Won't super power AI tools allow companies to do more with the same number of people? Don't you think a smarter way to run a business is to capture more of the market if you have the resources to do so?
If company A decides they just want the same slice of the market they have now and can fire half of their employees and pocket $$$, can't company B hire the same workers and compete harder with these new extra productive workers they hired? Won't the company B tend to capture more of the market and thus survive longer?
In nature we say there are no unfilled niches, meaning that if there were space for something to come compete for resources, it would quickly be 'solved' by the motivating factors involved. Not a precise thing, but a good heuristic.
US knowledge-worker compensation is around $10T / year. Anthropic and OpenAI have raised (not spent yet, just raised) $317B. That's ~3% of knowledge worker spending in one year alone. What business wouldn't pay 3, 5 or 10% more a year to make their worker productivity increase by larger factors?
That depends if AI gets to the point where it can fully replace workers, as opposed to just augmenting them. I heard Alex Imas on a podcast recently talking about how a SWE can be running 10 agents to be 10x as productive, then that SWE is more valuable so firms should want to hire more SWEs and pay them more.
That works for a while, but what if AI gets to the point where it can manage the 10 agents as well as the SWE? Of course you could say the SWE can now manage 10 agents who each manage 10 agents so he's even more valuable, but that has to break down eventually. You don't need 1,000 SWEs each managing 10,000 agents - you hit a bottleneck in the ability to give them work fast enough (even if you need the SWE at the top at all).
I think it's easier to think of from the perspective of blue collar labor. It's further out there time-wise, but let's assume we get a humanoid robot that can do any labor a human can do. It costs $25,000 and maybe a couple grand a year to operate. Works 20 hours a day when it's not charging.
The construction worker it replaces isn't going to start managing a team of robots construction robots - there's already a GC doing that, and you can't scale building nearly the way you can scale writing code because of physical constraints. When the robot I've described exists, a huge swathe of the population is going to be unemployed. There's no competitor to hire them because the competitors just get robots too.
It's not about "this time's different" but rather "the recovery will take too long to an individual" if AI is indeed replacing humans as currently hyped by the model companies.
There's no evidence that AI is replacing human jobs to any real extent. We're just seeing AI being blamed for ordinary layoffs that have more to do with broad economic instability.
I mean you could have written this article for mechanization word for word, I think the difference is that its coming for the white collar folks this time, who also are the folks writing the think pieces and media.
I guess it becomes different if instead of hiring more people to do more - all investment goes into more AI credits.
Then again, as long as there is more demand and there's a limited supply of compute you can still continue to hire people as well. If we assume that the market has infinite demand for whatever AI + humans can produce together both will have jobs.
If demand is limited and compute is plentiful it should make sense for a company to try to have AI do as much of the work as possible.
I think the thing companies forget is that a lot of them can't remain functional if a shrinking percentage of the population can afford their products. Yes, you can try and appeal to the rich and sell products/services aimed at their needs. But does that work for most companies?
I'd say no. The rich won't buy millions of food items or works of fiction or go to every service available in real life.
So, many of those companies won't remain viable unless there's some alternative way for people to spend money. Lots of people who see themselves at the top will end up out of a job, or watch their businesses crash down.
I will say that the fact these societies are (at least for now) still democracies makes the future these tech moguls want less certain for them though. Feels like if there's enough pain from unemployment and declining living standards, someone will run on that and win, whether those in power like it or not. The US may have some issues there, but a lot of the world has seen parties outside the mainstream grow in popularity, including some on the more leftward side of the political spectrum.
> Every investor presentation of an AI agent “doing the work of ten analysts” is telling you the same thing: the product is labor replacement.
I have a solution for that. Let's use AI to replace all these corporations who just lost their big moats. Conveniently, they just laid off a bunch of people with all the critical know-how and I bet they are very willing to just give it up out of spite.
Sure, if you assume that they've used their immense wealth to entrench themselves by paying for quality labor. If you take note of the myriad less-competitive ways they've ensured dominance and guaranteed profits rather than re-investing in their products or services then you will see that you have a large moat to cross yet.
I’m not sure this is so true. Anthropic and OpenAI are both heavily hiring for humans in enterprise roles. Safe to say they are using AI as much as possible and they need humans too.
The problem with the studies is that they're cases in which specific groups within the broader economy lost jobs. Those aren't really comparable to the (theoretical) path of job displacement of AI for a couple of reasons:
1. Those people didn't get substantial, ongoing financial assistance. If we end up in a UBI world, particular one where the UBI people get is high enough to get more or less anything that's not very scarce (e.g. land in coastal cities), the negative economic component of job loss is removed.
2. Everyone else still had jobs. When you lose your job and everyone else continues to work and be successful (or at least you perceive that to be the case), there's a big hit to the status and meaning in your life. If everyone is affected in the same way, then your relative status to others remains unchanged, and everyone collective needs to reorient society to find their meaning.
I'm not saying it will go well, but I do think there's a theoretically possible path where there is large scale unemployment but because we have nigh infinite productivity, everyone has access to unlimited non-scarce resources (including luxury cars and fine foods and whatever medical treatment they need), and we end up with an enormous number of competitive leagues of everything, events centered around music and arts, dinner parties and all manner of other social activities that are what give people meaning.
I have no opinion either way but this doesn’t follow. I can imagine a world where people don’t need oxygen to breathe but they still do. If we say people need oxygen, the argument is obviously about the world such as it is rather than the world as it could hypothetically be.
We have a word for imagining a society with different sources of happiness: utopian. We generally don’t regard utopian musings as evidence of anything.
There's a massive spike in mortality for those who retire from work versus those who keep working. In fact, working just a single year after you're 65 is associated with 11% lower risk of death for healthy people and 9% for unhealthy.
Working is objectively good for your health. Stopping work is associated with an extremely large increase in mortality risk, for both healthy and unhealthy people.
