Sam Altman seems to be making OpenAI way more non-profit than before:
Even as the AI bubble becomes a mainstream talking point on Wall Street, tech companies continue to peddle the fantasy that AI is poised to become an almost magical money-maker. Case in point, OpenAI wants you to believe that by 2030, it’ll be raking in $100 billion a year just from ads alone — even though it’s currently struggling to reach just $1 billion.
↫ Joe Wilkins at Futurism
The US tech giants fueling this “AI” bubble are trying to hide the true extent of their debt:
Hidden debt at U.S. tech giants swelled eightfold in four years to an estimated $1.65 trillion as artificial intelligence investments ballooned, a Nikkei study shows, exceeding actual debt and making it tougher for investors to assess risk.
[…]
The five companies’ hidden debt, which does not appear on balance sheets, totaled $1.65 trillion in the most recent quarter, exceeding the roughly $1.35 trillion in debt reflected on their balance sheets. The data includes some estimates.
↫ Kohei Yamada at Nikkei Asia
The bubble is expanding to comical proportions:
The American stock market is booming, thanks to artificial intelligence. Tech giants are borrowing billions to acquire AI talent, purchase chips and hardware, and construct data centers. And market watchers are starting to get worried. They see financiers bulldozing giant piles of money to private AI start-ups with no realistic path to profitability, tech companies reliant on other tech companies for revenue growth, and non-tech businesses without a lot to show for their AI investments. The value of AI-linked firms has climbed $27 trillion in the past three years—an astonishing amount, equivalent to 36 percent of the value of the entire U.S. stock market today. Although future earnings could justify those valuations, as Dominic Wilson and Vickie Chang of Goldman Sachs argued in a note to clients, the profit expectations require Panglossian optimism.
No less an authority than Sam Altman is arguing that we are in an AI bubble. The International Monetary Fund is citing it as a significant risk to financial stability and warning about what might happen when it bursts: diminished investment, tighter credit, reduced consumption, disrupted trade flows.
↫ Annie Lowrey at The Atlantic
I’m not worried, though.
I have it on good authority that “AI” increases productivity by 10x, so surely, none of the above is a problem. Any day now, we will be inundated with waves of brand new, high-quality, valuable software. Any day now, existing software will increase in quality by 10x, leading to a huge surge in software sales. Any day now, productivity in factories will increase rapidly thanks to “AI” freeing up workers’ time, driving prices down 10x, leaving consumers with 10x more money to spend. Any day now, everyone will be able to produce the next Citizen Kane or write the next Anna Karenina, causing an explosion in magnificent, timeless art that will have historians of the future marvel at our civilisation’s ingenuity and artistry.
In the meantime, these companies can just ask their “AI” how to become profitable. Should be table-stakes for a 10x force multiplier.
I’m not worried.
Thom’s irony aside, I’m VERY worried.
When the subprime crisis caused the economy to collapse in 2008, I paid the price. Just like every other citizen, since the governments wrote off the debts. Yet I have never owned a single share or stake in any company. But the financial crisis had a knock-on effect on the real economy.
When the AI bubble bursts, why would it be any different?
SergeJ,
if you asked me last year, I would say: it would be different and more like “dot-com” burst where good companies Amazon survived, and bad ones like Flooz.com failed.
However today things are different. Some of the big ones, especially those who have participated in the latest shenanigans (like stock pumping by circular billing) will be backstopped.
But unlike 2007, the economy is not supported by mortgages, (Freddy Mac/Fannie Mae) which turned out to be empty papers.
Yet, this time it is supported by student loan payments (Sally Mae), which are of course much more reliable as all students are paying on time! (do we have a [s] tag?)
Both are multi-trillion dollar government sponsored funds that generate constant income.
(This has replaced the function of the central bank, which is not even in the same league anymore, but will ultimately have to do “quantitive easing” or whatnot to fix the new mess)
The . “Dot com ust” wasn’t in 2007 neither had anything to do with mortages, either I’ve missed your point completely ( this is more of a possibility than I like to admit) or you are mixing up two crices that where only somewhat related
bn-7bc,
Yes,
Dot-com boom “burst” naturally, and the bad companies were decimated, opening up their resources to the actual productive ones
2007 crisis was backstopped by the government, which led to “moral hazard” as banks learned they were “too big to fail” and that their failure is still being paid by us, the taxpayers, almost two decades later.
