Tech Tycoons have actually Got the Economics of AI Wrong

Even as economic development was simply removing, some economists were already downhearted. Coal, wrote William Stanley Jevons in 1865, is “the mainspring of modern product civilisation”. Yet it was finite and would quickly run out. Although more could be discovered by digging deeper, it would be significantly expensive to extract and these higher costs would decrease the competitiveness of Britain’s producers. After all, in other countries the black fuel was still in sight of daylight. Efficiency gains-using less coal to produce the very same amount of stuff-would not save the country. Indeed, cleverer use of minimal resources would just supply an incentive to burn a lot more coal, which would, paradoxically, result in an even faster usage of British reserves. There was no escape, the Victorian economic expert thought. Coal would be tired and the country was likely to “contract 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”

Finance & economics February 1st 2025

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Tech tycoons have got the economics of AI incorrect

From the February 1st 2025 edition

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