Any alternatives must weigh the resulting death it will cause.
How are we sure about the direction of cause and effect here? I'd expect more healthier people to self-select the working cohort, all else being equal.
Did any of that signal come from people who hadn't spent the last 40 or 50 years working, in a society constructed around working?
If I had a study that showed increased mortality in people who had owned a parrot for 50 years in the year after that parrot died, you wouldn't cite it as evidence of the basic human need for a parrot.
the studies are set in a society in which the main way of existing in society and contributing to it is via employment.
Some generations ago females in this society were regularly without jobs but were "homemakers", in that time if one were not a homemaker and a female how was the person's feeling of well-being?
Reports conflict about that, but in that time of course females were often kept from employment by being homemakers and thus relegated to secondary status.
Perhaps the studies you look for would be related to feelings of social well-being among hunter-gatherer societies, however maybe those studies are not actually needed? Because probably now that the possibility has come up you will realize hunter-gather societies do not have traditional jobs or employment and that people were evidently able to feel happy in those societies.
Now you may respond with examples of how maintaining hunter-gatherer societies would mean death of much of population etc. because the best kind of goalpost moving is the kind that is true. Nonetheless the point should be clear that people can be happy without typical modern jobs and employment.
Whether or not a modern lifestyle and world can be constructed that does not need jobs and still keep people happy is a different question. And there we are back with something for which there are no relevant studies.
I agree "people need a purpose to be happy" is much more digestible than "people need a job to be happy". However, it has to be qualified with "some people need a purpose to be happy". Defining, or worse dictating, happiness for everyone is a fool's errand and, ironically, usually leads to large scale mass murder or starvation.
In theory we can do better than this, in practice we can't.
40% of the people in the US would rather starve to death themselves than live in a world where people they hate for their skin color get anything without toiling for it.
The problem is that he relies on a dubious Acemoglu estimate, without realizing that at best it's temporary. AI will be better than humans in doing tasks (the qualifiers don't matter in the aggregate). Any jobs then would be bullshit jobs, and everyone will know it.
Yeah, people need a creative output, not just for creativity sake but something that feels productive/constructive and beneficial to them and their society/community.
Open source is an example of such work, and amazing things have been achieved - arguably far more impressive and useful than any private tech company has achieved ( and arguably more than all for-profit tech companies combined).
We should focus on expanding the open source cooperative model to all other areas of society/productivity. With modern technology, knowledge availability, and AI, I don't see why people couldn't organize at the grassroots level and build/solve real problems their local (or global) communities may be facing.
I really don't see why we need all of the VCs, marketers and MBAs... No offense to anyone but the typical SV tech company structure and operations just don't even seem efficient... much of the focus is on marketing/manipulation, enshitification, dark patterns and other dishonest and ultimately counter-productive bullshit.
We should be able to organize and build open/cooperative alternatives to SV shitware (and not just software) and we should be able to outcompete the tech shittocracy.. simply because it's actually terribly shitty and inneficient.
> most people like the social aspect of work, but not being beholden to their boss
From what I see out there "being beholden to the boss" is the social aspect people like most. It is what gives the work purpose; knowing that you are pleasing someone else.
Some are quite capable of being their own boss, but the people who can actually sustain that long term seem few and far between. It seems that it becomes easy to spiral into a pit of depression when there is no clear feedback in the value being created. Having to regularly deal with another person is not always desirable but having to regularly deal with another person also forces that feedback to occur.
We would all love to move to a society where we don't have to work for others to survive, but our current system is fundamentally not set up to handle this situation. Capitalism is a useful system for employing scarce resources productively (most of the time) but it doesn't really have an answer for a post-scarcity world. If technology is developed to allow us to end scarcity, instead of everyone having enough, we will end up in a situation where the owners of that technology end up with far, far more than enough while the large majority of people who do not have anything to offer those owners will starve. That sounds dystopian (and it is) but I don't see how we avoid that fate with our current economic system.
> we can give people meaning, community, culture, growth, without relying on employment and money
What's your proposal if not traditional work? The realistic path I see is shifting labor to unautomatable sectors like hospitality. That will keep people employed, but unhappy as they increasingly find themselves unable to find jobs they enjoy, or at comparable levels of income.
>The US horse population grew from nine million in 1840 to twenty-one million by 1900, seemingly immune to technological change. Within sixty years of the internal combustion engine, the population collapsed by eighty-eight percent.
I think this is a very interesting and chilling point, especially if you draw the parallel literally. For quite some time, I was pondering the question:"Who is buying though?". I.e if you automate workers out of labor, who are we selling these AI services to?
I guess if global population drops by 80-90℅ you suddenly get a "sustainable" economy, as everything is repriced the economy of scale needs a much smaller scale.
(Not speculating this is a plan, just a thought that occurred to me when reading about horses example)
> The people writing the checks are not in the habit of lighting trillions of dollars on fire for a better autocomplete and an endless proliferation of longer and longer memos that nobody reads.
Aren’t they though? What about that whole crypto thing.
This is genius. Whenever a company does some fundamental discovery, you can point at some grant they once got for something vaguely adjacent and say "see! quasi-publicly funded!" and your worldview is saved.
The author is correct. It is incredibly simple to trace how public research spending creates scientific advancements and how private companies add on the last 1-3% to commercialize the research.
If you want to learn, go trace how deep learning was funded. It started off with USPS.
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.
> I think this is where government steps in for each country
People quite often lose the plot that "government" is "collective will". Governments will only do this if their constituents want them to. If the constituents would rather spend those recourses on free VR for every household and gatorade from drinking fountains, then that's all we're getting.
This article's premise is entirely built on the idea that CEOs who layoff people citing AI aren't just lying.
And, well, of course they are. If AI was really making these companies meaningfully more productive, they could use that to out-innovate competitors. Instead, they're doing cost-cutting. That only makes sense if you're entirely out of ideas! It's a terribly embarrassing thing to say for a CEO!
