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Tech Tycoons have actually Got the Economics of AI Wrong

Even as financial development was just taking off, some economists were already pessimistic. Coal, wrote William Stanley Jevons in 1865, is “the mainspring of modern product civilisation”. Yet it was limited and would soon run out. Although more might be found by digging deeper, it would be increasingly costly to extract and these greater expenses would reduce the competitiveness of Britain’s makers. After all, in other nations the black fuel was still in sight of daytime. Efficiency gains-using less coal to produce the exact same quantity of stuff-would not conserve the country. Indeed, cleverer usage of limited resources would simply provide an incentive to burn even more coal, which would, paradoxically, lead to an even faster usage of British reserves. There was no escape, the Victorian economist believed. Coal would be exhausted and the nation was most likely to “contract to her previous littleness”.

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

Finance & economics February 1st 2025

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Tech magnates have actually got the economics of AI wrong

From the February 1st 2025 edition

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