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by freakynit·2mo ago·view on hn ↗
I mean this case with AI-productivity fires itself back when we talk about GDP.

The more AI causes productivity increases, the less and less number of workers will be needed. This will heat up the job market even more and bring salaries down.

Net effect of this productivity increase: less consumption by the masses, even though you may be producing more good and much more efficiently.

A third effect also comes into play that once all this starts to happen, common people, who are generally living paycheck to paycheck, will now start to hesitate towards making any long term investment, housing included. And that indirectly will end up impacting financial and banking sector, which will then impact existing savings, bonds yields and retirement funds, and the recession-like cycle starts.

This productivity increase only makes sense if it is capped to a very small number.. like 20% max. Beyond that, who these companies will even be selling to?

Am I overthinking all this?

6 comments
> The more AI causes productivity increases, the less and less number of workers will be needed.

That only holds if companies have a fixed need for "productivity" which is met by their current employees, such that their employees becoming more productive means they need less of them.

Every company I've ever worked for has wanted to achieve way more than they are able to get done with current resources.

But generally yes, the biggest open question about all of this is how the impact will play out on the economy, job opportunities etc. I've not seen anyone come close to a confident prediction about how this will play out.

> Every company I've ever worked for has wanted to achieve way more than they are able to get done with current resources.

I mean sure. Every company wants an infinite addressable market. But that doesn't mean it exists.

It might not be possible to sell 10x the software we sell today. It might not even be possible to sell 2x

It's hard to imagine how making insurance sales cheaper for the brokers, churning out astrology apps faster, AI boyfriend bots or running ad campaigns with fewer and lower paid designers is going to drive 10% GDP growth in developed and middle income countries, that's the sort of figures you see when very poor countries finish rolling out electrification, sanitation and transportation.
>The more AI causes productivity increases, the less and less number of workers will be needed. This will heat up the job market even more and bring salaries down.

>Net effect of this productivity increase: less consumption by the masses, even though you may be producing more good and much more efficiently.

Big tech companies can't even create login flows and account recovery flows that work for everyone yet. There are countless stories of folks losing access to business Instagram accounts that get hacked, Google support from a human to fix a problem that is outside of their help articles is non-existent, etc etc. There's still so much "low-hanging fruit" IMO that isn't particularly fun or exciting to fix, but ask your average non-tech friend or family member what they think of the Facebook + Instagram security settings pages / sites / desktop-only settings.

Who is going to pay for all of these subscriptions that will power this GDP increase when average purchasing power of those outside of the top ~10% of earners is decreasing YoY? We're headed toward food and water shortages next to sprawling datacenters, not shared societal prosperity and a healthy middle class.

First of all, common people are not living paycheck to paycheck in the sense that they're at risk of not having money[0]. This is corporate content marketing that has entered the collective memory of people, not anything close to reality.

Secondarily, reducing the cost of making a thing doesn't always mean you get less of a thing. For me, certainly, what happened is that I write way more software than I originally did. When we built compilers, the amount of human engineering effort required to do things plunged, but the amount of software engineering jobs didn't go down.

This is as bad as models will ever be. That part is true. And it's entirely possible we go foom. But it's also possible we don't, and then it depends on where the asymptote lands.

0: https://www.slowboring.com/p/this-economic-myth-needs-to-go-...

Respectfully, that is truly ignorant. The vast majority of humans do not have any savings and would be in big trouble if regular income ceased. No paycheck no food. It’s wage slavery and it’s pervasive.
>Am I overthinking all this?

Nope, if AI were to realise the hype, you have to take into account macroeconomics. Usually this isn't a problem for most businesses

>The more AI causes productivity increases, the less and less number of workers will be needed. This will heat up the job market even more and bring salaries down.

People also underestimate that the reason why companies are so excited about AI isn't to increase productivity, its to fire workers and crack down on worker rights. They won't lay people off because AI means they don't need as many people to get the job done, they'll fire everyone while doing a much shittier job, because they hate having to abide by worker's rights and pay people

> The more AI causes productivity increases, the less and less number of workers will be needed.

Why does this have to be the case with AI but it didn't have to be (and wasn't) the case with the steam engine, electricity, the automobile, or the computer & internet?

Certainly, AI could be different.

It's curious to me why the vast majority of people on here think it must be different.

Because the previous revolutions only automated a small subset of jobs, it didn't automate manual work.

Some people take the view that AI could make knowledge work largely irrelevant. Any niche humans could carve for themselves would only live long enough to generate training data for the AI to automate.

> The more AI causes productivity increases, the less and less number of workers will be needed

This might not necessarily be true. Increased efficiency creates induced demand to the point where more workers are needed. Because the new capabilities unlock more value to extract and the economy rushes in to get it. The steam engine is a huge example of this

I dont exactly know what new value genAI will unlock but i think its more likely than not