Really what's going on is that companies do layoffs for all the usual reasons companies do layoffs. And as usual, they never say the real reason because it's embarrassing (we hired too many morons; I founded this place but now I dread waking up every morning because I hate all the middle managers; we just want more money now and not later; etc etc). Instead they say whatever silly excuse is in vogue to say. Right now that silly excuse is AI productivity. A few years ago it was "ZIRP is over oops y'all cost too much now", and before that it was "financial crisis!", which you could get away with for scary many years after Lehman went belly-up.
I feel like it's pretty ridiculous to take these remarks at face value and then build an entire what-if theory on top of it. Don't underestimate the possibility that layoffs happen because there happens to be a good excuse around. The occasional layoff can be good for a company. Cut out the dead meat etc. But if it makes you look bad, stock go down etc then you won't do it will you? But when ideas from lesswrong became mainstream enough that you can blame AI for your layoff, then what's stopping you?
> 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.
But these AIs need energy and GPUs data-centers ... who pays for those? I could imagine a circular mini-economy between a few companies making the bare essentials to keep AI running and not catering to 99.9% of the population because they don't have the funds to buy anything those companies could produce so they don't.
In that scenario AI and robots produce everything, the owners of those AI companies can trade their AI's output with other AI/robot companies, robot and chip manufacturers and commodity owners? So 10000 people world-wide are fine, everyone else is not?
> In that scenario AI and robots produce everything, the owners of those AI companies can trade their AI's output with other AI/robot companies, robot and chip manufacturers and commodity owners? So 10000 people world-wide are fine, everyone else is not?
That scenario is not really any different from having a technology advanced country (like the US) alongside some underdeveloped nation. The US could, in theory, close its borders and produce everything it needs itself, and leave said underdeveloped nation without the benefits of, for example, Netflix, Nike & Nvidia.
But it won’t, it’s not economically efficient. Economic theory (of comparative advantage) tells us that there’s always something that the less developed world can produce relatively cheaply, in exchange for sneakers, streaming services, and G-force Now subscriptions.
Not possible if they still require goods and services from the non-AI part of the economy. They’d still have to come up with something of value to exchange with that part of the market.
For the same reason it doesn't happen with humans.
Even for AI, it's probably better off paying another AI that is specializing in something and done all the work rather then reimplementing everything from the ground up.
Why do economies need people? We look at the past and say 'People are labor', but what happens when people are no longer labor? Effectively people live on handouts from people that own AI, or the AI itself.
All those Greed is Good people are going to look kind of silly when a hand full of greedy people fight over everything and leave the rest of us for dead.
The whole post is premised on a fixed pie economy.
"The financial model underneath requires the elimination of human cost centers at civilizational scale."
No, it is not. It requires humans to collectively want more things if they are offered and available at a lower cost. Which then requires more humans to fill in the blanks to provide those things. We've been doing this since the industrial revolution.
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.
"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."
Who are you projecting your views with such force on others?
We can all read the news and see AI constantly improving at a very quick pace. What's the barrier AI can't improve beyond? One that would last a lifetime? By all means (since you're such an accomplished person), explain yourself.
If you are so insistent on this then in the short-run the only thing to do is to concentrate all your money on firms that are pouring immense money into AI projects.
This is a great article, but it under-emphasises the fact that it’s middle-class jobs under threat. The studies that are summarised show what happens when working-class people are kicked out of the economy, but the historical record shows that when middle-class people are kicked out of the economy, they use their education to form and lead revolutions.
Unless the bubble pops and destroys all these companies, I don’t think the leaders of AI companies will die natural deaths.
It's not diseconomic, but it obviates a lot of constraints that required a person to manage a coordination problem, and those were a lot of jobs. Keynesian ideas about employment and GDP are just having an apocalypse. Like someone replaced the hole diggers and fillers with a conveyor belt and I would guess Keynes critics would have some predictive power here.
A couple developers can collaborate, but several need someone to specialize in coordination to yield additional value from more workers. Whether you call it management or orchestration, the need emerges at each threshold of additional complexity.
When AI collapses the productivity of 10 people into one, that's the disruption. The best AI user is going to suck all the opportunity out of the room for the others, and that's when layoffs happen. However, this assumes a fixed pie of opportunity. That's the real problem. As though there were only so much dirt to shovel.
FAANGs are old/mature and don't have exponential growth in front of them anymore, where opportunity within them is mainly about optimizing themselves but not growing in radical new directions. AI will indeed eat those optimization workforces alive. They resemble professions because law firms and doctors offices aren't growing either. They're mostly solving internal optimization problems, not finding net new growth opportunities.
The real effect is AI radically polarizing the difference between growing and dying in an org, where any firm that isn't growing fast enough will have its fixed opportunity pie collapse as AI disrupts this regulated oxygen supply. Whereas, growing firms without ceilings on the opportunity to deliver value will use AI to grow to the opportunity available.
Professionals can do fine if they re-orient themselves to new growth with different unit pricing, but yes, anything large and slow moving is probably going to get eaten.
The random aside blaming "Trump and MAGA" is bizarre considering who actually is in the upper echelons of these AI companies. Last I checked, Peter Thiel doesn't run Anthropic. AI isn't being brought to you by rural Iowa or bumfuck Alabama. The people who will be replacing your job with AI are the same people who championed mass immigration and outsourcing industrial production to China. It's neoliberal globalists, who are well represented in both parties.
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 thought this was obvious. It's not. I have a better summary than the link.
We're entering a paradigm shift in what "investment" means. It used to mean that for a given amount of cash, you might get returns in the realm of many multiples of the initial investment (if the risk pays off).
But at some point in an economy like ours, there is no more investment to chase. Even if you could make an investment that would bring in octillions of dollars (whatever that means) what would be the point? What could the investors hope to invest those octillions in? What could they buy with it?
