Tech Tycoons have actually Got the Economics of AI Wrong

Even as economic development was simply removing, some financial experts were already cynical. Coal, composed William Stanley Jevons in 1865, is “the mainspring of contemporary material civilisation”. Yet it was finite and would quickly run out. Although more might be discovered by digging deeper, it would be increasingly costly to extract and these greater costs would lower the competitiveness of Britain’s producers. After all, in other countries the black fuel was still in sight of daytime. Efficiency gains-using less coal to produce the very same quantity of stuff-would not save the country. Indeed, cleverer use of restricted resources would just offer an incentive to burn much more coal, which would, paradoxically, lead to an even quicker usage of British reserves. There was no escape, the Victorian economist thought. Coal would be exhausted and the country was most likely to “agreement to her former littleness”.

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This article appeared in the Finance & economics section of the print edition under the headline “Rocked by DeepSeek”

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Tech tycoons have got the economics of AI incorrect

From the February 1st 2025 edition

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