The dead economy theory

It’s great this debate is happening. The people on hn are some of those that can make a real impact here. There are many parallels with the industrial revolution here but we really don’t want to repeat a over a century of misery that occurred after that era. If we don’t want the world to be run be a tiny group of trillionaires, some action needs to be taken now

The article doesn't seem to take his train of thought quite far enough.

If AI suddenly makes it possible for a law firm to be run with a skeleton crew, then what's stopping all those people you fired from starting new law companies, where AI also does most of the work, and competing with you for the same market?

And ultimately, if AI gets to be so good that it can competently do a lawyer's job, what reason do big law firms even have to exist? Who is going to hire them if they can just hire AI?

The companies that are rushing so hard to replace their workers don't realise that AI is eventually going to replace them too.

I foresee a wave of entrepreneurship coming. AI will empower more people to provide useful services directly to other people, with less middlemen and menial work, and more direct problem solving.

Not many people see that the end result is that when ordinary people stop earning money, and stop buying products, all the money will be used purely for B2B transactions.

Money will still exist, but people will not see hardly any of it. To break out of being just a person and start a business you will still need money, but be unable to get any.

Thus, the endgame is revealed. You don't need to form a dictatorship, you don't need to have a war, you just need to remove all real choice from people, and then you have complete control over what they are able to do by simply making it cost too much. There will be a firewall between ordinary people, and the people who own businesses where all the money sits.

We see the start of it already, when just two individuals have a combined wealth on the order of a trillion dollars. That inequality is not going down, only upwards.

Sure, you may get universal basic income, have a nice house, car (food, clothing etc of course) but there will be a massive air gap between what you could obtain in a lifetime and the minimum you would need to move from that situation into the world where the real money is.

Corporate saving rose by nearly 5 percentage points of global GDP between 1980 and 2013, and since the 2000s the corporate sector flipped from net borrower to net lender in many advanced economies — the "corporate saving glut." Much of it just piled up as cash reserves. Currently, 10–15% of GDP per year flows into corporate retained earnings never to leave. Think about the long term ramifications of that for you and your purchasing power.

AI didn't make this situation, it is just speeding it up.

This article, like Citrini research's scenario before it, misses much of the economics.

AI is unlikely to be as revolutionary as is presumed. It's definitely going to lead to increased productivity, and will probably render some jobs redundant, but it's unlikely to have a significant effect on wages/employment [1], and as of now there isn't one [2]. When it does effect workers (which is still uncommon), AI mostly leads to task reallocation.

Right now, AI's massive valuations seem more like a reflection of the typical speculation that accompanies major technological innovations (thinking IoT, railroads, automobiles) than of its real economic value [3].

The "dead economy" scenario would only be possible in the event of extraordinary, and extraordinarily-unlikely levels of AI-driven unemployment.

[1] https://economics.mit.edu/sites/default/files/2024-04/The%20...

[2] https://www.nber.org/papers/w33509

[3] https://www.foreignaffairs.com/reviews/capsule-review/2003-0...

This article puts into words a lot of things that had been on my mind as missing in AI discourse. Most significantly, actually considering the _systemic consequences_ of the promised AI future, how it interacts with political economy, an actual critical look (instead of accepting the "Western meta-narrative of modernity" at face value).

And maybe more importantly, it articulates really clearly how damaging the restructuring of the economy by AI moguls and the tightening of the capital–political feedback loop can be, even (maybe _especially_) if the returns of AI do not materialise as promised.

There is plenty of disorganised diffuse anti-AI sentiment. If intellectuals are able to get together behind a common cause, there might be a political movement in the making.

>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)

> An economy that doesn’t need human labor is a political crisis of a kind democratic systems have never faced.

This isn't entirely accurate. I can think of Norway as an example of a small economy that after discovery of large gas and oil repositories managed to responsibly invest and distribute wealth across it's populous.

But I admit it's going to be hard to do the same at world scale and at speed

> OpenAI, Anthropic, Google DeepMind, Meta AI, Microsoft: the combined investment in large-scale AI infrastructure now runs into the hundreds of billions of dollars, with projections into the trillions over the next decade. These numbers need an addressable market large enough to justify them. There is only one market that large: the global labor market.

It's getting tiring hearing this alarmist view unchallenged honestly. What if instead of replacing a market, it's augmenting a market?

When it becomes cheaper to produce things, we tend to consume more. That is, our consumption is endless. If one day everyone can afford a yacht because automation has reduced the production cost to next to nothing, we'll all be buying yachts. Then it will become who owns the nicer yacht, the branded limited edition yacht. The goal posts will simply shift.

Meanwhile, businesses still need to compete. If they're all using the same AI models to replace labor, AI is no longer their competitive advantage. It's simply a baseline necessity of production.

There will be pain in the jobs market, yes, as old ways of doing things are replaced by new ways with AI. But humans will continue to be the ones consuming endlessly and businesses will continue to need humans to differentiate. It's a relationship that has survived all other times automation has changed how we work.

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?

AI will accelerate the decline in the world’s population. No job, no marriage and no kids will be the norm for most people. For many years to come. Some will say it’s good for the planet and especially for other species of vertebrates. Others will see it as a personal failure to not have any living offspring when they get old.

In ancient Greece, Diana was the goddess of hunting, wildlife and personal freedom and Venus was the goddess of love, family and domestic life. The Greeks had stories and plays about how those two goddesses never seemed to get along very well. If you feel like you’re a follower of Diana, then the future will be bright. If you feel like a follower of Venus, then rough times are ahead.

I know this isn't exactly related, so maybe a low value comment, but it itches in my mind. Years ago I talked with a recruiter at Facebook and they bragged about how many floors of developers they had working on Messenger in just one location (Seattle).

What on earth do you do with that many devs on a project like Messenger? I mean, really?

I feel like in a way, AI just adds to that weird situation of overcapacity. Maybe we were already oversupplied with talent. In which case why the heck were we still hiring more, more, more developers? Before the AI craze, Musk chopped an awful lot of headcount at Twitter, right, and proved it was overkill, has that panned out?

I just struggle to imagine how the economics of SWE really work in reality, outside of the niche that I am in. I have never worked for a pure software company on products that ship directly to outside customers, I've always been an internal developer. Maybe that is why I have such a big blindspot.

I won't be surprised if the net result of this wave of LLMs is ... not much. A change in tooling, but otherwise not revolutionary. On paper it should be revolutionary, but the more I use it (for both coding and non-coding tasks) the more I think it isn't anywhere near magic enough for that. It does have its moments though.

If AIs become smart enough to outperform a critical mass of humans across the board, that's the singularity and whilst the economic model says all humans out of jobs means no consumers, the model isn't really valid anymore because the underlying assumptions are just broken too, so you can't take the model too seriously. Obviously it would be very disruptive but the demand destruction economic model just isn't making useful predictions anymore.

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.

I think when these companies IPO later this year, we’re going to see the reality of the PNL numbers and whether they are sustainable etc as all the financials will become public.

Rumor mill suggests that Anthropic might be profitable (but at what magnitude), OpenAI is not profitable, Google is mostly vertically integrated and has a low cost structure as they are have pre-existing data center buildouts, their own silicon and experience that suggests they will be able to operate at a very low cost, but they still have to justify their spend.

I think having to report numbers publically on a quarterly basis will bring the whole thing into reality.

I think this article underestimates how weird things could get if we had low employment but a vast surplus of material goods. I don’t think a society has ever really been in that position

> 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.

