Will AI pay off the West’s debts?

There is no question that artificial intelligence (AI) is changing the global economy at unprecedented speed. But will it rescue rich countries from intensifying debt pressures, particularly as rapidly aging populations increase pressure on benefit programmes? If so, could these countries safely run even larger deficits, effectively borrowing against ultra-rich future generations? No one should bet the farm on it.

- KENNETH ROGOFF

To be sure, a wildly upbeat assessment of Al’s potential impact on economic growth has propelled asset markets higher cover the last few years. This is especially true for euphoric equity markets, which continue to rally despite political paralysis in France, a government shutdown and an all-cout assault on central-bank independence in the United States, and an exodus of high-skilled talent from the United Kingdom.

Although I have long argued that AI will eventually solve the problem of advanced economies’ anaemic growth, I have also cautioned that several possible obstacles could slow down the pace of this transformation. Among the many material, legal, economic, and social factors to reckon with are electricity supply; intellectual-property rights; a lack of skilled Al workers; and the need to establish a comprehensive framework governing how chatbots communicate and exchange information, including some kind of price mechanism.

Al companies have invested vast sums in the race to dominate the market (should governments allow it), seemingly willing to haemorrhage money in exchange for users and information. But eventually, probably in the not-too-distant future, these firms will need to develop revenue streams, most likely through advertising, like social-media companies before them.