AI won’t restore an era of rapid growth, says Nobel laureate Christopher Pissarides

Nobel laureate Christopher Pissarides dismissed the idea that artificial intelligence will restore rapid productivity growth in Western economies, arguing that the fast-growth years may be over. Speaking at a conference, he said up to 40% of jobs in the US and UK will be largely untouched by AI, and that the technology is unlikely to match the productivity boom of the 1980s and 1990s. His skepticism contrasts with tech leaders like Jensen Huang and Sam Altman, who predict AI will reshape work and output on a sweeping scale.

Nobel Prize-winning economist has poured cold water on the idea that artificial intelligence will haul Western economies back into an era of rapid productivity growth, warning that the fast-growth years may already be gone for good. Christopher Pissarides, who shared the 2010 Nobel Memorial Prize in economics and teaches at the London School of Economics, told Bloomberg News there was little sign of any productivity boost from AI so far. His scepticism cuts against much of the tech industry and the policy world, where the technology’s promised productivity payoff https://thenextweb.com/news/mckinsey-ai-productivity-paradox-enterprise-roi-capex is talked up in everything from central-bank gatherings https://thenextweb.com/news/central-banks-ai-sintra-forum to boardroom forecasts. Pissarides, who specialises in the impact of automation on work, reckons as many as four in 10 jobs across the US and UK will be largely untouched by AI. He singled out sectors such as nursing and hospitality, where he argued the technology would deliver few of the gains its champions predict. “There is up to 40%, or at least a big number of jobs in the UK, which are not exposed to AI so they are not going to get productivity gains because of AI,” he said. He was equally guarded about the scale of what AI might achieve elsewhere. The last comparable leap he pointed to was the personal-computing wave of the late 20th century, a period widely credited with a genuine, if temporary, jump in productivity. “I doubt there will be a new computer boom equivalent to what we had in the 1980s and 1990s,” Pissarides said, adding that “given what we know now and what we see happening, I don’t see the productivity growth matching those levels.” He stressed the uncertainty hanging over how the technology will develop. That puts him at odds with figures such as Nvidia chief executive Jensen Huang and OpenAI’s Sam Altman, both of whom have argued AI will reshape work and output on a sweeping scale. Speaking on 6 July at the Royal Economic Society conference in Newcastle, Pissarides went further. To hit the strong growth rates that optimists forecast, he argued, the most AI-exposed sectors such as finance would need to post enormous productivity gains, a stretch he considers implausible. “It’s just not practical to talk about high productivity growth,” he told the conference. “I think we should be resigned to the fact that the days of fast productivity growth are over, whatever we do.” The stakes are considerable. Tech firms and governments alike have pinned their hopes on AI reviving growth rates that have slowed sharply over recent decades. Sluggish output across the West, and Europe in particular, has narrowed the room for policymakers and left real wages barely moving, a backdrop that has sharpened political tempers and made hard trade-offs harder still. Small wonder that AI’s promise of a productivity jolt has been seized on so eagerly. Not everyone shares Pissarides’s gloom. Bank of England Governor Andrew Bailey has called AI a potentially game-changing technology for growth, cautioning that it will take time to feed through into the figures but suggesting it “may well ride to the rescue.” The disagreement mirrors a wider argument over whether AI’s soaring valuations rest on solid ground. Sceptics have drawn comparisons with the dot-com bubble https://thenextweb.com/news/ai-stocks-dot-com-bubble-comparison-market-outlook , and warnings persist that the tools can churn out as much corporate “workslop” https://thenextweb.com/news/ai-workslop-knowledge-decay-harvard-business-review-productivity as genuine output, leaving many firms yet to see measurable returns from their spending. For his part, Pissarides is no reflexive AI pessimist. He has previously suggested the technology could help usher in a four-day week by making people more productive in the hours they do work. His point now is narrower: useful as AI may prove, it is unlikely to rewind the clock to the growth rates of the late 20th century. Get the TNW newsletter Get the most important tech news in your inbox each week.