The illusion of an AI 'new era'
Historical bubbles and 'new era' thinking have recurred throughout economic history, and the current AI boom may not be an exception.
Technology publication Fast Company examines how the current artificial intelligence boom mirrors past economic 'new era' illusions, which have often ended similarly.
The optimism of the early 20th century, fueled by new technologies and corporate consolidation, ultimately led to the Panic of 1907. Much like then, 'new era' thinking can benefit innovators but also creates space for more marginal or risky players, increasing systemic risk.
The dot-com boom of the late 1990s, ignited by Netscape's IPO, saw massive capital inflows and deregulation. While some internet companies succeeded, many failed, and established firms like Enron and WorldCom became embroiled in scandals.
Financial engineering advancements from the 1960s onward, built on the belief that markets could be mathematically controlled, ultimately contributed to the 2008 financial crisis that nearly collapsed the global economy.
The current AI boom shows parallels to these past events. Despite astounding AI capabilities and unprecedented investment, early indicators like an MIT study showing zero return for 95% of companies investing in AI suggest potential challenges ahead.