are a function of costs, thus driving down costs has reduced in the overhead on loans.