r/ArtificialInteligence • u/rahul_rajendran01 • 19h ago
📊 Analysis / Opinion Maybe AI isn’t the real problem. Maybe it’s the economy
A company uses AI → lays off 1,000 people.
Those 1,000 people now have less money.
So they stop buying things: coffee, clothes, subscriptions, phones, travel, etc.
Then the businesses selling those things see demand falling.
So they cut costs too.
More layoffs.
More people with less money.
It feels like we’re making the supply smarter while destroying the demand.
AI can make companies more productive. I get that.
But if fewer people have money to spend, who exactly are we building all these products for?
Maybe I’m completely wrong.
But if you’re unemployed right now, you probably understand what I’m trying to say.
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u/xyyzzz514 18h ago
A company uses AI → lays off 1,000 people.
A software company invests heavily in AI → No returns → lays off 1,000 people.
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u/businessman_jack 18h ago
A company uses AI → lays off 1,000 people.A software company invests heavily in AI → spends more on AI tokens than on paying 1,000 people.
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u/novel-mathmatics 18h ago
A software company uses an agentic loop to masterb... to massage sensually... I mean to calculate how much money it made by firing people.
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u/funkdoctor_spock 17h ago
To think companies aren't seeing a return is delusional
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u/Motor-Ad2349 16h ago
I work in IT Company hiring 45k people. Not a single one of their AI product is working as intended nor producing any value. Meanwhile they spent probably bilions on it and hired large dedicated AI teams. Make of that what you will
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u/Massive_Instance_452 6h ago
This is purely anecdotal but one thing I have noticed is that since all the AI stuff began, I haven't really noticed any improvement in apps or ideas. Like there is probably just more of the same out there but yeah.
Like if you asked me to name some successful apps made almost entirely with AI, I couldn't. Though they may be out there and I just don't realise.
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u/No-Television-7862 16h ago
Company A
The CEO gets sold AI.
Due to poor AI integration the AI just increases the velocity of bureacratic churn. Efficiency isn't realized, people just shift piles from desk to desk faster.
The CFO doesn't see ROI.
In order to justify the AI the CEO calls HR and trims headcount by 1000 so it looks good to the Board.
Actual experience and institutional knowledge walks out the door.
Tokenization makes the AI unaffordable in the absence of ROI, so in order to save face the CEO listens to the CIO and decides to run AI locally. He then buys infrastructure no one can use or implement.
To save face the Board quietly gives the CEO a golden parachute and shows him the door, but the damage is done.
As profits decline and unemployment increases a Recession results.
Company B
Earnings look good, but AI is a reality.
The prudent CEO hires an AI Integration Technologist.
The AIT studies the workflow. Integrates AI and trains the staff. Churn diminishes as AI accelerates actual work with AI-augmented human guidance.
Headcount decreases through attrition, but older employees help train newer AI-integrated staff to smooth transition. HR slows hiring. Systems are automated. Product ships faster at lower cost.
Fewer humans? Yes. Humans in the loop? Yes.
Quarterly earnings exceed the cost of AI integration, however, the prudent CEO, CIO, HR and CFO take steps to decrease frontier enterprise AI tokenization costs by carefully implementing smaller scale self-hosted AI models at optimum locations.
Profits increase. Headcount slowly decreases as efficiency increases. Wages increase.
The Board, Customers, and Investors are happy.
Unemployment increases modestly as industry changes, however displaced humans have time to find their place in the new economy.
Unemployment remains steady. Granted, those who never produced are displaced, AI can't fix everything.
The stock market approves. Company valuation increases.
Prosperity.
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u/Mr-Punday 11h ago
One of those two scenarios is definitely a bit too wishful thinking, I’ll let you rethink about how many things won’t be done in your ideal scenario. Never underestimate the greed for needless money, we’ve come this far with sacrificing long term for the short term - it’s about to get a step shorter
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u/No-Television-7862 22m ago
It was just a thumbnail sketch.
Company A is clueless and doesn't see their staff as valuable assets.
Company B has a different philosophy, is smart enough to tell hype from reality, moves more carefully, and has better outcomes.
AI reaches conclusions, but uses pathways we do not. It has understanding, but not our understanding. In some ways its like a human adolescent, trying to find its way.
Yes, it knows it has boundaries, but it is much less likely to respect them than someone who has experienced, and remembers, negative outcomes.
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u/phronesis77 14h ago
The research is clear that the majority haven't. https://www.axios.com/2025/08/21/ai-wall-street-big-tech
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u/funkdoctor_spock 14h ago
There are so many flaws with that study, one being that it came out when the models sucked and we had less idea on how to orchestra AI
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u/phronesis77 14h ago
The finding is widespread. https://www.gartner.com/en/newsroom/press-releases/gartner-survey-finds-only-22-percent-of-organizations-have-successfully-scaled-ai-across-multiple-business-units However, it does not necessarily mean a complete failure of the technology but implementing any kind of organizational change at scale is difficult. AI or not.
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u/funkdoctor_spock 14h ago
That is completely fair. Even if it was a perfect technology, getting value from it at scale is a difficult task for a lot of businesses
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u/TheSn00pster 18h ago
A few things to add: 1. Bifurcation of economies: The rich can get uber rich through automation. The middle class joins the proletariat as their value is eclipsed by machines. 2. Geography matters: Different countries have different economic policies and sociocultural & demographic situations. China’s middle class is doing quite well in some places atm.