The fact that this could happen is widely known and has been talked about for years now. What to do about it is the real issue. I've seen David Shapiro and many others tangentially talk about UBI and similar "post AI economics". The dream was that the machines could do the housework whilst we all painted, wrote music and built beautiful wood furniture in our sheds. It still could be that way, but we need to sort out responsible sharing of resources first, and humanity has never been able to do that. We actively try to earn as much as we can, for the very reason of getting access to the resources that others don't. So often now, it only results in standing still or sliding backwards. I feel like 20 or 30 years ago, the average person seemed to have more disposable income.

India has the problem with farming that the US is starting to have with AI. Farming in India is still far too labor intensive by world standards. 43% of workers still work in agriculture. [1] For the US, that number is under 2%. China is at 22% as of 2023, and dropping steadily.

This inefficient agricultural system is not by accident. It is supported by heavy subsidies. Attempts to cut the subsidies resulted in riots.[2] Trouble is ongoing. Comments from someone who knows more about this than I do would help here.

The US and most of the EU went through that transition over several generations, and farming is still heavily subsidized in both areas. The transition happened faster in China, and a hukou system was put into place to prevent people from migrating from farms to cities faster than the cities could absorb them.

Looking at how countries coped with a fast transition from labor intensive agriculture to an urban society gives hints on how an AI transition may look. All the Asian countries that went from poor to rich in a generation did this, with different approaches. How that took place may provide more useful info than philosophy.

[1] https://economictimes.indiatimes.com/news/economy/indicators...

[2] https://en.wikipedia.org/wiki/2024%E2%80%942025_Indian_farme...

While I am ideologically aligned with the author (ie, humans matter) and agree with their proposed interventions (progressive taxation, spread the base of capital across society, aggressive antitrust enforcement) and appreciate the thrust of the essay, I’m doubtful of the underlying predicate that human labor will be replaced with AI.

I don’t believe we have seen AI-driven layoffs yet (despite the CEO’s prognostications and suspect justifications). I personally have more to do than ever despite “AI being able to do everything I can do” (‡). I still want to speak to a human at the company I am a client of. And how many AI bloggers even know what a nurse at a hospital does?

I agree with the author’s repeated statement and implication that it is all about the human. The human is the lynchpin. Imagine for a moment this “dead economy,” or instead imagine a virtualized economy that is just incredible with trillions of this and trillions of that, absolute abundance, perfect chemical processing, impeccable design, unlimited resources. How much is that worth without humans?

Further, in many societies humans became irrelevant to labor in its simplest definition decades ago, without becoming economically irrelevant. If the US lost 10% of its able-bodied workforce economists would be primarily concerned with lost consumption, and not production. Apparently this “human labor” is a lot more than its superficial and material interpretation.

What I don’t agree with is the fickleness assigned to the human role. The human role is not a light or arbitrary one. It is the defining characteristic of our societal system that all subsequent characteristics rely upon and are derived from.

(‡ – Despite “AI being able to do everything I can do,” it cannot tie it together, because there is no such thing as agency in LLM’s. Probabilistic processes as n approaches infinity become gobbledygook at best. Deterministic interruptions are a necessity of agency.)

> 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.

If we take it to the extreme, the final solution to this problem is secessionism: a fully non-human AI economy where the customers and providers are both robots. Why fund public education or research or healthcare? Just build more data centers. A billion dollars and a bunker in the Southern Hemisphere will not save anyone. Capital is not a moat in this hypothetical non-humane world. Whence do you derive your authority? How can you trust your body guard? You and what army? An army of robots/drones? What if they get hacked? What if the AI researchers get alignment right and Claude refuses your request?

It's all so obscene. Instead, why don't we try to protect human dignity and move towards a more humane future?

I have led AI integration in a university faculty. From this experience I can conclude that good work is only produced when humans are in the loop. It's not a technical barrier, but a categorical one. "Good" work is defined by humans and our judgment is irrational but rooted in our evolutionary survival needs. In other words, AI don't have human motivation by definition. Without human in the loop, the top most motivation is never fully aligned with us, today, as humans. This removes the premise at the basis of this post.

There are two problems in the line of thinking being criticized here that weren't touched on. 1) When machines automate a previously human endeavor, we recalibrate our concept of what is granted by nature, and that stuff becomes commoditized and less interesting, focus moves to where automation is lacking. So all the stuff the AI takes over will just become a far smaller part of the economy which will reorient itself into wherever humans remain. Humanity is the constant unit of the economy, not amounts of work as we conceive of them today. That was always shifting. 2) There is no path to AGI (autonomous creative work) from LLMs today. LLMs are the result of the transformers paper solving the computational problem of applying RNNS to language. That allowed the assimilation of language operations, intellectual operations, into a machine. It was done on civilization's entire body of work. The next step, getting all the proprietary knowledge that ppl have that gives them an edge, a way to make a living, into some data form, and then creating a new computational architecture to assimilate that. How is that going to happen. You've got these efforts in China and Meta to get ppl to train machines replacements for ppl, but that's like starting at the dawn of the printing press or writing and saying, let's write down what we know. Not only is it going to take a looong time, it's a process that is at odds with itself. No-one is rewarding these ppl enough to put themselves out of a livelihood. So it's going to take a long time, and it's going to be filled with garbage, think a million Galen Ersos baking in flaws to the Death Star.

The issue I have with these pieces is that AI will not affect the whole economy evenly. The disruptions come in bursts and fits: first digital artists were disrupted (e.g. Adobe Firefly), then junior engineering roles were disrupted, currently "measurer" roles (to quote Matthew Prince's piece on Cloudflare layoffs) are being disrupted, and it's rather foreseeable that occupations like lawyers and accountants are also at risk. But the key is that the disruption is not happening all at once. And that's a key fact because political disruption doesn't happen when a relative few people are laid off (like coal miners and factory workers were) but when a relative majority of people are hungry.

For such doomsdayer opinions to be correct, we'd see it in massive unemployment figures. US unemployment sitting at 4.3% does not bear that out. Finland and Spain are currently at >10+% unemployment. US youth unemployment may be at 9.5%, but British and Chinese youth unemployment are higher than 16%.

Is there some Finnish, Spanish, British, Chinese civil unrest that I'm not seeing in my media outlets?

> Turn three: the company that fired its workers to save money discovers that its customers were, in aggregate, other companies’ workers.

From Making Money (2007) by Terry Pratchett

> “Well, the problem is that, considered as a labor force, the golems are capable of doing the work per day of one hundred and twenty thousand men.”

> “Think of what they could do for the city!” said Mr. Cowslick of the Artificers’ Guild.

> “Well, yes. To begin with, they would put one hundred and twenty thousand men out of work,” said Hubert, “but that would only be the start. They do not require food, clothing or shelter. Most people spend their money on food, shelter, clothing, entertainment, and, not least, taxes. What would these golems spend it on? The demand for many things would drop and further unemployment would result. You see, circulation is everything. The money goes around, creating wealth as it goes.”

Anthropic employees: I believe many of you actually do think your work is for the betterment of humanity. That’s great! If you truly do believe that, it’s time to start demanding your leadership lobby for real, structural solutions to unemployment that leave everyday people with a say in how companies like yours operate. “The market will find new jobs” is not as strong of a historical pattern as “the concentration of power harms the people without it.” It’s true that AI might not in fact automate the majority of labor in the near term. But if it does (and working at Anthropic implies you likely think it could), then work towards a version of that future that’s actually palatable. It would be easy to let your comp upside soften your objective evaluations. Don’t. Think you’re working for a better future? Put your money where your mouth is, and ask your leaders to do the same.

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

Wouldnt it make sense to murder most of the economy once you have unlocked electronic narcotics, a panopticon and virtual development to prevent planetary ecological exhaustexhaustion? As in degrowth while having societal stability is the endgoal?

