{"id":2810,"date":"2025-11-14T12:48:14","date_gmt":"2025-11-14T12:48:14","guid":{"rendered":"https:\/\/blogs.bath.ac.uk\/iprblog\/?p=2810"},"modified":"2025-11-14T12:48:14","modified_gmt":"2025-11-14T12:48:14","slug":"if-the-ai-bubble-does-burst-taxpayers-could-end-up-with-the-bill","status":"publish","type":"post","link":"https:\/\/blogs.bath.ac.uk\/iprblog\/2025\/11\/14\/if-the-ai-bubble-does-burst-taxpayers-could-end-up-with-the-bill\/","title":{"rendered":"If the AI bubble does burst, taxpayers could end up with the bill"},"content":{"rendered":"

In this post, Dr Akhil Bhardwaj argues that the dotcom bubble is the wrong analogy for the AI sector \u2013 we need to be looking at the banking crisis and bailout.\u00a0<\/em><\/p>\n

Dr Akhil Bhardwaj<\/a> is an Associate Professor (Senior Lecturer) of Strategy and Organisation at the University of Bath School of Management<\/a>, researching issues related to executive decision making and governance, organisation failures and the use of AI.\u00a0<\/em><\/p>\n

This article is republished from The Conversation<\/a> under a Creative Commons license. Read the original article here<\/a>.<\/em><\/p>\n

You might not care very much about the prospect of the AI bubble bursting. Surely it\u2019s just something for the tech bros of Silicon Valley to worry about \u2013 or the wealthy investors who have spent billions of dollars funding development.<\/p>\n

But as a sector,\u00a0AI<\/a>\u00a0may have become too big to fail. And just as they did after the financial crisis of 2008, taxpayers could be picking up the tab if it collapses.<\/p>\n

The\u00a0financial crisis<\/a>\u00a0proved to be very expensive. In the UK, the public cost of bailing out the banks was officially put at\u00a0\u00a323 billion<\/a>\u00a0\u2013 roughly equivalent to \u00a3700 per taxpayer. In the US, taxpayers stumped up an estimated\u00a0US$498 billion<\/a>\u00a0(\u00a3362 billion).<\/p>\n

Today, the big AI firms are worth way more than banks, with a combined value\u00a0exceeding \u00a32 trillion<\/a>. Many of these companies are interconnected (or entangled) with each other through a complex web of deals and investments worth\u00a0hundreds of billions of dollars<\/a>.<\/p>\n

And despite a recent study which reports that 95% of generative AI pilots at companies\u00a0are failing<\/a>, the public sector is not shy about getting involved. The UK government for example, has said it is going 'all in'<\/a>\u00a0on AI.<\/p>\n

It sees potential benefits in incorporating AI into education, defence and health. It wants to bring AI efficiency to court rooms and passport applications.<\/p>\n

So AI is being\u00a0widely adopted<\/a>\u00a0in public services, with a level of integration which make it a critical feature of people\u2019s day to day lives.<\/p>\n

And this is where it gets risky.<\/p>\n

Because the reason for bailing out the banks was that the entire financial system would collapse otherwise. And whether or not you agree with the bailout policy, it is hard to argue that banking is not a crucial part of modern society.<\/p>\n

Similarly, the more AI is integrated and entangled into every aspect of our lives, the more essential it becomes to everyone, like a banking system. And the companies which provide the AI capabilities become organisations that our lives depend upon.<\/p>\n

Imagine, for example, that your healthcare, your child\u2019s education and your personal finances all rely on a fictional AI company called 'Eh-Aye'. That firm cannot be allowed to collapse, because too much depends on it \u2013 and taxpayers would probably find themselves being on the hook if it got into financial difficulties.<\/p>\n

Bubble trouble<\/h2>\n

For the time being though, the money flowing in to AI shows little sign of slowing. Supporters insist that despite the failures,\u00a0investment is critical<\/a>. They argue that artificial general intelligence (AGI), the point at which AI acquires human-like cognitive capabilities, will vastly\u00a0improve our lives<\/a>.<\/p>\n

Others are less optimistic. Commentators including computer scientists\u00a0Gary Marcus<\/a>\u00a0and\u00a0Richard Sutton<\/a>\u00a0have cast doubts on the power of AI to become truly intelligent.<\/p>\n

In my\u00a0own research<\/a>, I highlight the limitations of large language models (LLMs) when it comes to reasoning. Similar conclusions have been drawn\u00a0at other universities<\/a>\u00a0and\u00a0even at tech company Apple<\/a>.<\/p>\n

So perhaps the endless expansion of the AI bubble comes down to how strongly the AI pioneers believe in its future. They\u2019ve gone pretty far with it, so maybe it makes sense for them to go all in, with a\u00a0pragmatic kind of faith<\/a>\u00a0that keeps the bubble growing.<\/p>\n

The trouble is that one tech billionaire\u2019s act of faith could also be described as a gamble. And it\u2019s a gamble they\u00a0want everyone to join<\/a>, with taxpayers\u2019 money on the table.<\/p>\n

So if the gamble fails and the bubble bursts, who would\u00a0bear the costs<\/a>? Would the UK government cut funding from the NHS or siphon money from a cash strapped education sector? Would it bail out\u00a0pension funds<\/a>\u00a0that had over-invested in AI?<\/p>\n

One thing is certain. The future being offered by AI firms is not guaranteed. Yet governments and businesses are worried they will miss out if they don\u2019t get on board \u2013 and there are no safeguards in place to protect taxpayers from the fallout if things go wrong.<\/p>\n

All articles posted on this blog give the views of the author(s), and not the position of the IPR, nor of the University of Bath.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

In this post, Dr Akhil Bhardwaj argues that the dotcom bubble is the wrong analogy for the AI sector \u2013 we need to be looking at the banking crisis and bailout.\u00a0 Dr Akhil Bhardwaj is an Associate Professor (Senior Lecturer)...<\/p>\n","protected":false},"author":1948,"featured_media":2812,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[150,112,143],"tags":[],"class_list":["post-2810","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ai","category-economics","category-emerging-technologies"],"acf":[],"jetpack_featured_media_url":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-content\/uploads\/sites\/115\/2025\/11\/Blog-Images-1.png","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/posts\/2810","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/users\/1948"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/comments?post=2810"}],"version-history":[{"count":0,"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/posts\/2810\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/media\/2812"}],"wp:attachment":[{"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/media?parent=2810"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/categories?post=2810"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/tags?post=2810"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}