Tech Tycoons have Got the Economics of AI Wrong

Even as financial development was simply removing, some financial experts were already cynical. Coal, wrote William Stanley Jevons in 1865, is “the mainspring of modern-day material civilisation”. Yet it was limited and would quickly run out. Although more might be found by digging deeper, it would be significantly pricey to extract and these higher costs would decrease 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 quantity of stuff-would not conserve the country. Indeed, cleverer use of minimal resources would just offer a reward to burn much more coal, which would, paradoxically, result in an even faster usage of British reserves. There was no escape, the Victorian economic expert believed. Coal would be exhausted and the country was most likely to “agreement to her former littleness”.

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

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Tech tycoons have actually got the economics of AI wrong

From the February 1st 2025 edition

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