---
id: "contrarian-ai-capital-scarcity"
type: "contrarian-insight"
source_timestamps: ["\\\"§ So Long", "Cheap Capital\\\""]
tags: ["macroeconomics", "ai-infrastructure", "contrarian-insight"]
related: ["claim-ai-drives-interest-rates", "concept-end-of-cheap-capital"]
challenges: "The view that AI is a purely deflationary force; it highlights how the physical buildout of AI is highly inflationary regarding capital costs."
speakers: ["Michael Mankins", "Matthew Crupi"]
sources: ["reskilling"]
sourceVaultSlug: "hbr-seg-reskilling"
originDay: 10
articleStem: "hbr-sig-49-ai-squeezing-middle-managers"
sourceUrl: "https://hbr.org/2026/06/ai-is-squeezing-middle-managers"
sourceTitle: "AI Is Squeezing Middle Managers"
---
# Contrarian — The AI Boom Is Actively Ending Cheap Capital

**Contrarian insight.** AI is often viewed purely as a **deflationary** technology that will reduce costs. However, [[entity-michael-mankins|Mankins]] and [[entity-matthew-crupi|Crupi]] point out that the massive **physical infrastructure and energy investments** required to build AI are actually intensifying competition for capital, driving up interest rates, and contributing to [[concept-end-of-cheap-capital|the end of the cheap-capital era]] (mechanism in [[claim-ai-drives-interest-rates]]).

**What it challenges.** The view that AI is a purely deflationary force. The corrective: the physical buildout of AI is highly **inflationary with respect to capital costs**, even if AI's *operational* effects are deflationary.

**Enrichment tension.** The overlay notes the AI-buildout story is 'incomplete without offsetting deflationary effects' — AI can reduce operating costs, improve productivity, and lower working-capital needs, partially offsetting the capital-scarcity narrative. Net direction on rates therefore depends on which force dominates in a given sector.

Related: [[claim-ai-drives-interest-rates]] · [[concept-end-of-cheap-capital]] · [[claim-wacc-historical-norms]]