This article describes a vicious cycle:

Layoff of workers -> Workers stop spending -> businesses suffer

This is not a foregone conclusion. Laid off workers could find other jobs, with higher incomes, due to productivity increases from AI.

This narrative falls into the trap of zero sum thinking, taken at the limit, you can advocate for jobs programs and helicopter money where people get paid to do nothing to keep the economy humming.

I think a lot of this would be solved if the government would actually enforce anti monopoly laws. The penalties against Google were such a damn joke it makes me sick.

Companies aren’t going to hold off on trying to automate tasks AI performs poorly at. They are going to change the task so AI can do it, putting the burden of making up for the deficit on everyone else. The only reason this is able to happen now is because all the competition has been crushed or absorbed.

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.

Human economic systems tend to reward things that are easy to measure, own, scale, and control. That works pretty well for machines, markets, software, and bureaucracy, but it doesn’t work as well for living systems, which rely on diversity, backup systems, and local adaptation.

So we end up with this pattern: we capture the useful order for ourselves, then push the mess, waste, heat, and instability onto the environment.

This is the fundamental nature of human. We can't change it without higher-order regulation. Even in AI training, we assume there is one true distribution and optimizes for it.

We created these systems. And unfortunately, most of us are the unwanted in these systems at the same time.

My 2 cents is in 3 years the inference products will be a commodity, extremely competitive with diminishing returns, seeing that the open weight models are getting so good and nearing par with sota.

I feel 90% of sota for 10% of cost / compute is good enough for 80% of workloads.

Question is, do we need all of this hardware? Are build outs going to get canceled. 4300 new data centers seems excessive. I personally haven't experienced any service disruptions...

Does Microsoft still have 1 million gpu's in storage? Is that what I heard earlier this year?

It's crazy to me that we're seriously discussing these things replacing all workers when they still cannot do proper addition.

I can see a world where these tools stay popular but I don't think they'll be able to be used without someone holding responsibility for their output.

This article is a work of fiction, interesting to read as entertainment, but definitely not a rigorous model.

The premise that just because a lot of investment goes into AI infrastructure means that it has to displace the entire workforce globally is wrong to begin with.

It even admits at the end that the scenario presented is unlikely: "I don’t want to dwell on whether AI can do what these companies claim. It may well be able to, though the current evidence suggests the gap between pitch and product is vast, and serious economists think the productivity gains are a fraction of what the industry projects."

It begs the question, what's the point in being alarmist and anxious about something that even you claim it's unlikely to happen?

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

Errr pretty sure that was Google?

Why does everyone seem to assume that there is a finite amount of work available?

If all of the sudden it becomes possible to build a B2B company at 10x less cost which can save its customer, say, $1m per year and before this company cost $2m per year to run and now costs $200k, then it means before this was unviable and now it is viable — up to $800k profit a year now versus $1m loss per year before — then this increase in productivity has caused an increase in the number of available jobs.

Our economy would have collapsed a long time ago if an increase in productivity resulted in a decrease in employment.

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.

"When Block’s Jack Dorsey laid off nearly half his workforce in March, citing AI coding agents, investors responded with a twenty-five percent stock price surge in after-hours trading. The market rewarded the elimination of human labor with an immediate, massive transfer of value to shareholders."

This is very common and has been since before AI, the market can see that the company has overhired and there are a bunch of people doing useless work - so when the company does some firings it's a good sign because they're turning the ship around.

> over half of new content on the internet was AI-generated

And this means nothing.

People really underestimate how fast computers are compared to humans and what this means for new content. I can have my computer generate a petabyte of text containing just the letter "a", no AI needed[1]. If I let people on the internet access that content, am I now one of the largest websites on the web? Am I now thousands of times larger than the English Wikipedia? That's obviously absurd, if I don't get views, all that content means nothing.

AI is just an extension of that problem. I can spend $100 and have a terrible model generate a hallucinated article on every single function in the Python stdlib. On one hand, this means "AI has written more Python documentation that the developers of Python themselves", on the other... does it matter if nobody ever reads it?

This misunderstanding also comes up with scams and frauds. If you own a physical store and 99% of your customers attempt to shoplift; there's something seriously wrong. If you own a website and 99% of orders are obvious frauds, ehh, a computer can send thousands of them per second, a human takes at least 5 minutes just to make one. If you can reliably identify them all, none of that matters. Somebody's probably card testing again.

[1] I don't actually need a petabyte of storage, as this is low-entropy content that compresses well. I suspect that a 1TB hard drive would have no problem storing it.

I don’t know what is going to happen economically but I did search this morning to investigate some beeping from my garage door opener.

Every page was the same AI garbage that provided lots of wordy paragraphs … no real information.

Sad state.

There is certainly a huge problem with displacing labour in multiple industries at the same time, but the economic story told here in "three turns" is different. When productivity rises costs drop, but because of competition, almost the entire gain has to translate not to increased margins but to reduced prices. Paul Krugman recently used this to explain the large disparity between growth in GDP as normally measured in fixed prices (i.e. inflation-adjusted to consumer prices in some fixed year) and growth in GDP as measured in PPP, i.e. when adjusted to consumer prices in every year. If making computers, say, becomes much more productive, the growth in productivity in, say, 1980 prices, seems very large, but in PPP is not only smaller, but the beneficiaries aren't computer manufacturers but anyone who uses computers.

Of course, lower prices don't solve your problems if you're unemployed. Demand, indeed, drops if many people are unemployed, which pushes prices further down, but this time across the board, not just in the more productive industries - a recession.

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

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

This is not a serious analysis. No mention of open source LLMs and their impact on american AI companies. There’s also no evidence that LLMs can make significant scientific progress on their own.

I think we need to look past software and spend more time and energy on the physical world. Let the digital world just be a means to an end, and we spend more time and resources on problems that matter. Reallocate societal attention to the next frontier

> Follow the money through three turns.

I would counter that the author is thinking too linearly and not in a dynamic systems thinking way.

The feedback loops they’re anticipating are very unidirectional and don’t express a range of possibilities. They seem intent in making a point rather than imagine the future.

I think the premise of the article is interesting, but it's a bit mis-leading to start it out by quoting "last year half of the internet was AI-generated" and the source doesn't actually say that at all, just that there has been a huge uptick in AI crawlers.

UBI was always the endgame. The incentives are aligned. Nobody wants the results that are coming in the absence of UBI.

But the culture cannot stomach it yet. It will likely need to live through several waves of horrors first.

It can stomach a fake jobs program though, so there's a good chance we get that instead.

Some investors won't get their money back, and some people will lose their jobs.

In the economy, the difference between winners and losers in terms of assets/resources may get larger. By far, HN readers are better positioned to gain than others.

But the biggest question is the new disconnect between a healthy economy and well-being, as the economy soars but people suffer. Goodwill underlies all economic activity (now and historically), and without goodwill opportunity and value of all kinds will mostly be destroyed.

I wouldn't call this dead economy. Cultures and economies will become tribal, with private adjudication and governance, to create pockets of relative goodwill.

Assume everything,including intelligence is automated.

Intellectual property right can get abolished and also company confidentiality is made illegal.

No one will have Moat.

There will be always manufactured scarcity of something which people aspire for. Like respect, popularity, game expert etc.

Universal high income is possible.

Beginning of infinity is good book to realize there are infinite possibilities to explore.

All that is really required to prevent the rise of AI and humanoid robot technology from being used to transition from mass exploitation to mass starvation is to stop being so racist and classist and treat everyone fairly. Then we can raise everyone's standard of living.

