David Jackson

David Jackson's personal blog. Thoughts on economics, family, running, politics, and culture ….

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Husband, father, and runner. Improving day by day.

  • Artificial intelligence (AI) will fall over

    Artificial intelligence (AI) will fall over

    Interesting short article from Bain. At the demand predictions for use of AI, there is simply not enough capital to keep up.

    “Bain’s analysis of sustainable ratios of capex to revenue for cloud service providers suggests that $500 billion of annual capex corresponds to $2 trillion in annual revenue. What could fund this $2 trillion every year? If companies shifted all of their on-premise IT budgets to cloud and also reinvested the savings anticipated from applying AI in sales, marketing, customer support, and R&D (estimated at about 20% of those budgets) into capital spending on new data centers, the amount would still fall $800 billion short of the revenue needed to fund the full investment.“

    How Can We Meet AI’s Insatiable Demand for Compute Power? | Bain & Company

    So how will this play out?

    I don’t think AI gently plateaus. I think it will look more like a denial-of-service attach on a website, or trying to get Taylor Swift tickets from Ticketek. The system will groan under the weight of demand, degrade, and then stop.

    In my own life I am using AI about 3 times more than I did 3 months ago. That is 3x more demand. Is that 3x the compute power? If I multiply out my own experience by billions of people, I smell a demand and supply gap of GALACTIC proportions.

    $500 billion in annual spending on new data centres is an extraordinary number. For the AI business model to work, it doesn’t simply have to provide value to people. It needs to provide value IN EXCESS of what it costs to provide that value.

    Unless there is a major break through in the cost of computing power, or the existing computing power is focused very narrowly on those that can pay, I think this whole game has to stop, or at least slow down considerably while we work out how to power it.

  • Population growth “mega-trend”?

    Population growth “mega-trend”?

    I’m curious about the population growth “megatrend” that is often stated as fact but is highly questionable.

    Between now and 2050, world population is forecast to be 15–20% higher at most. I say “at most” as the UN forecast is continually revised down due to faster-than-expected birth-rate declines.

    Furthermore, even if you accept the forecast, the make-up of population will be very different from today. It will be a much older population in many countries, and current rich economies are forecast to be a much smaller share of the global population. This is because current OECD members will have a flat population at best while Africa grows substantially. Notably, China will substantially shrink.

    The certainty of China shrinking is far greater than the certainty of Africa growing, as the population has already peaked. I think this will have enormous implications for food demand in both directions.

    We like simple “megatrends”, especially for online posts, but under the surface things are always a lot more interesting.

    “Population growth, urbanisation, the infrastructure of decarbonisation, capital stock replacement and rising living standards are expected to drive demand for steel, non–ferrous metals, and fertilisers for decades to come. “ – 2024 BHP Economic and Commodity Outlook

    BHPs economic and commodity outlook

  • My 50th

    My 50th

    I had my 50th party in October (birthday was in September). Not everybody could be there, but it was a good representation of people from various circles who are meaningful to me over 50 years. Thanks to those that shared the night with me! I had a great time. Only one speech allowed (mine) and the recording tells me I spoke for 26 minutes! Thanks all for donations. Raised $3200 for Dementia Australia.