AI: Igniting the Spark to End Stagnation

Much of the West has been economically stagnant. Countries like Canada have failed to improve their productivity and standard of living as of late. In Canada, there has been no progress in Canadian living standards as measured by per-person GDP over the past five years. It is hard to overstate how anomalous this is: the USSR collapsed in part because it could only sustain a growth rate of about 1%, far below what the West was capable of. Canada is more stagnant than the USSR.

Late in 2022, some of us got access to a technical breakthrough: AI. In three years, it has become part of our lives. Nearly all students use AI to do research or write essays.

Dallas Fed economists projected the most credible effect that AI might have on our economies: AI should help reverse the post-2008 slowdown and deliver higher living standards in line with historical technological progress.

It will imply a profound, rapid but gradual transformation of our economy. There will still be teachers, accountants, and even translators in the future… but their work will change as it has changed in the past. Accountants do far less arithmetic today; that part of their work has been replaced by software. Even more of their work is about to be replaced by software, thus improving their productivity further. We will still have teachers, but all our kids, including the poorest ones, will have dedicated always-on tutors: this will not be just available in Canada or the USA, but everywhere. It is up to us to decide who is allowed to build this technology.

AI empowers the individual. An entrepreneur with a small team can get faster access to quality advice, copywriting, and so forth. Artists with an imagination can create more with fewer constraints.

I don’t have to prove these facts: they are fast becoming obvious to the whole world.

New jobs are created. Students of mine work as AI specialists. One of them helps build software providing AI assistance to pharmacists. One of my sons is an AI engineer. These are great jobs.

We often hear claims that artificial intelligence will consume vast amounts of energy and water in the coming years. It is true that data centers, which host AI workloads along with many other computing tasks, rely on water for cooling.

But let’s look at the actual water numbers. In 2023, U.S. data centers directly consumed roughly 17.4 billion gallons of water—a figure that could potentially double or quadruple by 2028 as demand grows. By comparison, American golf courses use more than 500 billion gallons every year for irrigation, often in arid regions where this usage is widely criticized as wasteful. Even if data-center water demand were to grow exponentially, it would take decades to reach the scale of golf-course irrigation.

On the energy side, data centers are indeed taking a larger share of electricity demand. According to the International Energy Agency’s latest analysis, they consumed approximately 415 TWh in 2024—about 1.5% of global electricity consumption. This is projected to more than double to around 945 TWh by 2030 (just under 3% of global electricity). However, even this rapid growth accounts for less than 10% (roughly 8%) of the total expected increase in worldwide electricity demand through 2030. Data centers are therefore not the main driver of the much larger rise in overall energy use.

If we let engineers in Australia, Canada, or Argentina free to innovate, we will surely see fantastic developments.

You might also have heard about the possibility that ChatGPT might decide to kill us all. Nobody can predict the future, but you are surely more likely to be killed by cancer than by a rogue AI. And AI might help you with your cancer.

We always have a choice. Nations can try to regulate AI out of existence. We can set up new government bodies to prevent the application of AI. This will surely dampen the productivity gains and marginalize some nations economically.

The European Union showed it could be done. By some reports, Europeans make more money by fining American software companies than by building their own innovation enterprises. Countries like Canada have economies dominated by finance, mining and oil (with a side of Shopify).

If you are already well off, stopping innovation sounds good. It’s not if you are trying to get a start.

AI is likely to help young people who need it so much. They, more than any other group, will find it easier to occupy the new jobs, start the new businesses.

If you are a politician and you want to lose the vote of young people: make it difficult to use AI. It will crater your credibility.

It is time to renew our prosperity. It is time to create new exciting jobs.

References:

Wynne, M. A., & Derr, L. (2025, June 24). Advances in AI will boost productivity, living standards over time. Federal Reserve Bank of Dallas.

Fraser Institute. (2025, December 16). Canada’s recent economic growth performance has been awful.

DemandSage. (2026, January 9). 75 AI in education statistics 2026 (Global trends & facts).

MIT Technology Review. (2026, January 21). Rethinking AI’s future in an augmented workplace.

Davis, J. H. (2025). Coming into view: How AI and other megatrends will shape your investments. Wiley.

Choi, J. H., & Xie, C. (2025, June 26). AI is reshaping accounting jobs by doing the boring stuff. Stanford Graduate School of Business.

International Energy Agency. (n.d.). Energy demand from AI.

University of Colorado Anschutz Medical Campus. (2025, May 19). Real talk about AI and advancing cancer treatments.

International Energy Agency. (2025). Global energy review 2025.

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