Episode summary
The Dot-Com Boom is Beating the AI Boom 3 to 1
Summary
The host compares the early productivity payoff from the AI buildout with the dot-com era and argues that the internet wave is still ahead on the numbers. Citing Bloomberg and using a car-factory analogy, he says total factor productivity rose 7.5% in the three years after Netscape went public in 1994, versus just 2.45% in the three years after ChatGPT’s release. On that basis, he says the dot-com boom is beating the AI boom by about 3 to 1, even though AI investment is happening faster and at a larger scale.
He frames the gap through Robert Solow’s productivity paradox: useful technology can be everywhere without showing up clearly in the statistics. The host says AI is already making businesses more efficient, including his own, but argues the measured gains may be delayed, mismeasured, or muted by the time needed for companies to redesign workflows and train staff. He also says the 1990s productivity surge benefited from the earlier 1980s spread of personal computers, suggesting the full AI payoff may still be ahead.
His bottom line is not that AI is a bust, but that the early return on the massive spending is weaker than many investors assume. He says the real question is whether future productivity, possibly from robotics or another new wave, eventually closes the gap.
Key takeaways
- The host says Bloomberg’s early data show total factor productivity up 7.5% three years after Netscape, versus 2.45% three years after ChatGPT.
- He argues the dot-com boom is outperforming the AI boom by roughly 3 to 1 in measured productivity.
- The host invokes Robert Solow’s paradox to explain why AI can be useful yet still lag in the statistics.
- He says much of AI’s payoff may be delayed because firms need time to redesign workflows and train staff.
- The host argues the 1990s internet surge was amplified by the prior 1980s computer buildout, which AI may not yet have had.
Notable quotes
“we're looking at the economy for signs of return so that it justifies the spend that all these companies are making”
“So total factor productivity in the three years after netcape goes public grew 7.5%. Okay, 7.5%”
“since chat GPG's release, total factor productivity has increased a much lower 2.45%”
“Basically,.com is beating AI in a total measure of productivity by a factor of three to one”
“there are computers everywhere except in the productivity statistics”
How the episode opens
Good morning. This is Dylan Germany with Behind the Markets. Happy Friday.
Today is Friday, September 4th. Which technology boom is better, AI or will early results are in? And this is a very very very important question to answer because basically a lot of money is being spent on the AI boom and we're looking at the economy for signs of return so that it justifies the spend that all these companies are making.
And we finally got early results. And the way economists measure increased productivity, something called total factor productivity. And what that measures is with an economy, it measures the amount after the investment in something, how much productivity is increased.
And I always thought it's a good way to understand it to think about it as if you own a car factory. Let's say you own a car factory and you make a 100 cars a day and then suddenly you make a big investment in AI. How many more cars a day can you make now after having made that investment?
How much has your productivity increased in relation to your costs, your outputs? Okay, so think about it. So we've had the.com boom in the 90s and we have the AI boom now.
And we now have some early results to see which tech boom has been more productive, better and again this is very very important. We have trillions of dollars going into this buildout right now. So we have some early results.
This is published by Bloomberg. I thought it was great to share with you. Very very important.
Do com boom starts after Netscape goes public. That's kind of the official big bang of the.com boom as far as you know the measurements are concerned. So.com boom starts after Netscape goes public in 1994.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai productivity
- total factor productivity
- dot-com boom vs ai boom
- solow paradox
- capital spending returns
Companies and tickers mentioned
- Bloomberg
- OpenAI
- Netscape
Watch the episode
Watch “The Dot-Com Boom is Beating the AI Boom 3 to 1” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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