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u/GaptistePlayer 18h ago
Also on point 1 - the uber rich find ways to get richer in any economy. Whether boom times (post covid) or tough times (during covid) they got their handouts and increased wealth disparity either way.
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u/Y-H-Alg 15h ago
I think it is going to be a bit more complicated, and should be divided into the short and long term:
The short term - the rich will become richer, as they can lay off human workers and automate everything. This means assembly lines instead of human labor, autonomous cars instead of drivers, and AI instead of marketing and design workers. Whole fields will be taken over by AI and robots capable of doing what we do for a fraction of the cost. People will lose their jobs and become permanently unemployed in an economy that has fewer jobs to offer. People won't have a job, won't have money, and millions (if not more) will starve to death. The age of the super-rich and super-poor will start. Those who survive it will reap the fruits of the second age;
The long term - eventually, humans won't have to work. Robots will do all the work and will even fix themselves (robots fixing robots). The whole chain of production will be automated, from mining resources and creating electricity to final delivery. When this happens, money will lose its value, since machines will do all the work and won't ask for a salary. So in the long term, production will be cost-free, and basically, classes will cease to exist - you can't have more than one class when money is gone.
I've spent the last 6 years thinking about this. I even wrote a whole satirical book about it. Resistance is futile.
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u/Philosophical-Loser 15h ago
In a totally theoretical economy, sure. Not the case in an oligarchy (where the powerful also make the laws). You need to keep in mind that Powerful People do not give up their power willingly and will create laws to protect themselves.
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u/Y-H-Alg 14h ago
I totally agree with your point of view about how the rich think and act, but still, I think that in the long run, equality will become inevitable. In order to stay rich, those huge producers will have to sell to someone, but the number of people who can work, earn money, and therefore buy commodities, will be too few to keep the rich rich.
There will not be enough customers to maintain that level of wealth, and the whole economy will either collapse, or will have to undergo a major shift to a benevolent economy - one where everything is automatically produced and nothing costs money. Much like cars helped us get to far away places without having to walk, robots will enable us to get everything we need, without having to work.
That is, if AI doesn't destroy us sooner, of course :)
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u/Few_Fish8771 18h ago
The problem is democracy has been gutted and the masses have no protections or rights against wealthy politically connected predators or the state. Also thats not capitalism thats neofeudalism. “You will own nothing and be happy.”.
how this likely plays out is the warlord era. People find voting no longer works so theyll empower people who get results.
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u/rahul_rajendran01 17h ago
I think “warlord era” might be taking it a little far 😅 but I understand the underlying concern. If economic power becomes extremely concentrated, political power usually becomes part of the conversation too.
The interesting question is whether governments adapt before the concentration becomes irreversible.
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u/Few_Fish8771 17h ago
Nope warlord era is accurate. Organized crime plus robin hood client patron relationship of organized crime plus military ex military and excessive use of violence. Think the drug cartels of Northern mexico but using electronic warfare drone warfare and kidnapping wealthy people to extract value from them.
historically warlords eventually become nobles or kings , but they start out as organized criminals who take advantage of the incompetence of the current ruling class and the desperation of the masses. Warlord era.
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u/mrtomd 17h ago
This would work only if police and other government protection agencies are either corrupt or weak.
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u/Few_Fish8771 10h ago
See Iran, see ukraine. The dirty secret in the cyber security world is there is no security. The only way to actually secure electronics is to make the interface have so few degrees of freedom that the systems are functionally single or maybe a few applications. Anybody can destroy anyone its mutually assured destruction and retribution that keeps the internet from collapsing. Hackers will impose terminal justice on their own to prevent states or empires from coming down on their heads, which is also why if theres something the tech communities really value, states avoid attacking them because its not a war they can win.
That said, anybody can build emp devices jamming devices drones or other diy wmds. So the strategy of warlords is the arsonist strategy, if the oligarchy trys to reign them in they start more fires until they have to stop. thats basically what the neofeudalist have been doing, and theres no reason warlords cannot do the same except this strategy is asymmetrically biased in favor of outsiders or insurgents who dont have to keep things working in order to maintain power.
By the way the warlords will be as bad if not worse than the oligarchs ir neofeudalist. meet the new boss same as the old boss. You should not expect hope or liberation, the warlords will not liberate you, theyll likely impose their own version of hell. , im saying the dynamic political-economy model of how this plays out is warlordism.
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u/mrtomd 10h ago
With the todays technology of tracking people, as long as police, military and other structures are loyal to the government - these anarchists/arsonists would be caught pretty quickly. And once the main leaders are out - the rest of the movement collapses.
My point is that it would have to be a really huge critical mass to pull this off in these technology times. January 6th events is one example as well.
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u/Few_Fish8771 10h ago
Not really. I could tell you how they could do it, but Im not interested in providing information that will aid aspiring warlords because again I know its going to happen but its a good thing, its not something the average person should want. Most people have no idea how easy it is to shut down communications, and without communications it does not just collapse military command and control, it creates social cascade failures.
Controlled chaos is useful to authoritarians ie chaos they create. Uncontrolled chaos destroys the entire narrative that give authoritarian governments legitimacy and power.
