Also railways would always be useful at that time - e.g. logistics in warfare.What other uses do GPU&#x27;s have that are critical...? lolIn addition to your points, this is why I always laugh when people do backward comparisons. What characteristics do they share in common? Very little.

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

This seems to show the railroads peaking around 9% of GDP. While that&#x27;s lower than some of the other unsourced numbers I&#x27;ve seen, it&#x27;s much higher than the numbers I was able to find support for myself at<a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=44805979">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=44805979</a>The modern concept of GDP didn&#x27;t exist back then, so all these numbers are calculated in retrospect with a lot of wiggle room. It feels like there&#x27;s incentive now to report the highest possible number for the railroads, since that&#x27;s the only thing that makes the datacenter investment look precedented by comparison.

The F-35 case is interesting. Lockheed Martin can, given peak rates seen in 2025, produce a new F-35 approximately every 36 hours, as they fill orders for US allies arming themselves with F-35&#x27;s. US pilot training facilities are brimming with foreign pilots. It&#x27;s the most successful export fighter since the F-16 and F-4, and presently the only means US allies have to obtain operational stealth combat technology.What that means for the US is this: if the US had to fight a conventional war with a near-peer military today, the US actually has the ability to replace stealth fighter losses. The program isn&#x27;t some near-dormant, low-rate production deal that would take a year or more to ramp up: it&#x27;s a operating line at full rate production that could conceivably build a US Navy squadron every ~15 days, plus a complete training and global logistics system, all on the front burner.If there is any truth to Gen Bradley&#x27;s &quot;Amateurs talk strategy, professionals talk logistics&quot; line, the F-35 is a major win for the US.

That&#x27;s the problem with going too far using &quot;money&quot; or &quot;GDP&quot; - you can roughly compare the WWII 45% of GDP spent with today - <a href="https:&#x2F;&#x2F;www.davemanuel.com&#x2F;us-defense-spending-history-military-budget-data.php" rel="nofollow">https:&#x2F;&#x2F;www.davemanuel.com&#x2F;us-defense-spending-history-milit...</a> because even by WWII much was &quot;financialized&quot; in such a way that it appears on GDP (though things like victory gardens, barter, etc would explicitly NOT be included without effort - maybe they do this?).As you get further and further into the past you have to start trying to measure it using human labor equivalents or similar. For example, what was the cost of a Great Pyramid? How does the cost change if you consider the theory that it was somewhat of a &quot;make work&quot; project to keep a mainly agricultural society employed during the &quot;down months&quot; and prevent starvation via centrally managed granaries?

I posted just that on the Twitter feed but then I realized that railroad started at the beginning of an industrial revolution where labor was a far larger portion of GDP compared to industrial production. So it kind of makes sense that the first enabling technology consumed far more GDP than current investments do, even on a marginal basis.

But doesn&#x27;t that overstate it in the other direction? Talking about investments in proportion to GDP back when any estimate of GDP probably wasn&#x27;t a good measure of total economic output?We&#x27;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&#x27;s another line in Paul&#x27;s post.)

You&#x27;re actually arguing those highly technical engineering projects provided nothing to humanity investing labor in them because they were not a financial success?Just confirms my suspicion HN is not a forum for intellectual curiosity. It&#x27;s been entirely subsumed by MBAs and wannabe billionaires.

&gt; Makes it a little less dramatic. But also shows what a big *&#x27;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&#x27;s a massive money sink, but it&#x27;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&#x27;s been paying dividends until January last year; 77 years.And that dividend wasn&#x27;t always obvious; Goodwill from Europe towards the US is what has prevented Europe from taking similar actions as China around the US&#x27; Big Tech companies. Many of whom relied extensively on &#x27;Dumping&#x27; to push European competitors out of business, a more hostile Europe would&#x27;ve taken much more protectionist measures and ended up much like China, with it&#x27;s own crop of tech giants.And then there&#x27;s the two programs left out. The railroads and AI datacenters. Private enterprise that simply does not have the luxury of sitting on it&#x27;s ass waiting for benefits to materialize 50 years later.As many other comments in this thread have already pointed out: When the US &amp; European railroad bubbles failed, massive economic trouble followed.OpenAI&#x27;s need for (partial) return on investment is as short as this year or their IPO risks failure. And if they don&#x27;t, similar massive economic trouble is assured.

I agree that AI will probably have bigger effects that we could possibly predict right now. But unlike past booms&#x2F;bubbles, I suspect the infrastructure being built now won&#x27;t be useful after it resolves. The railroads, interstate system, and dotcom fiber buildout are all still useful. AI will need to get more efficient to be useful as established technology, so the huge datacenters will be overbuilt. And almost none of the Nvidia chips installed in datacenters this year will still be in use in 5 years, if they&#x27;re even still functional.

Is there really that much inefficiency in our distribution of goods and services such that AI could have this much impact?

&gt; I would not be surprised at AI having a similar enabling effect over the long term.The big difference is that the current AI bubble isn&#x27;t building durable infrastructure.Building the railroads or the interstate was obscenely expensive, but 100+ years down the line we are still profiting from the investments made back then. Massive startup costs, relatively low costs to maintain and expand.AI is a different story. I would be very surprised if any of the current GPUs are still in use only 20 years from now, and newer models aren&#x27;t a trivial expansion of an older model either. Keeping AI going means continuously making massive investments - so it better finds a way to make a profit fast.

