Weekly viewpoints

24 July 2026, 10:00 UTC Chief Investment Office GWM Investment Research

Summer, sunshine, and perspective Weekly viewpoints Burkhard Varnholt, Senior Financial Market Adviser, UBS Switzerland AG

Today: Two old paradoxes offer encouragement for the future. They show why AI is opening new paths—and creating additional jobs. And the rhythm and blues earworm “Ain’t No Stoppin’ Us Now” lifts the mood and describes why shoppers are the driving force and expression of our “Roaring Twenties” scenario. For anyone looking for variety this weekend, we recommend a scenic, mostly crowd-free two-day hike in Switzerland. Lace up your shoes and switch off.

1. Paradox: Why AI creates additional jobs Agatha Christie once noted that she had never expected to become rich enough to own a car—or poor enough to no longer have servants: “I couldn’t imagine being too poor to afford servants, nor so rich as to be able to afford a car.”

That this sentence strikes us today as a curiosity is due to two paradoxes often cited in the tech world: the Jevons paradox and the Baumol paradox. Both explain why technological disruptions have often been misunderstood throughout history. Since the start of industrialization, people have feared that technological progress would put jobs at risk. Ultimately, the “human versus machine” debate is as old as the cultural history of the modern era.

Last week, I discussed it with several European entrepreneurs. The conclusion was clear: AI, too, is a job engine that will change many jobs but, on balance, create more work than it eliminates. The thesis may be provocative, but it is supported by facts and principles1. “Technology has never permanently destroyed jobs, but has always created new ones,” explained Nobel laureate in economics Paul Romer2, who has spent his career studying the interaction between ideas, growth, and labor markets. Let us look at the Jevons and Baumol paradoxes.

Jevons paradox: How AI creates far more jobs than it destroys In 1865, William Stanley Jevons (1835-1882) argued that technological advances that make resource use more efficient can, paradoxically, increase total consumption of that resource rather than reduce it. His observation— now known as the Jevons paradox—is often cited by tech executives such as Microsoft CEO Satya Nadella to justify the massive expansion of data centers: “The more efficiency, the more use—we will not get enough of it.”

1 BCG (3 April 2026): AI Will Reshape More Jobs Than It Replaces 2 Romer, Paul M. (1990): “Endogenous Technological Change.” Journal of Political Economy,

This report has been prepared by UBS Switzerland AG. Please see important disclaimers and disclosures at the end of the document.

In 1965—exactly 100 years later—William Jack Baumol described a second paradox, the so-called cost disease, which explains why the current AI boom does not replace some skilled manual activities but, on the contrary, makes them more expensive. Both paradoxes illustrate AI’s influence on the modern working world—and put the contradictory views of it into perspective.

Jevons’ gloomy 1865 book, The Coal Question, predicted the end of British prosperity because of coal shortages. Efficiency, he argued, was not a way out: “It is a confusion of ideas to suppose that the economical use of fuel is equivalent to diminished consumption. The very contrary is the truth.” If the efficiency of the steam engine doubles, less coal is not burned—more machines are built, and more coal is ultimately consumed. Jevons was wrong with his gloomy economic forecast—poverty caused by coal shortages—but not with the logic of rising consumption.

A present-day example: LEDs require about 15% of the energy used by an incandescent bulb. So do we save 85% of energy? At the start of their invention, yes. But then we installed more lights, left them on longer, and built, for example, the Las Vegas Sphere, whose gigantic LED wall— the largest in the world—alone consumes as much electricity as 50,000 households.

Professor Erik Brynjolfsson of Stanford University puts it this way: “Pilots became dramatically more productive with the jet. Did that mean we needed fewer pilots? No. We simply decided to fly much more.”…