Well, one of the things you can buy with it: a world of high tech luxury that you don't have to share with 8 billion other people. Those people will cease to exist (sooner or later) if they are cut off from the economy. You'd have to of course manage them in the meantime (they won't cease to exist instantly, and might cause trouble if they become aware of their pending fate), but they'll just be gone. For your high tech luxury you would need some sort of system to build and maintain the high tech luxury, a system without those humans that you intend to eliminate (even if you plan to just let them wither away)... something to build your megayachts and prepare meals and harvest the truffles and raise the sturgeons. That system certainly requires some sort of artificial intelligence.
We're heading down that path. I won't call it a conspiracy, it probably isn't one. It's just the path of least resistance.
There is almost certainly some sophisticated theory of economics that incorporates these potentialities. It would be the general relativity to orthodox economics' Newtonian. But, there would have to be economists left after all this goes down to even come up with that sophisticated theory, and those who remain won't be interested enough in the science to study economics. It turns out that humanity is fungible too.
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.
> 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.
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.
And "grow the pie" ignores the reality that the distribution of benefits is often "150% to capital, -50% to labor" because capital isn't held accountable for displacing labor and labor suffers displacement risk without compensation.
This would be fine if the money reliably trickled down, but it doesn't. This would be fine if we used redistributive policy to make it right, but we don't.
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.
The article explicitly addresses this. Crushing inequality was often a side-effect of industrial advancement, and while it always went away in the past it took a lifetime to do so.
>Crushing inequality was often a side-effect of industrial advancement, and while it always went away in the past
Historically, inequality is only significantly reduced through events of extreme destruction, like the Black Plague and the world wars.
In other words, a society that ever lets massive inequality happen is just doomed. High inequality reliably stays that way until insane global black swans mildly correct it.
> We won't all be unemployed if AI takes over white collar work.
So you wouldn’t mind going from 6 figure salary to working as a cashier at Walmart, figuratively speaking? Because I sure as hell mind, given mortgage and family obligations.
Obviously I'm not immune from the anxiety everyone feels and it's going to be bad for some people. That doesn't change that historically the jobs aren't from programmer to cashier. They're from shoveling shit or screwing caps on toothpaste tubes to software engineering.
The trajectory of the West has been good for a long time and the rate of improvement is increasing.
Did they massively improve working conditions, or your software job is as bad as working in an oil patch?
Mine isn’t.
> most people arent making a six figure salary, and have mortgage and family obligations
Maybe not most, but there’s sure lot of white collars making six figures. I don’t know what kind of teenage big tech bubble you’re in for the rest, but more than 70% of my colleagues have mortgage and families.
Historically that's not accurate. Automation eventually resulted in more jobs, but for the people actually living through the automation it was VERY bad.
Farms mechanized but we luckily had other jobs on hand to sponge that up. What used to be a farmhand is now a gas station worker selling zyn to a wallmart worker who sells food to the gas station worker.
However, AI is coming for them too. This time it really is different. The whole business pitch is the elimination of any safe harbor. All human labor to be automated. Why have 8 billion humans in that environment? Scary times ahead. We will probably end up culled by the machine.
In my now long lifetime, I can't tell you how many times I've heard the phrase "This time it really is different" for it to turn out that it really wasn't all that different. Maybe this time it is, but I'd put my bet on isn't.
> In my now long lifetime, I can't tell you how many times I've heard the phrase "This time it really is different"
This isn't an argument and it shows a fundamental lack of understanding of risk and game theory.
Besides, it's always been different, in the sense of boiling frog temperature going up. The present case is more different because this time, the rate of rising is high enough to make the frogs uncomfortable... and you are trying to calm them down and keep them in the water:
> Look frogs, the temps were always rising, "many times I've heard the phrase "This time it really is different" for it to turn out that it really wasn't all that different."
> Maybe this time it is, but I'd put my bet on isn't.
Bro, it's not about betting... you have to try hard to learn something about risk.
>"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).
Why is this time different?
Won't super power AI tools allow companies to do more with the same number of people? Don't you think a smarter way to run a business is to capture more of the market if you have the resources to do so?
If company A decides they just want the same slice of the market they have now and can fire half of their employees and pocket $$$, can't company B hire the same workers and compete harder with these new extra productive workers they hired? Won't the company B tend to capture more of the market and thus survive longer?
In nature we say there are no unfilled niches, meaning that if there were space for something to come compete for resources, it would quickly be 'solved' by the motivating factors involved. Not a precise thing, but a good heuristic.
US knowledge-worker compensation is around $10T / year. Anthropic and OpenAI have raised (not spent yet, just raised) $317B. That's ~3% of knowledge worker spending in one year alone. What business wouldn't pay 3, 5 or 10% more a year to make their worker productivity increase by larger factors?
> Why is this time different?
That depends if AI gets to the point where it can fully replace workers, as opposed to just augmenting them. I heard Alex Imas on a podcast recently talking about how a SWE can be running 10 agents to be 10x as productive, then that SWE is more valuable so firms should want to hire more SWEs and pay them more.
That works for a while, but what if AI gets to the point where it can manage the 10 agents as well as the SWE? Of course you could say the SWE can now manage 10 agents who each manage 10 agents so he's even more valuable, but that has to break down eventually. You don't need 1,000 SWEs each managing 10,000 agents - you hit a bottleneck in the ability to give them work fast enough (even if you need the SWE at the top at all).
I think it's easier to think of from the perspective of blue collar labor. It's further out there time-wise, but let's assume we get a humanoid robot that can do any labor a human can do. It costs $25,000 and maybe a couple grand a year to operate. Works 20 hours a day when it's not charging.
The construction worker it replaces isn't going to start managing a team of robots construction robots - there's already a GC doing that, and you can't scale building nearly the way you can scale writing code because of physical constraints. When the robot I've described exists, a huge swathe of the population is going to be unemployed. There's no competitor to hire them because the competitors just get robots too.
