Will AI Devalue The Real World?
Authored by Jeffrey A. Tucker via The Epoch Times,
Economic reality embeds many paradoxes, unexpected outcomes that go the opposite direction of what you might intuitively predict. The best example concerns a new innovation that seems to make more efficient use of existing resources. Intuition might suggest that the result will be less resource use but reality often goes in the other direction.
This is called the Jevons Paradox and it is based on a famous debate over the steam engine which made coal power far more effective than ever before, leading to wide predictions that the coal industry would experience a dramatic pullback in production need. Economist Henry Jevons said the opposite: the demand for coal will soar precisely because each unit will become more valuable in the task it serves.
He was correct. The lesson applies in many areas of life. Sometimes that very thing we believe is endangered by an innovation that seems to nearly replace it prompts the very opposite: the original resource becomes more valuable than ever before.
Consider the problem of counterfeit luxury goods. We are talking about Nike tennis shoes, Gucci accessories, Louis Vuitton luggage and bags, Rolex watches, and so on. There is a massive global economy supported by fakes. There is simply no way that a single brand can possibly stamp them out. I've been to cities in Turkey where the real and fake stores sell identical looking products happily, happily but at wildly divergent prices.
Economists have studied this phenomenon for many years and the results of the empirical studies are nearly always the same. The counterfeit good does not diminish the value of the authentic good. In fact, the valuation push goes in the other direction. The prices of the authentic thing rise in price, which is precisely why luxury brands know better than to crack down with a heavy hand.
Why might this be? The fake good provides brand advertising in two directions. It gets the name out there. And the very fact that these companies are dedicating time and resources to try to replicate the original only sends a market signal that the original is worthy of being copied. The result is a mad scramble on the part of consumers who can afford the real thing to find it, authenticate it, and brag about it.
The end result: the real thing becomes more valuable than ever.
The Coca-Cola Company discovered this early in its operations in the late 19th century. There were many imitators, despite the famous secret recipe. The company tried to stop the fake products through crackdowns and new techniques such as the beautiful bottle that other factories at the time could not replicate. All the while the demand for Coke only grew. Their impersonators only fed the legend through the decades. Finally the slogan "the real thing" dominated the marketing pitch.
Today there are huge studios of painters in China and elsewhere that specialize in recreating old paintings by the old masters. They only grow and grow and the demand for the product rises ever further without diminishing the valuation of the original at all. Quite the reverse. Imitation and counterfeiting itself is a market signal that causes consumer demand to rally around that which is being imitated.
Now we come to the core of why I'm explaining this. It concerns artificial intelligence or super intelligence or whatever you want to call it. (Actually I think AI has already stuck.) In only a few years since deployment, it is likely that a majority of the words you read on an average day are being written by machines not people. The same is true with videos and movies. The AI engines are playing a huge role in advertising and music production too.
This has led to an existential panic among creative artists. Are they being replaced entirely? Publishers can no longer tell what is real and what is authentic. News broke last week that a book being considered for an award turned out to be an AI-generated text. That's a humiliation for everyone involved.
No question that these innovations are legitimately troubling for the creative community. But keep in mind what AI specializes in. It is amazing at doing routine tasks, automating them, saving time and other resources. The more you use AI this way, the more it feels like a miracle. What took months only a few years ago takes minutes now.
What AI cannot do is think creatively, make insightful judgments, access authentic imagination, and exercise moral consciousness. To the extent that it behaves as if it can do these things, it is only impersonating people. But the human mind will always maintain its advantage in the creative spark, the conjuring up of new ideas, and the relaying of deep emotion from the experience of love, fear, terror, jealousy, rage, pathos, and sacrificial empathy.
In other words, the authentic products of the human spark will always have value even in a world flooded by AI slop and even its impressive output.
We can fully expect that real human achievement will go the direction of all before. Just as coal became more valuable after steam, and just as a genuine Louis Vuitton bag goes ever higher in price. The fakes don't reduce the price and value of the real but just the opposite, they create an even more intense demand for authenticity. This is just as any technology that makes an existing resource more efficient to use will increase the demand for that resource.
None of which is to say that AI is not going to destroy plenty of jobs, particularly those that have relied upon routine calculation and tasking. Many of those will mercifully go away. That said, we are already tired of AI-created videos that lack the creative spark and AI imagery, with its distinctive qualities, has already become dull.
All of this is going to require adjustment to the new realities. That said, I fully expect the real symphony to make a comeback, the genuine oil painting to achieve new heights of fame, and a truly virtuosic writer to experience an even higher demand.
If affordable and available, no one wants fake when the real is an option.
Think of the pipe organ in a grand cathedral. It is an all-of-body experience. Nothing else like it. You can listen to recordings at home but they are a pale imitation, a digital file on your phone even less. An AI rendering of a fake Bach piece even less. The more we get away from the foundational form of expression - the genius of the human mind combined with the most physical form of making it real - the less it enraptures the spirit.
The market will surely develop increasingly sophisticated mechanisms to certify and signal human authenticity, just as luxury brands developed holograms and blockchain verification to distinguish genuine goods from counterfeits. We are already seeing the emergence of "human-made" certifications and provenance tracking that command premium prices not from nostalgia, but from a deep consumer craving for connection to genuine consciousness.
The creative professions will bifurcate: those which use AI merely as a steam engine for the mind, freeing their unique powers for work bearing their unmistakable human signature, and those which surrender entirely to algorithmic production only to find themselves drowned in the very "slop" that markets reject.
The economic winners will understand that AI complements rather than replaces creativity, handling routine production while human judgment, moral courage, and imaginative depth become the scarcest and most valuable commodities of all.
The Jevons Paradox shows us that efficiency does not diminish value but reveals what is truly scarce. As AI renders mediocrity abundant and costless, it simultaneously illuminates the profound scarcity of genuine human insight, suffering transformed into art, and love made manifest through creative sacrifice.
We are not heading toward a future where the real world is devalued by its artificial imitation, but toward one where authenticity becomes the ultimate luxury, the one thing no machine can manufacture, no algorithm can optimize, and no counterfeit can replicate. And that, paradoxically, may be the most hopeful economic signal of all.