Sukru,
it was a bit more complex than that: the goal of the back-stop was to save the Depositors (not the banks per-se) because nobody wanted any old people to lose all their money and pensions. And of course, they got tricked because banking lobby managed to get not only bailed out at nominal debt, but even including risk margin, cost of operations and dividend payments. Not even a tiny haircut applied.
In this regard they doubled down on moral hazard: not only was taking risk not punished, the failures were even rewarded.
Andreas Reichel,
Yes, I’m painfully aware the system has been rigged since ~1970-1990s era to make sure old pensioners never lose money even on the risky bets they legitimately messed up,
No, this is simply not true. 2007 was very painful on banks and led to plenty of new regulations.
You can look at probulica that if the government paid 25$ billion to JP Morgan for example, the government got back 26.5$ billion from the bail out money, Citi received 45$ billion it paid back 58$ billion.
That bail out money was a direct wealth transfer from the shareholders to the government. Of course it was still better for the everyone, because for the shareholders it was losing 20% on the 80% that they have already lost and the other alternative was to go to zero.
For the government it was good because otherwise lending would have stopped. If you wonder why that is a problem, then you can look at Europe where the crisis was much more severe, and we just gave up on banking and technological investment since then.
If you think things are the same as before, you should look at the Silicon Valley Bank bankruptcy which could have gone very ugly, but the bank stepped in and spent a lot of money to contain. Mind you it is not from kindness, these collepses hurt a lot when you are inside banking, you know that collapse = no bonus. No bonus for you, no bonus for the bosses involved.
Edit: So you understand, the way I remember the bailout was in form of usually freshly issued preferred shared which the government could sell when the price recovered. Those preferred shares came at expense of the existing shareholders.
SergeJ,
as long as everybody is worried and expects the collapse, there is actually very little to worry about. Expected loss is always priced in, its the unexpected loss that is dangerous. No crisis ever happened expectedly (except the few “perma bears”, who predict armagedon minutely).
Right now everybody and his dog is pointing on the financials of “AI” which are indeed not very sound — but everybody knows that and hedges accordingly. (This has not been the case in 2007/2008). Yes, a few companies can/will collapse — but this seems to be expected and priced in. The technique will survive and who ever is last standing will rule the world. That’s the bet playing out here.
In general, the more interesting question was: What kind of “hidden debt” are we actually talking about? From second hand sources, I read it was about liability from long term rent contracts but this does not make much sense to me because both IFRS 16 as well as US GAAP require to disclose Rights of Use at Fair Value. Can anyone explain the details please?
Both IFRS 16 / ASC 842 require the ROU asset and lease liability only when the underlying asset is made available for use. A lease on a data center still under construction without a commencement date would be shown in the commitments note (IFRS 16.C) but not as a liability.
So technically the claim of “not appear on balance sheets” is not wrong — but the commitments are clearly stated in the notes and no-where hidden. The accounting seems to work as designed and I am sure investors do read the notes and not only the balance sheets or comprehensive income statements.
Yes, it is kind of an Open Secret that there is a lot of debt under the carpet.
BTW Thom, yesterday I had to think of you when I discovered the new label of “Certified organic software” at got-openbsd: chirpysoft.be
“organic software”
I like that. I suppose voluntary open-source software is “free range” rather than the factory farmed software produced by paid commercial devs.
Thom Holwerda,
If you are trying to imply that LLMs not meeting pie in the sky goals translates to LLMs being useless, well the reality is most people who are actually using LLMs today see them as assistants and productivity aides and aren’t looking for LLMs to do anything so radical overnight. IMHO the problem with exaggerations is that exaggerations have the effect of putting people off rather than convincing them. I actually do think there is common ground to stand on. There’s so much at stake and I think society is very ill-prepared. But honestly you’re failing to hit the points in a way that’s compelling to people who don’t already share your opinion. Extremists at the fringes make a lot of noise, but normal businesses and workers tend to ignore it because they just don’t identify with the extremists. I know this is a harsh thing to say, but you must put yourself in the shoes of people who are actually in the middle of these shifts to make arguments that are compelling for them rather than for yourself. That said, I’m learning that extremists like their echo chambers.
