PARTING SHOT

There is much hope — and hype — about what AI could do for productivity and economic growth in the future .

INCE RETURNING FROM THIS YEAR ’ S WORLD ECONOMIC FORUM meeting in Davos , I have been asked repeatedly for my biggest takeaways . Among the most widely discussed issues this year was artificial intelligence — especially generative AI (“ GenAI .”) With the recent adoption of large language models ( like the one powering ChatGPT ), there is much hope — and hype — about what AI could do for productivity and economic growth in the future .

To address this question , we must bear in mind that our world is dominated far more by human stupidity than by AI . The proliferation of megathreats — each an element in the broader “ polycrisis ”— confirms that our politics are too dysfunctional , and our policies too misguided , to address even the most serious and obvious risks to our future . These include climate change , which will have huge economic costs ; failed states , which will make waves of climate refugees even larger ; and recurrent , virulent pandemics that could be even more economically damaging than Covid-19 .

Making matters worse , dangerous geopolitical rivalries are evolving into new cold wars — such as between the United States and China — and into potentially explosive hot wars , like those in Ukraine and the Middle East . Around the world , rising income and wealth inequality , partly driven by hyper-globalization and labor-saving technologies , have triggered a backlash against liberal democracy , creating opportunities for populist , autocratic and violent political movements .

Unsustainable levels of private and public debt threaten to precipitate debt and financial crises , and we may yet see a return of inflation and stagfla-

Around the world , rising income and wealth inequality , partly driven by hyper-globalization and labor-saving technologies , have triggered a backlash against liberal democracy .

tionary negative aggregate supply shocks . The broader trend globally is toward protectionism , de-globalization , de-coupling and de-dollarization .

Moreover , the same brave new AI technologies that could contribute to growth and human welfare also have great destructive potential . They are already being used to push disinformation , deepfakes and election manipulation into hyperdrive , as well as raising fears about permanent technological unemployment and even starker inequality . The rise of autonomous weapons and AI-augmented cyber-warfare is equally ominous .

Blinded by the dazzle of AI , Davos attendees did not focus on most of these megathreats . This came as no surprise . The WEF zeitgeist is , in my experience , a counter-indicator of where the world is really heading . Policymakers and business leaders are there to flog their books and spew platitudes . They represent the conventional wisdom , which is often based on a rear-window view of global and macroeconomic developments .

Hence , when I warned , at the WEF ’ s 2006 meeting , that a global financial crisis was coming , I was dismissed as a doomster . And when I predicted , in 2007 , that continued on page 58

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