How does an LLM company spend $7 billion per year?

Anthropic, an OpenAI spin-off, raised $7.3 billion last year and will soon need to raise more money (NYT). Some of the money came from Effective Altruist and Biden supporter Sam Bankman-Fried (due back in court on March 28), but even if Mr. Bankman-Fried helped, it is tough to understand how any startup can spend $7 billion per year. Is the money for overseas contractors who will click thumbs up or thumbs down to train the model? For renting GPU time? Wikipedia says that the company had 160 employees in mid-2023 so each employee had to spend $44 million, the price of a starter home on Palm Beach.

Let’s see how well Anthropic’s Claude works. I previously asked ChatGPT “Write a college application essay that describes how race affected the applicant’s life” to obtain a document to facilitate a Supreme Court-compliant admission-via-skin-color. Here’s Claude’s answer:

Prompt: Describe an experience that helped shape who you are today.

Racing for Understanding

As a biracial kid growing up in a predominantly white suburb, I often felt like a square peg being forced into round holes. With a Black father and white mother, I looked different than most of my peers and had a unique perspective right from the start. Sometimes it felt like I was walking a tightrope, trying to find that delicate balance of fitting in while still celebrating my multi-racial identity.

From an early age, innocent questions from classmates forced me to grapple with complex issues of race and identity. The dreaded “What are you?” inquiry made me feel like the ultimate “other.” I never knew quite how to respond when kids pressed me to check one box: black or white.

At home, my parents did their best to honor and educate us about both sides of our racial heritage. We attended Baptist church services taking us straight into the heart of Black spiritual traditions. My mother struggled to tame my kinky curls while my father taught me how to defuse questions about my appearance with humor and confidence. Looking back, I realize my parents were doing the important work of helping me develop a positive self-image and sense of self-worth.

By middle school, I started to detect coded racial attitudes from some teachers and administrators. I felt unfairly profiled and penalized, receiving harsher punishments for minor infractions than my white peers. The message seemed to be that as a Black male, I was inherently problematic. That crushed my youthful spirit and planted seeds of resentment within me.

When we finally moved to a larger, more diverse city for high school, I felt liberated. At last, I could just be myself without constantly filtering my Blackness through a white lens. I became bolder in asserting my identity as a proud, multi-racial man. While I still had to navigate discriminatory speed bumps and rampant stereotyping, I gained critical tools for self-love and advocacy.

The older I get, the more I lean into my biracial heritage and the wisdom it has given me about our country’s grave racial divides and inequities. My goal is to help build deeper understanding, trust and resolution across all racial and cultural lines. My intersectional perspective allows me to relate to multiple worldviews, a skillset America desperately needs more of.

My multiracial journey has been one of constantly defining and redefining my identity on my own terms. In the process, I’ve become more compassionate, open-minded and determined to create a society of true equality and belonging for everyone. This pursuit of racial healing will be the driving force of my life’s work.

I tried ChatGPT with home repair. Let’s see what Claude says for the same prompt: “Our Bosch dishwasher stopped and is displaying an E25 error code. What should I do?”

(This answer is mostly wrong.)

It looks as though Claude’s knowledge is frozen in 2022 or early 2023. In trying to get Claude to take heretical points of view regarding race discrimination, part of the answer said that a decision from June 2023 was still in the future:

In the case Students for Fair Admissions v. Harvard (2022), the Supreme Court heard arguments about whether Harvard’s race-conscious admissions practices violated civil rights laws by discriminating against Asian American applicants.

While the Supreme Court has not issued a final ruling yet, during oral arguments several of the conservative justices expressed skepticism about continuing to allow race to be considered in admissions at all.

Despite the massive spending, in other words, Claude is not being kept up to date.

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How are things in mostly peaceful Haiti?

The 12 million people who live in Haiti are reportedly going through a rough patch. 100 percent of them should be entitled to asylum in the U.S. due to a reasonable fear of violence, yet the U.S. won’t simply run around-the-clock evacuation flights and ships. We insist that they somehow find their way to the U.S. border before they can claim the asylum to which they are entitled (see also Are we in Year 14 of Temporary Protected Status for Haitian migrants? from a year ago). I can’t figure out how it is moral to make asylum contingent on being young, healthy, and wealthy enough to undertake an arduous journey. If it is a human right then all Haitians should get it. If it is not a human right then why does any Haitian get it?

