Tech Tycoons have Got the Economics of AI Wrong

Even as financial development was simply taking off, some economists were currently downhearted. Coal, wrote William Stanley Jevons in 1865, is “the mainspring of modern-day material civilisation”. Yet it was finite and would quickly go out. Although more could be found by digging deeper, it would be increasingly costly to extract and these greater expenses would decrease the competitiveness of Britain’s producers. After all, in other nations the black fuel was still in sight of daylight. Efficiency gains-using less coal to produce the same amount of stuff-would not save the country. Indeed, cleverer use of minimal resources would just provide an incentive to burn even more coal, which would, paradoxically, result in an even quicker usage of British reserves. There was no escape, the economist believed. Coal would be exhausted and the country was most likely to “contract to her former littleness”.

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

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Tech tycoons have actually got the economics of AI incorrect

From the February 1st 2025 edition

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