AI and the Looming Competition for Margin

New technologies, like AI, deliver productivity growth by changing the ratio of inputs to outputs in one of three ways: 1) Reducing input costs (i.e. “Same with less”); 2) Growing outputs with the same inputs (i.e. “More with same”) or 3) Creating an entirely new business model.  While each approach may offer temporary advantages, ultimately the end result is the same: eroding margin. Economically transformative technologies are inherently deflationary, making consumers the real winners.

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