After returning from this year's World Economic Forum, I have been asked many times about my most important takeaways. Artificial intelligence (AI), especially generative AI ("GenAI"), was among the most discussed issues at Davos this year. The recent introduction of large language models (which power, for example, ChatGPT) creates high hopes (and excitement) about what AI can do in the future for productivity and economic growth.

To address this question, we must bear in mind that our world is governed more by human stupidity than by artificial intelligence. The proliferation of megathreats, each an element of a broader "multiple crisis," confirms that our policies are too ineffective, too flawed, to address even the most serious and obvious threats to our future. These include climate change that will result in huge economic costs, failed states that will further increase the number of climate refugees, and recurring, infectious epidemics that could be more economically damaging than COVID-19.

The situation is worsened by dangerous geopolitical rivalries, which are turning into new cold wars (for example, between the United States and China) and "hot" wars in Ukraine and the Middle East. Growing inequality of income and wealth around the world, driven in part by hyper-globalization and automated technology, is fueling a backlash against liberal democracy and giving rise to populist, autocratic, and violent political movements.

Unsustainable levels of private and public debt threaten to precipitate debt and financial crises, and we may yet face a return to inflation and stagflationary shocks to negative aggregate supply. The global trend is towards protectionism, de-globalization, decoupling and de-dollarization.

Bold new AI technologies that can promote economic growth and prosperity also have great disruptive potential. They are already being used to promote disinformation, deepfaking and election manipulation, as well as raising fears of permanent unemployment and greater inequality due to technological advances. Autonomous weapons and cyber warfare with the help of artificial intelligence are equally ominous.

Dazzled by artificial intelligence, Davos attendees did not focus on these megathreats. This was no surprise. In my experience, the spirit of the Davos Forum is an inverse indicator of where the world is really going. Policy makers and business leaders come here to sell their books and talk platitudes. They express popular wisdom, often based on rear-view global and macroeconomic developments.

So when I warned at the 2006 Davos meeting that a global financial crisis was coming, I was told I was sounding ominous. And when I predicted in 2007 that many eurozone member countries would soon face public debt problems, the Italian finance minister verbally threatened me. In 2016, when everyone was asking me if the Chinese stock market crash was foreshadowing a "hard landing" that would trigger another global financial crisis, I was right when I argued that China would have a bumpy but manageable landing. From 2019 to 2021, the trending topic at Davos was the cryptocurrency bubble, which will burst in 2022. Then the focus shifted to clean and green hydrogen. another fad that is already passing.

When it comes to AB, there is a good chance that the technology will really change the world in the coming decades. But Davos' focus on GenAI seems misplaced given that AI technology and industry will far outpace models in the future. Consider, for example, the revolution in robotics and automation, which will soon lead to robots with human-like features that can learn like us and perform many tasks. Or consider what AB will do in the field of biotechnology, medicine, and ultimately human health and life expectancy. No less interesting is the field of quantum computers, which will eventually merge with artificial intelligence to create advanced applications of encryption and cyber security.

The same long-term perspective should be applied in climate discussions. It is increasingly likely that the problem will not be solved by renewable energy, which is growing too slowly to make a significant difference, or by expensive technologies such as carbon capture or sequestration and green hydrogen. Instead, we may be witnessing a thermonuclear revolution, provided a commercial reactor is built in the next 15 years. This abundant source of cheap, clean energy, which will be combined with cheap desalination and agrotechnology 

er, will allow us to feed the ten billion people who will populate the planet at the end of this century.

Similarly, the revolution in financial services will not come from decentralized blockchains or cryptocurrencies. Rather, it will introduce AI-backed centralized financial technologies that are already improving payment systems, lending and credit distribution, insurance services and asset management. Material sciences will revolutionize new components, 3D printing, nanotechnology and synthetic biology. Space exploration and exploitation will help us save the planet and find ways of extraterrestrial life.

These and many other technologies can change the world for the better, but only if we can manage their negative side effects, and only if we use them to solve all the megathreats we face. One can only hope that artificial intelligence will one day overcome human stupidity. But there will be no such possibility if we destroy ourselves.

Source: Banks.am