Robert Reich: Who's Gonna Buy All the AI Stuff?

[FakeNoose]

Link: https://robertreich.substack.com/p/whos-gonna-buy-all-the-ai-stuff

Through the end of June, about $3.2 trillion in AI deals have occurred this year. That’s a 45 percent jump from a year earlier, according to Dealogic, a data provider. It’s the most spent on deal-making over a half-year period in at least a decade. Many of these were truly giant deals — 44 were larger than $10 billion, including takeovers.

Is this a bubble that’s going to burst? Because I’m located in the Bay Area, I often come across people who are deeply involved in AI. They rhapsodize over it. But when I ask them who’s going to buy all the wondrous AI products and services — especially after AI destroys millions of jobs and decimates the American middle class —they have no answer.

And AI will destroy millions of jobs and decimate the middle class. Already, Cisco, Block, Coinbase, HP, IBM, and Salesforce have cited AI as a reason for mass layoffs. Two weeks ago, Anthropic CEO Dario Amodei published a sweeping policy memo warning that AI will produce labor market disruptions larger and longer-lasting than any previous technological shift.

... snip ...

If productivity rises, as it’s supposed to do when the workplace becomes immersed in AI, each worker will generate more value, by definition. And supposedly with more value, we’re all better off. Not so. Although worker productivity has been rising for years, the median wage has barely risen, when adjusted for inflation.

Here’s the truth: the four-day workweek will most likely come with four days’ worth of pay. The three-day workweek, with three days’ worth. And so on.

So, as AI takes over much of their current work, workers will get poorer or have to take additional jobs to maintain their current pay. So, back to my question: Where will the demand for AI come from when most of us won’t be able to afford it?

You’d think that Amodei or Sam Altman (CEO of Open AI) or even Elon Musk would take the lead in trying to come up with an answer to this riddle. But so far, nothing. Nor is there any conversation about what we should be doing to help the next generation of young people survive the specter of mass technological unemployment....

- more at link -

Robert Reich is asking the the correct questions here, and it seems that none of the AI companies have an answer. Please read the rest on Mr. Reich's substack. (OP link)

[bucolic_frolic]

1. Will there be an incentive to produce output as demand and prices fall?

Productivity gains could be cannibalized for awhile to drive costs and selling prices down, but the costs of manufacture still need to be maintained, machines repaired and replaced. We're left with Super Capitalists on top, robots and armchair workers in the middle, and 93% of workers with marginal or no jobs. That would be my guess. Profits will trend lower as well.

[FakeNoose]

2. The billionaires and CEOs stay on top and garner whatever profits

... so that's all they care about. How this destroys our economy isn't their concern. I think Robert Reich is pointing out that these CEOs are counting on "profits" that will probably never occur.

[Mme. Defarge]

3. Exactement!