Why Krugman Is Wrong About AI

[The Bleeding Edge]( Why Krugman Is Wrong About AI By Colin Tedards, Editor, The Bleeding Edge Dear Reader, “ChatGPT and whatever follows are probably an economic story for the 2030s, not for the next few years.” That’s a line from Paul Krugman’s op-ed in The New York Times. In 2008, Krugman won a Nobel Prize in Economics. But you’d be hard-pressed to know why based on his past calls. In 1998, he said, “By 2005 or so, it will become clear that the internet’s impact on the economy has been no greater than the fax machine’s.” Ironically, this was a prediction he made in an article titled “Why most economists' predictions are wrong.” Other economists aside, he couldn’t have been more wrong himself. Recommended Link [Elon Musk’s bone-chilling warning to Americans]( [image]( His warning never made the front page news… But Elon Musk is sounding the alarm on a surprising development that could – as he puts it – spell the end of civilization as we know it. It has nothing to do with green energy… AI… or technology. And it could affect every man, woman, or child in America – starting this summer. [Click here to see the full story behind Elon Musk’s warning.]( -- By 2005, Amazon, Alphabet, PayPal, and Microsoft had a combined market cap of over $400 billion. Over 68% of the U.S. populace was online, according to Pew Research. Krugman wasn’t just wrong about tech, either. In 2002, he said that American prosperity had reached its peak. Since 2002, America’s GDP has more than doubled from $10.9 trillion to $23.3 trillion. In 2011, Krugman dismissed debt concerns in Europe. Even going as far as to say that Spain wouldn’t experience any major crisis. Within a year, European banks bailed out Spain with over $150 billion in aid. If his track record is anything to go by, it’s a great sign for AI. But let’s entertain Krugman’s arguments to see why the skeptics are so confident it’s all hype. Recommended Link [Prepare NOW for the Coming “Stock Shock”]( [image]( Over $13 trillion in household wealth has been wiped out… And stocks STILL cost DOUBLE what they did before the 2008 crash… But is the best solution really to just sit in cash? No. Over the last 4-decades, our firm has publicly predicted the fall of the Soviet Union… the Dot-Com collapse… the 2008 crash… Trump’s presidency… and the 2020, 2022, and 2023 crashes. Now, millionaire Jeff Clark is issuing a [new WARNING]( unlike anything we’ve seen in years. A [“Stock Shock” is coming to America]( that could be the worst OR BEST thing for your investments depending how you act BEFORE October 1st. Jeff’s also revealing the [ONE secret to getting ahead of this new shock]( and profiting in any market condition – closing returns huge gains in only 8 days. [Click Here to See Jeff’s New WARNING.]( -- AI Is Like… the Steam Engine? Krugman’s most recent article panning AI looks back 100 years at the slow transition from steam engines to electricity. Here’s what he said. To take full advantage of electrification, manufacturers had to rethink the design of factories. Pre-electric factories were multistory buildings with cramped working spaces, because that was necessary to make efficient use of a steam engine in the basement driving the machines through a system of shafts, gears, and pulleys. It took time to realize that having each machine driven by its own motor made it possible to have sprawling one-story factories with wide aisles allowing easy movement of materials, not to mention assembly lines. As a result, the big productivity gains from electrification didn’t materialize until after World War I. Let’s put aside the baffling comparison to an adoption cycle for a technology that kicked off a century ago. The crux of Krugman’s argument is that it’ll take a long time for companies to recognize that AI could make companies more efficient and productive. And even longer for them to adopt it. A recent survey of 1,600 C-suite executives found that 75% were developing an AI strategy or already using AI. So, it’s not as if businesses are unaware of the potential for artificial intelligence. And it’s not like AI tools won’t be available for easy adoption. Microsoft is already building AI capabilities into its products. - It uses ChatGPT to improve search results from Bing. - Wholly owned GitHub uses Co-pilot to help developers write code faster and more effectively. - Azure has several AI tools to help businesses make workflow even more efficient. Salesforce is another software company that helps businesses manage their data and customer relations. It already uses Einstein, an AI platform. And it's rolling out AI in all of its services over the next year. That includes Slack, Tableau, and its cloud platforms. Adopting AI is very different from converting a factory from steam power to electricity. The latter would have meant years of rebuilding physical infrastructure at an incredible cost. But current cloud-based software will allow these updates to be integrated seamlessly. No new factories need to be built. It’s “plug and play.” Users won’t even have to go out of their way to use AI. Recommended Link [Bear or bull market, this highly successful trader has shocking new forecast]( [image]( Nobody believed Larry Benedict’s prediction in February 2020. The DOW plunged 3.5%, and he told CNBC, “It seems like there’s much more to come.” Within a month, the market plummeted 34%. Then, nobody believed Larry at the start of last year, either. He predicted that “all the indexes will be negative for the year,” with the Nasdaq leading the way. Once again, he was spot-on. Anybody who followed his recommendations could be well in the black. Now, for the first time, Larry’s coming forward to share a brand-new forecast. [Click here to watch his interview right now.]( -- And Krugman makes the mistake of thinking that the AI adoption cycle just started. In reality, the AI adoption we’re seeing now is the result of long-term preparation. Since 2019, Microsoft has invested $13 billion into ChatGPT’s creator, OpenAI. Together, Microsoft and OpenAI have spent hundreds of millions on Nvidia’s AI chips. Salesforce launched its first AI initiative, Einstein, in 2016 after years of development. Others aren’t far behind. Meta is developing its own AI tech. Meta will have generative AI tools built into Facebook, Instagram, and WhatsApp in the coming months. Krugman seems to mistakenly think that today’s AI wasn’t the product of billions of dollars and years of development. When Krugman was questioned about his wrong call on the internet’s impact, he responded, “I was clearly trying to be provocative and got it wrong, which happens to all of us sometimes.” I believe that Krugman is trying to be provocative again. And I know he’s just as wrong about AI as he was about the internet in 1998. There will be plenty of other pundits in the weeks and months ahead that will dismiss AI just for the attention. Don’t fall for it. Regards, Colin Tedards Editor, The Bleeding Edge --------------------------------------------------------------- Like what you’re reading? Send your thoughts to feedback@brownstoneresearch.com. IN CASE YOU MISSED IT… [“Shadow CIA” Insider Releases Tell-All Book on the End of the World]( This is how the world will end. According to best-selling author, Peter Zeihan, massive changes are brewing which could turn the world as we know it – and the financial markets – upside down. 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