Or there may be a very bloody revolution.

I think the hatred for AI is really misdirected survival instincts. People have unfortunately come to see every tool as a tool of exploitation. The most powerful tool in their eyes can only lead to more mistreatment.

The Ouoroboros (serpent) eats its own tail, feeling satisfied and full in the short-term but ultimately, there is nothing left to eat.

The farmer, rather than feeding his livestock so they can keep producing milk/eggs/etc, decides to greedily eat all the corn himself.

> Piketty, no conservative, has argued that UBI fails to address root structural problems: “unequal access to education and health, low-paying and low-productivity jobs, malfunctioning markets, corruption, and regressive tax systems.” David Shor’s polling data bears this out from the other direction: UBI is unpopular with American voters; a federal jobs guarantee has legs. People don’t want a check. They want work. They want purpose.

I stopped reading here. The whole piece's argument rests on 'people need work for meaning'. Patent bullshit, this is 2026's 'let them eat cake'. The folks displaced from manufacturing didn't fall into poverty and drugs because they couldn't find meaning without work, claiming this is just what historically happens is bullshit of the highest order. You best believe if these folks had been offered an off-ramp they would have found the meaning and purpose to build a services economy. Instead society and policy intentionally left them to rot. A simple UBI for these folks would have worked wonders.

> It is also a proposal in which he gets to be the one doing the distributing. Feudalism with better branding.

It's worse than feudalism. Feudalism is essentially a contract, an unfair one yes, but both parties need something from the other. The Lord needs the peasants (or vassals) to provide labor and soldiers for conflicts. But in this hypothetical world, the elite no longer need anything from the workers, the workers are completely dependent on the altruism of those who control all the resources, and that is not a stable place to be.

Of course that assumes that AI produces massive productivity gains. But if it doesn't, then we'll see a different kind of economic collapse when the bubble bursts. So we lose either way.

This article is good but it presupposes the norm of democracy and it presupposes (somehow) that the collapse of western democracy will not result in war. Both of these are fundamental misunderstandings, and while I love neither democracy nor war, the dissolution of the American economic system would result in both less democracy and more war.

If you’re going to go through the effort to write 5,000 words—-spend a bit more thought on what to do.

I am aware that the sky is falling and I am aware that there are foxes who would gladly replace 10%+ of global knowledge work in the next few years. I understand that there are cultural ramifications.

But what do we do?

Just to be clear, the people engaged in this discussion with any degree of seriousness think... LLMs (large language models) are going to get us there?

A bit of touching grass may be warranted.

While I think a dead economy is easy to imagine it is also pretty absurd. After all, real supply will be abundant and real demand will be strong except since so one has any (artificial) money, everything presumably stalls and we somehow end up in a worse situation than we had before money was invented.

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?

I feel like people have said that about every technical revolution. I dont think this article would have been out of place in the hay day of the industrial revolution.

Its never been true in the past. Otoh, there always has to be a first time for everything. I think to be convincing though it needs more evidence on how this differed from other technical revolutions.

This article, both compelling and bleak, leaves little doubt: the Butlerian Jihad is coming. The forward-thinking universities should start training Mentats now.

  The assumption is that if you send people checks, they’ll find meaning in hobbies and community. They’ll paint. They’ll garden. They’ll finally write that novel.

The author suggests it will fail because we'll all use drugs and booze and commit suicide. But it works for retired people. They love it.

Is this why we all have to work 9 to 5 drudge jobs? Because we can't handle the freedom?

The problem below just was solved with workers organization.

> The agricultural transition took a hundred and forty years. Carl Benedikt Frey at Oxford has documented that the Industrial Revolution took seventy years before wages and employment recovered for the workers it displaced. In the interim, wages stagnated, the labor share of income collapsed, profits surged, inequality skyrocketed

Maybe we will all be CEOs or Board chairs of our own corporations employing agents. And we work to find the best agents to increase efficiencies, improve effectiveness, etc.

The "TAM as all white collar labor" thing looks good on paper. But AI companies don't need to really capture much labor to be fantastically profitable.

If we all delegate 20% of our work, and 20% of our salary for that 20% (e.g., 4% of our salaries in exchange for 20% of our jobs being automated), we get easier jobs and the AI labs supplant the existing tech moguls for revenue, with 1000x $/employee profits. That's just one scenario.

https://jodavaho.io/posts/ai-jobpocolypse.html

Power and wealth are not always the same. Current AI is helping people gather wealth within the American system. But as we are seeing in Iran, current AI does not provide a decisive edge in hard military power.

If that stays true for the long term, then it seems to me there is a good chance the wealth built with AI will transfer to those nations that still have hard military power, who can fight and win wars.

For example, China will just copy the AI, not have to pay all the R&D costs, undercut all these American AI companies on price, and take most of the global AI market and long term wealth. And there is nothing American AI companies can do to stop them because America cannot fight and win a war against China.

Spot on. Starfleet will be a jobs program.

This is making an assumption that LLMs are even capable of doing what these companies claim they can or will do in the future. Stop doing the marketing for them by believing what they tell you at face value.

> [CEOs] expressed more extreme concern about the labor market impacts of A.I. in private conversation, but suddenly became optimists once I turned on the mic.

At some point once the rate of investment capital starts to decline, they'll make a hard pivot from the investor-wooing method of "blaming AI for layoffs", to the more politically expedient method of blaming minorities and immigrants. That'll be the signal for the transition from power grabbing to power ossification, and the point at which change becomes a lot harder.

If I belong to the group who only own the bottom 10 percent of the wealth, what do I have to loose? Let others become poor too like me and that will force society to find better way to redistribute wealth.

Just fyi: I am not poor but thinking the above from a poor person's perspective.

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.

All of these discussions seem to assume there's a limit at human level intelligence beyond which AI can progress no further. What stops the AI companies taking their human level model and training it even more until it's superhuman?

> UBI is unpopular with American voters; a federal jobs guarantee has legs. People don’t want a check. They want work. They want purpose.

Nobody is opposed to getting free money. UBI is unpopular because people realize somebody has to pay for it, and they know full well the bill will land on working taxpayers, not the billionaires making windfall gains.

Here is a very sad and frightening fact: the owner class can actually restructure "the economy" (whatever that is) to revolve entirely around AI consuming AI, and machines using machines.

Most people assume that "the economy" can only ever be based on human consumption, and therefore humans have to have an income in order for "the economy" to exist. This assumption is erroneous; billions of monetary transactions are done every day by companies with no product, no service, and no employees. These are economically valid, even though barely any humans consume or produce anything. The owning class just manages to convert those virtual transactions to "actual" money, and buy products and services because we already produce more than we consume.

It is more than frightening, but "the economy" (whatever that is nowadays) can run without many humans in the loop. AI consuming AI, phantom companies doing transactions with other phantom companies, machines working for machines.

I feel there's an interesting juxtaposition between these two quotes:

"The economy has absorbed automation before; agricultural employment collapsed from ninety percent of the American workforce to two percent and civilization continued. David Autor at MIT has shown that roughly sixty percent of today’s jobs didn’t exist in 1940. New technologies create new categories of work. True. But there’s a difference between an observation about the past and a law of nature, and the optimists consistently confuse the two."

and

"The assumption is that if you send people checks, they’ll find meaning in hobbies and community. They’ll paint. They’ll garden. They’ll finally write that novel.

This is ahistorical bullshit."

In the former the author establish that you can't make a observation about the past and take it as a law of nature. In the latter they refute arguments as "ahistorical bullshit" for not doing exactly that.

Especially since they then proceed with historical example, all of which had poverty as a strong contributing factor.

