Tech Tycoons have actually Got the Economics of AI Wrong

Even as economic growth was simply taking off, some economists were currently pessimistic. Coal, composed William Stanley Jevons in 1865, is “the mainspring of modern product civilisation”. Yet it was finite and would quickly run out. Although more might be by digging deeper, it would be increasingly pricey to extract and these greater expenses would reduce the competitiveness of Britain’s manufacturers. After all, in other countries the black fuel was still in sight of daytime. Efficiency gains-using less coal to produce the exact same amount of stuff-would not conserve the country. Indeed, cleverer usage of limited resources would merely offer a reward to burn even more coal, which would, paradoxically, result in an even quicker use of British reserves. There was no escape, the Victorian economist believed. Coal would be tired and the nation was most likely to “agreement to her previous littleness”.

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

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Tech magnates have actually got the economics of AI incorrect

From the February 1st 2025 edition

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