My AI prompt: Who is going to buy the goods and services when everyone loses their jobs to AI?AI response: "Why are you such a negabear?" No, just kidding. Real AI response:
"When Artificial Intelligence (AI) takes over most jobs, the question of who will buy goods and services is one of the most debated topics among economists and futurists. The consensus is that without intervention, mass unemployment could trigger a catastrophic collapse of demand, a scenario some call the "profit paradox of automation". However, several economic models and potential solutions exist to address this threat, from redistributing wealth to creating new markets.
The demand collapse scenarioIn the current capitalist model, consumer spending drives economic growth. The doomsday scenario unfolds like this:
Job displacement: AI automation eliminates a huge number of human jobs, including repetitive tasks and many skilled positions.
Wage collapse:With labor value approaching zero, wages plummet. The vast majority of people have no source of income.
Demand destruction:With no wages, consumers have no purchasing power. Aggregate demand collapses, even for products that are cheap to produce.
Economic paradox:Companies achieve near-infinite productivity with AI but have no one to sell their products to.
Potential solutions to create consumer demandIf society chooses to adapt rather than collapse, several strategies could maintain consumer purchasing power.
1. Universal Basic Income (UBI)A UBI is a government program that provides a regular, unconditional sum of money to all citizens, regardless of their employment status.
Mechanism:AI-driven productivity would generate immense wealth for corporations. Governments could then tax that wealth (for example, via an "AI automation tax") and redistribute the income as a UBI.
Benefits:It would provide a reliable safety net, reduce poverty, and ensure everyone has a baseline of purchasing power, keeping the economy afloat.
Challenges: Critics question its cost and whether it might disincentivize work, though some studies suggest otherwise.
2. Universal Basic Services (UBS)Instead of providing cash, a UBS model would ensure access to essential goods and services, such as healthcare, housing, education, and transportation, for all citizens.
Mechanism:AI and automation could produce these necessities at near-zero marginal cost, making them freely available to the public.
Benefits:This would meet people's fundamental needs and free up any remaining income for discretionary spending, even with lower wages.
3. New forms of ownershipThis model focuses on democratizing the ownership of AI and the wealth it generates.
Mechanism: Cooperative ownership models or sovereign wealth funds could allow the public to collectively own and benefit from AI-driven production.
Benefits:It would ensure that the vast profits from automation are distributed widely rather than being concentrated in the hands of a few tech billionaires.
4. The "experience economy"Some predict that as AI handles routine tasks, humans will pivot to providing unique, non-automatable services and experiences.
What people would buy: "Uniquely human" services like massage therapy, personalized coaching, entertainment, and art would increase in demand.
Shift in labor: Human workers would likely have much more leisure time and would earn higher wages for these niche services, as the overall cost of living would fall.
What is most likely to happen?In reality, the future will probably involve a mix of these scenarios. Experts generally see a total collapse as avoidable, but only with proactive policy changes.
Hybrid economy:Most likely, repetitive jobs will be automated, and humans will shift toward creative, emotional, and social roles. Wealth inequality could grow substantially in the interim if policies are not put in place to redistribute wealth.
Policy and governance are key:The ultimate outcome depends on whether governments, corporations, and citizens collaborate to redefine the social contract and ensure equitable access to AI-driven prosperity. Without this foresight, a small technological aristocracy could emerge, leaving the rest of society with minimal income."
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