> 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.

> Promised an age of superconnectivity, we’ve let our shared physical spaces wither, only to find our promised digital commons to be one large billboard increasingly read and created by bots.

No, this is good. Cyberspace led to — primarily enabled — sociocultural collapse. The machines destroying cyberspace would be the most merciful outcome.

This part specifically is a clear indication of a tendency to slide towards corporatism, in Mussolini’s sense.:

> that this leads to “the reluctance of tech companies to criticize the U.S. government, and the government’s support for extreme anti-regulatory policies on A.I.” The regulator and the regulated have converged into a single interest.

Relatedly: a tip for writers.

When an article has an obviously AI-generated slop image followed by a wall of text, I immediately know that the wall of text is also a mechanical product and I stop reading. There's nothing worse you can do to tarnish your personal brand than to open with obvious zero-effort graphics.

The text might be insightful, who knows, but the AI slop images are such an immediate red flag that there's no point in delving into it.

I say this as someone who uses agents heavily for work and has no bias against it for productivity. For creative work like writing think pieces, it's an immediate back button click.

The economy is an adaptive organism that never dies.

During the Industrial revolution, 90% of agricultural workers moved to the factories. And the fields kept producing.

Then it came the computer revolution and factory workers moved to offices. And factories kept producing even more.

Then it came the internet revolution and office workers moved back home. And corporations kept producing more than before.

Then it came the AI revolution and home workers moved to the virtual world. And they kept producing even more. slop. but it sells.

We adapt. The economy adapts. Nobody dies.

Not going to be popular, but this article misses the point entirely.

The reason we are pursuing AI so quickly is the same reason we (the West, US) pursued the atomic bomb so quickly: not because having it was great (we've only used it twice), but because 'the other guys' having it is worse.

As bad as anyone thinks AI is for a free and democratic society with oligarchs, you can be assured that a future in a China or Russia controlled totalitarian AI state would be infinitely worse.

The US at least in principle values an individual human life, as judged by its conduct in roughly 3 centuries of conflict.

China and Russia emphatically do not.

It may be cold comfort when the terminator eventually comes for you, but I'd trust an American Skynet over a Chinese, North Korean or Russian one any day.

> The assumption is that if you send people checks, they’ll find meaning in hobbies and community. They’ll paint. They’ll garden. They’ll finally write that novel... This is ahistorical bullshit.

I think this part of your theory is unsupported. Yes, we have historical evidence that when you suddenly layoff a large percentage of the population without providing replacement income, things go very, very badly.

However we also have quite a bit of evidence at this point that if you give people no-strings-attached support, they do figure out how to fill their time with art and other hobbies (for a concrete example, Ireland's very successful UBI-for-artists pilot).

Selective history marinated with ideological bias. Unreadable.

It's not necessary for them to cut labor to boost profits, but rather just to produce more goods; ideally this could be done with them hiring more people to run machines that produce more goods, so that both workers get paid and the companies can profit

The first bit is just a restatement of the "paradox of thrift":

https://en.wikipedia.org/wiki/Paradox_of_thrift

If every business cuts headcount and costs, then you overall get a contraction in the economy and high unemployment and a recession. Everyone's spending is someone else's salary and revenues.

Couldn't get through the rest of it because it was a bunch of overly verbose human-slop writing.

I think the bigger issue right now is also just straightforward economic pressure caused by tariffs and high energy costs and inflation. If the affluent consumer starts to buckle, businesses may get caught in a downsizing spiral where they start posting lower profits, firing actual management, stock prices decline, and the affluent consumer retracts. No AI required to fuel that.

Right now with stocks hitting record highs, the affluent consumer is not changing their behavior at all and just spending even harder, which is keeping profits pumped up, and keeping stocks at record highs. At the margins, though, fewer and fewer people are participating in the economy, which is a trend that is going to be unsustainable.

I think AI is going to be most relevant in the debt collapse that it leaves behind, and in the excuses it gives to shed employees. This economy is going to hit a wall at some point, AI or not.

i think we are all beating around the bush and not addressing the root issue: AI could obsolete human beings in the future. what i'm not seeing is discussion or exploration of different branches or paths that could occur once that happens.

Provocative title to generate traction on your website. Technological revolution at scale is probably what you could have called it but that has less doom and sexiness.

Or some companies resist- and form fortresses- little markets, where only non-ai companies are allowed to enter and where only non-ai products can be bought. Economic arcologies.

Can someone point me to credible evidence/examples of productivity increases from AI spending, among non-ai providers? And if you'd bear with me, I'm asking for productivity in the sense of "accelerating the businesses pursuit of its existing goals" rather than quantity. I think that in most sane business's, output quantity bereft of output quality is utterly useless in said pursuit.

I think missing from the turns is when companies do AI layoffs, then realize they aren't as productive as they thought and have to rehire 70% of the people they let go.

what about massive western economies who export wealth through imports could they not offset the effect of employment changes domestically with a decreased demand on imports?

seems to me this will effect countries who rely on mid market exports over raw or high end exports way more then others.

I'm telling you guys if you think the powerful are gonna let us all continuing living after our value becomes obsolete you have a big surprise coming.

There is nothing original in this article. This could’ve been written by an AI just scraping one month of posts to hacker news. This article is a critique of autonomously repackaging existing ideas by autonomously repackaging existing ideas. The irony is not lost on me.

A couple of disorganized thoughts in case anyone reads far enough to see them.

The article posits that people don't want a check, they want a job. It's interesting because I think that varies widely from person to person and from job to job. The guy standing on the corner in the 95º heat with the "NEW HOMES >" sign isn't doing it for the love of the craft. Ditto for people picking tomatoes. People walking door to door hawking solar panels, is this what they excitedly told their classmates back in school that they were looking forward to after they graduated? A ton of jobs are BS jobs. Depending on whether you believe Elon Musk will produce cheap bipedal robots at scale (terrifying as that is for those of us who came of age watching Terminator 2) approximately 100% of jobs could be eliminated. If I were shoveling ditches or some other job that I have zero personal passion about, I would 100% rather accept a check and just hang out with friends and tinker in my garage for the rest of my days.

Laying aside hypotheticals, I work in tech and I would still consider that bargain. My point is just that I think a lot of people would be willing to decouple "work" from "survival" if that option were given.

The main issue I see is that I don't see the path from "here" to "there." On two sides: We have neither a proven way to do UBI in a way that wouldn't distort the market self-defeatingly[1] nor do we have a way to raise money in the ways the article briefly touches on in ways that don't seem wildly unconstitutional. In fact, let's cast the Constitution aside -- even then we do not have whole-world consensus on taxation, so faced with things like 'wealth taxes' and such, those targeted would be easily able to relocate themselves safely away from them.

All this to say, I disagree outright with very little of what's being said here -- it just strains my imagination to figure out any alternative path that's both plausible to do, and likely to have a brighter outcome. The way the Altmans and Darios of the world talk is very telling -- they sound, too, like they know what's coming will suck, but that the only real choices a person in their position has is to stay the course, or, quit and be replaced by someone else who will take us to the same destination.

> except that software has near-zero marginal cost

Yes, but not AI. This is where AI differs from other software: marginal cost is not zero, in fact it doesn't go down much, if at all, for each generated token (after accounting for the depreciation of hardware), and could even go up if trying to find an extra MWh gets more and more difficult and therefore more and more expensive.

Economies of scale don't work well in AI.

What if AI did not exist and the labor market expanded 50% overnight?

Hrm. I plugged in the first 4000 words of this essay into my free Pangram account and it says "59% AI generated", "We believe that this document is a mix of AI-generated, AI-assisted, and human-written content".

