A.I. Is a Bubble. Maybe That’s OK. (Mohamed A. El-Erian, 11/20/25, NY Times)
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But what if the bubble is an inevitable part of developing and adopting a revolutionary tool that will fundamentally improve productivity and growth? After all, A.I. is a general-purpose technology that will most likely alter a vast range of economic activities fundamentally. Its transformative potential could be on par with electricity, offering an enormous upside through durable improvements in what we do and how we do it. It’s not just that many existing activities will be done better and more efficiently. A.I. is poised to open the door to discoveries, particularly in health and education.
Such gains would allow the economy to grow faster without kicking off inflation, something economists describe as raising the “speed limit” for noninflationary growth. Increased productivity and a larger economy provide us with more opportunities to address the problems that my generation is leaving our kids and grandkids: high levels of debt, climate change and excessive income inequality.
Whichever way you look at it, the potential payoffs of A.I. adoption are staggering — for the economy, for social sectors, and, of course, for investors. That could not be said for the majority of the big historical bubbles, such as the tulip mania of the early 17th century.