Nobel Prize-winning economist Paul Krugman draws parallels between the current AI excitement and the dot-com bubble, but believes the outcome may be different. He highlights the dominance of existing tech giants in the AI landscape and their close ties to government, suggesting potential for a tech-bro bailout rather than a catastrophic crash.
Paul Krugman says the AI frenzy has shades of internet mania — but might not finish with a devastating crash.Krugman, a winner of the Nobel Memorial Prize in Economic Sciences, said in a Substack post this week that the heady valuations of some technology stocks and the mass excitement about the future reminded him of the internet craze.Even so, he wrote that 'while AI fever bears a lot of resemblance to the dot-com bubble , the end game may be quite different.
He said they might even generate less income if they have to pour money into AI to defend their positions, especially if they're overspending.The other big difference is that Silicon Valley was largely divorced from politics a quarter-century ago, Krugman said, whereas now Big Tech bosses like Jeff Bezos and Mark Zuckerberg have close ties to the government.Krugman said that Tesla stock — which has surged more than 12-fold since the start of 2020, valuing the company at $1.
Economics Business AI Tech Boom Dot-Com Bubble Economic Forecast Government Intervention
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