Tech Tycoons have actually Got the Economics of AI Wrong

Even as economic growth was simply taking off, some financial experts were already downhearted. Coal, composed William Stanley Jevons in 1865, is “the mainspring of modern material civilisation”. Yet it was limited and would soon go out. Although more could be discovered by digging deeper, it would be increasingly costly to extract and these higher costs would reduce the competitiveness of Britain’s manufacturers. 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 a lot 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 was most likely to “contract to her former littleness”.

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This short article 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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