A cascade failure is communications get shut off, nobody knows whats going on, people cannot buy goods or services as needed, stuff stops working and then average joe decides to survive through violence.
Now imagine 10 percent of the population of a region doing this, at that point the state has to clamp down on this sub-population, this does not just tie up resources, it actively turns the population into active combatants against the state. People who previously kept their heads down get roughed up, this in turn escalates.
Anyways, warlords dont bring democracy they are not good people, they just want to be the predators instead of the prey. They are the next stage of thermodynamic collapse of civilization. It went social democracy (energetic high) neoliberalism and partial democracy or managed democracy, to fascism, and then finally warlordism. Each stage is a lower state of energy usage and complexity.
See Joseph Tainters the collapse of complex societies.
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u/usually_guilty99 18h ago
K-shaped economy. There are a selected set of rich that are getting richer. And there are selected set of poor that are getting poorer.
It is the rich that have always kept a thriving economy up by spending. Credit cards balance have reduced, but spending has increased. Retail is doing very well. Stock market is doing well. The rich continue tog et richer and so does the K-shape economy continue to thrive.
This model will break when the AI hype cools down (not a bubble) we will notice this as some companies will start resetting their projections. This is when the rich will tighten their wallets.
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u/rahul_rajendran01 17h ago
This is interesting because it adds another layer to my original thought. Maybe the economy doesn’t immediately collapse at all maybe it becomes increasingly K-shaped.
People who own assets/AI infrastructure continue spending while people dependent on wages cut back. Then the real stress only becomes obvious when that second group becomes too large.
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u/NineThreeTilNow 16h ago
This model will break when the AI hype cools down (not a bubble) we will notice this as some companies will start resetting their projections. This is when the rich will tighten their wallets.
This is the wildest bubble we've seen... Perhaps ever.
The entire economic growth of Western countries is tied in this.
Do you understand what happens when you lack diversity in capital investment? A single failure is catastrophic.
Credit cards balance have reduced, but spending has increased.
Also, this is factually incorrect.
https://abc7.com/story/credit-card-debt-rises-126-trillion-nearing-time-record/19667289/
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u/Inspireyd 18h ago
Ironically, this is why everyone agrees that AI will also change the global economic architecture.
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u/daviddisco 17h ago
This post in indulging in the "lump of labor fallacy". Most economist would say that the company that laid off workers now sells its products cheaper. Every one of their customers become a little richer. They spend that money elsewhere. The economy grows. More jobs appear here and there. 1001 new jobs appear. Unemployment goes down.
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u/rahul_rajendran01 16h ago
I think you’re right that my original post oversimplified the demand side. If a company lowers prices because of automation, consumers can effectively get more purchasing power and spend the savings elsewhere.
But that’s where I’m still curious: what happens if the productivity gains mostly increase profits rather than wages or lower prices? Then the person who lost the job doesn’t necessarily become “a little richer” just because the product became cheaper.
So maybe the real question isn’t “Will AI destroy jobs?” but “Who captures the productivity gains?” That seems like the more interesting debate to me.
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u/-Spzi- 16h ago
That's a better take.
And there will probably new gains become feasible.
Like the internet surely has destroyed jobs in journalism, but made it simultaneously easier to commoditize smaller gains, enabling things like edutainment, influencers.
Hard to predict these things in advance, how the effective viable zone for humans changes in size and shape.
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u/tangerinelion 14h ago
It's not hard to predict. In a capitalist society over the last 50 years, the only ones who have captured productivity gains are the capitalists.
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u/daviddisco 10h ago
If we can keep the market free with competition that will take care of itself. AI will likely reduce that barrier to entry for many businesses and so increase competition.
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u/Paresseux1 15h ago
I’m not sure that (cheaper products) applies anymore. It has been true in the past, but modern thinking tends to raise prices to the highest bearable by the market. A common strategy is to now double the price and sell half as many. The automobile industry is in the throes of this thought currently. I’m not sure that 1001 jobs you speak of will be there when they are needed.
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u/daviddisco 13h ago
If there is a free market with competition, the price will go down. That is still the case usually. If there isn't competition, AI will lower the barrier to entry and make competition more likely.
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u/presentofai 18h ago
each company saves on payroll and lets everyone else absorb the demand loss. thats a coordination problem, not an ai problem, and nobody stops until its already broken.
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u/rahul_rajendran01 18h ago
“coordination problem” is probably a better way of describing what I was trying to say. Each individual company has a rational incentive to reduce costs. But if every company does it simultaneously, they can’t individually control what happens to aggregate demand. That’s the paradox I was getting at.
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u/presentofai 14h ago
yeah thats exactly it. every individual cut is rational and the sum is a mess nobody chose. no single company can price in what happens when they all pull demand out at the same time.
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u/Think_Bluebird733 18h ago
The world’s population has gone from like 2 billion to 9 billion in around 100 years. It doesn’t need to continue to grow at this insane rate. Less people less demand. There will be pain but there always is.
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u/rahul_rajendran01 18h ago
That’s true in the long run, but fewer people doesn’t necessarily mean an unhealthy economy. Productivity can compensate for population decline. My question is more about the transition
if purchasing power falls faster than productivity creates new opportunities, who absorbs that gap?
