The Half-Percentage Point

When Tyler Cowen estimates AI will add roughly half a percentage point to annual economic growth, the figure sounds disappointingly small against breathless Silicon Valley forecasts of explosive GDP expansion. But compound mathematics transforms the modest into the momentous: 0.5% additional growth sustained over thirty years means an economy 16% larger than the baseline trajectory—not a slight improvement but a fundamentally different civilization, the way the postwar boom made the 1970s unrecognizable from the 1930s. The estimate is deliberately conservative, pricing in the institutional bottleneck that will prevent societies from capturing AI's full technological potential. The technology could deliver two or three percentage points; committees, regulations, and organizational inertia will capture a fraction. The half-point is not the ceiling. It is the realistic expectation of what human institutions can absorb.