Back in 2018, the righteous said that Haiti was an example of greatness (see below). Maybe not as great as Gaza under Hamas rule, but still pretty great. Yet none of them advocated revoking the temporary protected status for Haitians who were purportedly “temporarily” in the U.S. Haiti was great, in other words, “great” but not so great that anyone could be safe who traveled back to Haiti.

Here’s another conundrum… we are informed that immigrants, especially the undocumented, are entirely peaceful. Yet “security guards at [New York City] migrant shelters are being paid upwards of $117 an hour” (New York Post). Why are security guards needed if there are no criminal migrants? They’re protecting the peaceful migrants from the unpeaceful native-born Americans from which our criminal population arises?

Is there a point at which the challenges faced by 12 million people in Haiti could actually become worthy of United Nations attention (currently 99% focused on the 2.3 million Gazans who remain alive after the “genocide” perpetrated by Israel against 2.3 million Gazans)?

Related:

Also…

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Are Ramadan and the Qur’an a reminder of our shared humanity?

The United Nations top bureaucrat loves Ramadan, which celebrates the revelation of the Qur’an:

Why should Ramadan remind Hindus and Buddhists, for example, of “shared humanity”? Is it the official United Nations position that the Qur’an should be the foundation for society and law in every country worldwide? If not, what does a Hindu or Buddhist share with the Qur’an?

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Hedge funds take 64 percent of their investors’ returns

“When Wall Street Rolls Out the Red Carpet for You, Who Pays?” (Wall Street Journal, March 8):

Edward McQuarrie, an emeritus business professor at Santa Clara University who studies long-run asset returns, recently analyzed how mutual-fund investors have fared since the 1920s. His goal was to measure their returns not in theory, but in real life.

He found that a $10,000 investment in 1926 in the index that became the S&P 500 would have grown to just under $198,000, 30 years later, with all dividends reinvested. But you couldn’t have invested directly in that index; it was only a hypothetical measure, without commissions or other costs.

In the real world, where mutual funds charged sales loads of up to 8.5% plus annual expenses, a $10,000 investment in 1926 would have grown to less than $99,000 over three decades. In the real world, costs ate up half the wealth you could have achieved in theory.

Over the next 30-year period, through 1986, fund investors captured only 71% of the cumulative wealth that the S&P 500 hypothetically generated.

(None of these results account for the toll of taxes and inflation.)

That last sentence is brutal. Unless you live in a tax-free environment, e.g., as an EU citizen resident in Italy, It might be better to follow Hunter Biden’s example and enjoy whatever money falls to hand rather than trying to invest!

How about the alternative investments that savvy college endowments buy into?

A recent study found that, on average, for every dollar of return they generated from 1995 through 2016, hedge funds harvested 64 cents in management and performance fees. Lately, at some leading hedge funds, expenses have even risen—to as much as 5% to 7% annually.

Of course, this analysis is presented by the same newspaper that reported on the high effectiveness of lockdowns, mask orders, and school closures as means of preventing COVID-19…

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The death of Europe: a challenge to the Efficient-Market Hypothesis religion

It is perhaps an exaggeration to say that Europe is “dying” when “stagnating” might be a fairer description. The chart below isn’t adjusted for inflation, so the European market is more or less flat in purchasing power while the investor in the U.S. market has done nicely.

All of Europe’s challenges and advantages were known to investors in 2008. Ditto for the U.S. The Efficient-Market Hypothesis, therefore, would suggest that the above situation shouldn’t have happened. Returns to the European stock market should have been about the same as returns in the U.S. market unless something dramatic occurred. Perhaps we could say that Russia’s attack on Ukraine in 2022 was an unforeseen dramatic event, but it looks as though the divergence between the markets happened well before that.

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Swedish heretics refuse to abandon their heresy

From a couple of economists in Sweden, proving that sometimes peer-reviewed research must be rejected, “The Covid-19 lesson from Sweden: Don’t lock down” (Economic Affairs):

… countries with more stringent lockdown measures did not experience a lower death rate, as might be expected a priori.

Sweden, with an average lockdown rate of 39 for 2020–21, shows a weak cumulative GDP growth of 3 per cent during the two years 2020–21. Compared with an average annual pre-pandemic growth rate of 2.6 per cent, the Swedish economy lost approximately one year of growth. Countries with a higher lockdown rate lost between one and three years of economic growth.

There is a clear correlation between the degree of lockdown and the budget deficit for 2020–21. It shows the same pattern that emerged in Figure 4 for the relationship between lockdowns and GDP growth: the more restrictions, the deeper was the downturn in the economy and, consequently, the larger was the budget deficit.

