Didn't go well for South America in the 60s and 70s but perhaps, as economists are prone to saying, "this time will be different".
Since when does "private capital" speak in such honeyed tones to state powers?
https://www.cnn.com/2025/01/21/tech/openai-oracle-softbank-t...
It's private money. CEOs will say whatever they need to say to achieve goals (here, favorable conditions for AI work), look at what the actual money flows say.
As Elon said, they don't the money.
Talk is cheap.
$500B is not.
Groupthink capital, directed by mostly 2 "thought leaders".
Economies don't like Groupthink Capital, regardless of it being private, public or a combination of the 2
Of course the US economy as a whole is huge so even billions can be absorbed, once you start talking about half a trillion though...
South America didn't have a mix of domestic and foreign investors deploying massive quantities of private money into capital assets in the 60s and 70s. They had governments borrowing to fund their citizens' consumption. Massive difference on multiple levels.
The problem here being that it was money spent that was never earned back, and money that eventually had to be paid back, right?
This can also happen with private capital. 2008 was a bust caused by private banks, for example. AI hasn't proven to be profitable yet [1], and I'm not sure it'll makes a difference, for the success of projects like this, wether the money is coming from government or not.
In fact, if the 2008 bank bail-out, auto industry bail-out, the Silicon Valley bank prop-up, and other such actions by the US government are considered [2], if this turns out to be a bubble it will be taxpayers who end up fronting the bill.
[1] https://www.cbc.ca/news/business/ai-generative-business-mone...
[2] https://www.investopedia.com/articles/economics/08/governmen...
In part. It was money borrowed by the state. That means when it can't be paid back, it's automatically a systemic issue. And it was money borrowed to fund consumption. There was no good reason to ever expect it to be paid back because it wasn't funding productive activity.
> if this turns out to be a bubble it will be taxpayers who end up fronting the bill
Very possibly, particularly if part of the package are e.g. federally-subsidised loans. Before that, however, private parties will almost certainly lose tens if not hundreds of billions of dollars. That cushion, together with those parties being spread between domestic and foreign sources, is what makes this less risky to the United States than similar relative-magnitude projects in South America. (Plus the fact that this is a capital asset versus consumption.)
Haven’t all three examples you note (2008 crash, auto bailout, and SV prop up) resulted in a net return/gain for the taxpayer?
I'm not saying "this time will be different". I'm saying this is business as usual.
Zuckerberg lost $30bn or more trying to create a VR amusement park. Scale that up to $500bn and see how much waste and dead-weight losses are created.
2. There is no commitment to spend in a single year
3. There is no actual contractual commit here, this is a press release (i.e. Marketing)
4. There is not actually a $500B pile of gold being spent. This is more of a "this is how big we think this industry will be and how much we may spend to get exposure to that industry"
[1] https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile...
The demand for more AI compute is already here and is less risky of an investment.
"Centralized planning" was effective under Bell Labs
The fact that a handful of individuals have half a trillion dollars to throw at something that may or may not work while working people can pay the price of a decent used car each year, every year to their health insurance company only to have claims denied is insane.
This is disputed [1]. In reality, a handful of individuals have the capital to seed a half-a-trillion dollar megaproject, which then entails the project to raise capital from more people.
[1] https://www.wsj.com/tech/musk-pours-cold-water-on-trump-back...
Also the guy disputing it is trying to regain control of an entity that he was too distracted to hold to its original mission, is on record as agreeing with the statement that Jewish people are the enemies of white people, takes copious amounts of mind-altering substances daily, has lost billions of dollars on purchasing a company that had a path to (modest) profitability, and did what could easily be seen as a Roman salute at an inauguration speech. Maybe he's not a great source of statements on objective reality, even within the AI industry.
With regard to the monetary amount, understand, once you reach a certain point, the amount of capital held by the quantity of individuals we're talking about is immaterial. Any capital they raise is usually derived from the labor of others and they operate a racket to prevent any real competition for how that capital is distributed by the labor or the customers who are the source of their actual wealth. The average Oracle employee (I know a few), for example, probably has a few more immediate things they want the surplus value of their labor to be spent on than Larry's moonshot. However, he ultimately controls the direction of that value through a shareholder system that he can manipulate more-or-less at-will through splits, buybacks, and other practices.
His customers would probably also like to pay less for what are usually barely Web 2.0 database applications. Of course, he has the capital to corner markets and shove competition out of the space.
All of this is to say when you reach this amount of money in the hands of one individual, they're more likely to regularly harm people than beat the odds on their next bet in a way that actually uplifts society, at least in a way that could beat the way just disbursing that capital among those who created it could.
Hyperbole much?
[0]: https://www.yahoo.com/news/elon-musks-drug-becoming-problem-...
This is a valid conflict of interest. That means we should closely scrutinize his claims. From what I can tell, he's added up correctly in respect of the named backers' wealth and liquidity.
> a paper that is literally named after a place where the vast majority of people have never had to do any real labor in their lives
Yes, we should ignore bankers when it comes to questions about money...
Do you have an actual claim? Or is it all ad hominem?
