tech
February 26, 2026
The economist who formalized the AI doom scenario says its own conditions are too extreme to hold
A fictional memo from 2028 just wiped over $200 billion in real market cap. IBM had its worst day in 25 years because Anthropic wrote a blog post about COBOL. And the doom narrative driving all of it is probably wrong — not about the technology, but about the economics.
TL;DR
- The 'doom meme' scenario, while internally consistent and emotionally resonant, is likely too extreme based on formal economic math.
- The bull case is strengthened by AI's potential to compress service costs by 40-70%, increasing household purchasing power.
- The market is betting incoherently on AI, simultaneously viewing it as too weak for infrastructure and too strong for incumbents.
- Four forms of societal inertia—regulatory, organizational, cultural, and trust—affect AI timelines for both doom and boom scenarios.
- The Capability-Dissipation Gap highlights the growing distance between AI's technical abilities and the economy's adaptation, leading to outsized returns for early adopters.
- Five prompts are provided to operationalize these concepts, including personal gap audits and narrative stress tests.
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