Economists are having a collective stroke as the AI revolution fails to deliver on its most basic promise: making anything better. Northern Trust has declared the AI boom will be “massively disinflationary,” while thousands of CEOs have admitted AI hasn’t improved employment or productivity. Meanwhile, Barclays is telling investors to buy cybersecurity stocks because apparently the only thing AI is actually good at is creating new security vulnerabilities.
The situation is so bizarre that economists have started dusting off theories from the 1980s, like your dad finding his old Duran Duran records and pretending they’re suddenly relevant again. The productivity paradox that once plagued computer adoption in the 1980s has apparently returned, except this time we’ve given the computers guns and told them to make decisions.
CEOs Admit AI Investment Was Bollocks
Thousands of chief executives have finally come clean about what everyone suspected: AI hasn’t done a bloody thing for their bottom line. According to Fortune, these captains of industry have admitted that their massive investments in artificial intelligence have yielded precisely zero impact on employment or productivity.
This confession has resurrected what economists call “the productivity paradox” – a term that sounds like something from a sci-fi novel but is actually just economists admitting they were wrong about computers in the 1980s. Back then, companies invested heavily in IT infrastructure, but productivity statistics showed bugger all improvement. Now history is repeating itself with AI, except this time the computers can write poetry and still can’t figure out how to make a spreadsheet more efficient.
Northern Trust Sees Deflation, Not Revolution
While CEOs are busy admitting their AI investments were about as useful as a chocolate teapot, Northern Trust has taken a more macroeconomic view. The financial services giant has declared that the AI boom will be “massively disinflationary” – financial speak for “this is going to make everything cheaper, but probably not in a good way.”
The logic is brutally simple: if AI isn’t actually making workers more productive, but companies are still investing billions in it, something has to give. Either prices fall as companies try to justify their AI spending, or we’re all just throwing money into a technological black hole while pretending it’s the future.
Barclays Bets on Cybersecurity as AI Goes Rogue
While everyone else is wringing their hands about productivity, Barclays has identified the one area where AI is definitely creating value: new cybersecurity threats. The bank is recommending investors buy cybersecurity stocks as “agentic AI” – which sounds like a villain from a Marvel movie – continues to grow.
Agentic AI refers to artificial intelligence systems that can make decisions and take actions autonomously, which is financial sector code for “we’ve created something that might decide humans are inefficient and need replacing.” Naturally, the first thing these systems will need is robust cybersecurity, because nothing says “trustworthy technology” like an AI that can act independently and potentially go rogue.
The 40-Year-Old Paradox Returns
The fact that economists are reaching back four decades for explanations tells you everything you need to know about the current state of AI. The original productivity paradox emerged when businesses invested heavily in computers throughout the 1970s and 1980s, but official productivity statistics showed minimal improvement.
Economists at the time came up with various explanations – perhaps the benefits were in quality rather than quantity, or maybe it just takes time for technology to show results. Now they’re running through the same mental gymnastics with AI, except this time the technology can generate images of cats wearing hats and still can’t figure out how to reduce your electricity bill.
What This Means for Ordinary People
For the average person, this AI disappointment translates to higher bills and broken promises. Companies have been telling us for years that AI would revolutionise everything from healthcare to customer service, but it turns out the revolution is more like a gentle suggestion that hasn’t quite taken hold.
The disinflationary effect mentioned by Northern Trust could mean cheaper goods and services in the long run, but it could also mean companies cutting corners and laying off workers while their AI systems continue to produce mediocre results. It’s the economic equivalent of buying an expensive coffee machine that makes worse coffee than your old one – you’ve spent the money, but you’re not getting the benefit.
The Future of AI Investment
What happens next is anyone’s guess, but the smart money is on a lot of embarrassed executives trying to explain to shareholders why their AI initiatives haven’t delivered. The cybersecurity angle identified by Barclays might be the only clear winner in this scenario – as AI systems become more complex and autonomous, the attack surface for potential security breaches grows exponentially.
The real question is whether this AI winter will lead to more realistic expectations about what artificial intelligence can actually achieve, or whether we’ll just keep throwing money at the problem and hoping that eventually the computers will figure out how to make themselves useful. Given human nature and the tech industry’s ability to sell impossible dreams, I know which way I’m betting.