Imagine this scenario:
- All companies start producing mostly using only AI and firing people, because people have no use anymore
- Joe spend most of his income on digital video games products
- Joe get fired because he got replaced by AI now, since AIs are taking over most jobs
- Joe has no income anymore
- Joe doesn’t have any more money to spend on video games
- Companies have no more profit, because people don’t have income, so people can’t spend on their AI produced products
In this scenario both lose, the company adopting AI and the worker. Am I missing something? Is there any possibility besides Universal Basic Income to keep the system running and not collapsing?
That is the question. But you’re missing one crucial element. How are the very companies employing the AI going to make money when there’s no consumer to purchase their products?
I’m sure at least some are operating under the assumption that government bailouts will be on offer (too big to fail). The industries that have received bailouts in the past are also on the AI bandwagon.
The whole system is predicated on people consuming. AI can’t take over everything to the point where people can’t buy stuff. Why would the government bailout a company that has no customers.
Bailouts help the company to become profitable so they can be repaid. Again, no customers no profit no bail out.
Eh, the US gov’t has a pretty solid track record of “bailing out” with “loans” and then “forgiving” them, aka free money for the C-suite.
Yes, but historically companies that receive bailouts pay them back at a minimum in part. But very often they are completely repaid.
Can’t be bailed out of noones got money for taxes
So many financial businesses these days don’t really seem to have a product, just a stock price, and they make it go up and down, and bet on it, and that’s all it takes to make money. None of it is real, but it contains pixels on a screen, so it exists enough to buy real products, and that’s all that matters.
So I’m having a really hard time communicating this to people and I don’t know if it’s because they are young and inexperienced in the way of the world or they simply lack a complete education of how economics function I don’t know.
Our entire economic system on this planet, every version of it from socialism to dictatorships to capitalism, and whatever it is they have in Denmark and Sweden, functions on one simple fundamental principle: consumption.
The companies being traded on the stock market exist because people buy the products and services those companies provide.
Adobe sells licenses that allow graphic designers to use its products. There is no physical product involved, only digital services, but those licenses are still what keep the business operating and allow it to be publicly traded on the stock market.
If AI replaces the people physically working at these companies, the people creating the software and products being sold by these publicly traded corporations, then eventually there will be no consumer income left to sustain those businesses. Without consumers spending money, companies will have nothing meaningful to report to shareholders and investors, which would ultimately destabilize the entire system.
People have to consume products and services for the economy to function. AI cannot fundamentally replace the entire workforce indefinitely because, if it does, there will eventually be nothing left to support the economic system, including the infrastructure required to sustain AI itself.
Actually exchanging currency for a product is so old school. Now they just need a stock price, make an announcement, and the price goes up, and those in the know make a fortune. Nothing was sold, nothing changed, there was just an announcement, and those who know the announcement is coming, or are actually making the announcement, get to cash in. It was worth one thing yesterday, and it’s worth more today, and that increase is very real money.
There are lots of smoke and mirrors tricks to manipulate stock prices and make money going up or down, and people thinking of new ones every day. Now they’re just creating their own money out of thin air.
And none of it requires any products to be sold.