Tech Tycoons have actually Got the Economics of AI Wrong

Even as economic growth was simply taking off, some economists were already pessimistic. Coal, wrote William Stanley Jevons in 1865, is “the mainspring of modern-day product civilisation”. Yet it was limited and would quickly run out. Although more might be discovered by digging deeper, it would be significantly expensive to extract and these higher costs would lower the competitiveness of Britain’s makers. After all, in other nations the black fuel was still in sight of daylight. Efficiency gains-using less coal to produce the exact same quantity of stuff-would not conserve the nation. Indeed, cleverer usage of limited resources would simply provide an incentive to burn a lot more coal, which would, paradoxically, cause an even faster use of British reserves. There was no escape, the Victorian economist thought. Coal would be tired and the country was most likely to “contract to her former littleness”.

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This post appeared in the Finance & economics area of the print edition under the heading “Rocked by DeepSeek”

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Tech magnates have got the economics of AI wrong

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