Top economist Steve Hanke told us why he doubts AI will be the job destroyer many expect

Aug 02, 2026 03:07 PM - 1 month ago 534

The thought that artificial intelligence will beryllium free to usage and virtually costless to supply is illusion and dumb, Steve Hanke says.

"This belief is based connected a disconnect from reality, arsenic good arsenic a bully dose of idiotic economical reasoning," the professor of applied economics astatine Johns Hopkins University told Business Insider by email.

"AI is incredibly costly; it is very assets intensive," Hanke continued. "It requires huge amounts of water, power, and beingness capital" for illustration graphics chips, he added.

Microsoft, Alphabet, Amazon, and Meta person projected astir $700 cardinal successful mixed superior expenditures this year, and $1 trillion successful 2027, arsenic they title to build retired the information centers needed to powerfulness the adjacent procreation of AI models.

Hanke, who served connected President Reagan's Council of Economic Advisers, besides addressed wide concerns that AI will origin massive occupation destruction.

"Businesses will not beryllium firing everybody and replacing them pinch AI," he said, because successful galore cases that will beryllium a batch much costly than employing humans.

The seasoned economist took purpose astatine AI visionaries, describing galore of them arsenic "charlatans and hucksters." He said they're "comparing apples and oranges" erstwhile they liken AI to software, arsenic providing AI to customers costs money whereas software, erstwhile developed, tin beryllium sold countless times astatine virtually nary further cost.

Hanke predicted the "cost of scarce resources that are gobbled up by AI will determine really acold the 'AI revolution' goes."

AI optimists person countered that technological advances will make microchips and information centers more power-efficient complete time, bringing down the costs of AI.

Elon Musk has made waves for predicting that AI will supercharge productivity and thrust down accumulation costs, ushering successful an era of abundance wherever "anyone tin person immoderate worldly they want."

The Tesla and SpaceX CEO has recommended group stop redeeming for retirement successful 10 aliases 20 years arsenic "money won't matter." Personal finance and AI experts previously told Business Insider they resoundingly disagreed pinch Musk's advice.

Musk has predicted AI will return complete astir jobs, and the "best way" for governments to woody pinch the resulting unemployment is to supply a "universal precocious income" by mailing checks to everyone.

Mounting concerns astir AI

Hanke has been skeptical of AI for a while, describing it to Business Insider successful February arsenic "overhyped and perchance dangerous."

Last fall, Hanke said the AI roar could falter if Big Tech companies grounded to deed their numbers, and said it "might beryllium wise to buckle your spot belt."

Mark Cuban, the erstwhile "Shark Tank" investor, and Michael Burry of "The Big Short" fame warned this week astir the monolithic standard of AI spending and Nvidia's cardinal domiciled successful financing it, underlining Hanke's interest astir really overmuch the exertion costs.

Cuban said it was "truly scary" really cardinal Nvidia is to the AI boom, and cautioned it "all could crumble" if the chipmaker gets outcompeted aliases makes a mistake.

Burry said Nvidia was "overreaching" successful its run to onslaught deals pinch customers to support its spot sales, and its efforts threatened to "push the information spending to biblical proportions."

Theron Mohamed is simply a London-based analogous connected the Trending squad astatine Business Insider. His sum spans finance, investing, wealth, markets, and the economy.Theron joined BI successful 2019 arsenic a newsman astatine Markets Insider and roseate to the rank of analogous earlier moving to the Trending squad successful 2024. He previously covered tech, media, and telecom stocks for Investors Chronicle mag and had a little stint connected the Financial Times' Data team. He interned astatine the Wall Street Journal successful New York wherever he chiefly wrote for Heard connected the Street.Theron has freelanced for The Independent, The Telegraph, WIRED, and respective smaller publications. He holds an undergraduate grade successful surface science from the London School of Economics, and a master's grade successful publicity from Columbia University.Theron often covers Warren Buffett, Michael Burry, Jeremy Grantham and different top-flight investors. He besides writes astir the world's wealthiest group and shares financial proposal from each mode of rich | and successful people.Email Theron astatine [email protected] and travel him connected X @theron_mohamed.Expertise

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