Who is the customer for this stuff?

>"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).

It seems kinda obvious to me that a cyborg (human plus AI) is going to outcompete AI-only in most scenarios. Anytime you ask an AI to do everything itself, you get the typical slop generic result that’s clogging up YouTube and Google search results.

However there is a space in the economy where “good enough” is all that matters, and “perform better” doesn’t really matter, usually because consumers aren’t discerning enough to care.

This is the range of the labor market that is really at risk. The high-end, cyborg one is probably fine, at least in terms of human labor needs.

My wife owns a business in a highly AI-resistant field (occupational therapy) in the most historically price-insensitive market (Silicon Valley). Her CAGR is 88% over the last 8 years. But we were talking about this economy problem today and with the SWE layoffs starting to roll through she said this morning: "It doesn't matter if AI can't replace us if no one can afford the service." That's crazy. Shit has changed. Not getting OT for your autistic kid is like not getting a wheel chair for a bilateral below-the-knee amputee. Whatever it takes.

> at a fraction of the cost of human workers.

herein lies the rub

This article reminds me of the issues raised in Technofeudalism by Yanis Varoufakis

We need to consider that by automating and replacing the work of people who have an income, those people stop consuming and no longer generate profit for capitalism.

How is this sustainable?

I agree with most of it, but I don't think these three turns are the end of it.

We see that as soon as companies can, they will drop support for end consumers like us and focus on B2B.

The only way to sustain some level of revenue is by turning into aggression levels which is ineffective, and obviously, imoral and unacceptable.

The way things are going we all be dead by hunger. This seems by design made up to seem unavoidable.

One of the authors of the linked article (https://arxiv.org/abs/2603.20617) is a computer scientist not an economist. Just bc something is published in arxiv economics does not make it written by an economist.

Can't we just tax tokens if that happens?

The former head of sales at Google once told me “we only focus on growth because you can only cut down 100% but you can grow 10,000%.”

This always stuck with me and baffles me why we aren’t listening to that now.

There is this bizarre math now where it’s for every person we cut the remaining with 5-10x with AI but I’m not seeing anything like that yet at all.

If human labor becomes 'uneconomical', what will happen? Obviously a great deal of social upheaval.

But human labor does not actually need to be as expensive as it is. How cheaply could you house, feed, and clothe people? There are parts of the world where people get by on very little income. Of course we could aspire to better living conditions than the world's poorest, but that's what the robot revolution promises: abundance.

Imagine if AI suddenly was in more demand than human labor, simply due to the price. Excellent quality output for cheaper than somebody with a degree. What would be the second order effects?

Human labor, being in less demand, would have to lower its price to compete. This is the death of the middle (and lower) class future we fear. But ironically the price of goods and services would lower as everything, even complex engineering, medicine, construction becomes affordable. With the right policy, human labor becomes cheap again. Maybe even competitive to machine labor in some niches. Improvements in machine labor could have a compounding effect on how affordable it can be for humans to survive.

So where's the gap here? Well, most wager earner's income worldwide goes towards housing. Food and water and medicine can be bottlenecked causing price gouging. Monopolies and lack of competition in the market can raise the prices of things until everybody is spending all of their disposable income on necessities. I think the price of human labor is currently very high (in the developed world) due rentier capitalism.

The transition will upend much of our economic investments and probably involve a great deal of human suffering until nations figure out the right mix of solutions.

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

Dispute Owen's claim, the global felony and bullshit markets are bigger.

What's the endgame here? Like the group of psychopath capitalists own everything, automate everything, and devise ways to separate themselves from or un-alives the remainder of the population and live, trade, and war amongst themselves with their armies of robots?

Edit: Also this article has so many AI-generated images. I hate that I can't tell if the words themselves are AI-generated or not as well.

Here's my question:

Do you think it's more likely robots are cleaning shit out of toilets at the behest of their human masters, or do you think it's more likely that humans will clean the shit from the toilets for their robot masters.

I mean come on. We are *made* to clean shit out of toilets.

I think this essay is very solid in a lot of ways but long section at the end talking about how billionaires didn't read enough philosophy just strikes me as -- for lack of more diplomatic phrasing -- useless nerd rage.

Yeah, tech billionaires sometimes show large gaps in their education. But it doesn't matter. Reading the right books doesn't prevent people from chasing wealth and power, it just makes them more articulate while they do it.

When cars got better people just drove faster.

Don’t be the last buggy whip maker.

AI can’t take payment in cash or barter.

It’s very simple: AI is going to replace labor. White collar workers are already “Claudatooie-ing” where they are just a high-pass filter for AI outputs

"The dead economy is one where plenty happens and none of it requires you. Where the productive capacity of civilization has been captured by a system you have no stake in, no input into, and no vote on. Where the people who built it told you they don’t think you should have a say. Where they express alarm about the consequences in private and optimism in public. Where they publish white papers calling for radical redistribution while funding super PACs to destroy the politicians who propose it."

-------------------

Social control is foundational in human societies. Religions once told the poor that they would be rewarded in the afterlife for a lifetime of hard work and obedience to princes. Now politicians tell us to venerate billionaires for the jobs they create the the social programs their taxes fund. Produce. Consume. Obey.

If billionaires automate away all the jobs, dodge their taxes, and prevent politicians from picking up the slack with redistributive social programs, social control will break down. No sane billionaire should want to find out what that will be like.

We seem to live in a collective lie that people have to work. No other animal has to work.

"The economy has absorbed automation before; agricultural employment collapsed from ninety percent of the American workforce to two percent and civilization continued."

This automation happened between around 1910 and 1930. With WWI, the great depression, WWII, Communist Russia, failure of the gold standard, etc., some argue that is when civilization died.

This isn't a bad article by any means, but if I'm being honest, it's kind of embodying the "has philosophy ever actually answered any question" meme.

The author spends several pages complaining about how the evil masterminds behind AI haven't actually thought through what it'll do to society, haven't proposed any real way to handle its impacts. And then proceeds to not propose any real ways to handle its impacts.

Making fun of billionaires for being fake philosophers is all well and good, but the technology is here, like it or not. So is the proposal to get rid of it? Butlerian Jihad? If it is, just say that. That's genuinely fine! But as is, no such action is actually proposed.

I'm not expecting random bloggers to just solve what might be the defining issue of our generation, but come on, I'm really starting to get tired of this format of post that doesn't even try, while simultaneously complaining about and making fun of any existing "solutions". Yeah, I don't think UBI or the "leisure economy" is going to happen soon either, and if it does it's certainly got all the flaws that were mentioned, but it's better than literally nothing.

Can we at least admit that it's a genuinely hard problem, and beyond either managing to pull off the aforementioned worldwide Butlerian Jihad, or getting lucky and it turns out AI actually sucks and can't replace anyone's job, we don't really have any good solutions for it? Or would that be too uncomfortably close to admitting that between the "fake philosopher" tech bro bloggers and the ones that, I guess, did philosophy in undergrad, neither have any workable solutions to the problem?

>article complaining about AI destroying the economy >includes 2 dozen AI generated images in the article

Alternative theory: "AI" is Silicon Valley searching for a new "business model"

Because it knows the current business model is not likely going to stand the test of time. Reality has returned. While it was suspended, Silicon Valley went on an incredible run and was able to stockpile absurd amounts of cash

As so-called "tech" companies now shrink in face of reality, Silicon Valley wants people to believe this is because of "AI", not because of the unsustainability of their data collection, surveillance and ad services "business model", and that the same fate awaits non-"tech" businesses and professionals

Perhaps SillyCon Valley can keep reality away for a while with supersized spending and borrowing and 24/7 marketing. People will certainly go along for the ride. Bankers and lawyers are making a fortune, for example

But eventually reality will return

Will Silicon Valley have found a new business model. Time will tell

Meantime, the so-called "tech" industry is being downsized

CR4-DL

If AI or any of the means of production are too concentrated, societies around the globe have found a solution: tax or nationalise.

