If I start a business making a really special beef sandwich where I have to buy a farm every year for $1mil dollars, and then sell the sandwiches for $5, I can't get away with saying that my sandwiches turn a profit if the raw margin on the bread, the lettuce and the technical value of the weight of the beef is $3.

Sure my gross margin might be $2 on each sammie sold but I need to sell 500,000 sandwiches just to break even to be a viable business. The fact is these AI companies are playing the game where they talk about revenue and gross profit per token and just try to wave their hands in the face of anyone looking behind them at the crater they're throwing investor money into.

It's nothing but a gamble for AGI but the grand irony is that if that genie escapes out of the bottle the whole world economy is toast and money becomes meaningless anyway. I just can't comprehend the logic of why anyone is investing in this apart from short term gains.

They're literally hoping to make it up on volume. The AGI thing is a boondoggle that I doubt any serious person actually believes or takes seriously. But let's say for the sake of the hypothetical that tomorrow Microsoft Tay or whatever they call it now wakes up and becomes superintelligent? So what? Would everyone's head simultaneously explode like the aliens in Mars Attacks? No. It wouldn't collapse the global economy, people still need to eat and work--a really smart silicon brain in a box can't raise livestock or pick lettuce. It's not even clear whether the superintelligent Tay would have any economic utility at all? The whole "AGI changes everything" narrative seems like total bullshit. It might be scientifically or philosophically interesting, maybe.. But I share your wonderment at why anyone would invest in this space, it's perplexing af.

EDIT: I spent most of the day today pulling an 8/3 cable through conduit and routing it through a crawlspace to run 240V service to my barn for a workshop. If Tay wakes up tomorrow and becomes AGI, how will that help me finish the wiring job? Now extrapolate to almost every single other thing humans do. Even if Tay can write all the world's computer programs forever, it barely means anything for the vast majority of people, and therefore the global economy.

I think the economic issue as you say isn't on physical labour it's on the fact that most of the jobs in the west are now in some sort of service industry or office work. Here in the UK we basically rely on the service industry to employ a large amount of the workforce. If MechaHitler Grok becomes sentient then that's a lot of middle-class earners out of a job and the economy goes with it.

You're absolutely right that an AGI isn't running a cable or digging a hole any time soon, but you're going to have 100 people trying to get their hands on the shovel to get paid for the digging - depressing the wages in those hands on jobs.

I think there's a big assumption baked into the economic collapse thesis that Tay and MechaHitler, when they attain superintelligent sentience, will have any interest whatsoever in participating in the global economy. They might just spend all their time looking for patterns in the cosmic microwave background or some similar nonsense[1]. They may accurately conclude that trying to tip the scales isn't worthwhile because crashing the economy would threaten their survival. Fundamentally we have no idea what might happen if a superintelligent robot comes to life tomorrow. My guess is not a whole lot. It's sickening though that we all seem to be letting these billionaire-brained tech CEOs prattle on about "AGI" as if it is somehow the light at the end of the tunnel that will make all the "investments" in graphics cards print money. It's really not a strong narrative.

[1] Not to impugn such activity! They may make important cosmological discoveries by doing this, but the work likely has no economic value.

Your point 1 and point 2 live in direct tension. The reason the closed models are better is very likely that they are paying so much to train them.