I’m surprised there is no broadband rollout or telecom network on there. I guess it’s hard to quantify the cost within a specific event?

GDP adjustments are warranted, but it is more stark than both the estimates suggest.

The megaprojects of the previous generations all had decades long depreciation schedules. Many 50-100+ year old railways, bridges, tunnels or dams and other utilities are still in active use with only minimal maintenance

Amortized Y-o-Y the current spends would dwarf everything at the reported depreciation schedule of 6(!) years for the GPUs - the largest line item.

The railroad buildout was a lot more, idk, tangible. Most of that money was spent employing millions of people to smelt iron, lay track, build bridges, blow up mountains, etc. It’s a lot more exciting than a few freight loads of overpriced GPUs.

This seems to show the railroads peaking around 9% of GDP. While that's lower than some of the other unsourced numbers I've seen, it's much higher than the numbers I was able to find support for myself at

https://news.ycombinator.com/item?id=44805979

The modern concept of GDP didn't exist back then, so all these numbers are calculated in retrospect with a lot of wiggle room. It feels like there's incentive now to report the highest possible number for the railroads, since that's the only thing that makes the datacenter investment look precedented by comparison.

But doesn't that overstate it in the other direction? Talking about investments in proportion to GDP back when any estimate of GDP probably wasn't a good measure of total economic output?

We're talking about the period before modern finance, before income taxes, back when most labor was agricultural... Did the average person shoulder the cost of railroads more than the average taxpayer today is shouldering the cost of F-35? (That's another line in Paul's post.)

The railroads and the interstate are arguably the biggest and broadest impact, especially in 2nd order effects (everything West of the Mississippi would be vastly different economically without them).

I am not an ai-booster, but I would not be surprised at AI having a similar enabling effect over the long term. My caveat being that I am not sure the massive data center race going on right now will be what makes it happen.

> Makes it a little less dramatic. But also shows what a big *'n deal the railroads were!

It also makes it more dramatic, consider the programs on the list and what they have in common.

* The Apollo program. A government-funded science project. No return on investment required.

* The Manhattan Project. A government-funded military project. No return on investment required.

* The F-35 program. A government funded military project. No return on investment required.

* The ISS. A government funded science project. No return on investment required.

* The Interstate Highway System. A government funded infrastructure project. No return on investment required.

* The Marshall Plan. A government funded foreign policy project. No return on investment required.

The actual return on investment for these projects is in the very long term of decades; Economic development, national security, scientific progress that benefits the entire country if not the entire world.

Consider the Marshall Plan in particular. It's a massive money sink, but it's nature as a government project meant it could run at losses without significant economic risk and could aim for extremely long term benefits. It's been paying dividends until January last year; 77 years.

And that dividend wasn't always obvious; Goodwill from Europe towards the US is what has prevented Europe from taking similar actions as China around the US' Big Tech companies. Many of whom relied extensively on 'Dumping' to push European competitors out of business, a more hostile Europe would've taken much more protectionist measures and ended up much like China, with it's own crop of tech giants.

And then there's the two programs left out. The railroads and AI datacenters. Private enterprise that simply does not have the luxury of sitting on it's ass waiting for benefits to materialize 50 years later.

As many other comments in this thread have already pointed out: When the US & European railroad bubbles failed, massive economic trouble followed.

OpenAI's need for (partial) return on investment is as short as this year or their IPO risks failure. And if they don't, similar massive economic trouble is assured.

As sibling comments mentioned deceptive comparison as well. How about comparing in percentage of Gross Energy Output. https://www.sciencedirect.com/science/article/abs/pii/S09218...

For some reason this reminds me of people at work who walk up and say we did x bazillion things in n time, and then pause and expect us to express shock at how amazing that is and how much more productive they are than other teams. So what. Without a proper comparison to something equivalent I can't evaluate whether it's exceptional. I could treat each molecule as a thing and tell people how incredibly many things I eat on average per minute, but if I explain no one would find this to be exceptional.

Fwiw, Railroads were the reason for some of the biggest bank collapses in history. Panic of 1873 was literally called "The Great Depression" (until a greater depression hit). 20 years later was the Panic of 1893. Both were due to over-investment and a bubble bursting, and they took out tons of banks and businesses.

We're seeing exactly the same thing with AI, as there is massive investment creating a bubble without a payoff. We know that the value will lower over time due to how software and hardware both gets more efficient and cheaper. And so far there's no evidence that all this investment has generated more profit for the users of AI. It's just a matter of time until people realize and the bubble bursts.

And when the bubble does burst, what's going to happen? Most of the investment is from private capital, not banks. We don't know where all that private capital is coming from, so we don't know what the externalities will be when it bursts. (As just one possibility: if it takes out the balance sheets of hyperscalers and tech unicorns, and they collapse, who's standing on top of them that collapses next? About half the S&P 500 - so 30% of US households' wealth - but also every business built on top of those mega-corps, and all the people they employ) Since it's not banks failing, they probably won't be bailed out, so the fallout will be immediate and uncushioned.

The problem is that once built, railroads provided economic value right off the bat.

I would love to hear about the economic value being generated by these LLMs. I think a couple years is enough time for us to start putting some actual numbers to the value provided.

The other categorical error is that the American people paid the railroads a monumental subsidy to get the job done. We gave them almost 10% of the territory.

"Infrastructure build out"? Everything put into these datacenters is worthless well before 10 years have gone by.

We aren't even getting infrastructure out of it, they are just powering it with gas turbines..

regardless, it's true that AI-related spending is the largest mobilization of capital in history

It doesn't seem like it to me. I like watching Ed Zitron rant about it on YouTube. It's fun.

We could have had non-carbon energy independence by now.

You can't run a data center on solar or wind (even w/ batteries included). Everything they're building runs on gas & coal like what Musk got running for xAI.

It literally says 'Inflation-adjusted costs' on the right side of the graph, right under the main title, FFS.

Hyperscale exists as a term pre-LLM-hype. It mainly exists to describe the kind of datacenteres that companies like google and amazon have been building for at least a decade now: very large, very highly integrated and customised hardware, with a focus on cloud deployment and management strategies. This is to distinguish from just a large datacenter built with commodity server parts from a set of vendors (i.e. the kinds of servers 99% of people will be able to lay their hands on. Another way to put it is that if you're not writing your own BIOS/BMC/etc, you're probably not hyperscaling).

I have concluded the entire public discourse surrounding AI has no relationship to real stuff that you can go, test, and point at.

There’s a loop of everyone is saying stuff because everyone else is saying stuff that turns into a sort of reality inspired fan fiction.

It’s not just that it’s wrong or imprecise, that I expect, it’s that the folklore takes on a life of its own.

It always makes me think of a hyperactive toddler running around in circles, which oddly fits most thought leaders who use the term.

Nobody really uses the term in the Valley except probably C-level people talking to Wall street investors.

Superscaler sounds too much like superscalar…

If you adjust for GDP railroads were much more expensive, and I don't think they're viewed as a mistake https://x.com/finmoorhouse/status/2044985790212583699?s=20