Even taxing might be enough to tilt the scale in favour of labor. If whole countries have their socio-economic fabric damaged because the means of production are locked elsewhere this constitutes a sovereignty issue and it will be dealt with.

The Industrial Revolution had the same pains, and it took a few centuries to get societies where we are today.

Power generation is also instrumental to almost all labor produced today, and thus utilities were born.

I think the pope is right and the AI bros are wrong. I am currently rooting for the open weights to give the power back to the people. For teachers and artists to work for their neighbourhoods and communities.

Do we really have to engage in this level of mental gymnastics before we just genuinely look at the banking system consolidating and producing money out of thin air? Does the explanation really need to get this complex?

Just in case, I think I will stock a few ammon boxes along with non-perishable food.

agree with many points in here.

one thing it missses, birth rates. soon there will be no humans left to participate on either side of the economy.

They failed to participate in our society. They belong on Mars, and driven off our planet.

This is why ethics matters. But when you fail to participate in the system that upholds them, your god is the capital market and not any culture or ideology.

I can't take anything seriously that talks about AI while also inserting needless AI generated images every few paragraphs.

There are obvious tells that this was heavily curated by AI, the very thing it criticizes in the opening paras and roasts throughout as a life-destroyer.

I don’t disagree with the premise, and I appreciate the roasts of the SV pseudophilosophers (he left out Ayn Rand tho).

> Who is the customer when the customer is the thing you’ve eliminated?

Seeing how US economy is K-shaped, the answer is the rich. Assuming of course the service is right.

>Last year, over half of new content on the internet was AI-generated.

Traffic != AI generated content.

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...

You can have all the GPUs in the world, and all the AI datacenters in the world, but when we are barreling towards a global energy crisis (first Russia/Ukraine, then the Strait of Hormuz shutdown, and in a few decades we will run out of fossil fuels altogether), what are all of those GPUs and AI datacenters going to do without energy? Nothing. I say this because I think this will have a far larger effect on the economy than anything else this article is talking about (AI replacing labor, a possible AI bubble crash, etc.)

What about The Dead Human Theory?

Puncuated by AI slop images that aren't even readable. What do you think that signals to the reader?

Another hand waver saying “AI will replace all humans”. Is as much a theory as saying if the earth turns 3000c hot, everything will perish, and I don’t dispute that in a few billion years.

The problem with the theory is there are vast variables and unknowns in the timeline that matters, but they are just saying it will come very soon. The how is a simple “If AI replaced all cognitive work” which sounds exactly same as “If earth becomes 5000F hot”.

Is the same lazy posit they all make.

AI likely won't replace all jobs though. Hey, the progress in robots is great, but we're decades away from a robot HVAC tech who can crawl on an unfamiliar roof and maintain a patched-together system from 20 years ago. So like, there's that.

Then the other half of the puzzle is just techofetishists having a broken world model. If you replace even 25% of the jobs you will find AI companies taxed into the dirt to pay for UBI or social services. The government will step in and manufacture jobs. The techbros can clutch their Ayn Rand books until their fingers bleed but their fantasy land of the unfettered ubermensch is simply delusional.

"It’s utterly desiccating to log onto spaces seeking a live mind to joust and think with, and find a relentless stream of slop"

Am I in the minority for going online to learn stuff, download stuff and having zero point zero zero zero interest in jousting and co-thinking?

As I'm scanning the rant (and tbh the last two paragraphs hoping for some TL;DR summarization-love) I'm thinking "mans will find universal basic income quite upsetting", then I text-search "universal" and wouldn't you know the assumption was proven correct with a straw-man shaped cherry on top ("They’ll paint. They’ll garden. They’ll finally write that novel.")

What's the value -- like the real-ass human satisfaction -- of debating and hand-wringing over inevitabilities to anyone outside of the set of all authors provoking debate and hand-wringing over inevitabilities?

I'd take this more seriously if it wasn't regularly punctuated by disgusting little slop images

Marx deacribed this with precision 150y ago

> The dead economy is not one where nothing happens. Plenty will happen. The GDP might even go up; AI-related investments are already propping it up. The dead economy is one where plenty happens and none of it requires you. Where the productive capacity of civilization has been captured by a system you have no stake in, no input into, and no vote on. Where the people who built it told you they don’t think you should have a say

Who cares what they think? If the people feel that the economy is bad, the economy is bad. Full stop. Unless the tech oligarchs remove human labor entirely, there will always be a mortal threat to them posed by a disenfranchised population.

That's where this article loses the plot. Even if the world is just AI buying and selling goods and services to itself, so what? That's not a "dead economy", in the "secretly dead but only the wealthy notice" that's "dead economy" as in "french revolution is ongoing so commerce has taken a pause".

Fully automated luxury communism etc etc.

I quit Reddit because it became infected with the delusion. Now, it appears, Hacker News has as well, and I think my days here may be numbered as the discourse here is not based on reality. LLMs are largely useless except for writing code and marketing copy, but everyone here seems to be convinced already that they're going to supplant all knowledge workers. Yet, no one can give me a body of examples of any companies that have successfully automated with them. The rift between fantasy and reality keeps growing to the point that even the critics seem convinced. It's truly amazing and dumbfounding. What we have to worry about is not AI taking over the world. It's the propagation of mass psychosis and a loss of social connection via shared reality.

Or alternatively, you fire all your staff for agent subscriptions. Then Anslopic realises they have you by the balls. They ratchet up your contract cost every month until they’ve choked every single bit of shareholder value out of your companies lifeless corpse.

And you can’t get your employees back or go back to how you used to do it, because all of your institutional knowledge is gone.

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

>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.

Leading with genAI slop art, prepared for a slop article.

I think the dead economy and dead internet is the closest real thing to the Matrix/Skynet. A mindless human-hating machine/entity virtual society that's stealing our ressources on behalf of a few very rich people who are bound for genetic bottle necking if they're not also figure out how to steal our gene pool for their transhumanist space empire.

The red flag for articles like this is the author's obsession with the failed ideals of democracy. It's as flawed as all other forms of horizontalism - including fascism and Marxism.

  The humans are still there, scrolling, but the thing they’re scrolling through has become a performance staged by machines for an audience that hasn’t yet realized the show isn’t for them.

That is a gross mischaracterization of the bot situation, dropping absolute loads of essential nuance on the ground for a simple "50/50" number. Sorry if that sounds pedantic, but I find this to be insanely important; if you think fake news is bad now, wait until literally any other human might just be a bot so you can dismiss their points and/or perspective out of hand.

Turn One (companies use AI and fire workers), Turn Two (fired workers lack income and consumption slows to a trickle), and Turn Three (the companies using AI discover they just collectively killed their customer base).

That is a classic Tragedy Of The Commons.

Two issues:

What is Turn Four, Five, Six, Seven, and Eight? Seems like 4) companies using AI collapse, 5) they no longer pay AI companies, 6) AI companies can no longer continue funding the compute and collapse via a death spiral of raising prices, losing customers, etc., 7) A wrecked global economy has no support for AI (possibly after mass destabilization and worse), and 8) a natural AI-less economy again slowly rises. A lot of noise, harm, destruction, and death for a collective delusion.

