AI Isn't Crowding Out the Economy. It's Hollowing It Out
Techstrong.ai, Wednesday, July 1st, 2026
AI competes for capital, power, labor, and attention at once, hollowing out institutions, argues Shimel.
Author Alan Shimel builds on Jennifer Harris's New York Times argument about capital constraints, showing AI competes simultaneously for physical infrastructure, electrical power, skilled labor, engineering talent, and human attention.
Data center construction has surpassed transportation infrastructure spending, and electricity demand could reach 9 to 17 percent of US consumption by 2030, cascading into semiconductor and skilled-trade shortages.
Shimel identifies a hollowing out, the erosion of institutional capacity within universities, consulting firms, and media as AI takes over functions that justified their economic models.
He argues this differs from past technology booms because it concentrates demand across all resource categories at once.