Useful Residue

This week I was listening to the Prof G Markets podcast. It was the episode, “AI Skeptic: This Business Makes No Sense.”

The host, Ed Elson, was interviewing another Ed, Ed Zitron, about the AI Bubble. In the podcast, Zitron was using the phrase useful residue a lot. I liked it.

Useful residue refers to the physical assets left behind when a company goes bankrupt, which assets can then be used by other companies. These physical assets are things like servers, telecommunication lines, and even office chairs.

Zitron was trying to explain to Elson that when the dot-com bubble burst in 2000-2001, the companies that went down left behind a lot of useful things. For example, Lucent sold its Power Systems business to Tyco International, its Optical Fiber Solutions business to Furukawa Electric, its New Ventures Group to Coller Capital, its manufacturing plants to Solectron and Celestica, its Enterprise Networks to Avaya, and its Microelectronics division to Agere until the entire company (or what was left of it) was acquired by the French telecommunications giant Alcatel in 2006.1 That’s a lot of useful residue. That’s a lot of assets and businesses getting spun off into other going concerns.2 It looks like a Nick Saban coaching tree.

Zitron is worried that when the AI Bubble pops, people will be left sifting through Nvidia GPUs that are too expensive to even turn on, let alone run. He’s worried the businesses’ left behind assets won’t be useful. There will be no useful residue.

Here’s the first stanza of T.S. Eliot’s East Coker that touches on useful residue.

In my beginning is my end. In succession

Houses rise and fall, crumble, are extended,

Are removed, destroyed, restored, or in their place

Is an open field, or a factory or a by-bass.

Old stone to new building, old timber to new fires,

Old fires to ashes, and ashes to the earth

Which is already flesh, fur and faeces,

Bone of man and beast, cornstalk and leaf.

The last stanza of W.B. Yeat’s The Circus Animal’s Desertion is about useful residue.

Those masterful images because complete

Grew in pure mind but out of what began?

A mound of refuse or the sweepings of a street,

Old kettles, old bottles, and a broken can,

Old iron, old bones, old rags, that raving slut

Who keeps the till. Now that my ladder’s gone

I must lie down where all the ladders start

In the foul rag and bone shop of the heart.

The Yeats poem, I assume, is the inspiration for the White Stripe’s song, Rag and Bone.

Jack white sings about making old stuff new in it.

It's just things you don't want, I can use 'em
Meg can use 'em, we can do something with 'em
We'll make something out of 'em
Make some money out of 'em at least

The idea of people using old things to make new things reminds me a lot of my scripture study this year.3 In Deuteronomy 2:19-23, the Lord explains to Moses how the Ammonites were given the land of the Zamzummims. They “succeded them and dwelt in their stead.” And, the children of Esau destroyed the Horims, and “succeeded them, and dwelt in their stead.” The children of Israel did the same. They killed the people of King Sihon, and possessed their land, and took their cities, and dwelt in them.

God even promises the children of Israel useful residue. Useful residue is part of the plan. In Deuteronomy 6:10-12 he says:

And it shall be, when the LORD thy God shall have brought thee into the land which he sware unto thy fathers, to Abraham, to Isaac, and to Jacob, to give thee great and goodly cities, which thou buildest not, and houses full of all good things, which thou filledst not, and wells digged, which thou diggedst not, vineyards and olive trees, which thou plantedst not; when thou shalt have eaten and be full; Then beware lest thou forget the LORD, which brought thee forth out of the land of Egypt, from the house of bondage.

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