Wages aren’t all that important though, the important thing is purchasing power. Theoretically, if AI replaces jobs and costs less to operate than those jobs, the price of whatever that job produced should go down. If it’s a widespread phenomenon, we should expect deflation to occur.
The important thing is to make sure costs actually go down. That should be true if there’s enough actual competition in the market, so if one service keeps prices up, another will eat its lunch.
If those jobs aren’t replaced with other jobs and prices remain high, demand will crater as more and more people can no longer afford to pay, and that hurts profits.
I’m not too worried long term and mostly worried about market manipulation from companies claiming there’s value when there isn’t.
The problem is that wages are only like 30% of the cost of a product. The rest is materials and company profit.
If wages drop to zero because AI does it, then yes, the cost of products is also gonna drop, but only by 30%, while your wages drop by 100%. You see the issue: decreasing purchasing power. Maths.
Wages aren’t all that important though, the important thing is purchasing power. Theoretically, if AI replaces jobs and costs less to operate than those jobs, the price of whatever that job produced should go down. If it’s a widespread phenomenon, we should expect deflation to occur.
The important thing is to make sure costs actually go down. That should be true if there’s enough actual competition in the market, so if one service keeps prices up, another will eat its lunch.
If those jobs aren’t replaced with other jobs and prices remain high, demand will crater as more and more people can no longer afford to pay, and that hurts profits.
I’m not too worried long term and mostly worried about market manipulation from companies claiming there’s value when there isn’t.
The problem is that wages are only like 30% of the cost of a product. The rest is materials and company profit.
If wages drop to zero because AI does it, then yes, the cost of products is also gonna drop, but only by 30%, while your wages drop by 100%. You see the issue: decreasing purchasing power. Maths.
That’s assuming that new jobs aren’t created.
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