It's not about "this time's different" but rather "the recovery will take too long to an individual" if AI is indeed replacing humans as currently hyped by the model companies.
There's no evidence that AI is replacing human jobs to any real extent. We're just seeing AI being blamed for ordinary layoffs that have more to do with broad economic instability.
I mean you could have written this article for mechanization word for word, I think the difference is that its coming for the white collar folks this time, who also are the folks writing the think pieces and media.
I guess it becomes different if instead of hiring more people to do more - all investment goes into more AI credits.
Then again, as long as there is more demand and there's a limited supply of compute you can still continue to hire people as well. If we assume that the market has infinite demand for whatever AI + humans can produce together both will have jobs.
If demand is limited and compute is plentiful it should make sense for a company to try to have AI do as much of the work as possible.
I think the thing companies forget is that a lot of them can't remain functional if a shrinking percentage of the population can afford their products. Yes, you can try and appeal to the rich and sell products/services aimed at their needs. But does that work for most companies?
I'd say no. The rich won't buy millions of food items or works of fiction or go to every service available in real life.
So, many of those companies won't remain viable unless there's some alternative way for people to spend money. Lots of people who see themselves at the top will end up out of a job, or watch their businesses crash down.
I will say that the fact these societies are (at least for now) still democracies makes the future these tech moguls want less certain for them though. Feels like if there's enough pain from unemployment and declining living standards, someone will run on that and win, whether those in power like it or not. The US may have some issues there, but a lot of the world has seen parties outside the mainstream grow in popularity, including some on the more leftward side of the political spectrum.
> Every investor presentation of an AI agent “doing the work of ten analysts” is telling you the same thing: the product is labor replacement.
I have a solution for that. Let's use AI to replace all these corporations who just lost their big moats. Conveniently, they just laid off a bunch of people with all the critical know-how and I bet they are very willing to just give it up out of spite.
> corporations who just lost their big moats
Sure, if you assume that they've used their immense wealth to entrench themselves by paying for quality labor. If you take note of the myriad less-competitive ways they've ensured dominance and guaranteed profits rather than re-investing in their products or services then you will see that you have a large moat to cross yet.
I’m not sure this is so true. Anthropic and OpenAI are both heavily hiring for humans in enterprise roles. Safe to say they are using AI as much as possible and they need humans too.
They'll just order those humans to train their own future overlords.
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
> we can give people meaning, community, culture, growth, without relying on employment and money
I agree, but those people will still need to eat and pay rent so I guess they're stuck either working or dying
Star Trek isn't real life, when human labor stops being valuable the humans who's labor was previously vital will be at best left to rot in squalor.
> not only is the premise wrong
The blog post offers several studies as evidence, where's yours?
The problem with the studies is that they're cases in which specific groups within the broader economy lost jobs. Those aren't really comparable to the (theoretical) path of job displacement of AI for a couple of reasons:
1. Those people didn't get substantial, ongoing financial assistance. If we end up in a UBI world, particular one where the UBI people get is high enough to get more or less anything that's not very scarce (e.g. land in coastal cities), the negative economic component of job loss is removed. 2. Everyone else still had jobs. When you lose your job and everyone else continues to work and be successful (or at least you perceive that to be the case), there's a big hit to the status and meaning in your life. If everyone is affected in the same way, then your relative status to others remains unchanged, and everyone collective needs to reorient society to find their meaning.
I'm not saying it will go well, but I do think there's a theoretically possible path where there is large scale unemployment but because we have nigh infinite productivity, everyone has access to unlimited non-scarce resources (including luxury cars and fine foods and whatever medical treatment they need), and we end up with an enormous number of competitive leagues of everything, events centered around music and arts, dinner parties and all manner of other social activities that are what give people meaning.
A study obviously can’t prove that people need jobs to be happy.
If you can so much as imagine a society organized around some other source of happiness, there’s your evidence by counterexample.
I have no opinion either way but this doesn’t follow. I can imagine a world where people don’t need oxygen to breathe but they still do. If we say people need oxygen, the argument is obviously about the world such as it is rather than the world as it could hypothetically be.
This is untrue. You cannot imagine a world where people, without changing the definition of people, don't need oxygen to breathe.
"they still do" is just begging the question. Plenty of people live without working. We're ruled by people who don't work.
We have a word for imagining a society with different sources of happiness: utopian. We generally don’t regard utopian musings as evidence of anything.
Who is "we?" A utopian society is what we should ideally be aiming for at all times, not some dirty word like you seem to think it is.
There's a massive spike in mortality for those who retire from work versus those who keep working. In fact, working just a single year after you're 65 is associated with 11% lower risk of death for healthy people and 9% for unhealthy.
Working is objectively good for your health. Stopping work is associated with an extremely large increase in mortality risk, for both healthy and unhealthy people.
Any alternatives must weigh the resulting death it will cause.
How are we sure about the direction of cause and effect here? I'd expect more healthier people to self-select the working cohort, all else being equal.
Did any of that signal come from people who hadn't spent the last 40 or 50 years working, in a society constructed around working?
If I had a study that showed increased mortality in people who had owned a parrot for 50 years in the year after that parrot died, you wouldn't cite it as evidence of the basic human need for a parrot.
the studies are set in a society in which the main way of existing in society and contributing to it is via employment.
Some generations ago females in this society were regularly without jobs but were "homemakers", in that time if one were not a homemaker and a female how was the person's feeling of well-being?
Reports conflict about that, but in that time of course females were often kept from employment by being homemakers and thus relegated to secondary status.
Perhaps the studies you look for would be related to feelings of social well-being among hunter-gatherer societies, however maybe those studies are not actually needed? Because probably now that the possibility has come up you will realize hunter-gather societies do not have traditional jobs or employment and that people were evidently able to feel happy in those societies.
Now you may respond with examples of how maintaining hunter-gatherer societies would mean death of much of population etc. because the best kind of goalpost moving is the kind that is true. Nonetheless the point should be clear that people can be happy without typical modern jobs and employment.
