Economist Steve Hanke argued that artificial intelligence is unlikely to replace workers on a massive scale because deploying it remains too expensive. Hanke, a professor of applied economics at Johns Hopkins University and a former member of President Ronald Reagan‘s Council of Economic Advisers, said AI requires significant investments in electricity, water and computing infrastructure, making large-scale worker replacement less practical than many forecasts suggest. “The idea that artificial intelligence will be free to use and virtually costless to provide is delusional and dumb,” Hanke told Business Insider, adding that AI is “incredibly costly” and “very resource intensive,” requiring “huge amounts of water, power, and physical capital” such as graphics chips. “Businesses will not be firing everybody and replacing them with AI,” he said, arguing that in many cases employing people remains less expensive than deploying advanced AI systems. Major technology companies including Microsoft Corp., Alphabet Inc., Amazon.com, Inc. and Meta Platforms Inc. have projected roughly $700B in combined capital expenditures this year and about $1T in 2027 as they accelerate investments in AI infrastructure. Hanke’s comments come as Wall Street debates whether the AI boom is sustainable. Earlier this month, ‘Big Short’ investor Michael Burry argued investors were questioning whether Big Tech’s massive AI spending could deliver adequate returns. Last week, Hanke also warned of an “AI bubble,” saying the industry’s increasing reliance on circular financing raised concerns about sustainability.