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- Hacker News
- It's not a bet.
The counterfactual was never "cutting pensions and medicare". That wasn't on the table and no government would ever commit suicide and pass it. It was either, spend until the economy completely collapses under the weight of debt and hyperinflation, or do exactly the same thing but pray for a miracle while doing so.
So, we're doing the second one.
by bpodgursky - Yeah... but the point is that pensions will eventually have to go unless the magical exponential productivity boost really hits its swing.
- Trump administration doesn't care. They just use it to manipulate market and make billions for themselves.by feverzsj
- Link?
- > It could be a while before the boost comes. ... There is another problem. If the productivity boost from AI is large enough to change any country’s fiscal arithmetic profoundly, vast job disruption is probably coming too, meaning more spending on unemployed workers (see United States section). Income may also shift from labour to capital, which is more lightly taxed. Should AI prompt an arms race, countries will also need more defence spending.
What a load of crap. Most of the AI investment by governments is defense spending and it's been happening for years.
This whole article's premise is trying to rearrange the reasons for the large amount of spending and muddy waters. This isn't a bet on economic growth. This is purely a capabilities arms race and the cold war never ended.
The stock market is still business as usual. This spending is all coming from taxes and private equity mostly detached from those investments. The scaremongering about employment is a red herring. We all know it doesn't work that well. It doesn't matter. The only real losers are those trying to run a business too cheaply with AI. They tend to be the same startups always expected to lose anyway.
by sublinear - Curious: Is there any technologies and their adoption that were successful that Economist was wrong, or right about?by j45
- So you don’t listen to the weather or use weather apps?by looksjjhg
- Many. They did an overly generous self examination a few weeks ago.
Generally, they are a trailing indicator, like someone appearing on the Forbes millionaire under 30 list (Theranos, FTX). However, they are not always wrong.
Think of Economist writers as intelligent interns - people who couldn't make it in the world of finance, and with a particular ideological bent imposed on them by their editors.
by RachelF - I'd argue (almost)every party in the economy is making a dangerous bet on the AI boom. Capex is great for boosting the economy, but eventually the debt that funded said capex comes due..combine that with the depreciation of the underlying assets(chips, buildings, etc.) and I don't see how this doesn't destroy balance sheets wholesale.
- by zekrioca
- I wonder about Japan and Europe these days. Back in the 80s, when Japan was pursuing the "Fifth-Generation Computers", EU and US scrambled to compete with Japan. Like, it was a big deal for strategists and decision-making high-level politicians of that era.
Now in 2020s, it seems only China is tailing US and in turn, US is wary of China. What gives?
by ducktective - > in the 80s, when Japan was pursuing the "Fifth-Generation Computers"
“The Fifth Generation Computer Systems…was a 10-year initiative launched in 1982 by Japan's Ministry of International Trade and Industry (MITI) to develop computers based on massively parallel computing and logic programming” [1].
That sounds an awful lot like GPUs and HBM.
[1] https://en.wikipedia.org/wiki/Fifth_Generation_Computer_Syst...
- Do you think Japan and the EU would be better off if our/their economies were centred around trillion dollar companies that make a product that is 20% better than the Chinese models at 1000x the cost?
The reality is LLMs are just tools, and not even close to as revolutionary of tools as computers themselves. Even Chinese companies understand that. It is the US alone that is in machine god mania, gambling their economy on this idea that the next model will let them rule the world if only we give it three more months.
- It's private companies making a bet on the AI boom.
What governments do (which is the actual content of the article) is betting on economic growth to exceed the growing debt.
by gpt5 - Governments offer tax incentives for AI investments.by itake
- Staring down the mountain of debt and thinking about how much needs to be cut or taxes raised to get anything resembling balance is no fun so we get this grasping at straws. At least the US has room to raise taxes unlike the EU.by amberjack
- The problem with public debt is vastly overestimated. It mostly doesn't matter at all. It can be just rolled over forever like it always was.
It's the private debt which is the problem since individuals and enterprises don't have the capability the governments have to roll it over forever.
by mono442 - Which is their dangerous bet on the AI boom.by UncleOxidant
- Betting on economic growth exceeding the piling up of debt is something most governments around the world have been doing for about 40 years straight now.by missedthecue
- A "bet" implies there's a risk of losing if it doesn't play out. As far as the individuals in the Govt and the involved companies are concerned, there is no risk for them. It's not their money, and the individuals will come out much better off regardless of outcome. It is simply a good investment.by ares623
- Further, Uncle Sam can always service dollar-denominated debt.by junofan