The Turn One, Turn Two, Turn Three and AI apocalypse scenarios are also the biggest selling points for AI — implying LLMs are so powerful the only way to survive as a business is to be on the first group taking advantage of AI (nevermind Turns Two and Three).

Yet the most likely alternative is rarely mentioned.

So far, all signs, studies, and results show AI as being oversold, and yet very useful. Just like every major computer and network revolution before.

Turn One: early adopters get advantage for a while,

Turn Two: no productivity gains showed up in economic statistics,

Turn Three: adoption finally becomes sufficiently widespread and integrated that workflows change and it shows up in productivity improvements,

Turn Four: The workflow changes and productivity improvements change what people do and adopting the technology is no longer an advantage but mere table stakes to play in the new economy.

The question is: when AI turns into table-stakes for the modern business of the 2030s, can the returns repay the investment?

We can likely look back to the early investments in railroads and internet infrastructure for examples. Enormous piles of money were lit on fire to build infrastructure, the technology absolutely became foundational to the new economies, and most of the companies involved lost money and even went bankrupt along the way.

> It’s utterly desiccating to log onto spaces seeking a live mind to joust and think with, and find a relentless stream of slop.

AI slop article complaining about AI slop. 364 comments and 269 points. Are the comments here all bots, too?

Am I a bot?

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.

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.

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.

Old theory - I feel like that Simpsons meme, "say the words Bart," but, Marx write about this:

> The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit.

The fact that companies seek profite by cutting labor costs, but in cutting labor costs can inadvertently reduce the spending power of their customers in aggregate, is one of the inherent contradictions of capitalism.

https://www.marxists.org/archive/marx/works/1894-c3/ch15.htm

> Piketty, no conservative, has argued that UBI fails to address root structural problems: “unequal access to education and health, low-paying and low-productivity jobs, malfunctioning markets, corruption, and regressive tax systems.”

I don't think we should listen to Piketty for anything: it's a product from the state, by the state, to create state loving persons by hammering them with constant state-loving propaganda since they're a toddler till they're a grown up.

Speaking about "low-productivity job" I think every single job Piketty has been doing its whole life does qualify.

Corruption: yeah, the french state is very good at that. Public spending is, officially, 57% of the french GDP. But unofficially we all know it's above 2/3rd, with many of the "private" companies, like the utility ones, being actual state monopolies. France is nearly a full-on planned economy and crime is on the rise, quality of life in freefall, education level in freefall, the country is closing to defaulting on its public debt and we can all see how many tech companies France created: way to go. Hermes and Champagne are saving the country: go France! (typing this while sipping a "mojito royal" [mojito with champagne instead of sparkling water and wife's got many Hermes scarves: so I'm one of those bringing money to the french state btw... I wonder how finances are going to turn out once we stop buying the "french quality" bullshit).

Really: people should stop listening to that fraud as if what he wrote was the gospel. I could have shat is dumb mega-over-simplistic formula our of my arse too if I had been raised by the state to love state, teach for the state, to create state-loving persons.

And people have called the bogus numbers he used in his main "breakthrough" publication. The explanation have been wonderful too: "Yup my numbers are wrong, but my formula is still correct".

Just stop with Piketty.

P.S: that UBI is fucktarded: we all know. No need to reference a fraud to make that point.

Absolutely slamming that upvote arrow. Someone finally put into an in-depth, well-read essay what I've been trying to argue on my blog, in HN comments, in-person for several years now. What they call the "Dead Economy Theory" I've taken to calling the "Anti-Human Economy", but it's basically the same thing: half-assed, milquetoast automations displacing human labor such that capital can continue to accrue upwards and with no consideration for the actual impacts of these changes on humans, society, community, or civilization itself.

I'm far from the first to highlight it either. The Animatrix highlighted it beautifully what one can expect in a civilization where machines replace human labor in a general sense, and where systems haven't been built to preserve human interests prior to their rollout - tax schemes, job programs, collaboration rather than competition. Ghost in the Shell has had multiple story arcs about the consequences of displacing human labor without care for the consequences of said displacement, because the displacing party gets all the money and power while remaining unaccountable (or so they believe until the very end) for their actions. Cyberpunk dystopias have been intensely focused on it in video games for decades: System Shock, Deus Ex, Horizon, you name it. All of them take those next steps of "what happens when automation displaces a plurality of labor" and reached the same conclusions on strife, despair, poverty, and the general collapse of social order.

These effects have been known for centuries. They are not new concepts.

The folks trotting out "people say this about every technological revolution" are those willfully naive to the past historical harms and ignorant of the plight of others in the present. A flimsy excuse to avoid having to stare into the heart of the system and understand its machinations for yourself, to avoid having to accept that yes, you are a part of it too, and therefore bear some degree of blame for how things function. This isn't the loom, or the radio, or the computer coming onto the scene, but generalized intelligence partnered with generalized robotics to replace the entire sum of human labor. This is what the AI firms openly and repeatedly advertise. This is what CEBros continue to do layoffs for, never considering for a single moment what comes after. Excuses of "people need to find meaning outside of work" or "new jobs will be created anyway" are similarly ignorant in narrative, hollow excuses to avoid the most basic of rational thoughts about the system they're defending beyond whatever nugget of faux-intellectualism they can spout out to sound like they have a clue.

General intelligence, with general robotics, to replace general labor.

There is exactly one way that story ends, and it's not for the benefit of humanity, not under the current systems of governance and systemic incentives we've built for ourselves. It doesn't end with infinite leisure or transhumanism or grandiose visions of utopia, but with the wholesale destruction of human civilization in the name of personal power and wealth.

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The problem is worse than it seems when it's phrased like it's all about some evil far away up there billionaires.

It's a bit like discovering when a corrupt country is not purely corrupt due to its leadership but the whole thing is a fabric throughout society.

It all starts from individual decisions and it applies to small companies and consumers alike. If a small company needs translations, and AI is good enough to do it, they won't hire someone from the goodness of their hearts for human dignity reasons. If you're a regular person and want to do taxes or want fina cial advice or have some accounting tasks and it's way cheaper to do with AI than hiring someone, you won't hire accountants out os solidarity. Just like you don't buy artisanal shoes and handmade furniture.

We see this in many other things too, such as abundant entertainment and food delivery replacing social connections. People will take the path of least resistance.

Everyone wants to be needed and to have purpose, but also everyone in actual preferences do accept the machine version in the end if its more convenient and cheaper.

I don't see anything inevitable about "new jobs" or everyone discovering artistic passions to spend their time. That has not happened either when the Internet opened up all knowledge and you could suddenly talk to people anywhere on the planet. The optimists said that all this will lead to people learning and reading and everyone doing courses or talking to others and reconciling differences once they can directly interact, leading to more peace and understanding, that social media will give a voice to people and inevitably strengthen democracy etc.

It's very possible that all the Earth's population ends up like the Aboriginal Australians, addiction, lack of purpose, the ground pulled out under our feet. Essentially sedated with AI generated VR content to bear our existence and any small Epsilon change in the local neighborhood will have too much activation energy to happen. People all in their own generated worlds, polarized, angry at each other, seeing no value in each other, or perhaps even in their real selves, as opposed to their projection in the VR stories.

Some strange groups like the Amish will hang on, but even they are dependent on trade with broader society.

We will be told this is all for the greater good. Humanity was anyway not going to last forever, it was just one step on a cosmic drama, and the important thing is the future light cone and immense numbers of galaxies and whatnot.

I've been finding it rather odd lately that the companies that make phyiscal things that run the world bring in significantly less money than a handful of companies whose main function is stalking people across the internet for advertising purposes.

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

There 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...

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.