&gt;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.Maybe? It seems as if the tech is starting to taper off already and AI companies are panicking and gaslighting us about what their newest models can actually do. If that&#x27;s the case the industry is probably in trouble, or the world economy.

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.

As sibling comments mentioned deceptive comparison as well. How about comparing in percentage of Gross Energy Output. <a href="https:&#x2F;&#x2F;www.sciencedirect.com&#x2F;science&#x2F;article&#x2F;abs&#x2F;pii&#x2F;S0921800921003128" rel="nofollow">https:&#x2F;&#x2F;www.sciencedirect.com&#x2F;science&#x2F;article&#x2F;abs&#x2F;pii&#x2F;S09218...</a>

This tweet shows it as a percentage of US GDP:<a href="https:&#x2F;&#x2F;x.com&#x2F;paulg&#x2F;status&#x2F;2045120274551423142" rel="nofollow">https:&#x2F;&#x2F;x.com&#x2F;paulg&#x2F;status&#x2F;2045120274551423142</a>Makes it a little less dramatic. But also shows what a big **&#x27;n deal the railroads were!

Justin Lebar (he built xla compiler and worked at OpenAI) has an amazing talk about this subject <a href="https:&#x2F;&#x2F;youtu.be&#x2F;cyJU32ivIlk?si=gYuHtzMJIvaSqcht" rel="nofollow">https:&#x2F;&#x2F;youtu.be&#x2F;cyJU32ivIlk?si=gYuHtzMJIvaSqcht</a>

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&#x27;t evaluate whether it&#x27;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.

&gt; We&#x27;re seeing exactly the same thing with AI, as there is massive investment creating a bubble without a payoff....And so far there&#x27;s no evidence that all this investment has generated more profit for the users of AI.If you look around a bit, you will find evidence for both. Recent data finds pretty high success in GenAI adoption even as &quot;formal ROI measurement&quot; -- i.e. not based on &quot;vibes&quot; -- becomes common: <a href="https:&#x2F;&#x2F;knowledge.wharton.upenn.edu&#x2F;special-report&#x2F;2025-ai-adoption-report&#x2F;" rel="nofollow">https:&#x2F;&#x2F;knowledge.wharton.upenn.edu&#x2F;special-report&#x2F;2025-ai-a...</a> (tl;dr: about 75% report positive RoI.)The trustworthiness, salience and nuances of this report is worth discussing, but unfortunately reports like this gets no airtime in the HN and the media echo chamber.Preliminary evidence, but given this weird, entirely unprecedented technology is about 3+ years old and people are still figuring it out (something that report calls out) this is significant.

Fwiw, Railroads were the reason for some of the biggest bank collapses in history. Panic of 1873 was literally called &quot;The Great Depression&quot; (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&#x27;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&#x27;s no evidence that all this investment has generated more profit for the users of AI. It&#x27;s just a matter of time until people realize and the bubble bursts.And when the bubble does burst, what&#x27;s going to happen? Most of the investment is from private capital, not banks. We don&#x27;t know where all that private capital is coming from, so we don&#x27;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&#x27;s standing on top of them that collapses next? About half the S&amp;P 500 - so 30% of US households&#x27; wealth - but also every business built on top of those mega-corps, and all the people they employ) Since it&#x27;s not banks failing, they probably won&#x27;t be bailed out, so the fallout will be immediate and uncushioned.

&gt; once built, railroads provided economic value right off the batIf they were laid on a sensible route, completed on budget and time, and savvily operated. Many railroads went bust.

Equating this buildout with LLMs is also a category error. Waymo (self-driving cars) depends on the same infrastructure, and there are a variety of other robotics programs which are actually functioning, you can see them in operation. They all require a lot of GPUs to train and run the models which operate the robotics.

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.

Given the size of some of these data centers, the incentives packages that local governments often give their developers, and the impact on the electric grid that can, in some cases, raise costs for other ratepayers, I&#x27;d say the comparison could be similar.The one Google&#x27;s putting in KC North is 500 acres [0] and there were $10 billion in taxable revenue bonds put up by the Port Authority to help with the cost.This for a company that could pay for that in cash right now.[0] <a href="https:&#x2F;&#x2F;fox4kc.com&#x2F;news&#x2F;google-confirms-its-behind-new-data-center-coming-to-northland&#x2F;" rel="nofollow">https:&#x2F;&#x2F;fox4kc.com&#x2F;news&#x2F;google-confirms-its-behind-new-data-...</a>

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.

This isn&#x27;t true and you can easily prove it to yourself by renting a Sandy Bridge CPU or a TPUv2 from Google today.

