Growing Backlash Against AI – Economics Help
The more we use AI, the more sceptical we are becoming. In 2025, there was excitement about AI, but that is now falling.
In 2026, AI is more likely to make us angry and anxious. Yet, whether we like it or not, AI is becoming pervasive. Workers who don’t use AI are more likely to be laid off. There is a growing fear AI will take jobs but it not just economics will the AI algorithm slowly replace and degrade human creativity and independence of thought? What is going on and can we avoid a dystopian AI future?
The good news is that I think the risk to jobs is generally overstated. AI will change job market, but as of yet, I don’t see widespread AI related job losses, but there are still good reasons to be sceptical about AI.
AI hallucination
The FT reports a recent KPMG report on the benefits of AI was found itself to contain AI hallucinations. There is still some shame attached to using AI, But increasingly students and parents feel under pressure to use AI, whilst at the same time being told they shouldn’t use. There is a fear of being left behind, despite AI diminishing scope for critical thinking.
We have reached a stage where everyone now can produce the perfect CV, but when people turn up for an interview, the reality is different. We have the situation of AI writing CVs and AI choosing a short-list. It’s the battle of AI, which benefits no-one.
Who benefits?
Even if AI does produce a productivity miracle there is no faith that the benefits will be widely shared. Whilst big tech has seen a surge in stock value and profit, consumer sentiment has plunged. This is the AI big tech economy, a small share are winning, the majority left behind. For a brief time, Elon Musk AI SpaceX company approached a valuation of $3 trillion. A massive overvaluation, but it speaks to an irrational exuberance in the future of AI which leaves ordinary people bewildered. There is a bubble in AI stocks but it is increasingly detached from reality.
AI is very resource-intensive and requires huge investment in data centres. Yet, these data centres are increasingly unpopular, local residents fear higher electricity prices and water shortages. Ironically, the astronomical valuation of SpaceX is partly based on the idea that Elon Musk will build AI data centres in space. If this becomes a reality, it will basically be the privatisation of space, with large parts owned by Elon Musk.
Another problem with AI is that it relies entirely on hoovering up human content and reselling it back to us as a package. I had this experience with my own website and revision guides written before AI. The problem is we used to google and visit a website, now we google and read the AI summary.
AI Traffic
Visits to websites have fallen off a cliff. The result is that AI is relying on real humans to provide content, but it is not rewarding those human writers. And this threatens the viability of real journalism. AI offers the syndicated effects of journalism without paying for it. Across the world we have seen cut backs in real journalism, and a shift to algorithm friendly content, with click bait titles. This isn’t just about AI, it is also the AI algorithm rewarding controversy and polarisation. But AI itself makes it easier to produce this kind of AI slop. And it’s not just AI slop, but even worse, AI has enabled the creation of sexualised images from AI. AI has no respect for human privacy or human copyright.
The problem with AI, is that it can also lead us to a path where we are less certain what to trust. In fact, some journalists are resorting to the use of unusual phrases and even adding mistakes to prove they are not relying on AI, I mean for example, what do you call a chatbot pirate? Arr-tificial intelligence. The funny thing is I pasted this script into Claude and asked if it had any suggestions to improve. It suggested I remove this joke because it is not very funny. Well I’ll let you judge, but this is the essence of AI – it provides a generic, personality free, middle of the road kind of slop.
And this is behind the backlash against AI. We are getting bombarded with AI content, be it music, posters, emails and content. As AI develops and it promises humanise features, we worry we won’t be able to tell the difference.
You might say why does it matter? I’m not going to spend 5 hours writing a legal contract when Chat GPT can do it in 5 minutes. I would be the first to say AI does have uses. I have a Claude subscription and I get it to write computer code for apps and websites. It made me feel very clever for a short time, but then I realised, that the market is saturated with new apps and content. AI is causing a boom in the production of books, apps and website content, but who is actually making money from it? The point is when everyone is an AI expert, you lose the value of your education.
Tim Ferriss author of 4 hour week, says that since ChatGPT was realised he is seeing 50% annual declines in book sales, everyone uses AI instead.
We are also told that AI is going to reduce costs, reduce inflation and lead to a productivity boom. But actually, this is not so clear cut. 12% of CEO’s said AI has increased revenue and decreased costs. 42% of firms state AI had no impact. Firstly AI is more expensive than we were led to believe. After a boom in AI use, companies are now cutting back after they realise how expensive AI tokens are. Also, AI has ironically led to a rise in software engineers. Why, because AI needs more humans to check the problems AI code creates.
Also AI is incredibly memory intensive and this has led to a surge in demand for memory chips. The result is that the cheap mobile phone, which was a real boon to low income consumers in Africa is over, AI has raised the price of memory so much, it is no longer profitable and so the cheap mobile phone is over. Global smartphone shipments will fall 13% in 2026. 20% in poorer countries.
The thing is we can’t reverse the creation of AI. In fact, it is only likely to evolve and become more embedded in society, but the initial enthusiasm and optimism is wearing off quickly. The speed of change is quite unnerving and for all the promises of AI, is it actually making lives better? AI is bound up with the other great human experiment. If we save time, with AI, do we end up using that time to scroll our phones seeing AI generated content that grab our attention. For all the benefits of technology, we are seeing a dramatic fall in birth rates and rise in mental health issues like depression and loneliness. There is a new generation needing constantly stimulation, as teachers report.
In a final twist, people are actually reporting to using AI like a partner or friend. This is the existential angst of the AI age, do we really want to go to a place where human relationships are replaced with inanimate machines.
In India, workers were asked to wear go-pro cameras to help train AI robots who will one day replace them. This is probably the biggest fear of AI, the realisation, that many previously safe and secure jobs are at risk of automation. It could be a second job shock like the process of deindustrialisation, which decimated manufacturing, but this time, AI is coming for the graduate jobs, the white collar service sector jobs we once thought were safe. The good news is that so far, fears of AI causing mass unemployment are not showing in job data.
But, for a young generation facing high tuition costs, high housing costs and stagnant wages, the threat of AI disrupting the labour market is a major issue.
AI is changing society, just like computers and the internet. But, how do we make it improve lives? Saving time with AI only helps if we spend those hours doing something better, and the essential question is how to make sure the benefits are widely shared, a universal basic income paid for by a digital tax is one way to keep the benefits shared.
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