What's Actionable in AI?

You are receiving this post because you are a subscriber to Charles Hugh Smith / Of Two Minds.

It's been a busy week in AI-Land, and after all the sound and fury, we come to the key question: is anything AI-related actionable in terms of our own lives?

This is a question few ask, as the smoking crater left by the impact of DeepSeek generated a supernova of commentary on other topics, including these two of general interest: when will AI become super-intelligent and take over the world, and how can we invest to get rich from AI.

I devoted the week to the DeepSeek impact on the AI bubble, which has expanded in the financial, media and cultural realms to dizzying heights.

But what's the impact on our own lives in all this? How might we anticipate and respond to these developments as individuals and households?

My starting point is simple: nothing will become clear until the money runs out.

Big Tech corporations have spent billions of dollars on raw computing power because they have billions to blow.

Companies have spent untold additional billions on mostly fruitless efforts to avoid falling behind in the frenzy to attach "powered by AI" to their products and services.

The global financial sector is awash in trillions of dollars created out of thin air over the past 15 years, and so billions of these dollars have sloshed into speculative bets on AI.

Billions, billions, billions. There's too much money sloshing around for anyone to feel any pressure to make decisions based on scarcity, which is what drives careful shepherding of resources and a fruitful focus on efficiency.

Correspondent Les M. recently described this dynamic in an email. He related that when he was running an IT service enterprise, customers weren't interested in efficiency until there was an economic slowdown, at which point demand for their services exploded and they struggled to keep up with demand.

This is related to humanity's naturally selected focus on windfalls: in a hunter-gatherer world of scarcity, the tree loaded with fruit is a magnet. We rush to the tree and hungrily strip it of fruit, gorging ourselves, unmindful of waste. Once the tree has been stripped, then we move on.

This explains a great deal about financial manias and the inevitable subsequent busts: we all pile into speculative windfalls, where "you can't lose" and "greed is good." Nobody cares about wastage or risk because the abundance is so compelling. And we all know that once the tree has been stripped, we can move on to the next financial windfall.

It's only when the windfalls dry up do we start avoiding waste and conserving resources with an eye on nurturing some modest payoff in a landscape of scarcity.

So what's actionable in our own lives regarding AI? There are several well-established lines of inquiry.

One is "AI will automate tens of millions of jobs," causing mass unemployment. Techno-enthusiasts tend to draw a comforting but illogical conclusion from the past century: every technology will automatically create millions more jobs than it destroys.

The problem is there is no actual causal mechanism in technology that automatically creates more jobs than it destroys. This chain of events was unique to a specific time, place and set of technologies.

Given that AI's promise is to generate more AI without any need for messy humans, then this claimed causal link--technology always created full employment--vanishes. It's entirely possible AI eliminates tens of millions of jobs and creates only a handful of new jobs.

It's also entirely possible that the expectations of AI automating everything under the sun is a financial-windfall-inflated euphoria disconnected from real-world dynamics.

CHS NOTE: I understand some readers object to paywalled posts, so please note that my weekday posts are free and I reserve my weekend Musings Report for subscribers. Hopefully this mix makes sense in light of the fact that writing is my only paid work/job. Who knows, something here may be actionable and change your life in some useful way. I am grateful for your readership and blessed by your financial support.