&quot;Infrastructure build out&quot;? Everything put into these datacenters is worthless well before 10 years have gone by.We aren&#x27;t even getting infrastructure out of it, they are just powering it with gas turbines..

regardless, it&#x27;s true that AI-related spending is the largest mobilization of capital in history

This seems like a total category error. The Railroads are the only example that actually seems comparable, in being an infrastructure build out that&#x27;s mostly done by a variety of private companies. Examples of things that would be worth comparing to the datacenter boom are factory construction and utilities (electrification in the first half of the 20th century, running water, gas pipes.)

Does anyone have any plans for what to do with all these chips and things once they are obsolete? I can&#x27;t imagine they are all just going to go to some scrap heap.

Same. He’s very knowledgeable about this and very skeptical. Not to mention hilarious.I’m getting my popcorn ready for the bubble pop.

It doesn&#x27;t seem like it to me. I like watching Ed Zitron rant about it on YouTube. It&#x27;s fun.

Is this an appropriate spend and risk? I&#x27;m starting to feel as if we have been collectively glamoured by AI and are not making sound decisions on this.

Just for context, Amazon+Microsoft+Alphabet+Meta+Oracle total revenue for the 5 years ending in 2025 was...~$6.5 trillion

<a href="https:&#x2F;&#x2F;xcancel.com&#x2F;finmoorhouse&#x2F;status&#x2F;2044933442236776794" rel="nofollow">https:&#x2F;&#x2F;xcancel.com&#x2F;finmoorhouse&#x2F;status&#x2F;2044933442236776794</a>

Is this _actual_ spend? Like dollars actually changing hands?Or is this &quot;we said we are going to invest $X&quot;? What about the circular agreements?

But the AI fanatics claimed that AI would solve cold fusion, making that whole thing moot.The only problem is, if AI doesn’t solve cold fusion, we’re back to square one. And a few trillion dollars in the hole.

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

We could have had a space elevator by now.

You can and _must_ if you want competitive costs. Musk famously overpaid in order to get speed of deployment.I was reading geohot&#x27;s musings about building a data center and doing so cost effectively and solar is _the_ way to get low energy costs. The problem is off-peak energy, but even with that... you might come off ahead.And that dude is anything but a green fanatic. But he&#x27;s a pragmatist.

That’s because Rs let NIMBYs and the fossil fuel lobby call the shots, and Ds let NIMBYs and degrowthers call the shots. I bet China isn’t powering their datacenters with gas turbines

You can&#x27;t run a data center on solar or wind (even w&#x2F; batteries included). Everything they&#x27;re building runs on gas &amp; coal like what Musk got running for xAI.

Does anyone know what&#x27;s included in &quot;datacenter capex&quot;? In particular, does that include spending for associated power generation? Because whether or not the AI craze pans out, if we&#x27;ve built a whole bunch of power plants (and especially solar, wind, hydro, etc) that would be a big win.

It literally says &#x27;Inflation-adjusted costs&#x27; on the right side of the graph, right under the main title, FFS.

Adjusted for inflation?edit - sorry, it is in fact adjusted, text is kinda hard to see

as of november last year, data centre capex was only 60% of their revenues. which provides the bussiness justification to increase investment further

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&#x27;re not writing your own BIOS&#x2F;BMC&#x2F;etc, you&#x27;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.

That&#x27;s not fair to the toddlers; their crap tends to be safely contained in a diaper as opposed to their heads.

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…

I really dislike the term hyperscaler. Comes off very insincere. They came up with it themselves, didn&#x27;t they? What&#x27;s the official definition supposed to be now? Companies that are setting up as many GPU&#x2F;TPU server clusters as possible for a demand that&#x27;s yet to exist?

Gentle reminder that the cost of producing well-formatted graphs is much, much lower than it used to be. We grew up in a world where the mere existence of this graph would prove that someone put a great deal of effort into making it, and now it does not. I have no specific reason to doubt the information, but if you want to have reliable epistemic practices, you can no longer treat random graphs you find on social media as presumptively true.

Just wait until the DAOs become agentic!

Really shows where our priorities are at as a country. SMH

we, the people, are the ultimate mega project, and it&#x27;s showing

It&#x27;s not totally clear that the gigantic push to run rail lines through undeveloped parts of North America &quot;ahead of demand&quot; for reasons of genocide (aka &quot;white settlement&quot;), especially the transcontinental routes, was the smartest investment, even leaving aside the horrific crime it represents. We probably would have gotten greater ROI connecting more developed places on a piecemeal basis and extending the rail network more slowly in the West (and probably even more rapidly in the developed East) instead of founding new towns along brand-new rail lines. There is a reason the federal government was so involved in the finance of these things: left alone, private Eastern capital would not have done things the way they were done, which was chiefly to &quot;open the frontier&quot; aka accelerate the genocide.I certainly think it was a mistake.

If you adjust for GDP railroads were much more expensive, and I don&#x27;t think they&#x27;re viewed as a mistake <a href="https:&#x2F;&#x2F;x.com&#x2F;finmoorhouse&#x2F;status&#x2F;2044985790212583699?s=20" rel="nofollow">https:&#x2F;&#x2F;x.com&#x2F;finmoorhouse&#x2F;status&#x2F;2044985790212583699?s=20</a>

Further evidence that the US, for whatever reason, lacks basic ability to rationally use resources.

Hyperscalers have already outspent most famous US megaprojects