Most economic forecasters have largely shrugged off recent advances in artificial intelligence (for example, the quantum leap demonstrated by DeepMind's self-learning chess program last December), seeing little impact on longer-term trend growth. Such pessimism is surely one of the reasons why real interest rates remain extremely low, even if the bellwether US 10-year bond rate has ticked up half a percentage point in the past few months. If supply-side pessimism is appropriate, the recent massive tax and spending packages in the United States will likely do much more to raise inflation than to boost investment.

There are plenty of reasons to object to recent US fiscal policy, even if lowering the corporate tax rate made sense (albeit not by the amount enacted). Above all, we live in an era of rising inequality and falling income shares for labour relative to capital. Governments need to do more, not less, to redistribute income and wealth.

Project Syndicate