My take must be frustrating for you on issues like this at times. You know what’s ironic about that, if you were a pro-AI extremist instead you still be frustrated with me because my natural inclination would be to call out the pro AI extremism on the other side, haha. I tend to gravitate toward the center. owing to my desire to have things balance out.
Alfman,
We are in a bad situation, since two world powers China and USA are currently experiencing “prisoner’s dilemma”
Neither can fully stop developing AI without ensuring ruin of their civilization. But neither want to spend the cost of achieving “AGI” either.
Scenario 1:
They both agree on a moratorium on advanced AI. Nobody loses, no waste of resource, we discuss AI in more philosophical and theoretical way, no existential thread to human civilization.
Scenario 2:
One of them stop unilaterally while the other one achieves AGI (or at least significant enough progress) and then dominates the the party that was peaceful
Scenario 3:
The current path. Both of them push with all the resources they have. The process is extremely expensive, and the resulting AI is not guaranteed to be controllable.
Both of them are using all the dirty tactics in their quiver. China is smuggling chips, “distilling models” and actively funding and running fake astroturfing campaigns in US against datacenter construction (where they are about 10x behind)
It will be a very bumpy ride, and those who can see with clear head are actually frustrated with all the stupidity that’s going on.
Kudos, this is the perfect explanation, why all of this actually makes sense (even economically). Whoever survives this, will absolutely dominate the world for maybe the next 100 years (at least economically). Since the outcome is not clear, investors keep pumping money into both sides (a bit like Krupp delivering to all parties, benefiting no matter what).
It does not matter if you are going to lose 80% of your stakes as long as you will have 20% of your stake with the “winner” (who likely will be just the sole survivor). Economic war of atrocities.
Apologies for taking much of your time, but I found your statement very interesting.
It seems to look like a “very bumpy ride” with a lot of “stupidity” — I’d rather call it chaos. But lets get real: what was the alternative? When has “central planning” ever worked out?
“When has “central planning” ever worked out?”
China. The most successful economic growth story in human history. For some prospective it added the equivalent of Germany’s total electricity production in 2025. A single shipyard in China built more tonnage in 2025 than the US has since WW2. In 2025 China produced more steel than Britain has produced in 250 years.
Brisvegas,
No, just no.
I agree that their story is remarkable. But it also comes with many problems and challenges and I do very much doubt that they are any more stable or struggling less than the “failing” western economies.
I don’t want to derail this here, but ask yourself one thing: If China was such a shining beacon of success, then why does every Chinese try so hard to bring his fortune out of the country, rather buying empty Condos in Thailand for example. Do you actually have a glimpse on how many Chinese investment in foreign countries is failing badly — and still it is better than “staying China”?
China is facing many problems.
Andreas Reichel,
And they just miss the fact that China started growing only after free market reforms, became a real challenger, and switched back to old days, and now regressing, literally.
The once close competitor is now about half the GDP of USA.
They even had to update official population numbers and lowered them, which is unexpected from a closed system.
China’s economy exploded when they put Lenin in the back seat and introduced a more market-oriented model. Industrial policy of the kind you’re alluding to might make for good “number go up” statistics but that’s not necessarily a sign of an economy working well for its citizens.
Andreas Reichel,
Beyond short term periods?
Basically never.
It is mathematically impossible anyway.
(The best was in East Germany, which technically did not fail, but their industrial and resource rich half was 1/3 of the economic output of their free brethren at their end)
This is why the current “AI race” worries me.
It is not an organic growth, both China… and also USA are pumping their companies with artificial subsidies, which will ultimately be paid by taxpayers.
