I do not yet know how many of you have studied finance.

Or, better said, have studied financial metrics to understand how to choose investments.

In a society like ours, based on capital, investment makes a big part of it. Capitalists, but also households, everyone, tries to maximize the bang for its own buck.

Financial institutions, asset managers, companies, Governments etc…do this all the time - of course at a larger scale - and following common finance principles.

Most common ones are ROI (Return on Investment), IRR (Internal Rate of Return), Payback period and NPV (Net Present Value). I do not want to dwelve deep into how those metrics are actually measured, which can be a topic of the next or another newsletter. But I would like to tell you what those metrics usually do not measure.

Maths is a science.

But numbers, can be tweaked. Especially in finance and economics.

Is important nonetheless that we have a blueprint of how much is actually invested in AI. Have a look here.

The simple logic of investments is the following: I put 1 dollar, in order to have 1 dollar + x amount tomorrow.

I want hence a return, for not having consumed my dollar today (spent it in fun stuff or leisure) so that tomorrow I can spend more and have more leisure than I had today.

Logically - it makes sense, right?

Given the AI example, all of these companies are pouring money in Data Center, R&D on AI etc… in order to have a much higher return from it tomorrow - more capital and money.

Any investment, entails risk.

The biggest risk of all, is for sure not taking any.

But a way bigger risk, is not to understand what risk is and just pouring money in something because other do so. Everyone has the doubts about what AI can and will do in the future. The point I want to make here, is that this flow of money measure a ROI in one specific category - cost cutting, increased productivity.

Cost cutting will mean lay offs. Revenue increase will mean higher productivity per person.

No one, and I say no one, takes into account related social costs on the return on investment. Are we blind? Or are we getting just more egoistic and selfish?

I need to protect my garden, invest in my AI, at the expense of society as a large.

There are two options at this point:

1) AI is bullshit - we invested lots of money in tools that actually do not make sense - I do no think this is the case.

2) AI will become a substitute to large chunks of human labour. What are we hence investing in, if there is no social risk assessment attached to our investment?

Bottom line - financial metrics measure ROI on capital. Capital today is really unequally split and returns go to the same people - symptom of a selfish society. The masses, like a big pack of sheep, follow the profecies of the leaders, forgetting about the social costs those same people have inflicted on society, forgetting about nature and the environment which is slowly dying at the expense of an era where cold steel and data center should warm up our hearts.

What are we measuring? What metrics