Alan and Beth, two economists are walking through some woods. They come across s pile of shit and Alan says to Beth “if you eat that shot I’ll give you a tenner”
“Okay,” says Beth. She eats the shit and Alan hands her a £10 note
They walk on for a bit and find another pile of shit. Beth says to Alan “now I’ll give you a tenner of you eat that pile of shit”
“Okay,” says Alan. He eats the shit and Beth hands the £10 note back to him
They walk on a bit further and Beth says “you know, it seems to me like we both just ate a pile of shit and nobody gained anything”
“Ah, that’s where you’re wrong,” says Alan “we’ve increased the GDP by £20”
Not quite. The point of the broken window fallacy is that had the money not been spent on the window, it would have been spent on something else. So breaking a window does generate revenue, but not necessarily more than not breaking a window
Whatever happens, the shopkeeper is in a worse position than he otherwise was
Here the point is that they’re passing the money back and forth. That’s like the AI companies right now - passing money round in a circle and that being presented as if it were the same thing as the industry as a whole making money
NVidia gives money to OpenAI, who give it to another company to build datacentres, who give it back to NVidia and NVidia’s Number Goes Up
Alan and Beth, two economists are walking through some woods. They come across s pile of shit and Alan says to Beth “if you eat that shot I’ll give you a tenner”
“Okay,” says Beth. She eats the shit and Alan hands her a £10 note
They walk on for a bit and find another pile of shit. Beth says to Alan “now I’ll give you a tenner of you eat that pile of shit”
“Okay,” says Alan. He eats the shit and Beth hands the £10 note back to him
They walk on a bit further and Beth says “you know, it seems to me like we both just ate a pile of shit and nobody gained anything”
“Ah, that’s where you’re wrong,” says Alan “we’ve increased the GDP by £20”
Isn’t this just the broken window fallacy but with a poop fetish?
Not quite. The point of the broken window fallacy is that had the money not been spent on the window, it would have been spent on something else. So breaking a window does generate revenue, but not necessarily more than not breaking a window
Whatever happens, the shopkeeper is in a worse position than he otherwise was
Here the point is that they’re passing the money back and forth. That’s like the AI companies right now - passing money round in a circle and that being presented as if it were the same thing as the industry as a whole making money
NVidia gives money to OpenAI, who give it to another company to build datacentres, who give it back to NVidia and NVidia’s Number Goes Up