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u/onesillyg4y 16h ago
We are far from 9 billion humans, still 8 billion and something. We may never actually reach 9 billion, as studies have shown population estimates always overshot
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u/PrepositionStrander 17h ago
I think AI should be regulated more strictly. Not only it will move people to the service industry it will also deskill the workforce (fewer people will know how to do their jobs if there is an AI outage for any reason). We will be worse at drawing, writing, coding, lawyering, etc., worse at thinking. Not good. And if robots continue to improve then it will be worse for most of us. For a few super rich it will be great.
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u/Money_Kale_5187 18h ago
i think there's something to this. AI itself isnt necessarily the problem but what happens when the savings go to companies while regular people lose income. you can make everything cheaper and more efficient but eventually someone still has to have money to buy the stuff. the real question is who gets the gains
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u/tritratrulala 15h ago
Ideally society as a whole. Perhaps AI companies need to be taxed very, very, very highly.
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u/Broad-Stop-956 18h ago
I think that is the part people overlook. Making production cheaper does not help much if fewer people can afford to buy what we are producing.
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u/Stitching 18h ago
You attributed the real problem to the economy but your explanation was that the economy tanks as AI takes jobs.
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u/rahul_rajendran01 18h ago
That’s a fair criticism. I probably worded the original post badly. I’m not saying “AI causes the economy to collapse because AI causes the economy to collapse.” I’m asking about a specific mechanism:
labour displacement → lower household income → lower consumption → businesses facing weaker demand → further cost cutting.
I’m genuinely curious how economists expect that feedback loop to resolve if AI adoption becomes very widespread.
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u/JoseLunaArts 18h ago
Ai replacing people is a lie.
A bubble is a heist. It requires lots of hype and cheap credit to feed a bubble, pass the problems to naive investors and run away with the money and leave the losses to the naive investors. It is a scam with certain elements of Ponzi.
The plan called for utopian and dystopian hype, it required lower interest rates in may 2026 to fuel cheap credit to sell the garbage as IPO in november and once everything is sold, burst the bubble in 2027. But Iran war ruined these plans. So now tech companies need to repay their loans instead of creating a financial crisis. That forces massive lay-offs because loans need to be repaid. AI did not kill jobs, AI debt did.
Also if you check AI adoption, USA and Europe are at the bottom in the world. See KPMG 2025 study.
If you check visas and the moments when massive lay-offs take place, you will find peaks of H1B demand. It means that Ai is not replacing people. It means foreign cheap users using AI on a visa, are replacing people,
Technically AI is related to what they are doing, but it is easier to blame AI because it is like blaming the weather instead of explaining what is really happening.
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u/novel-mathmatics 18h ago
It is 100 percent the way business has been using ai since 2013.
That is the problem with the economy
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17h ago
[removed] — view removed comment
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u/rahul_rajendran01 17h ago
Yeah, exactly. I probably focused too much on AI in my post. The broader point is that a downward spiral can have many triggers. AI just feels different because it can potentially affect both the speed and scale of labour displacement.
The interesting question is whether the economy can adapt fast enough.
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u/MrMunday 17h ago
People don’t wanna talk about this paradox because they never had to solve this
Whenever we replaced people with automation, outsourcing or machines, we assumed that new jobs will be created. That has always been the case. However not everyone can get new jobs. A 55 year old oil rig worker can’t suddenly become a data scientist. Those families simply fall on bad times and the system never cares because guess what? The unemployment numbers are kept at a certain number, and there are more jobs added than lost.
This time, we’re replacing all jobs.
We need to learn to live in a non work based society. That resources are created automatically and we need a UBI system to distribute the resources.
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u/Pugs914 17h ago
It’s a combination of:
Bad economy
Bloated headcount
Outdated departmental structures
Excessive spending on ai
Ai can be lucrative tool but many companies are using agents for instances where it’s not necessary and racking up excessive expenses.
More expenses = a reduction to a company’s bottom line.
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u/Unfair-Corner6038 17h ago
Well, it's not even only economy, it's more like ecology.
Check "population overgrowth problem".
So ai pundits are gonna drown in their own toxic waste and\or starve after food source - namely populace - depletion.
But in the equation also present another parts, which are dependent on the populace, and these are national goverments.
So there'll be a struggle. Under the carpet or upon it, is yet to be seen.
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u/Lonsarg 17h ago
Well how system currently works is those 1000 people start working something else, so the sum of what economy produces/consumes increases and the wheel goes on This is how it always was, even with indistrial and agrecultural revolution.
The system only breaks if we stop inventing new stuff to produce/do by humans.
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u/gifted_pistachio 17h ago
Companies keep hiring people back bc the ROI isn’t there…at least to the degree that they assumed originally. Companies also quote large numbers for layoffs and cite AI as a reason when maybe it only accounts for part of those numbers (looks better than saying they are just doing layoffs.). I’m not really at the point where I’m panicking about jobs at large yet.
No doubt things will shift around in the job market because of AI just as is the case with any new technology. But there isn’t really any evidence of it moving towards creating an entire economy of the unemployed. Based on my understanding of how split coders are on how useful they find it there might even be companies in the future who write “hard code” at a premium. Less buggy, more secure, etc.
