From AI boom to economic bust

OXFORD — The split between artificial intelligence (AI) enthusiasts and skeptics is widening. The enthusiasts envision AI as a catalyst for rapid economic growth and a utopian world of abundance. Conversely, the skeptics warn that AI threatens humanity's very existence and could lead to widespread job losses, pervasive surveillance, and alternative realities before ultimately eliminating us. The question remains: who is correct? And can governments take any steps to mitigate the risk of a catastrophic outcome?

AI advocates are enthusiastic about the technology's potential impact on productivity. Dario Amodei, CEO of Anthropic, has predicted that U.S. GDP growth will surge from its current modest 2% to a range of 10-15%. Elon Musk anticipates AI could even double U.S. growth to over 4% next year, expecting machines to soon replace humans in nearly every job.

However, this optimism is questionable at best. While the data-center boom and soaring stock-market valuations might temporarily boost near-term growth, their contribution will likely be fleeting. After all, much of the economic activity in developed countries occurs in sectors where AI's influence will be minimal.