Whether or not a modern lifestyle and world can be constructed that does not need jobs and still keep people happy is a different question. And there we are back with something for which there are no relevant studies.
> the studies are set in a society in which the main way of existing in society and contributing to it is via employment.
That's the one we live in though, so I guess that seems fair
If you know happy rich people that don't have a job, you got your counter example, and one is enough.
I do.
People usually need to have a purpose, but it doesn't need to be a job.
I agree "people need a purpose to be happy" is much more digestible than "people need a job to be happy". However, it has to be qualified with "some people need a purpose to be happy". Defining, or worse dictating, happiness for everyone is a fool's errand and, ironically, usually leads to large scale mass murder or starvation.
> we can do better than this
In theory we can do better than this, in practice we can't.
40% of the people in the US would rather starve to death themselves than live in a world where people they hate for their skin color get anything without toiling for it.
> people need jobs to be happy
The happiness of the aristocracy depends on the spectacle of miserable workers performing humiliating tasks.
Solution: take turns every other year.
The problem is that he relies on a dubious Acemoglu estimate, without realizing that at best it's temporary. AI will be better than humans in doing tasks (the qualifiers don't matter in the aggregate). Any jobs then would be bullshit jobs, and everyone will know it.
Yeah, people need a creative output, not just for creativity sake but something that feels productive/constructive and beneficial to them and their society/community.
Open source is an example of such work, and amazing things have been achieved - arguably far more impressive and useful than any private tech company has achieved ( and arguably more than all for-profit tech companies combined).
We should focus on expanding the open source cooperative model to all other areas of society/productivity. With modern technology, knowledge availability, and AI, I don't see why people couldn't organize at the grassroots level and build/solve real problems their local (or global) communities may be facing.
I really don't see why we need all of the VCs, marketers and MBAs... No offense to anyone but the typical SV tech company structure and operations just don't even seem efficient... much of the focus is on marketing/manipulation, enshitification, dark patterns and other dishonest and ultimately counter-productive bullshit.
We should be able to organize and build open/cooperative alternatives to SV shitware (and not just software) and we should be able to outcompete the tech shittocracy.. simply because it's actually terribly shitty and inneficient.
So there’s one reference to happy, investor happiness. There’s 4 to meaning though.
I don’t disagree with you but you’re also missing the scarier point that economic collapse will come before the meaning even is missed.
This article ideally should have been two. One about how a consumer economy without consumers cannot be an economy. Another about what comes next.
https://aeon.co/essays/what-if-jobs-are-not-the-solution-but...
> most people like the social aspect of work, but not being beholden to their boss
From what I see out there "being beholden to the boss" is the social aspect people like most. It is what gives the work purpose; knowing that you are pleasing someone else.
Some are quite capable of being their own boss, but the people who can actually sustain that long term seem few and far between. It seems that it becomes easy to spiral into a pit of depression when there is no clear feedback in the value being created. Having to regularly deal with another person is not always desirable but having to regularly deal with another person also forces that feedback to occur.
We would all love to move to a society where we don't have to work for others to survive, but our current system is fundamentally not set up to handle this situation. Capitalism is a useful system for employing scarce resources productively (most of the time) but it doesn't really have an answer for a post-scarcity world. If technology is developed to allow us to end scarcity, instead of everyone having enough, we will end up in a situation where the owners of that technology end up with far, far more than enough while the large majority of people who do not have anything to offer those owners will starve. That sounds dystopian (and it is) but I don't see how we avoid that fate with our current economic system.
> we can give people meaning, community, culture, growth, without relying on employment and money
What's your proposal if not traditional work? The realistic path I see is shifting labor to unautomatable sectors like hospitality. That will keep people employed, but unhappy as they increasingly find themselves unable to find jobs they enjoy, or at comparable levels of income.
A couple of options off the top of my head: art, research, athletics, the humanities
Or maybe the problem is that exchanging labor for scarce necessities only makes sense when labor itself is scarce.
Milking unicorns.
>The US horse population grew from nine million in 1840 to twenty-one million by 1900, seemingly immune to technological change. Within sixty years of the internal combustion engine, the population collapsed by eighty-eight percent.
I think this is a very interesting and chilling point, especially if you draw the parallel literally. For quite some time, I was pondering the question:"Who is buying though?". I.e if you automate workers out of labor, who are we selling these AI services to?
I guess if global population drops by 80-90℅ you suddenly get a "sustainable" economy, as everything is repriced the economy of scale needs a much smaller scale.
(Not speculating this is a plan, just a thought that occurred to me when reading about horses example)
> The people writing the checks are not in the habit of lighting trillions of dollars on fire for a better autocomplete and an endless proliferation of longer and longer memos that nobody reads.
Aren’t they though? What about that whole crypto thing.
> And the public funded the research that made it possible. The transformer architecture,
Errr pretty sure that was Google?
The author never claims otherwise?
Did the public fund googles research?
The foundations of it, yes: "all of these were publicly or quasi-publicly funded"
This is genius. Whenever a company does some fundamental discovery, you can point at some grant they once got for something vaguely adjacent and say "see! quasi-publicly funded!" and your worldview is saved.
The author is correct. It is incredibly simple to trace how public research spending creates scientific advancements and how private companies add on the last 1-3% to commercialize the research.
If you want to learn, go trace how deep learning was funded. It started off with USPS.
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.
> America embarked on to take many huge infrastructure projects
There was a certain other undertaking in those years that went a little beyond infrastructure.
World war I and II in general?
> I think this is where government steps in for each country
People quite often lose the plot that "government" is "collective will". Governments will only do this if their constituents want them to. If the constituents would rather spend those recourses on free VR for every household and gatorade from drinking fountains, then that's all we're getting.
This article's premise is entirely built on the idea that CEOs who layoff people citing AI aren't just lying.