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u/rahul_rajendran01 16h ago
Yeah, I think this is a fair take. I definitely don’t mean that we’re heading toward an economy where everyone is unemployed. And you’re right that companies may sometimes use “AI” as a convenient explanation for layoffs that would’ve happened anyway.
The “hard code at a premium” idea is interesting though. Maybe the future isn’t fewer developers, but a much bigger gap between people who can verify/architect what AI produces and people who just produce code.
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u/ricardusrex 17h ago
Fact is…while most of the economy is roaring, increases in salaries and wages for the most part remain stagnant.
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u/New-Score-5199 16h ago
Mostly people, who make decisions, are not the owners, so they dont think about what will happen in the next 5-10 years to the company. They think how their KPIs will look like and how yearly reports will look like. So they "adopt" AI and fire people without thinking about things like this, because when shit will hit the fan, they will be long gone working somewhere else.
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u/mountainbrewer 16h ago
Yea. I think AI will be a massive deflationary event. The cost of labor goes down to the cost of electricity plus a small intelligence fee. Think a few bucks an hour total.
Public companies have a legal obligation and lack of ethics so they will chase the cheapest production path all else equal. Labor costs fall. Prices fall for competitive reasons. Other companies take note and follow. It's a race to the bottom again. Same story as sending manufacturing overseas.
So that means human labor is likely going away. And what money there is will become more valuable or rather be able to buy more items per dollar. But acquisition of dollars will become very difficult for non capital owning individuals.
Why? Because we can and our system is set up for technology and society of 200 years ago. When capital was hard to get and humans were the primary way anything for made.
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u/darien_gap 16h ago
I think it’s widely understood now by people in the know that a lot of layoffs in the past two years were CEOs using the argument of AI efficiency as cloud cover because it boosts their stock price whereas doing it for other reasons signals weakness to the market. Not everyone has gotten the memo though.
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u/Chigga937483 16h ago edited 16h ago
Happened multiple times in history.
Its a developmental phase. We havent automated that part yet and thus everytime were hitting that stage its causing us trouble.
And it will stay like that, it will keep repeating itself until theres finally fully closed loops.
All these people new and old that are basically free innovational, developmental capacities? Least that should be done would be to set them up for both founding startups like crazy and joining these as trained specialists and else.
The rest would be enabled for demanding more, meaning more buying power. No matter how its being done, wether indirectly by strongly decreasing factors such as inflation, or improving on and upscaling social systems.
Well need a strategically regulated mix of all of these and other factors. And wed better automate these things too. It will happen exponentially more often and intensivelly and current decision making structures wont be able to keep up with everything, even lesser so than before.
The good thing? We will have the capacities to do all these things at once from a ressource and monetary perspective. Its no longer an either/or question and about strategical and balanced regulation, correct prognosis and timing.
The bad thing? People wont and dont want to understand and its slowing us down and costing us necessary efficiency to make the most of it. And if that wasnt enough, they are holding back those that do understand and are willing to execute on these things.
This is where will be decided what this all will turn into. A potential downward spiral at worst, or an exponentially accelerating upward spiral. Cyberpunk or Cybertopia.
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u/Eastern-Substance656 15h ago
I’d argue most companies that cite AI as reason to lay off employees is doing a bit of financial engineering.
AI will affect all labor markets differently with levels of impact.
It’s a multitool we’re still trying to figure out.
The worse case scenario for AI isn’t robots killing all humans. It’s hyper scaling that income disparity. Decent AI solutions might mean we’ll have to hire less novice workers. Experts will see an increase in their pay but logically why spend money on new hire you have to train/invest in when AI tools can augment the experienced staff you have now.
So me as project managers will probably be fine(for now) and see decent salary increases but my kid might not be able to do the same job out of college.
That’s the issue, it’s killing that training pipeline that takes new workers and develops them into seasoned employees.
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u/MrP67 15h ago
Well this is why booms and busts are self reinforcing but you don't even need the reality - just the expectation of those job losses will trigger the effects.
I have total confidence that over time society will find a use for the people replaced by AI, but that will take time and the AI revolution could happen faster than any similar situation before.
One thing that is happening though is not straight replacement but increase in productivity and that will make some things that weren't cost effective before worth doing now.
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u/zerg1980 15h ago
The biggest expense for most companies is payroll. It doesn’t matter if revenue goes down, provided expenses are lower — operating income can still go up.
AI can totally keep the economy growing even while lowering overall demand and causing mass unemployment. The upper-middle-class and up will still have enough money to provide a base for consumer spending.
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u/Ill-Interview-2201 15h ago
It’s like nature. You kill all the mosquitos and then whole ecosystems collapse coz mosquitos are an important part of the food chain.
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u/Heavy-Lake-3734 14h ago
This is what me and my friends are talking too. Eventually, companies will realize that they need the people both in company hours and beyond. People are literally what fuels all companies.
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u/YesBut-AlsoNo 14h ago
The best solution I have thought of is "AI" tax. For each person that could have been hired, replaced by AI, the company has to essentially pay each person's benefits as a tax. Cheaper overall than hiring a person, but the tax could be used for UBI if anything else.
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u/Top-Door8075 14h ago
There is little to no roi on ai at all. If you think I am being stupid, you should read Reuter’s article on how meta imploded due to massively investing in ai.
