As AI continues to advance, it’s replacing human labor in industries ranging from manufacturing to more cognitive fields like data analysis and healthcare. While the benefits of AI—such as increased efficiency and cost savings—are widely discussed, I’ve been concerned about a deeper issue: what happens when AI displaces so many jobs that it disrupts the entire economic system?
In a functioning economy, people earn money through work, and that income drives demand for goods and services. If AI eliminates a significant portion of the workforce, many people will lose their income and their ability to purchase/consume what’s being produced. This would harm businesses, as reduced consumer demand could lead to declining revenues, and in turn, not allow the companies to operate AI, which would then lead to economic stagnation or collapse.
Some suggest Universal Basic Income (UBI) as a solution, arguing it would ensure people still have money to spend. But if UBI increases demand, businesses may raise prices, leading to inflation. If inflation outpaces UBI, the purchasing power of individuals could be diminished, making this solution less effective than it appears.
This creates a paradox: AI is meant to make businesses more efficient and profitable, but its widespread use could reduce the consumer base that businesses rely on. If fewer people are working and consuming, AI might ultimately undermine the economy it was designed to improve.
So, how can we structure society to avoid this scenario? Is there a way to balance AI’s benefits with the need to maintain a functioning economy?