And, well, of course they are. If AI was really making these companies meaningfully more productive, they could use that to out-innovate competitors. Instead, they're doing cost-cutting. That only makes sense if you're entirely out of ideas! It's a terribly embarrassing thing to say for a CEO!
Really what's going on is that companies do layoffs for all the usual reasons companies do layoffs. And as usual, they never say the real reason because it's embarrassing (we hired too many morons; I founded this place but now I dread waking up every morning because I hate all the middle managers; we just want more money now and not later; etc etc). Instead they say whatever silly excuse is in vogue to say. Right now that silly excuse is AI productivity. A few years ago it was "ZIRP is over oops y'all cost too much now", and before that it was "financial crisis!", which you could get away with for scary many years after Lehman went belly-up.
I feel like it's pretty ridiculous to take these remarks at face value and then build an entire what-if theory on top of it. Don't underestimate the possibility that layoffs happen because there happens to be a good excuse around. The occasional layoff can be good for a company. Cut out the dead meat etc. But if it makes you look bad, stock go down etc then you won't do it will you? But when ideas from lesswrong became mainstream enough that you can blame AI for your layoff, then what's stopping you?
> 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.
But these AIs need energy and GPUs data-centers ... who pays for those? I could imagine a circular mini-economy between a few companies making the bare essentials to keep AI running and not catering to 99.9% of the population because they don't have the funds to buy anything those companies could produce so they don't.
In that scenario AI and robots produce everything, the owners of those AI companies can trade their AI's output with other AI/robot companies, robot and chip manufacturers and commodity owners? So 10000 people world-wide are fine, everyone else is not?
> In that scenario AI and robots produce everything, the owners of those AI companies can trade their AI's output with other AI/robot companies, robot and chip manufacturers and commodity owners? So 10000 people world-wide are fine, everyone else is not?
That scenario is not really any different from having a technology advanced country (like the US) alongside some underdeveloped nation. The US could, in theory, close its borders and produce everything it needs itself, and leave said underdeveloped nation without the benefits of, for example, Netflix, Nike & Nvidia.
But it won’t, it’s not economically efficient. Economic theory (of comparative advantage) tells us that there’s always something that the less developed world can produce relatively cheaply, in exchange for sneakers, streaming services, and G-force Now subscriptions.
It cannot. Only reason the US is rich is because of foreign countries buying and trading in Dollars. If that falls the US is toast
>So 10000 people world-wide are fine, everyone else is not?
Well ya, if you don't need labor, why keep 8 billion laborers around polluting your planet?
Not possible if they still require goods and services from the non-AI part of the economy. They’d still have to come up with something of value to exchange with that part of the market.
If the business process is fully AI-able, why wouldn't it just be implemented by the next AI in line?
I'd argue the only companies to survive will be the ones with either a human input or a human output. Everything else is effectively worthless now.
For the same reason it doesn't happen with humans.
Even for AI, it's probably better off paying another AI that is specializing in something and done all the work rather then reimplementing everything from the ground up.
Yep, if AI gutters the middleclass and small budinesses who you gonna sell to?
Well that part of the economy and anything that caters to it might just die.
The whole economy would be whatever AI/robots need: compute, energy, raw materials, software, data, etc.
Why do economies need people? We look at the past and say 'People are labor', but what happens when people are no longer labor? Effectively people live on handouts from people that own AI, or the AI itself.
All those Greed is Good people are going to look kind of silly when a hand full of greedy people fight over everything and leave the rest of us for dead.
You’ll be entertainers for the rich class. Teen prostitutes, jesters, and caretakers, while they live their best lives.
The whole post is premised on a fixed pie economy.
"The financial model underneath requires the elimination of human cost centers at civilizational scale."
No, it is not. It requires humans to collectively want more things if they are offered and available at a lower cost. Which then requires more humans to fill in the blanks to provide those things. We've been doing this since the industrial revolution.
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...
"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."
Who are you projecting your views with such force on others?
What have you achieved?
I bet you are nobody of substance.
We can all read the news and see AI constantly improving at a very quick pace. What's the barrier AI can't improve beyond? One that would last a lifetime? By all means (since you're such an accomplished person), explain yourself.
Bla-bla-bla.
If you are so insistent on this then in the short-run the only thing to do is to concentrate all your money on firms that are pouring immense money into AI projects.
Have you done that?
>Last year, over half of new content on the internet was AI-generated.
Traffic != AI generated content.
This is a great article, but it under-emphasises the fact that it’s middle-class jobs under threat. The studies that are summarised show what happens when working-class people are kicked out of the economy, but the historical record shows that when middle-class people are kicked out of the economy, they use their education to form and lead revolutions.
Unless the bubble pops and destroys all these companies, I don’t think the leaders of AI companies will die natural deaths.
It's not diseconomic, but it obviates a lot of constraints that required a person to manage a coordination problem, and those were a lot of jobs. Keynesian ideas about employment and GDP are just having an apocalypse. Like someone replaced the hole diggers and fillers with a conveyor belt and I would guess Keynes critics would have some predictive power here.
A couple developers can collaborate, but several need someone to specialize in coordination to yield additional value from more workers. Whether you call it management or orchestration, the need emerges at each threshold of additional complexity.
When AI collapses the productivity of 10 people into one, that's the disruption. The best AI user is going to suck all the opportunity out of the room for the others, and that's when layoffs happen. However, this assumes a fixed pie of opportunity. That's the real problem. As though there were only so much dirt to shovel.
FAANGs are old/mature and don't have exponential growth in front of them anymore, where opportunity within them is mainly about optimizing themselves but not growing in radical new directions. AI will indeed eat those optimization workforces alive. They resemble professions because law firms and doctors offices aren't growing either. They're mostly solving internal optimization problems, not finding net new growth opportunities.