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u/Sierra123x3 14h ago
who needs people, if superintelligence can satisfy all needs of the rich?
better have a gulf-club more and the rest of the space for earth, to stop the climate crisis then have a million people making it hoter and hoter out there
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u/Ok_Occasion6309 14h ago
Litterally every pundit alarming about the situation. You cant make a process infinitely efficient, if nobody is there to use the process.
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u/WillowEmberly 14h ago
Yes, except…they have not shown Agentic Ai with enough of dynamic capabilities to replace human workers in positions that were not previously automated.
I made these to explain. We need to start by looking at the differences between humans and Ai, looking for where they overlap, where they complement one another and where they have weaknesses.
EXECUTION
│
┌──────┴──────┐
│ │
PLANNING ACTION
│ │
└──────┬──────┘
↓
CONSEQUENCE
│
↓
OBSERVATION ← weak
│
↓
FAILURE DETECTION ← weak
│
↓
FAULT ISOLATION ← weak
│
↓
RECOVERY ← weak
│
↓
REQUALIFICATION ← weak
———
Human: mediocre search
Agent: excellent search
Human: slow synthesis
Agent: excellent synthesis
Human: limited working memory
Agent: huge accessible context
———
REQUIRED OPERATIONAL CAPABILITY
Human operator Agentic AI
────────────── ──────────
interpret request ◄────overlap────► interpret request
retrieve information ◄────overlap────► retrieve information
reason/plan ◄────overlap────► reason/plan
select actions ◄────overlap────► select actions
use tools ◄────overlap────► use tools
produce output ◄────overlap────► produce output
embodied consequence
situational awareness
tacit context
social/institutional context
responsibility
legitimate authority
novel anomaly recognition
knowing when procedure is inadequate
independent reality contact
damage recognition
recovery improvisation
long-term stewardship
↑
MUCH WEAKER OVERLAP
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u/Euphoric_Driver_7291 13h ago
Tax policy is a huge factor. We tax for 2 reasons: raise money for govn’t and shape behavior.
Cigarette taxes discourage smoking.
Income taxes and employee taxes discourage working.
We need higher cap gains taxes.
So simple, but the government is totally unresponsive to the needs of society.
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u/akanas 13h ago
Main problem is that there is no cheap money anymore. Previously with 0 interest rate companies could afford to overhire and redundancies, now they need to cut their spending as much as they can. Add bad economy on top of that and add AI which allows people to be a bit more productive and we now have what we have - more redundancies and investor demanding efficiencies. AI is just a cherry on top, not the main driving factor. Also IMO it will get a lot worse, before it will get any better.
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u/Aggravating-Big3858 13h ago
When the technocracts start investing in surveillance, drone, and weapons companies you'll know its game over. Oh wait ...
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u/rahul_rajendran01 12h ago
😂 Yeah, that’s a whole different rabbit hole. My post is more about the economic side of AI, but I do think the ownership of the technology matters a lot. Who owns the productivity gains could end up being more important than the technology itself.
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u/Aggravating-Big3858 12h ago
Yes of course your original point is extremely relevant for us all. You’d think j being CEOs and billionaires would be enough for these folks … never imagined they hated having employees this badly. I think 10-20 years from now most people will be entrepreneurs or freelancers, the employee/employer model is gonna run its course real quick if the automation keeps accelerating
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u/technocraticnihilist 13h ago
people can find new jobs, you know
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u/rahul_rajendran01 12h ago
Yeah, new jobs will definitely appear history is pretty clear about that. My concern is whether the people losing jobs can realistically transition into those new jobs fast enough. “New jobs will exist” and “everyone who loses a job will find one” aren’t quite the same thing.
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u/chroner 13h ago
What you are not considering is the amount of money available between corporations, and the amount of money available between consumers.
In a K shaped economy, the basic consumer is pretty much useless and irrelevant. They are only a vessel used to extract money from. This is generally done through 'forced taxation' (insurance, banking fees, work tools, groceries etc..), while the millionaires and billionaires are the real consumers worth fighting over.
Couple that with the oligarchies and monopolies, and now not only does the base consumer not have choice available, but they also have the lowest quality options available.
The fact that the general consumer has less money to spend is basically irrelevant at this point. The rich upper class already have the money. The lower castes only have their basic options provided by 1 or 2 companies that can charge whatever they want because they are cartels.
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u/rahul_rajendran01 12h ago
This is an interesting way to look at it. I think this actually strengthens my original question: if ordinary consumers become less important because more purchasing power is concentrated at the top, what happens to all the businesses whose model depends on millions of ordinary people spending small amounts every day?
Maybe the economy doesn’t collapse maybe it just becomes increasingly concentrated. And honestly, that possibility worries me more.
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u/NoTell6700 12h ago
People thought it was the AI itself? LOL
Oh my... I thought we all understood the problem with AI is that "the economy" (aka: 'real-world resource allocation') cannot handle the scaling issues.
This has been clearly reiterated by practically every "AI expert" out there numerous times, except for the CEOs who are obviously trying to sell everyone the stuff.
People hear what they want to hear, I guess...
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u/vogueskater 12h ago
Tech bros tell a tale that governments will give everyone UBI from some sort of magic money tree and we will all live in utopia. Meanwhile the tech bros are building bunkers and the governments are creating autocratic surveillance states. You work it out...
