The author makes an error while explaining Jevons’ Paradox

> But that’s not paradoxical at all. That’s basic supply and demand curve from economics 101. It’s exactly what you’d expect. The key part is the "demand more than eclipsed the cost savings" bit. The cotton gin is another well known example, labor per unit down, labor for the whole industry up.

a16z is heavily long on AI, so this article sounds very biased. From the article: If you live in the United States today, and you accidentally knock a hole in your wall, it’s probably cheaper to buy a flatscreen TV and stick it in front of the hole, compared to hiring a handyman to fix your drywall. Probably because the US has been focused on services for years rather than physical goods production. Everything else in US is focused on importing cheap(er) goods or materials. > On the other hand, I think he wants to push the narrative that AI is seeing enormous productivity gains. That is my impression as well. I would be thrilled to see this mythical 10x productivity. Even with 2x productivity, I would be highly pleased. This should mean developers (and everyone else) are producing 2x more quality, software (and general services) are 2x better? I see none of that, except 2x more junk. Did…

Oh that's a fine example of the Baader-Meinhof Phenomenon. Read this comment first, went to read one of the other top links on HN ( https://news.ycombinator.com/item?id=45804377 ) and which Paradox shows up? Jevons'! Was thoroughly confused which article this comment belonged to for a second.

Honestly I feel like Jevons Paradox is a distinctly unhelpful way of phrasing phenomena, designed to create a feeling of novelty where there's none. It's completely obvious that if you need energy, and you have energy source A and B (lets say natural gas and oil), people will use the one that is cheaper. Oil became cheaper because a new supplier entered the market, and people started using more of it! Jevons Paradox! The other explanation is that people have an outsize demand for a resource, and are actively making efforts to make it cheaper so they can use more of it, then when it gets cheaper, they use more of it. Transistors got cheaper and we are using more of them! Jevons Paradox!

> price per token, which has fallen. I think that statement is incomplete. It's cheaper because the AI providers are subsidizing the queries by burning cash in order to gain market share. So it's not a price , it's a subsidized and temporary price. Which will likely go up once burnable money runs out / the providers switch from "market acquisition" to "let's try to make this thing profitable at all".

> Jevons observed that when steam engines get more efficient and individually use less coal And your basic supply and demand curve indicates that, at least until the supply is diminished in kind which isn't going to happen immediately given the all the constraints at play, using less coal leads to coal becoming cheaper and more readily available. > This seems like a basic oversight Not really. Improvements to the steam engine being why we got "cheaper and faster at producing coal" is immaterial. The added detail you've given is an interesting aside, I suppose, but doesn't change anything about the original premise. The only oversight is you not realizing this, perhaps?

You’re right it’s not a real paradox. It simply states that movements of a/b (efficiency of steam engines input coal / output work, price of coal per kilo of coal etc.) doesnt tell us anything about a and b. Easy maths. But for humans economics usually it means demand increasing so a and b increasing. It’s only a paradox for humans who focus on numbers too much

thing is these a16z guys have money & try to build a narrative around that money. they did the same in the crypto days - probably most of their narratives were taken down. then when they finally dumb their investments on the stock market - the market within a year or 2 sees the ruse and stock goes tumbling down. they would've cashed out.