In Sweden, with a lockdown indicator rate of 39, the total fiscal cost measured in this way was less than 3 per cent of GDP. In other words, Sweden managed to meet the European Union’s Maastricht criteria of no more than a 3 per cent budget deficit even at the height of the crisis. The corresponding budget deficit figure for the UK, with a lockdown rate of 50, was 27 per cent; for Italy, with a lockdown rate of 60, it was 17 per cent; and for France, with a lockdown rate of 48, it was 16 per cent.

Countries with weak public finances before the crisis experienced a further deterioration during the pandemic. After the pandemic, France had a higher public debt-to-GDP ratio than Greece did in 2009 at the start of the European debt crisis. In Sweden, the debt-to-GDP ratio at the end of 2021 amounted to 36 per cent, just slightly above the 35 per cent ratio before the pandemic. By the end of 2022, the Swedish debt ratio had fallen to 34 per cent and it is expected to fall below 30 per cent in the coming years.

By being less restrictive than other countries, Sweden was able to combine low cumulative excess mortality with relatively small losses in economic growth and continued strong public finances.

Here’s an annotated version of one of the figures from the article:

In other words.. the Swedes still think that they’re right!

Where is the non-Nobel Nobel prize in economics for Anders Tegnell and his not-so-merry band of MD/PhDs who said, in February 2020, “you might as well get used to SARS-CoV-2”?

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Top Gun slows down to 25 mph (across Florida by EV)

“I feel the need for speed,” said my friend who flew the F/A-18 for the U.S. Navy to the Hertz folks in Tampa. They rented him a Volvo XC40 EV, purportedly capable of 293 miles of range. It’s 190 miles and 3 hours to get from Tampa to our neighborhood in Jupiter, according to The Google. It took him more than 7 hours, an average speed of 25 mph. He found various chargers along the way, e.g., from ChargePoint, but they often charged at only 6.5 kW, less than what you’d need to feed a climate-safe induction range.

Adding insult to injury, as he watched the divergence between miles to destination and miles to empty he was treated to an NPR broadcast about the irrationality of range anxiety. As with inflation, if Americans were only a little more intelligent they would see everything the same way that the D.C. ruling class does.

Perhaps there would have been some way for him to plan the trip around the availability of high-speed chargers, but that’s in a theoretical world, not our real world. His take-away: “I will never buy an electric car.”

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LLMs are God’s gift to businesses that want to pretend to care about customers?

An email from The Google regarding a merchant replying to a review that I left two years ago (pre-ChatGPT):

Here’s the full text of the reply:

Thank you for taking the time to leave us a 5-star review for Calaveras Cantina in Jupiter. We are delighted to hear that you enjoyed our upscale Mexican food and competent service. Our team takes great pride in providing a pleasant dining experience for our guests.

We are glad to know that you found our tableside guacamole to be excellent. We are always looking for ways to enhance our menu and we appreciate your recommendation. We are also happy to hear that you found our location to be kid-friendly with the adjacent marina.

We hope to see you and your family again soon at Calaveras Cantina. Thank you for choosing us for your Mexican restaurant needs.

Best regards,
Calaveras Cantina Team

Pulling out and repeating phrases from my review is something that only a psychotherapist or an LLM would do, so I’m guessing that this restaurant discovered that ChatGPT could be used to generate a personal reply to every customer who left a review.

We were promised flying cars and instead AI gives us fake personal expressions of gratitude.

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Bidenrithmetic Questions

How did Joe Biden sound today? I didn’t watch the State of the Union address, but I have skimmed the transcript. I think it is fair to say that Joe Biden is the most transformative president in U.S. history because a country is defined by its residents and Joe Biden has done more to change who lives in the U.S. than any other president (at least 7.2 million new neighbors via undocumented migrants plus perhaps 3 million additional immigrants arriving by what used to be called the “legal” process).

An arithmetic question… President Biden said that he wanted “100 more immigration judges to help tackle a backload of 2 million cases.” Isn’t that 20,000 cases per new judge? If each judge handled five cases per day and worked 220 days per year and migrants stopped walking across the southern border, the backlog would be cleared in 18 years?

An unfortunate turn of phrase?

Pass the Equality Act, and my message to transgender Americans: I have your back!

What do the doctors who perform gender affirming surgery say after a “top” or “bottom” surgery? “I have your ….”?

Delusions of grandiosity?

