Very cool, if true

Posted by mhoye

https://exple.tive.org/blarg/2025/09/25/hyperrealist-datacenters-and-potemkin-mcribs/

https://exple.tive.org/blarg/?p=6682

Strong title, I know. Buckle up.

You’ve heard of Beaudrillard’s idea of the Hyperreal, right?

Baudrillard‘s concept of hyperreality is closely linked to his idea of Simulacrum, which he defines as something which replaces reality with its representations. Baudrillard observes that the contemporary world is a simulacrum, where reality has been replaced by false images, to such an extent that one cannot distinguish between the real and the unreal.

It’s perhaps better explained, as so many thing are, in terms of the Mario Brothers:

Waluigi is the ultimate example of the individual shaped by the signifier. Waluigi is a man seen only in mirror images; lost in a hall of mirrors he is a reflection of a reflection of a reflection. You start with Mario – the wholesome all Italian plumbing superman, you reflect him to create Luigi – the same thing but slightly less. You invert Mario to create Wario – Mario turned septic and libertarian – then you reflect the inversion in the reflection: you create a being who can only exist in reference to others. Waluigi is the true nowhere man, without the other characters he reflects, inverts and parodies he has no reason to exist. Waluigi’s identity only comes from what and who he isn’t – without a wider frame of reference he is nothing. He is not his own man. In a world where our identities are shaped by our warped relationships to brands and commerce we are all Waluigi.

Ars Technica asks:
Why does OpenAI need six giant data centers?

Let me propose a theory: these are not datacenters. They are the physical byproducts of a misguided hyperreality arbitrage scheme, processed and extruded into the world as an incidental byproduct of the maintenance of much larger financial delusion.

Or, put differently: they are Potemkin McRibs.

“Potemkin Villages”, the quickly-stood-up facade-villages of lore, you know about these. They’re apocryphal, sure, but they’re also just too good a metaphor not to keep in the bag when we’re talking about false-fronted institutional chicanery, about the incredible amount of effort that can go into maintaining a deception.

As an aside: Imagine having a story like that completely overshadow your life’s work? Grigori Potemkin was a fascinating guy! Successful military leader, lover, friend and consort to Catherine the Great, notable diplomat and city-builder… It’s like finding out the Earl of Sandwich invented the appendectomy and nobody cares. But I’m not here talk about notable seventeeth-century Russian nobility, I’m here to talk about mediocre extruded pork sandwiches.

You might have heard the story that McDonalds isn’t actually a restaurant chain; it is really a commercial real estate company that by historical coincidence just happens to sell hamburgers; It’s a true story. But McDonalds is so huge that even the “just” in “just sells hamburgers” has an almost tidal impact on adjacent markets.

These tides roll ashore in all sorts of strange ways. One such manifestation is that something they try for a year or two before giving up can spontaneously create a durable global market entirely by accident, one that McDonalds will just conjure it into existence and let it go on its way unbothered, because the hundreds of millions involved are so far below their financial giving-a-shit noise floor that it’s barely worth their time to even notice it happened.

That’s not an exaggeration; the reason you can find edamame beans just about anywhere today is because 20 years ago McDonalds included some in a salad, and suddenly an edamame market came into being, and McDonalds does not care about it at all.

Another manifestation of this is the McRib.

“A McRib” is a sandwich. “The McRib” is – probably – a huge exercise in pork-market arbitrage.

It’s fascinating – and maybe also apocryphal-but-metaphorically-useful – but for the purposes of this argument, the important discriminant is this: McRibs are sold to people who want to buy McRibs.

You might question their taste, their judgment, life choices, any of that but none of that matters; what matters is that McRib purchasers are real people who purchase real McRibs with their real money. A transaction occurs in which value is discerned and money changes hands.

Nobody is feeding McRibs to pigs. I mean, sure, I bet it’s happened, somebody’s out there right now way past the north end of the Bad Ideas Bell Curve where it’s all lonely scattered data points, and they’re gearing up to do something wildly misguided and astonishingly heinous as we speak. But nobody, in any number that matters, is feeding McRibs to pigs.

But for all these new datacenters… where’s the customer?

Here’s this massive investment, whose sole purpose is to keep this one already-overinflated market afloat, but for who? To do what? It’s completely divorced from anything you’d call an insight, a customer need, anything. Nobody’s even pretending to hint that there’s a discernible motivator here, that anyone has presented some vision for any product that is going to solve any problem anyone anywhere has. Facebook’s given up even pretending they’re going to make their Double-Amputee-Wii-Sports-MMO thing work, whatever that was called, and OpenAI is has given up talking about “AGI” in favor of … what, shopping chatbots now? Enterprise subscriptions? The absolute dregs of the dregs of valley “ideation”?

This is pretty much where I think we are: blockchain were a bust, NFTs were a bust and AI sure looks like the last trench of artificially-created scarcity in this field. Right now, that’s going down the drain right now as people come to grips with the math of it, that large models will never be reliable and small models built on curated data for specific tasks outperform scrape-the-world warehouse computing every time.

I think this is really great news; today you can buy a device that sits on your desk, runs off USB-C power and handles 200B-parameters worth of stochastic processing for laptop money. And you’ll never need it, because it turns out count-on-your-fingers number of billions works as well or better.

But that’s only good news for the people. It’s the worst possible news if your entire business model depends on computational scarcity, and OpenAI looks like the last trench of artificial computational scarcity out there, and large-model AI looks like last chance at induced demand in computing.

Which is why Facebook’s investment is so important, and I’m convinced why these companies are passing subsidies around to each other in big hundred-million-dollar circles; when this bubble finally bursts “compute” will become a commodity, and eventually a utility. Like electricity or water, something most of just expect(and all of us deserve) to have a clean supply of, on tap, well-regulated and nearly free.

And I’m really of looking forward to high performance computing being so cheap that modest quantities of it of it at a time are basically free. Server farms ending up as low-margin businesses and co-ops seems pretty cool.

But this whole sordid scenario is one of the reasons, maybe the main reason, that I’ve long argued that high marginal tax rates are a national security question; specifically to force a sanity check, some sort of reality-anchor on this intersection of hypergrowth and hyperreality, this place where market inflations can become entirely for its own line-goes-up sake. Policy measures that rate-throttle hypergrowth and forces some durable connection to market reality in the process are Tier 1 critical social infrastructure for a stable economic democracy.

But that’s tomorrow. Today, this is hot air inflating a bubble, the intersection of hypergrowth and hyperreality with total disregard for any requirement that a product, insight or customer be real. It’s massive arbitrage effort for markets and products that don’t exist.

It’s Potemkin McRibs, extruded out of the desert of the hyperreal so they can be fed to pigs.

https://exple.tive.org/blarg/2025/09/25/hyperrealist-datacenters-and-potemkin-mcribs/

https://exple.tive.org/blarg/?p=6682