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Comment by lelanthran | Hacker News Reader

> But the problem is that the AI buildout has become a large percentage of GDP. So obviously the government wants to keep it going because these companies are pumping enormous amounts of money into the economy.

They are pumping enormous amounts of money into each other. Hardly any of that is making its way to people, it's all going to highly automated construction and to energy use.

Seriously, how many jobs did the $1t in venture capital fund?

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If I pay you 100$ for mowing my lawn, and you me for yours. Technically the GDP increased with 200$.

How about I draw you a picture instead. Mowing a lawn is a priceable service.

And, in this case, the dollar-amount increase in GDP serves as a virtual quantitative proxy for the increase in mowed lawns (and the value thereof). In other words, the participants in this economy are collectively ~$200 richer with their mowed lawns than they were without them.

This is a thinly disguised broken window parable.

If everyone goes around mowing lawns for each other, the economy is richer in lawn mowing at the expense of all the other things that would have been funded had everyone mowed their own lawns and purchased different services instead.

I am confused with this, if "everyone mowed their own lawns" then the net result will be exactly the same, everyone will be busy the same and not poorer, just without money movement.

look at the broken window parable as he mentioned it might help understand the rest of his comment

Broken window is different from the mowing lawns hypothetical

This is not the same. If everyone wants mowed lawns, and everyone is busy working on that, there is no opportunity cost, everyone is working on their top priorities. The broken window fallacy is a fallacy because the headline gdp figure doesn't account for the destruction of the window which cancels out the benefit. In the grass mowing analogy nothing has been destroyed, useful and priority work has been done all around.

If the pricing is fair and at arms' length. What's happening in reality is as if they are mowing each others' lawns at wink wink nudge nudge $1000. Not a good proxy for actual value created.

In the real world, you have to pay taxes. So people are incentivized to claim less value for the lawns mowed, or even just do it themselves, instead of benefiting from the division of labour.

Person A has leverage, and every $1000 sale makes his share price $10000 higher, more than compensating for the $100 in taxes.

Person B owns shares in Person A.

> eru

Tolkien fan?

Leverage doesn't work that way. (If it were so easy, it would load up my investment portfolio with a lot more leverage than I currently do. And I don't live in the US where regulation T would keep me to a puny 2x leverage.)

Tolkien is great, yes.

But also importantly the government of the residents' country is about 39% ($78) richer, if say the participants are honest in reporting this and the country is the UK and the participants are people like you and me in the tech industry who frequent HN and would think to do something like this.

Well, yes, because both of your lawns got mowed!

Value was created!

> Hardly any of that is making its way to people, it's all going to highly automated construction and to energy use.

How do we know that? How automated is the construction really?

In any case, the Fed and other central banks can print as much money as they want in order to hit any aggregate spending or inflation target they have for the economy.

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