Quarterly

The past year revealed a world in shambles, one with tragic echoes to Pablo Picasso's famous tableau of mass slaughter carried out with modern efficiency. Like Picasso's generation, we must not avert our eyes from the bleak and tragic global reality that is now being conjured before our eyes.

Given that generative AI models capable of rendering life-like “deepfakes” are now accessible to everyone, it is understandable that many would worry about the implications for elections and democratic discourse. But during the “super election year” of 2024, the worst predictions were not borne out.

Judging by the current paradigm in the technology industry, we cannot rule out the worst of all possible worlds: none of the transformative potential of AI, but all of the labor displacement, misinformation, and manipulation. But it’s not too late to change course.

Rather than use “normal” policy tools, such as interest rates and fiscal spending, to address low consumption or deflationary pressures, Chinese policymakers should be pursuing fundamental reforms that address the issues underlying these problems. The key is to allow for a more market-driven allocation of land, money, and labor.