What subsidies is the US government pumping into AI companies? Genuinely curious. I’m aware that the AI companies are expecting a government bailout for when they fail, they’ve essentially said as much, and I’m aware that government protectionism is helping them against foreign competition (at the expense of the consumer), but I’m not aware of actual subsidies…….yet.
I wasn’t particularly worried either, as I’d assumed AI was still decades behind solving the visual spatial reasoning problems that made them horrible at warehouse and anything but very specific factory work. Then 60 Minutes showcased how far the Atlas Robot has come. It doesn’t effect my job, but a complete economic collapse can easily be the result. Hyundai workers are already striking over it.
dark2,
Vision models were already pretty good before Transformer architectures arrived. Since people rarely directly worked with them, they were “invisible” (and early LLM integrations were frankly not very good)
But if you have a cellphone and use the camera, if you were using “select text” on modern PDF viewers, or you played a recent video game, a Vision model was in there.
(And what do people think modern warehouse inventory systems, or factory automations used)?
Now they are pretty much integrated with the recent advancements, and frankly, they work like magic.
It’s not so much that they’re good, or they’re using them. It’s that getting close to a 1:1 replacement of an average human worker simply isn’t compatible with capitalism. Once the market crashes this time around, it won’t recover until something like UBI is passed into law.
dark2,
But that is the fallacy
“This time is different”. No it is not
Since the days of industrial revolution we had many major shifts in the economic workforce. We had automobiles replacing buggy owners. We had automated lifts making elevator operators entirely redundant. We had computers + xerox sacking entire typewriter rooms. We had Automated Teller Machines that …
You get the idea
Today we have AI replacing some entry level jobs, and there will be short term disruption (I was already personally affected)
But once again, it will be fine, and we will see “this time was not actually too different after all”
It didn’t cost a few million dollars to buy the machines necessary to break into the industry during the industrial revolution. And there weren’t so few competitors that they often chose collision instead of competing. It is different now because you need millions to even get your foot in the door, and the money itself is just going to the rich at the top, then sitting there doing nothing. Unlike the industrial revolution, resources are not getting reallocated. The math doesn’t support that this is like the industrial revolution at all.
dark2,
I’m not sure what costs that much.
For using a local setup that can help with creative writing and basic image features, you only need a modern computer.
https://ollama.com/library/qwen3.5
For engineering tasks with agentic coding you’d need a beefier machine, but depending on your needs, it start only about $3000 or so
https://github.com/nousresearch/hermes-agent
For using state of the art models, the large companies are basically throwing their systems at you for modest fees (like $10/$20 per month)
If you are talking about building a frontier model, though, it would cost more. A lot more, start at billions (or you do Chinese scale covert operations to distill at “only” $100 million or so)
sukru
It sounds to me like you are referring to using someone else’s LLM whereas dark2 is referring to what it takes to actually develop a competing LLM, which is not really the same thing.
I think it could be useful to have an LLM project that is explicitly trained on GPL compatible sources to be used for submitting GPL compliant patches. It’s not really clear that copyright law mandates this because of the transformative nature of LLMs (obviously we’ve talked about this before). Nevertheless, since it is a common complaint, I believe that using explicitly compliant training data could go a long way in plotting the course for an LLM that the GPL community could get behind. This would solve a common criticism and lower the stigma of LLMs in FOSS.
Training LLMs models is generally out of reach for individuals, but working together I think the majority of issues with AI become genuinely solvable. The key is working together though, if we can’t agree to do that then community efforts break apart. AI will keep evolving whether or not the community comes together, but my worry is that without a strong community AI of the future will be far less likely to address any of our concerns.
Alfman,
I think I touched that somewhere else as well, but let’s be explicit
Unless you want to compete with SoTA, building a very capable local LLM or VLM (with Vision understanding support) is entirely within reach
https://huggingface.co/blog/smollm3
Hugging Face Smol3
They not only give the model, the source code, and the training data, they explain all the recipes and training steps in detail.
(It specially only uses copyleft code, and they cleaned up the open web crawl corpus to the best of their ability)
If you want to replicate this from scratch, it would cost $500k to $1 million in cloud compute.
So, here you go, we already have proper open models with known ancestry.
