Has the bailout of generative AI already begun?
Or is pouring a pile of government money in just a coincidence?
“The way this works”, said an investor friend to me this morning: “is that when Nvidia is about to miss their quarter, Jen Hsun calls David Sacks, who then gets this government initiative to place a giant order for chips that go into a warehouse.”
I obviously can’t confirm or deny that actually happened. My friend might or might not have been kidding. But either way the White House’s new Science and AI program, Genesis, announced by Executive Order on Monday, does seem to involve the government buying a lot of chips from a lot of AI companies, many of which are losing money.
And David Sack’s turnaround from “read my lips, no AI bailout” (November 6) to “we can’t afford to [let this all crash]” tweet (November 24) came just hours before the Genesis announcement.
Coincidence?
Another friend of mine, an AI consultant who works closely with government agencies, sent me a concerned LinkedIn note, “Are you following the Department of Energy’s big AI announcement yesterday? [Part of me is] excited about it. But part of me - a part of me that your post speaks to - sees it as a government [bailout]. Is that cynical?”
Still a third friend, a leading neuroscientist, said much the same to me, in an email “A bailout was how I read it.”
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The libertarian news site LewRockwell.com, reprinting a blog by Moon of Alabama, reached essentially the same conclusion, in detailed analysis called Executive Order Provides for Bailout of Overextended AI Companies.
Building on my Monday “A tale of two capitalisms” newsletter, and expanding on its notion of “safety-net socialism for overextended companies,” the author lays out several facts that certainly seem to speak for themselves:
Whether this is the first step towards sub rosa bailout remains to be seen, but it’s definitely worth keeping an eye on. In particular, it will be interesting to see both whether all these LLMs have a genuine, positive impact on science (or just produce a lot of queries that go nowhere, a digital version of the infamous never-built Gravina Island Bridge) and whether this is the last government subsidy of the AI industry, or just the first of many.
Gary Marcus has a sixth sense for danger, hype, and misappropriated funds. He was the first person to predict that scaling would not lead to AGI, was also first to anticipate that the AI industry would seek a bailout. Please join over 88,000 subscribers in supporting his efforts to keep the AI industry honest.
Socialism for the rich, capitalism for the poor, as has often been said.
Seems entirely possible, in light of all the circular investments. Just add a government circle. Appreciate that I knew about the importance of Google’s chips early due to one of your posts.