> capital they raise is usually derived from the labor of others and they operate a racket to prevent any real competition for how that capital is distributed by the labor or the customers who are the source of their actual wealth
They're capitalists, herego they can raise unlimited wealth?
Given that all of the capital and implementation is private anyways, I am not even sure why this was announced with Trump on stage. To me it seemed like a spectacle to help Trump in return for maybe favorable regulation on things like antitrust or copyright or AI regulation or whatever.
This money is managed by small amounts of people but it is aggregated from millions of investors, most of these are public companies. The US spends over 10x that amount on healthcare each year.
The "free movement of capital" only ever seems to move the capital one direction: up to the people who needed the labor of others to reach such wealth.
I am sorry that you feel you are downwardly mobile, but you should not assume your experience generalizes.
This is, in fact, a generalized experience: [0]
[0]https://www.pewresearch.org/social-trends/2019/02/14/millenn...
i think if you gave people a legitimate choice to go back to 1980 (and take their friends let’s say), we would see the revealed preference. certainly if you did it for a year and then gave them the option to come back
Your article is from 2019. We're now "wealthier than previous generations were at [our] age" [1].
[1] https://www.wsj.com/personal-finance/millennials-personal-fi...
- there is a shortage of housing
- predatory loans for higher education
- chronic health crisis due to terrible government health policy and guidelines
- globalization has led to an international labor market
The last point may be bad for many Americans but an unequivocal good for the world. Global poverty has seen an incredible drop in the past 70 years. https://en.wikipedia.org/wiki/Extreme_poverty#/media/File:Wo...
I would put that more on a failure of culture to value healthy living and activity. I wouldn't call that the responsibility of the government. Perhaps lack of clarity on ownership is related to the crisis itself.
There are lots of problems with our current approach to healthcare, but insurers aren’t charging you way more than the cost to counterparty on that contract should be.
A graph of the stocks for UnitedHealth, Elevance (formerly Anthem) and Cigna shows that they're all on the growth track for the last five years.
If a subscriber pays them what they do, and they don't have money to pay a claim declared medically necessary by a medical doctor, but do have the money to forward to a retirement fund, they are charging too much.
Most of the rest of the industrialized world seems to grasp this concept, and their people live longer.
Stock price ! profitability, but you're still correct. UnitedHealth's operations have churned out cash each of the last four years [1], as have Cigna [2] and Elevance [3]. Underwriting gains across the industry have been strong for years [4]. The only story I can think of where American health insurers lost money was Aetna with its underpriced ACA plans [5].
That said, whimsicalism is also partly right in that insurers aren't the cause of the unaffordability of American healthcare. They by and large pay out most of their premiums. (With some variance.)
[1] https://finance.yahoo.com/quote/UNH/cash-flow/
[2] https://finance.yahoo.com/quote/CI/cash-flow/
[3] https://finance.yahoo.com/quote/ELV/cash-flow/
[4] https://content.naic.org/sites/default/files/2021-Annual-Hea...
[5] https://spia.princeton.edu/news/why-private-health-insurers-...
> If a subscriber pays them what they do, and they don't have money to pay a claim declared medically necessary by a medical doctor, but do have the money to forward to a retirement fund, they are charging too much.
If it is only legal to lose money on providing insurance, nobody would do it.
> Most of the rest of the industrialized world seems to grasp this concept, and their people live longer.
I agree that there are problems with cost/performance in our healthcare market. I think it is largely due to overutilization & misallocation, combined with some poor genetic/cultural luck around opioids and obesity.
0: https://content.naic.org/sites/default/files/industry-analys...
You'd think the healthy working population wouldn't be that much of a burden to care for as well, but they have to go out of pocket and get insurance to provide for themselves after providing for everyone else.
There is a lot of graft going on for this to be the case. It may not be the fault of insurance companies but someone is stealing a great deal of money from the American people.
Now here's the million dollar question; are you aware of this obvious fact? Have you ever heard someone frame the socialized medicine debate in this way: "If we could be as efficient as the UK we could give you free healthcare AND cut your taxes!". If not, why not?
[0]https://www.statista.com/statistics/283221/per-capita-health...
au·tar·ky /ˈôˌtärkē/ noun economic independence or self-sufficiency. "rural community autarchy is a Utopian dream" a country, state, or society which is economically independent. plural noun: autarkies; plural noun: autarchies
Musk cannot ban Chinese autos from the US market, but the government can. Same goes for Tiktok, Zuck cannot force Americans not to use it. AI is the next battlefield and further bans will be coming down the line to make sure the investment is protected.
One of the broken parts of the American system is permitting. Trump can sidestep that by letting this be built on federal land. That, in turn, unlocks investment.
Beyond that, DoD and DoE are massive buyers of compute. Seeding the venture with purchase agreements from them de-risks the project further.
Finally, by Trump putting his name to it he assigns it his bully pulpit's prestige. (Though that doesn't appear to have carried over to Musk, who's already taking pot shots at it.)
i agree that our protectionist policies are bad and autarkic in nature
There is nothing saying a socialist country can't produce goods and services, and sell them.
This is first-mover industrial development being funded by private actors looking out for a return on their investments. South America saw nothing similar--it was duplicating others' industrialisation with state capital (often borrowed from overseas) while spending massively on handouts.