(minor follow up)
Don’t dismiss this as it is “smol”, it actually is more capable than ChatGPT-3.5 for most tasks, even though it will run on your cellphone entirely locally.
(128K context, build in “reasoning”, native tool calling… All ChatGPT 4 level features)
But it of course loses on “trivia”. There is so much you can compress into a few GB.
@Alfman
I think it’s pretty obvious at this point that sukru is one of those “I can’t give my employees a raise,” but can mysteriously afford a new $100,000 car every year kind of person.
I’m not talking about just LLMs. Pretty much all modern manufactoring for the last few decades has followed the same trend. Modern, computerized equipment costing millions, no real competition because the cost of entry is too high. The benefits of the Industrial Revolution aren’t happening. Software enshitification is another example. You’d probably need more money than exists to build a Windows competitor at this point. We’ve got decades of stagnant wages, higher prices, etc. according to the numbers we’re more productive than ever, but we’re truly living in another gilded age where the 0.1% take everything and don’t contribute to making society better. AI is just going to be the final nail in the coffin for the idea of unrestricted capitalism.
dark2,
I don’t disagree things might seem bleak, but objectively we are at the best times for an average person. Especially here in the US of A.
Yes, you should not be. The LLMs have already been mostly democratized, and the rest is billionaires burning their money to improve the state of the art (which ultimately helps open source)
This is true.
https://www.worseonpurpose.com/
I’d argue the opposite. Not only software is easy to access today, now even hardware and manufacturing is pretty cheap. The modern 3D printer can operate at industrial scale with a $1000 – $2000 investment (for a start). There are many small operators that build their own “cottage” farms under the stairs.
I’d push back on this.
The studies tell an entrepreneur “takes” around 2.2% of the value they create for the society. Even if you reject those studies, we can use the market as a proxy. Someone like Bezos, who receives a lot of hate, owns only 10%-ish of the Amazon wealth he created, 90% is “taken” by other people
The only real “takers” are those big sharks who depend on government bailouts like bankers, or political insiders who somehow get $200 million fortunes with a $160k public worker salary.
Anyway, I don’t say it great for everyone, but for average person, things have never been better.
sukru,
Not for nothing sukru, but it’s comments like that that make it seem like you are extremely disconnected from the average person, even more so than a silicon valley worker. The middle class in the US are struggling so much and here you say we are objectively at the best of times for average people… You always say you are of the middle class, and I have to take you at your word, but that’s why I never understand how you are so wrong about the realities of today’s middle class. If you weren’t such a nice guy, I’d be more tempted to write this off as gaslighting, haha.
Obviously I don’t know much about your real living situation, but any time wealth distribution comes up I always have the distinct impression that you are quite disconnected from the modern middle class realities without even knowing it. Like when we talked about health insurance and it didn’t even register to you how painful those expenses are to average people.
Alfman,
I take “the median” person in a family as it is the most objective representative.
However, yes, if you stratify not everyone is in the same situation.
Young people around 20 are miserable (we can point fingers later)
Middle aged ones around 40 are doing pretty good (again median)
Seniors, 55 and over are living like kings. A whole one quarter of them are literal millionaires, and they hold most of the wealth.
The middle class is measurably shrinking. But not the way people usually think. Between 1980 and today a net 5%+ of them moved to upper income, while about 2% of then were moving downwards
(Look up Pew Research Center)
I’m painfully aware of the health insurance costs. Especially early on my career most of the “disposable income” so called was going into healthcare
And insurance did not become cheaper after all. But if we want to look at the actual reason, people will get upset, since having insurance companies write the law themselves, favoring their profits was not the right thing. But since ACA solved some long standing problems, it is many people’s sacred cow, and does not go well with critique, even its bad parts (many assume not liking guaranteed profits for insurance companies is somehow meaning I don’t want people having coverage)
Long story short insurance should not even be in the equation except for catastrophic cases. Cash pay was much cheaper than what I today pay as “co-insurance”
They are an anomaly, a cancer that we chose to grow instead of sever.
Alfman,
Thinking back
“Average” is their own reality and peers for each person.
