Prominent economist Steve Hanke has strongly dismissed predictions that artificial intelligence (AI) will eventually become free and universally accessible. He labelled the expectations of “free AI” a delusion driven by flawed economic thinking. Hanke, a professor of applied economics at Johns Hopkins University and a former senior economist on President Ronald Reagan’s Council of Economic Advisers, warned that the extreme resource requirements of AI infrastructure make zero-cost access impossible.Nontably, his comments directly push back against predictions made by Tesla and xAI CEO Elon Musk, who has argued that AI will usher in an era of post-scarcity abundance where goods and services become virtually free.‘AI infrastructure demands massive capital and physical resources’As per Business Insider, unlike traditional software, which carries near-zero marginal distribution costs once built, generative AI relies on continuous, high-cost physical infrastructure. This includes advanced graphics processing units (GPUs), massive electrical power and millions of gallons of cooling water.“This belief is based on a disconnect from reality, as well as a good dose of idiotic economic reasoning. AI is incredibly costly; it is very resource intensive. It requires huge amounts of water, power, and physical capital,” Hanke said regarding the concept of costless AI.Hanke also criticised tech visionaries who equate AI with legacy software, describing the comparison as “apples and oranges”, while predicting that the finite availability and rising cost of physical resources will ultimately dictate the boundaries and pace of the AI boom.In the meantime, major technology groups, including Microsoft, Google-parent Alphabet, Amazon and Meta have already projected hundreds of billions of dollars in capital expenditures to construct the specialised data centres required to run frontier models.Steve Hanke pushes back on mass automation, job cuts and ‘universal high income’Hanke also rejected claims that AI will trigger immediate, widespread unemployment across the workforce. Elon Musk has previously suggested that AI will automate most jobs, advising that governments will need to implement a “universal high income” to support citizens and suggesting people may no longer need to save for retirement.Hanke countered that replacing human workers with AI will often prove expensive for businesses than retaining human employees, limiting how quickly companies can automate tasks.“Businesses will not be firing everybody and replacing them with AI,” Hanke noted, emphasising that corporate adoption will be constrained by operational costs rather than pure capability.