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Tech Tycoons have Got the Economics of AI Wrong

Even as economic development was just taking off, some economic experts were currently pessimistic. Coal, wrote William Stanley Jevons in 1865, is “the mainspring of modern product civilisation”. Yet it was limited and would quickly run out. Although more could be discovered by digging deeper, it would be increasingly pricey to extract and these greater costs would minimize 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 very same quantity of stuff-would not save the country. Indeed, cleverer use of minimal resources would just offer a reward to burn much more coal, which would, paradoxically, cause an even much faster use of British reserves. There was no escape, the Victorian economist thought. Coal would be exhausted and the country was likely to “contract to her previous littleness”.

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

Finance & economics February 1st 2025

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Tech magnates have actually got the economics of AI wrong

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