The FT noted this yesterday:
Consumers should prepare for price increases this year, of as much as 20 per cent for smartphones, computers and home appliances, analysts and manufacturers have warned, as artificial intelligence demand drives up the cost of memory chips used in electronics.
They added:
Consumer electronics makers including Dell, Lenovo, Raspberry Pi and Xiaomi have warned that chip shortages were likely to add to cost pressures and force them to raise prices, with analysts forecasting increases of 5 to 20 per cent.
The paradox in this is obvious.
AI wants to be universal, and yet AI will increase the price of access to IT in general, and make it out of reach for many, just at the time when the government is making sure that access to IT is vital for integration in society.
This, then, is not some minor side issue. Assuming the prediction is correct - and it may not be, of course - the implication is that what we are facing is a new digital divide between those who have potent IT and those who have none at all.
Simultaneously, we face an inflation risk because chips are built into so many products, and the price spillover will affect vast numbers of consumer goods. This, too, will split society.
And don't doubt that this will also affect public services, where already inadequate IT will be kept in use, and the demand for austerity will grow if IT costs increase.
And all of this because a few people have decided we need AI, but no one really knows why, and almost no one has any real clue how to use it (though we have a guide here).
This is the case of financial capitalism, fuelled by financial engineering delivering technological change and physical investment for which there is no proven need, but with massive potential consequences for environmental capital, human capital and societal capital. That means this matters.
Taking further action
If you want to write a letter to your MP on the issues raised in this blog post, there is a ChatGPT prompt to assist you in doing so, with full instructions, here.
One word of warning, though: please ensure you have the correct MP. ChatGPT can get it wrong.
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[…] Is this possible? Not in the opinion of the Bank of England. They predict nothing less than. 3.5% next year, but they ignore the very real risk of a recession. So, yes, I think this is plausible, and much more so than anything the Bank of England suggests, especially if, as I suspect, AI fails to deliver for stock markets and does hike inflation, as I note is possible this morning. […]
I hope this is not off topic: “Internet of Things”. Increasing numbers of products have ICs (& communications to the Internet) built into them. The aim is to turn the object (via the software & Comms) into something that generates a rent. This is a slow but relentless process but is closely related to your final sentence which could be summarised with the phrase “techno-feudalism”, which I predicted back in 2018. Indeed, “we ain’t seen nothing yet” is the most likely current situation – unless citizens decide to do something.
Much to agree with
As a micro e-commerce business we have already seen price increases in software and plugins across the board as everyone adds AI features to their products. That increase probably genuinely reflects the development work and costs that have gone into that addition.
But I don’t use any of the AI features, and I’m sure most others don’t. I can’t see why the developers have bothered, unless it’s some kind of fashion they feel they have to keep up with.
For example, I have an excellent suite of shipping plugins that helps manage our rather idiosyncratic requirements. The software now constantly prompts me to save time using their new AI features. But it would take me longer to make AI understand what I need than to set it up myself, and then I would have to check all scenarios to make sure it had got it right. If my shipping arrangements were uniform enough to be set up by AI, I wouldn’t need most of the plugins in the first place.
Thanks
And true.
I use AI, but I have never yet used anything it has created as it created it
There’s good reason to be super sceptical about AI and be worried about its impact on the economy and everything.
Not sure if you saw this? A wide ranging interview by Paul Krugman with an analyst and researcher of AI which covers all the bases: what it is, how it has already hit peak learning and what it learns here on in is likely to be dross; how it is dominating demand for resources; that no one really knows what it is for; how ultimately it is likely the source of the next financial crisis the US is going to be gifting to the world.
https://paulkrugman.substack.com/p/talking-with-paul-kedrosky
I did not watch – I find his interviews slow
Thanks for summarising
Maybe this is creating the expectation of price rises so that they can just increase prices anyway and blame external forces, not profiteering?
The energy required for all the proposed AI data hubs does not exist, and it isn’t going to. Doubling or trebling US electricity supply is not possible. There would have to be a complete breakthrough in fusion reactors, or something else. As things stand gas and oil are now in slow decline, and the energy cost of energy is rising.
Agreed
I noted this price warning through a camera website I frequent – so much for the ‘democracy’ of markets eh? Markets simply always act on the size of your wad. Tough!
As for AI I do not use it at home, I do not trust it at all, I might use it at work to edit my main communications but I somehow see it as a challenge to make my communication as clear as possible without AI.
What I abhor is how colleagues all jump on the band wagon to use AI so unquestioningly. How long before it learns so much from us and someone works out (which I am sure they are doing) that they don’t need us!
If professionals give up professing they are no longer professionals.
I wonder if the gatekeeper for your site uses AI. My comment on a previous post was declined because it appeared that I already submitted it. I had started by thanking you for the post. When I deleted the words “thank you, Richard”, my comment was accepted. So, I now know not to start with these words, but it seemed that the gatekeeper software looked only at the first few words in coming to a decision. I had to conclude that it may be “A” but it’s not very “I”.
Weird…
Each and every technology transformation of our lives has damaged the web of life. With the climate changing and ecosystems failing , we cannot risk another high tech, energy intense “upgrade”. The maximum “intelligence “ produced is trivial compared to the intelligence evident in a handful of soil, or a drop of blood. Destroying our genius life support systems for AI is hubris. Spending money for AI , instead of restoring nature is stupidity.
I cannot agree that “Each and every technology transformation of our lives has damaged the web of life.”
I don’t want to live in a cave, cook on a fire and live a short, brutal life, maybe in pain.
So I cannot agree. What we need to find is the golden mean – what technology works for us, and how. That is what AI could do for us, without ever taking over.