The real effect is AI radically polarizing the difference between growing and dying in an org, where any firm that isn't growing fast enough will have its fixed opportunity pie collapse as AI disrupts this regulated oxygen supply. Whereas, growing firms without ceilings on the opportunity to deliver value will use AI to grow to the opportunity available.
Professionals can do fine if they re-orient themselves to new growth with different unit pricing, but yes, anything large and slow moving is probably going to get eaten.
A clearer look at the point about the internet being half/over-half AI generated content :
AI Now Writes as Many Online Articles as Humans
https://graphite.io/five-percent/ai-now-writes-as-many-onlin...
I'd take this more seriously if it wasn't regularly punctuated by disgusting little slop images
What about The Dead Human Theory?
I call it "Drinking your own piss." America is drinking its own piss.
The random aside blaming "Trump and MAGA" is bizarre considering who actually is in the upper echelons of these AI companies. Last I checked, Peter Thiel doesn't run Anthropic. AI isn't being brought to you by rural Iowa or bumfuck Alabama. The people who will be replacing your job with AI are the same people who championed mass immigration and outsourcing industrial production to China. It's neoliberal globalists, who are well represented in both parties.
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.
I don't know if over half of the content on the internet was AI-generated but over half of this article definitely was.
> Even that claim is suspect, but it’s very different from half of the content on the internet coming from AI.
Agree, from my experience around 70% is generated by bots.
It's much easier to generate and publish vast amounts of slop articles than to make real ones.
I thought this was obvious. It's not. I have a better summary than the link.
We're entering a paradigm shift in what "investment" means. It used to mean that for a given amount of cash, you might get returns in the realm of many multiples of the initial investment (if the risk pays off).
But at some point in an economy like ours, there is no more investment to chase. Even if you could make an investment that would bring in octillions of dollars (whatever that means) what would be the point? What could the investors hope to invest those octillions in? What could they buy with it?
Well, one of the things you can buy with it: a world of high tech luxury that you don't have to share with 8 billion other people. Those people will cease to exist (sooner or later) if they are cut off from the economy. You'd have to of course manage them in the meantime (they won't cease to exist instantly, and might cause trouble if they become aware of their pending fate), but they'll just be gone. For your high tech luxury you would need some sort of system to build and maintain the high tech luxury, a system without those humans that you intend to eliminate (even if you plan to just let them wither away)... something to build your megayachts and prepare meals and harvest the truffles and raise the sturgeons. That system certainly requires some sort of artificial intelligence.
We're heading down that path. I won't call it a conspiracy, it probably isn't one. It's just the path of least resistance.
There is almost certainly some sophisticated theory of economics that incorporates these potentialities. It would be the general relativity to orthodox economics' Newtonian. But, there would have to be economists left after all this goes down to even come up with that sophisticated theory, and those who remain won't be interested enough in the science to study economics. It turns out that humanity is fungible too.
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.
> 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.
Don’t threaten with good 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.
There's a chance AI will still need us for data/entropy.
It does today, that could continue.
>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.
And "grow the pie" ignores the reality that the distribution of benefits is often "150% to capital, -50% to labor" because capital isn't held accountable for displacing labor and labor suffers displacement risk without compensation.
This would be fine if the money reliably trickled down, but it doesn't. This would be fine if we used redistributive policy to make it right, but we don't.
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.
The article explicitly addresses this. Crushing inequality was often a side-effect of industrial advancement, and while it always went away in the past it took a lifetime to do so.
>Crushing inequality was often a side-effect of industrial advancement, and while it always went away in the past
Historically, inequality is only significantly reduced through events of extreme destruction, like the Black Plague and the world wars.
In other words, a society that ever lets massive inequality happen is just doomed. High inequality reliably stays that way until insane global black swans mildly correct it.
> We won't all be unemployed if AI takes over white collar work.
So you wouldn’t mind going from 6 figure salary to working as a cashier at Walmart, figuratively speaking? Because I sure as hell mind, given mortgage and family obligations.
Obviously I'm not immune from the anxiety everyone feels and it's going to be bad for some people. That doesn't change that historically the jobs aren't from programmer to cashier. They're from shoveling shit or screwing caps on toothpaste tubes to software engineering.
The trajectory of the West has been good for a long time and the rate of improvement is increasing.
you could still go work on the oil patch
most people arent making a six figure salary, and have mortgage and family obligations
Did they massively improve working conditions, or your software job is as bad as working in an oil patch? Mine isn’t.
> most people arent making a six figure salary, and have mortgage and family obligations
Maybe not most, but there’s sure lot of white collars making six figures. I don’t know what kind of teenage big tech bubble you’re in for the rest, but more than 70% of my colleagues have mortgage and families.
Historically that's not accurate. Automation eventually resulted in more jobs, but for the people actually living through the automation it was VERY bad.
Farms mechanized but we luckily had other jobs on hand to sponge that up. What used to be a farmhand is now a gas station worker selling zyn to a wallmart worker who sells food to the gas station worker.
However, AI is coming for them too. This time it really is different. The whole business pitch is the elimination of any safe harbor. All human labor to be automated. Why have 8 billion humans in that environment? Scary times ahead. We will probably end up culled by the machine.
In my now long lifetime, I can't tell you how many times I've heard the phrase "This time it really is different" for it to turn out that it really wasn't all that different. Maybe this time it is, but I'd put my bet on isn't.
> In my now long lifetime, I can't tell you how many times I've heard the phrase "This time it really is different"
This isn't an argument and it shows a fundamental lack of understanding of risk and game theory.
Besides, it's always been different, in the sense of boiling frog temperature going up. The present case is more different because this time, the rate of rising is high enough to make the frogs uncomfortable... and you are trying to calm them down and keep them in the water:
> Look frogs, the temps were always rising, "many times I've heard the phrase "This time it really is different" for it to turn out that it really wasn't all that different."
> Maybe this time it is, but I'd put my bet on isn't.
Bro, it's not about betting... you have to try hard to learn something about risk.
>"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).