Top economist Steve Hanke told us why he doubts AI will be the job destroyer many expect

Steve Hanke, a professor of applied economics at Johns Hopkins University and former member of President Reagan's Council of Economic Advisers, told Business Insider that AI will not cause massive job destruction because it is costly and resource-intensive, requiring huge amounts of water, power, and physical capital. He criticized AI visionaries as 'charlatans and hucksters' and predicted that the cost of scarce resources will determine how far the AI revolution goes, countering claims that AI will be virtually free. Microsoft, Alphabet, Amazon, and Meta have projected roughly $700 billion in combined capital expenditures this year and $1 trillion in 2027 for AI data centers.

The idea that artificial intelligence will be free to use and virtually costless to provide is delusional and dumb, Steve Hanke says https://markets.businessinsider.com/news/stocks/wall-street-jobs-hanke-johns-hopkins-class-buffett-investing-valuation-2023-11 . "This belief is based on a disconnect from reality, as well as a good dose of idiotic economic reasoning," the professor of applied economics at Johns Hopkins University told Business Insider by email. "AI is incredibly costly; it is very resource intensive," Hanke continued. "It requires huge amounts https://www.businessinsider.com/how-calculate-data-center-cost-environmental-impact-methodology-2025-6 of water, power, and physical capital" like graphics chips, he added. Microsoft, Alphabet, Amazon, and Meta have projected https://www.businessinsider.com/dan-loeb-ai-dotcom-bubble-big-tech-stocks-anthropic-investing-2026-5 roughly $700 billion in combined capital expenditures this year, and $1 trillion in 2027, as they race to build out the data centers needed to power the next generation of AI models. Hanke, who served on President Reagan's Council of Economic Advisers, also addressed widespread concerns that AI will cause massive job destruction https://www.businessinsider.com/ai-job-losses-unemployment-stock-market-outlook-ubi-carson-block-2026-6 . "Businesses will not be firing everybody and replacing them with AI https://www.businessinsider.com/jamie-dimon-jpmorgan-ai-work-jobs-life-skills-cancer-healthcare-2026-4 ," he said, because in many cases that will be a lot more expensive than employing humans. The veteran economist took aim at AI visionaries, describing many of them as "charlatans and hucksters." He said they're "comparing apples and oranges" when they liken AI to software, as providing AI to customers costs money whereas software, once developed, can be sold countless times at virtually no additional cost. Hanke predicted the "cost of scarce resources that are gobbled up by AI will decide how far the 'AI revolution' goes." AI optimists have countered that technological advances will make microchips and data centers more power-efficient https://www.businessinsider.com/mark-cuban-ai-buildout-data-centers-infrastructure-pickleball-dotcom-bubble-2026-7 over time, bringing down the cost of AI. Elon Musk has made waves for predicting that AI will supercharge productivity and drive down production costs, ushering in an era of abundance https://www.businessinsider.com/elon-musk-killer-robots-ai-abundance-progress-unstoppable-2026-7 where "anyone can have whatever stuff they want." The Tesla and SpaceX CEO has recommended people stop saving for retirement https://www.businessinsider.com/elon-musk-retirement-saving-abundance-ai-tech-tesla-spacex-billionaires-2026-1 in 10 or 20 years as "money won't matter." Personal finance and AI experts previously told Business Insider https://www.businessinsider.com/elon-musk-retirement-savings-wealth-ai-abundance-personal-finance-experts-2026-1 they resoundingly disagreed with Musk's advice. Musk has predicted AI will take over most jobs, and the "best way" for governments to deal with the resulting unemployment is to provide a "universal high income" by mailing checks https://www.businessinsider.com/elon-musk-universal-high-income-government-checks-ai-job-losses-2026-4 to everyone. Mounting concerns about AI Hanke has been skeptical of AI for a while, describing it https://www.businessinsider.com/steve-hanke-ai-yann-lecun-meta-hype-bubble-stocks-hyperscalers-2026-2 to Business Insider in February as "overhyped and potentially dangerous." Last fall https://www.businessinsider.com/steve-hanke-ai-boom-dotcom-bubble-tech-stocks-growth-forecasts-2025-10 , Hanke said the AI boom could falter if Big Tech companies failed to hit their numbers, and said it "might be wise to buckle your seat belt." Mark Cuban, the former "Shark Tank" investor, and Michael Burry of "The Big Short" fame warned https://www.businessinsider.com/mark-cuban-michael-burry-nvidia-ai-deals-boom-microchips-infrastructure-2026-7 this week about the massive scale of AI spending and Nvidia's key role in financing it, underlining Hanke's concern about how much the technology costs. Cuban https://www.businessinsider.com/mark-cuban-net-worth-2018-9 said it was "truly scary" how central Nvidia is to the AI boom, and cautioned it "all could crumble" if the chipmaker gets outcompeted or makes a mistake. Burry https://www.businessinsider.com/big-short-michael-burry-substack-ai-bubble-stock-picks-bitcoin-2025-12 said Nvidia was "overreaching" in its campaign to strike deals with customers to support its chip sales, and its efforts threatened to "push the circular spending to biblical proportions."