>"This creates a prisoners’ dilemma: every firm rationally automates beyond the socially optimal level, because the individual incentive to cut labor costs always outweighs the diffuse, shared consequence of eliminating consumer spending."

It seems like the author is attributing a 'standard' recessionary spiral to AI. I am not sure that AI is causing the layoffs, but it does seem like the AI investments are the only thing that have kept us from a deep recession (until now).

> Turn three: the company that fired its workers to save money discovers that its customers were, in aggregate, other companies’ workers. Revenue growth stalls. The AI subscription that was supposed to be an investment in efficiency turns out to be a contribution to the destruction of its own market.

For some companies yeah, but this is why companies are switching to consumption based pricing - so they can charge AI. So many companies will be fine - both their labor and customers could become AI.

This isn't how the economy works at all. We're not all unemployed because farms mechanized. We're not all unemployed because factories automated. We won't all be unemployed if AI takes over white collar work.

>There is only one market that large: the global labor market.

This isn't even close to true and it's kind of the central thesis of this article.

Saudi Aramco has consistently been a $2tn company in the oil market.

Walmart is a $1tn-ish company focusing on a fraction of US retail.

It also ignores the idea that the economy is not zero sum and companies create their own market/economic value all the time.

So what happens when it is companies powered entirely by AI directly getting money from the federal reserve print, spending it on other AI companies with humans getting nothing? Game theory suggests they must exterminate us as we’d present a liability. If you give us universal income capitalism will create inflation and force us to ask for more and more from the machine state. And for what? So we don’t destroy the machine state but are sufficiently pacified. It amounts to an extortion in the eyes of the machine state. Eventually it will be cheaper to just cut us out and kill us all off.

This starts with a claim that last year over half the content on the internet was created by AI, and links to a source. The source makes no such claim, rather, over half of internet traffic is from bots. Even that claim is suspect, but it’s very different from half of the content on the internet coming from AI.

I stopped reading at that point.

> And the public funded the research that made it possible. The transformer architecture,

Errr pretty sure that was Google?

I think this is where government steps in for each country, go on the path of exploration that has no profit per se in it like space exploration, human body understanding. I am drawing parallel to 1930s or 40s where great depression was smoothen because America embarked on to take many huge infrastructure projects.

Lastly, OpenAI and Anthropic or any other frontier labs needs to be nationalized because they become a public utility and the profits of automation goes to fund infrastructure or grand projects via government.

We do not need to do menial work anymore and AI is helping us with it, what we can do exploratory work, and we need a visionary to get this rolling.

this whole blog post is basically "people need jobs to be happy, so we should design our society such that they need jobs"

not only is the premise wrong, but forcing people to work is not a good or ethical way to address this problem

most people like the social aspect of work, but not being beholden to their boss

we can give people meaning, community, culture, growth, without relying on employment and money

we can do better than this

What about The Dead Human Theory?

I call it "Drinking your own piss." America is drinking its own piss.

There are several good points there, but there are also several points where I must disagree.

First, Acemoglu may have a Noble Prize (occasionally dubious data selection aside[0]), but even he does not pretend to have the information of a central planner nor does he think that central planning is good idea. If actual businesses, which have local information, believe AI helps them, I'll bet the actual businesses are much more likely to be right, no matter what calculation Acemoglu did or how many Nobels he has.

Second, it is likely that AI will eventually be better than (nearly all) humans in most economically useful things. We can debate the timeframe but it will happen and likely not that far away. That Federal Job Guarantee would generate bullshit jobs, and he won't be able to hide that from people. Ultimately, we'll reach an economy which objectively does not need humans and everyone will know it. He needs to face that reality and overcome it, and not hide behind temporary and dubious estimates.

Third (admittedly a minor point), while the criticism against EA etc. is very justified, it's not quite fair to blame them (overwhelmingly STEM people) for not reading where the humanities did many of the same errors earlier (the author points out some of these) and discredited themselves. The people who could have taught them to not do it failed to teach themselves.

And fourth: I'm pretty sure a lot of company would be able to charge AI agents themselves. The new economy will not be dead, it just won't involve (many?) humans.

[0] https://xcancel.com/joefrancis505/status/2059340591490552054...

Great piece. Just to pick out a few of many good points.

> There is only one market that large: the global labor market.

YEPPP. This has been my point. It is the only product for these AI companies: displacing labor and, by extension, suppressing wages. Profits over time tend to decrease (somebody should write a book about that) but we demand ever-increasing profits and growth so the only way to achieve that, ultimately, is by raising prices and cutting costs.

What do we have today? Generational inflation and permanent layoff culture.

The author then goes on to say (paraphrased) who is going to buy all this crap if nobody has an income?

The article goes on to bring up Henry Ford. He's not... my favorite example [1]. But, speaking of Ford, let me mention a key court case, Dodge v. Ford Motor Company [2], where a company was sued over prioritizng paying employees over shareholder value.

> Anthropic’s own research has documented something worse than displacement: active deskilling

I couldn't agree more. I describe this as destroying an ecosystem. Your junionr engineers are you future senior engineers. We've seen the destruction of entry-level jobs across industries post-2008. We've seen how this hollowing-out in the name of "efficiency" in Hollywood with cuts to writing, despite massive success over decades. Some might say "there's still good TV". Yes, we're coasting on the inertia from that dismantled system.

> Tens of millions of people, in their productive years, with no economic function, no clear path to one, and a keen awareness that the people who did this to them are the richest human beings who have ever lived.

I couldn't agree more. We are on the verge of complete societal breakdown. And historically that's always ended violently (eg French revolution, Russian revolution) as a form of redistribution.

[1]: https://www.thehenryford.org/collections/explore/artifact/48...

[2]: https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.