So, not knowing the exact the average circumstances the location you live (and cannot ask here), this might not have been very useful.
@sukru
I assume you are using some old standard to define “middle class,” meanwhile newer definitions like the “true rate of unemployment” is almost 25% (which includes people on poverty wages and people getting less than 35 hours a week) The middle class is dead, has been for a while. Especially if you consider it only took 5 years for rents to double, and the insane inflation of residential property.
dark2,
Changing meaning of terms makes any discussion close to impossible.
No, once again I am using statistical blocks. However if you look at the real classical definition of middle class is
“Owning your home”
That is it. That was the difference between poor people (not low income. since income and wealth are different topics), and middle class.
Poor people rented, middle class owned their home
(Removing “rich” from this discussion for now, since they are literally a statistical anomaly at 1%)
(That makes basically none of us middle class, as very few of us actually own our homes)
Now…
I don’t disagree cost of living has increased due to housing. But…. that came due to a perfect storm of “elephants” in the room.
With everyone having sacred cows, this is a tough topic to discuss.
Why are homes expensive?
1- We are not making enough of them. Basic supply and demand (NIMBY-ism)
2 – People are duped into thinking they are “investments” so they fight tooth and nail to ensure they stay expensive and unaffordable
3 – Influx of about 20 million new people in a very short period of time
4 – Governments depending on property taxes, and them too fighting tooth and nail to prevent any actual affordable housing
5 – Speaking of “affordable” housing, overloading that term by subsidizing large landlords by government funds using poor people as vehicles, so no actual affordability exists
6 – Modern “redlining”, You can still “protect the character of the neighborhood” by ensuring only extreme wealthy can relocate there
https://www.paloaltoonline.com/news/2020/06/28/un-forgetting-the-segregationist-history-of-palo-alto-and-daly-city-and-san-francisco-and-2/
I’m sorry, I did not want to pivot into this, since lack of housing is one topic that makes me really upset for the future.
sukru,
This isn’t imagined. The data back the fact that inequality is on the rise and is consistently causing the middle class to loose ground. We’ve already looked at all the data before and I know you refuse to accept it, but the fact is things are not getting better for most and and are actually getting worse.
The government’s CPI rate of inflation that’s crafted to remove weight from the highest expenses like education, medical expenses and housing. These are responsible for much of our decline, totally out of control. Yet since the Greenspan era the government has intentionally manipulated the weights and even fabricated data using fictitious “owners’ equivalent rent” rather than using real house prices. For consumer goods they started substituting products of lower quality. As quality went down, the price for durable quality products went up. Consumers are forced to replace products more frequently. This obviously leads to a higher cost of living, but government doesn’t count these.
The motivation to manipulate inflation is that government pegs social benefits against CPI numbers and the Reagan government wanted to pay less in benefits. The honest thing to do would have been to openly admit the benefits were decreasing, but that was politically hard to sell so in order to pay less while simultaneously saying the benefits were the same, they used creative accounting and redefined the rate of inflation and now none are the wiser and everyone’s happy /sarcasm.
Some groups have tried to project the difference between CPI and real inflation and there’s a lot of factors involved. But regardless, generational income gains begin to look a lot worse once you look at real prices new generations have to pay for everything over their lifetime. I do think you are in denial about this though. You’ve never wanted to admit what study after study are telling us about economic reality. And most of us have lived long enough to see this with our own eyes too.
https://finance.yahoo.com/economy/article/middle-class-americans-living-standards-in-decline-at-this-point-as-inflation-outpaces-wage-gains-143939724.html
https://www.investopedia.com/insights/americas-slowly-disappearing-middle-class/
Maybe if you live in Silicon Valley things could be different there, but know that you are the exception and not the norm. The middle class overall is struggling and your comment “for average person, things have never been better.” is very wishful thinking.
Alfman,
I know this is getting long and tiring. I hope you don’t misunderstand my stance here.
Two things can be true at the same time.
Most people in middle class are being pushed out. Once again, some are moving downwards, and some are moving to upper middle class. The studies show more are actually in the upwards trajectory.
Which brings your first point
Yes, “inequality” is expanding.