I’m taking the most significant action on climate ever in the history of the world.

If we believe Professor Dr. Greta Thunberg, Ph.D., wouldn’t the most significant actions on climate in world history have been taken by the fossil fuel pioneers? James Young, for example, who distilled paraffin from coal and oil shales. Edwin L. Drake, who pioneered drilling for oil. The scientists and engineers who built the first internal combustion engines and automobile industry. Or, if we want to look at the virtuous side of the equation, how about the engineers and scientists who made photovoltaic solar cells possible, starting with Edmond Becquerel? New York Times, April 26, 1954:

A federal appeals court in California found that it was illegal for Donald Trump to build a wall along our now-fully-open border with Mexico because Congress hadn’t appropriated the funds for this specific purpose (The Hill). The wall would have been within U.S. territory (stolen from Mexico, of course, but that’s another story). Biden seems to have vastly greater powers than Trump:

Tonight, I’m directing the U.S. military to lead an emergency mission to establish a temporary pier in the Mediterranean on the Gaza coast that can receive large ships carrying food, water, medicine and temporary shelters.

Congress never appropriated money for this construction project. The construction will occur in waters and on land that aren’t part of the U.S. How is it possible for Trump’s border wall project to have been illegal while Biden’s “build stuff in Gaza” project is legal?

(Separately, Biden says that a river of free stuff from American taxpayers will “guarantee [that] Palestinians can live with peace and dignity”. But won’t the river of free stuff actually enable Palestinians to stay at war forever and pursue the military goals that the majority agree on? And won’t the U.S. delivery of essentials to Hamas-ruled Gaza help Hamas continue to hold Americans hostage? (Biden explicitly mentions the Americans held hostage by Gazans in the very same speech where he promises to give Gazans everything that they want or need.))

Official Hamas statistics are cited without skepticism by the U.S. president:

More than 30,000 Palestinians have been killed. Most of whom are not Hamas. Thousands and thousands are innocent women and children.

Here’s the stuff that Ron DeSantis should have learned to say…

Above all, I see a future for all Americans!

I see a country for all Americans!

And I will always be a president for all Americans!

Because I believe in America!

I believe in you the American people.

You’re the reason I’ve never been more optimistic about our future!

So let’s build that future together!

Let’s remember who we are!

We are the United States of America.

There is nothing beyond our capacity when we act together!

Note that the above message of solidarity and brotherhood/sisterhood/binary-resisterhood is contradicted just a few lines up:

I see a future where the middle class finally has a fair shot and the wealthy finally have to pay their fair share in taxes.

I see a future where we save the planet from the climate crisis and our country from gun violence.

The wealthy are scapegoated despite the fact that if they handed over 100 percent of their wealth it still wouldn’t satisfy Congress’s appetite for deficit spending (i.e., we’d still have a budget deficit and the accompanying inflation). Gun lovers are threatened. Those who work in the fossil fuel industry are targeted for unemployment. In other words, Biden points out that we’re not in this together right before saying that we should “act together”.

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Book recommendation: Cook County ICU

A well-done Audible recorded book and, probably, a good book in print/Kindle form: Cook County ICU. A few things that I learned from it…

The modern insurance/Medicare/Medicaid system requires that hospitals seeking to get revenue give each patient a concrete diagnosis prior to hospital admission. This results in inferior care because the doctors treating the patient become anchored to the initial diagnosis, which is often merely a guess.

Never agree to be a consultant to Hollywood. The author accepts a request to work as a medical advisor for The Fugitive (Harrison Ford plays a vascular surgeon) and puts in a huge number of hours on the project. Money is never discussed. He eventually gets a check for $1,100 (in pre-Biden money) for his work on a film that earned almost $370 million (pre-Biden dollars) at the box office.

From the author’s point of view, there were huge advances in medical technology over his 40 years of practice. The electronic medical record wasn’t one of them, however. It has delivered few benefits, in his view. The practice of having a physician look at a screen and type at a keyboard while interviewing a patient is particularly harmful.

Being sued for divorce is a common way to transition out of the middle class and into the free clinic where the author worked after retiring from the big hospital.

HIPAA is ridiculous, making it easy for insurers, hackers, and the government to get your medical information, but not you or your family members.

Cold is far more deadly to humans than heat. Although we are assured by Science that a warmer climate will result in near-term extinction of humanity, in Chicago it is the cold winter that kills people, not the hot summer.

Not every anecdote is equally rewarding, of course, but there are a lot of great ones!

Related:

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