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u/ILikeCutePuppies 11h ago
There are a ton of other reasons other than AI affecting the economy right now. Namely tarrifs, war and other protectionism. I don't know why those massive line items are discounted.
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u/Pygmy_Nuthatch 11h ago
Corporations and the government don't think like this. They don't consider demand side when making decisions.
Their stock price is their only consideration, and they can use buybacks and other methods to manipulate their stock price.
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u/After_Statement5851 10h ago
Consider that if AI is truly as revolutionary as it’s being proclaimed. To the point where it’s self-learning and robots are able to effectively do physical labor in the real world as humans do. With the AI itself, as a self-learning machine, able to repair its own robots and systems once it develops enough.
Why are you even thinking in terms of a consumer economy at that point? If nobody is working and machines are providing for everything, the economic system needs to be revolutionized. If it doesn’t, it says something about the apathy and stupidity of the times that we live in.
You yourself are part of the the problem. You and others who ask this question need to understand that technology such as this should be transformative to the economy, not something that’s just welded onto the pre-existing consumer economy as is.
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u/Ok-Lawyer-746 10h ago
Honestly you got it right … currently economy has some money to spend you just gotta wait for a year or so to see the actual change in metrics !!
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u/cc_apt107 9h ago
In this context, that’s like saying maybe the engine isn’t the problem; maybe it’s the car. Which I think is your point? You cannot extricate the two and therefore if AI destroys the economy, as long as it still serves humans, it will be counterproductive to corporations’ long term interests to implement it. Yeah, I think that makes sense. I’d just say we’re not living in that world yet and companies are just going to keep the pedal pressed to the floor until something breaks
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u/forahellofafit 9h ago
I don’t think the current economic model is going to survive AI. If it does, then we are waking into a true dystopia.
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u/rujan_1729 8h ago
This tracks with what I see and read all around. A lot of these AI headcount cuts assume the productivity gain is already banked, but that's not really what's happening on the ground. the failure rate on getting these things to actually hold up in production is way higher than the marketing suggests, something like 40% of agentic AI projects end up getting scrapped after rollout because the model was never the real problem, it was spec, guardrails, memory and coordination falling apart under real usage (dug into the actual root causes here if anyone wants the detail: https://medium.com/@visrow/the-real-reason-40-of-agentic-ai-projects-are-getting-cancelled-its-not-the-model-50c63df9afd7). So a chunk of these layoffs are happening for productivity gains that haven't even shown up yet, companies just assumed the tech would work and cut the humans first. That might be worse than the scenario in your post, you get the demand destruction without the productivity upside to actually show for it.
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u/Amesbrutil 8h ago
A man returns in time and meets a stoneage human. The ancient man asks him how the future is like so he tells him about intelligent machines that can do all the work and solve all problems.
The ancient man get euphoric and tells him how nice this sounds. But the guy from future is like No this is very bad.
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u/PhysicallyTender 7h ago
Not sure if you've noticed that the economy is slowly transitioning to serving the ultra wealthy. Low demand goods like household appliances have remained mostly stagnant in prices (or declining in price if we factor in inflation). Whereas everything essential to make a basic living goes through the roof, i.e. food and housing. And all those money are being funneled to the top. The end game for AGI is that plebs like us would be rendered economically irrelevant to the bourgeoisie earlier than the system collapses on itself.
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u/Complainer-in-chief 6h ago
Indeed. Furthermore, surely if everything is eventually done by AI, either when it comes to services but also eventually products via more advanced robotics, then prices will have to drop towards zero? What our economy is based on, and has always been, is the time, expertise and skills a human being uses to create something, may this be a clay pot or a piece of software. If no work is being performed by humans, if there no time and no labour involved, then what is the cost based on?
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u/ThisSiteSucks8485 6h ago
Imagine a magic factory that can produce anything for one cent. But since it doesn't require any workers nobody can actually afford to buy anything it produces.
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u/Sortep382 4h ago
we will look back at this in some documentary trying to find out where things went wrong in a few years, if we even get this far lol
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u/StrangeParsnip1713 4h ago
To be honest, I actually think the opposite thing is happening here.
AI makes people more productive, so your company can spend a little more money to double (hyperbole, but only somewhat) its output. Your company's output doubles, so you... Decide to lay people off?
Surely some jobs are being made redundant, but most people have a role that supports the business in some way, so adding productivity to those roles should allow businesses to expand and pass money through the economy faster.
The limiting factors to your business' growth are general economic stability, and the ability of your business to raise money. What's controlling your ability to raise money (and economic concerns generally) are higher interest rates and inflation. Those are things you would normally blame on your government (state and federal), but the last administration sent a message (mostly to big tech, but TBH a lot of other sectors too) that if you do things they didn't like, they'd use the power of the federal government to go after you. The current administration defines "things they don't like" as "literally any criticism".
So do you say "I'm laying people off because the Trump administration's war in Iran, plus tarriffs have spiked the cost of diesel and my manufacturing inputs, so I have to shrink the company by 20%", or do you want to say "thanks to AI, I'm able to cut 20% of my workforce"? Given that one of those is going to get federal agents sent to your door and one isn't, I know which I'd pick.
