The Economics of Information

Photo courtesy of Gareth Ellis

When demand outstrips supply, someone is going to provide something that sucks. To fill the gap. To meet demand. They’re going to cobble something together and sell it to people who just want to consume.

This doesn’t just happen in fast food or housewares; this is also what happens in the information economy.

I read an article from Ed Zitron called Put Up Or Shut Up. Zitron talks about how the media acts as an advertising campaign for AI companies. The media keeps us engaged with the progress of AI, which is actually very little progress at all. It serves to enrich people like Sam Altman of OpenAI by telling us stories that not only are vague and silly, but are verifiably untrue.

For instance the news story Zitron picks on the hardest is a story about an “AI employee” that a company had a grand reveal for… but it turns out that AI employee is a made-up thing that does not exist. People started asking questions. Questions like “what is an AI employee” and “how do you pay it” and “what does an AI employee do?” And the company, in response to these very basic questions, took its ball and bat and cried itself home.

AI employees are not a thing. Not even close. The companies that say things like this are just using the word AI to market themselves. To make themselves seem young and cool, like an adult showing up to a high school with a skateboard and trying to connect.

On the earnings calls of public company after public company, and in news stories about AI startup after AI startup, the story that’s being delivered is:

“AI is absolutely, completely changing the world.”

“The AI Revolution is already underway. If you’re not using it, you’ve already lost.”

“AI is already replacing human workers.”

Zitron’s question (and a question myself and others have discussed online) is:

“How?”

“In what precise, specific ways is AI doing… anything?”

And I have yet to hear a response that contains any actual information.

So far, AI has exactly two use cases:

Selling it to people who are easily fooled,

And buying it.

I can speak for myself, and I can say this: I have tried using AI for exactly one business purpose. I figured I’d give ChatGPT a chance to help me with a relatively simple task, a) to test it out and b) to possibly save myself about ten minutes.

What happened instead is that it cost me ten minutes, as well as a portion of my self-respect. I knew better and I did it anyway. ChatGPT hallucinated data (out of a really quite simple data set) and gave me nonsense back as an answer. So that is the last time I will be doing that.

In the late 1990s, internet companies were sold to us as “innovators” and “game changers” and “future” when they didn’t have products, missions, or even staff yet. All they had was a website and a vague promise about how they were going to participate in the new economy. It was all Christmas lights and no tree.

The issue is, people wanted this nonsense news. They wanted bad stock tips, and vague news stories, and ridiculous things to be excited about. If the demand is there, supply will show up.

Since we don’t have enough “sense” to pass around every day, we just start passing around nonsense. There’s demand for information even where there’s none to be had.

Guys like Sam Altman of OpenAI keep raising more money because we keep listening to them. Because “the future.” It’s the exact same kind of bloviating nothing that Elon Musk has been doing for years: promising every year for almost a decade that “the future,” (in his case fully safe self-driving cars), “is right around the corner. Just there. Just right there.”

I’m reminded of the scene from Goodfellas where Robert De Niro is trying to convince Lorraine Bracco to go into the dark storefront where she knows she’s about to be murdered. “Nah, it’s there. It’s right there. Go ahead,” he says, increasingly alarmed that she knows she’s being bullshitted.

Fortunately for Bracco, she walks away. Not everybody from the internet bubble can say the same thing. Nor can everybody who listens to Elon Musk, or who bought his irredeemably awful Cybertruck.

Zitron’s claim is that most of the news stories about the ridiculous promises of AI are just advertising. They’re selling you a narrative so that these big piles of nothing can keep amassing more and more money from investors. The hope is, someday, eventually, they’ll figure out an actual use case for AI. But even without that hope, the transaction completes: our attention-and-information-based economy has paid them and they have become richer.

You’ll notice how, despite all of 2021’s promises, cryptocurrency has yet to be anything other than a way for most people to lose money and get scammed. Will it someday change everything, or at least become useful in some basic way? Sure, maybe.

But:

1. Playing with it in the meantime, or sitting around waiting for that to happen, are not great ideas, and

2. What that means is that all of the past “news” about cryptocurrency has amounted to nothing, zero. We would have been better off if it hadn’t been printed.

When it comes to cryptocurrency, or AI, or when it came to internet companies in the late '90s, or when it comes to frankly most things you ever hear about, the story is this: there is no story.

In the kind of “news” we’re talking about, in the “news” that produces nonsense, being right does not matter. Being first does. Once you have the eyeballs, they stick to you. Because the action is too good, I can’t look away now. In this way, working in mainstream media is really about who can be wrong fastest. Who can deliver nothing before anyone else.

After the closing bell, TV news stations always have an explanation for why stocks went up or down today. Geopolitical fears caused stocks to go down, stocks rose on oil optimism, etc. When really, the truth is probably closer to “today was pretty random and more people happened to buy/sell than happened to sell/buy.”

An information-driven world is economically guaranteed to be full of nonsense.

A woodworker has to go to work every day and make things out of wood. It's his job. And even if he's in a rut, and his creations keep breaking like Mel Gibson's rocking chair at the beginning of The Patriot, he still has to wake up and make things out of wood every day. Because it's his job. It's his only way to participate in the economy and to possibly feed his family.

Journalists and media personnel have the same problem. They have to wake up and distribute something.

And that is why you should be skeptical about most everything you see in an information-driven world. Because people don't have anything better to do than produce information. We’re no longer out working fields or slaving away in mines, so we sit around talking about things we don’t understand.

Remember, most people are not experts on the things they talk about. Because most people are not experts on anything, and also because journalists have to publish something whether they've done their research or not.

I don't think journalists are evil. We can explain the situation with Hanlon’s razor: never attribute to malice that which can be explained by stupidity. In other words, don’t assume people are evil and corrupt if their being stupid is a good enough explanation.

I don't think journalists and commentators wake up every day wishing to make the world a worse place. But they do, because it’s their job. Their bad information makes all of our lives a little worse.

(Some journalists are great. But mathematically the profession is doomed to produce mostly bullshit.)

Those pieces of news that Zitron mentions, and that I am so tired of, represent an economic conundrum. And it’s a very similar conundrum to what I wrote about in How Things Get Worse:

“If I don’t pick up this story, someone else is going to. Therefore, towards the goal of providing a good life for myself and feeding my family, it is in my best economic interest to write this story.”

This is how economics works. Supply appears out of somewhere to meet demand. Bullshit shows up to meet eyeballs that want bullshit. Empty, vague promises about the future show up to meet people who just cannot fucking wait for the future.

And meanwhile, it destroys little by little the economy that the rest of us unfortunately have to use.

The best way to fight back against the bloat and poison of the information economy is not to call media evil — it's to be disinterested.

If you're disinterestedly curious, it means you want information... but only information that's actual information. It means you'd like to participate, like a good citizen, but only when there's something to participate in.

Every day, part of my routine is to take a quick (and I mean quick) scroll through Substack and Twitter, to see if anyone in my immediate network has posted anything interesting.

Some days, this produces so much tasty fare that it takes me 3 days to eat it all. Other times, it produces nothing. And that's okay with me. I'd rather wait until next time there are interesting things to read. And until then I can go do something else that I want to do. Because in the same way that I don't snack when I'm at home, I refuse to read junk food just to have something to read.

Drink some water and don’t buy a Cybertruck.

JR

“The Internet gave us access to everything; but it also gave everything access to us.” - James Veitch