(Which is not the fault those who achieve a better life for themselves though)
I touched housing above, and will not repeat it.
However…
All these 3: housing, medical and education (I’d include transportation, and utilities as well) are entirely controlled by the government, and government alone. Even so called “private” ones are subject to heavy regulation that includes setting their prices.
Government will of course hide their inaptitude (or I’d rather call effects of active bad policies at this time)
Tell me about it. He has been a real disgrace to our economy, and had long lasting effects we are still paying decades later.
Many times I would quote his “people can no longer buy steak, so we are replacing that with hamburgers in the inflation cart”
(facepalm-emoji)
Which should actually be tied to accounts receivable in tax gross.
Long story… for another times…
Again, I specifically sliced wrt generations above. A certain generation I will not name, not only spent everything their parents gave them, but actively pulled the ladder behind them, and made their own offspring forever debt slaves through the government.
And not only that, … anyway I’d probably write several pages of rant here. Let me stop
It is actually quite bad here. A rental without roaches is considered “luxury”. And we usually have to choose between a livable home and a terrible commute.
(A commute that measurably affects physical and mental health)
If it was up to me, I’d move somewhere else, without hesitation.
sukru,
Please be more specific. I know there can be exceptions, but what you are saying is untrue overall; most people are not doing better. I know you want to absolve the wealthy of responsibility for the economic hardships below them, but the mathematically objective truth is that the growing share of wealth around the top contributes to the loss of wealth under them. At some point their share can overtake everyone else and modern generations are facing this reality.
I can see why those who are well off might want to morally disassociate themselves from the equation. The old idiom “the tide rises for everyone” offers a nice clean way to clean everyone’s conscience, but as the economics get more and more skewed the factual basis for it is no longer true. Even our wealthiest cities with ungodly amounts of wealth have 1/4 of the population officially living in poverty.
https://povertycenter.columbia.edu/news/22-million-new-yorkers-are-living-poverty
Yes blame the government, but the government and it’s fiscal policies are mostly puppets of the elite though. Are you going to blame the elites who control the politicians? I have my doubts.
I mean, you can. Most of us don’t live there after all. You’d likely have to realign your salary expectations. That’s the main issue, right? That’s kind of my point about silicon valley being an outlier.
Alfman,
It’s a long story, but no, it actually isn’t about the wages. A bit personal, I’ll leave it at that.
Of course I blame them.
Our media is at the hands of a small group, and “elites” have to buy their way in. One might be directly listed many times in the Epstein list, but can easily pay them off to not have any coverage.
(No, I’m not talking about the person you’d most likely thinking of)
I looked at the report, but it is unfortunately pushing for the very policies that cause that “poverty”… even with their own custom definition.
No amount of external money can fix a supply crisis. Subsidizing demand actually makes it worse, and causes those with means to leave the area (the exact thing that is happening in New York, and many places in California)
Until and unless those harmful policies are rolled back, especially on housing like restrictive zoning laws, unending decade long environmental reviews, and harmful policies like rent control, there is no solving “poverty” as it only gets worse.
(I still don’t understand how people support policies that have been proven to be harmful in every place they were tried. In this day and age supporting rent control should receive the same response as claiming the Earth is flat, or vaccines cause autism. But here we are)
Anyway, I really with we lift more people out of poverty, but we cannot do this while pulling the lower rungs of the ladder out of their reach.
sukru,
We can debate the reasons why, but my point was that the “things have never been better” comment seems rather crass given the economic hardships of the modern middle class. Clearly the higher you go, the better off you’ll be but the fact remains wealth keeps getting skewed to the top. When you insist on deflecting away from the unfair distribution of the pie, the issue isn’t so much that the that the problems you bring up are untrue, it’s that the deflections in perpetuity are always used to pretend the principal benefactors of the skewed economy are faultless. New generations of the middle class who keep getting smaller slivers of the pie are sick and tired of this game and rightfully so.
We’ve had machines replacing factory work and unskilled labor generally since before electricity.
Loved the slightly rephrased Anna karenina intro and to continue the theme. “The boardroom was inn uproar”