David O'Mahony: History tells us betting on AI bubble is a bad idea
Every little company wants a piece of AI technology, because nobody wants to be left behind. But for all the billions being pumped into the technology, almost nobody is profiting.
Artificial intelligence is no match for human stupidity.
The Australian researcher Mike Seymour said that in 2018, long before every company in the known universe decided to try and cram AI into every orifice of every app we use, and it remains as true now as it did then — albeit for different reasons.
He was exploring ethics. Now, though, it’s better applied to the fact so much wealth, resources, and mental effort is being poured into so-called AI, to the extent we’re now in an economic bubble bigger than the one that led to the financial crash in 2008. The Bank of England sounded the alarm in recent weeks.
Every tech giant is betting on an AI future, with dubious claims about productivity gains. But here’s the thing: for all the billions being pumped into the technology, nobody’s profiting (except Nvidia, which makes the hardware all of this stuff works on). It’s not even clear the money invested can ever be recouped. But every little company wants a piece of it, because nobody wants to be left behind.
In our house, we recently bought a dock to park and charge our various devices. It came in a case marked “powered by artificial intelligence”, which wasn't what we bought it for. Dear reader, it didn’t work at all. If there was anything that perfectly summed up our planet’s AI obsession, it was that.
“But wait,” you cry, “what are you on about? Are you having an AI hallucination?” Regrettably I am not. I have simply seen all of this before.
As well as the day job in journalism, I’m also a historian. And let me tell you, every pattern recognition sense I’ve honed is in overdrive — and not just because of 1930s Europe getting a Temu rerun in 2025 America.
In the late 1630s, the world’s first speculative bubble formed and then burst in the Netherlands, when tulips became all the rage. They were a novelty, having only been recently introduced to Europe, and became something of a status symbol among the financial elite, who all wanted their own type of tulip and pumped fortunes into contracts for plants which hadn’t even been planted yet.
Effectively, people weren’t buying the thing itself, they were buying into the idea of the thing.
You see where this is going.
Within about three years — possibly due to some legal changes about investment contracts — the bubble burst, and swathes of people just refused to pay up.
This didn’t bring down the Dutch economy, but some people really suffered on the back of it.
An AI crash, however, would do global damage because of the number of companies and investors who could go broke. There was a taster of this when crypto speculators got wiped out last week following Trump’s latest China spat. Some people lost millions of dollars in just 10 minutes (though others made a fortune).
Something small will start it, most likely. A lawsuit. A grid failure. Too many missed profit targets by too many companies, perhaps.
And even if it limps along, the cost of doing that is immense. Data centres are already running so hot that not only are they wearing out supplies of fresh water to cool them, but the parts are projected to break down in three to 10 years. And all for what, so we can make rip-off videos of Pikachu storming the beaches of Normandy? So we can exacerbate the climate crisis instead of using the same financial and technical resources to arrest it? So boards of directors can say they created value for shareholders?
Perhaps every generation thinks it’s invincible, or at least that it knows better than the one that went before. Socrates, 2,500 years ago, said young people “talk as if they alone knew everything and what passes for wisdom with us is foolishness with them”.
And perhaps that’s as it should be, to some extent: blindly following things leads to stagnation. But more pertinently, he also said “if you want to be wrong, follow the masses”. It’s a more intellectual sounding version of the line trotted out by a million parents: “if they jumped off a bridge, would you do it too?”
I wonder if, in 400 years, people will look back on the 2020s and wonder how we let things fall over because we collectively jumped off a virtual bridge chasing digital tulips. The stupidity.
- David O’Mahony is print production editor with the Irish Examiner, a historian, and a short story writer
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