Tech Tycoons have actually Got the Economics of AI Wrong

Even as financial growth was simply taking off, some financial experts were already pessimistic. Coal, composed William Stanley Jevons in 1865, is “the mainspring of modern-day material civilisation”. Yet it was finite and would quickly run out. Although more might be found by digging deeper, it would be progressively expensive to extract and these higher costs would reduce the competitiveness of Britain’s makers. After all, in other nations the black fuel was still in sight of daylight. Efficiency gains-using less coal to produce the exact same quantity of stuff-would not save 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 use 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 short article appeared in the Finance & economics area 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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