For years, we have been told that our productivity problem can be solved by taxing landlords, lifting the GST, or reining in big business. The latest hope is that AI will be the breakthrough. But AI will not transform the economy simply by existing. Without the ability to redesign jobs and workflows, it will go the way of many other over-hyped technologies – present in the headlines, absent in the productivity figures.
History is clear on this point. When electricity replaced steam, most factories initially swapped the motor but kept the same layout. It was only when firms reorganised production lines to exploit electricity’s flexibility that output surged. Computers followed the same path – Robert Solow famously observed that they were “everywhere except in the productivity statistics” until businesses redesigned work around them. AI will follow the same pattern. Adoption matters more than invention.
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