Repeating Patterns in Technology Booms
We live in a constantly changing world, and at the center of this change is always new technology. Recently, the interest and investment in Artificial Intelligence (AI) are hotter than ever. However, this enthusiasm is not new. Looking back at history, we see that technology innovation booms have occurred repeatedly. And each time, the end followed a similar pattern.
Edward Chancellor explains this phenomenon well through the 19th-century railway boom and bust in Britain. People believed that railways would change the future, and excessive optimism about railways led to an investment frenzy. However, it all ended with a market collapse, leaving many investors with significant losses.
Now, we find ourselves in the midst of a new technology boom with AI. Many companies are investing vast amounts of money in AI, and there is great expectation that this technology will completely change our lives. But we must not forget the lessons of history. Optimism is good, but excessive optimism can be dangerous.
Comparing Past and Present Technology Booms
One characteristic of technology booms is the rational investment in the early stages followed by excessive optimism. In the 1840s, the railway industry in Britain grew rapidly as it discovered the commercial potential of passenger travel. Early investors gained stable returns, and railways greatly advanced the British economy. However, excessive expectations and optimism eventually led to overinvestment, resulting in a market collapse.
Similarly, the telecommunications industry in the 1990s experienced the same. People believed the internet would change the world, and massive investments were made in telecommunications infrastructure. But excessive expectations ultimately led to overinvestment, and many companies went bankrupt or suffered huge losses.
Now we are witnessing a surge in AI investments. AI is undoubtedly a powerful technology and will change our lives in many ways. However, the lesson we have learned from history is that excessive optimism brings risks. We need a calm and rational approach.
The Future of the AI Boom: Balancing Optimism and Reality
Investment in AI continues to grow, and this technology has already deeply embedded itself in our lives. However, the key is to view the present through the lessons of the past. Just like the telecommunications industry in the 1990s, excessive investment in AI could lead to great disappointment later on. Right now, AI may seem like it will change everything, but eventually, the side effects of overinvestment and optimism will become apparent.
Technological advancement always presents exciting opportunities. However, we must be careful not to set our expectations too high. A wise investor chooses a game they understand and believe they can win in the long term. The same applies to investing in AI. Rather than getting caught up in the excitement that this technology offers, we need to soberly assess what real value it can provide us.
Conclusion: Rational Investment Leads to Success
The AI boom presents us with another intriguing opportunity. However, we must not forget the lessons of history. Technology booms always grow amidst optimism and excessive expectations, but they always end with a return to cold reality. We should all take advantage of the opportunities AI offers, but seek long-term success through rational and prudent investment.
Reference: Vitaliy N. Katsenelson, “Lessons from History’s Technology Booms”