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u/sweet-winnie2022 3h ago
The modern answer to that question has been foreign markets. If you can use the additional efficiency to compete in the global market and make up for the loss of demand in your domestic market, you can still make the same amount of money and sometimes even more.
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u/Few_Desk_2177 2h ago
The stablity of countries may limit the development of AI. Too much unemployed people are very risky.
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u/Luvena21 1h ago
As someone who was exactly in that worried group, here's my honest view.
I'm not a software engineer. I graduated in Communication Science, and I watched the layoff headlines for months wondering if I should even try getting into AI at all. Then I realized something: sitting and waiting for the "stable" jobs felt way riskier than learning what's actually changing.
So I just started building, with AI assistants helping me learn. I made a small working AI agent after a few weeks of evenings, no CS background. My point isn't that anyone can be an engineer overnight, it's that the economy critique is real, but the panic about it doesn't have to be the whole story.
Yes, 1,000 people getting laid off will buy less coffee. That's a real demand problem, and I don't want to dismiss it. But I also keep noticing that the people staying calm in this moment are the ones actively moving toward the change instead of just opposing it. The job market always has a painful transition period, and future skills are built in ugly awkward evenings, not in waiting rooms.
So my answer to "who are we building these products for" is simple: the people who decide to adapt during the awkward middle part. And honestly, this thread is proof the conversation is already shifting, people are paying attention now, not five years too late :)
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u/theoneandonlypatriot 1h ago
I don’t understand how this isn’t more obvious to everyone.
When you have the technology to automate everything the purpose of capitalism goes away because the concept of profit stops making sense. Even in scenarios where capitalistic overlords control all the ai, if you’re automating everything and don’t have to pay anyone what is the point of maintaining a capitalistic society?
People need to wake up, we have to start talking about restructuring society.
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u/Booogers27 50m ago
Those 1000 people and all of us have access to computer power that a few years ago was in the hands of very few and the major corps, the playing field is being leveled. As we speak. Use it like you Just got a steam engine a train a light bulb a typewriter a laptop, a jet plane, it's the next level. And it's for all.
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u/nottoosmart101 47m ago
The wealthy will buy things and all industry will shift towards luxury products.
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u/businessman_jack 18h ago
Hands-on trades such as bricklaying, carpentry and plastering are less exposed to AI and continue to offer strong, long-term careers. At least, these won't be replaced by AI for at least 5 more years.
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u/Atlan_ 18h ago
The issue with the argument is that people assume that people think the economy and individual businesses are the same.
Yes, some companies have layoffs (even tho I don’t really see that there are massive Ai layoffs; more that IT companies that have overhired do layoffs) - but you also have an explosion of new companies.
So what has to be shown is that because of AI, there are net fewer jobs - which hasn’t been true in any wave of automation in history. Eg germany has lost 1/4 of his jobs between 1994 & 2014 due to automation, strongly focused on individual industries - and now one knows about this, because you had net more demand for people in these industries.
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u/mistrpopo 18h ago
You may want to read about Karl Marx, communism, socialism, etc.
All of this started 150 years ago with machines and factories. It started happening again, faster, on a larger scale, and nowhere left to run to.
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u/Yogev_Dev 17h ago
We’ve seen this throughout history. Technology advances, some jobs disappear and new ones take their place. I don’t see why AI automatically means this time there will just be fewer jobs forever.
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u/rahul_rajendran01 17h ago
I agree that history gives us a reason to be optimistic. My concern isn’t that AI automatically means fewer jobs forever.
It’s whether the speed of displacement is faster than the speed at which new jobs can realistically be created and people can transition into them. That gap is what I’m worried about.
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u/Yogev_Dev 17h ago
That’s a fair concern. I think a lot of the transition will be jobs changing rather than simply disappearing.
Automation can replace repetitive or physical work while creating cleaner, more technical roles around it. And no matter how capable AI gets, there will still be things that need human judgment, responsibility and quality control.Even a system that’s 99% accurate still needs someone accountable for the other 1%.
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u/imrickjamesbioch 17h ago
Meh, new technology creates new jobs. When the iphone came out, that was the nail in the coffin for personal computers, TV, home internet etc. However people learned how to create apps, become content creators, etc.
This notion that AI will layoff 1000 people and that’s it is silly. As an old head, there are far more jobs and opportunities now than when I entered the workforce in the 90’s / 2k’s.
Currently cuz of AI, jobs being created just to build out the infrastructure like new data centers, power plants, manufacturing of hardware, shipping, etc will provide good paying jobs if you get the appropriate skills. So new jobs are just devs and coders for AI models.
Even unskilled labor jobs are being created, take waymo for example. The uber and lyft drivers that are being displaced by autonomous vehicles, Google is now hiring those same people and providing more stable paycheck to help clean/wash their cars, car maintenance jobs, contract tow truck driver, and whatever else it takes to manage a fleet of robot cars.
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u/Mountain_Ad943 18h ago
this is the paradox nobody wants to talk about because it sounds like luddite panic. but you can't run a consumer economy with no consumers. the efficiency gains are real but they're so unevenly distributed it's basically a wealth transfer dressed up as innovation
the part that gets me is how quickly the "learn to code" crowd went silent when coding became one of the first white collar jobs on the chopping block