26. Here's How Artificial Intelligence Will Wreck the Economy

What happens when productivity explodes but jobs disappear?

i do not understand why no one is talking about this.

I’m flummoxed.

The full scale of this has probably has never crossed your mind. Who knows?

I stumbled upon the different pieces of this puzzle and now I care about it a lot. I’m going to tell you why I’m so passionate about this and then you can decide if it’s something you care about, too, or if I’m one of Professor McGonagall’s babbling, bumbling band of baboons (RIP Maggie Smith).

But first, let me acknowledge that sometimes I tell stories about time spent in the mountains and about guiding people in the backcountry. Other times, I share insights I’ve picked up on my journey in tech. This? This, strangely, is the result of both — a realization brought about by pattern recognition.

the choice between denial, giving up, grasping for control, or responding.

Seth Godin recently published a newsletter about the certainty of change and the 4 ways to navigate it.

Here’s a quick summary, for context:

“DENY: We can pretend that the world isn’t changing, that nothing is different and angrily push back on any evidence to the contrary.

GIVE UP: We can embrace our perceived powerlessness and simply stop trying.

CONTROL: You can hold back the ocean for a little while, but it always finds a way.

RESPOND: Responders see and acknowledge the situation, then use their resources to make an impact. It never works out exactly the way we hope, but it usually works out better than any of the other paths.”

We’re going to weave our way through these together before landing on the “respond” option.

the change I want to talk to you about has to do with ai.

No, NO… WAIT… wait, please, it’s not what you think. Hear me out; I want to talk about the changes we’re facing together because of AI. This is not a post about the utopian society and lavish lives we’ll lead if you just please oh please give it a chance and learn to love AI the almighty.

The piece of the puzzle that has snagged my full attention is the potential for economic devastation like we’ve never ever seen. Worse than the Great Depression. We seem completely unprepared for it, and we’re charging ahead like it doesn’t exist. 

Now, before we keep going I need you to know that this is not a doom & gloom post. I’m not here to serve you some hot and ready depression stew. I DO have concerns, but I also see opportunity.

And that, my friend, is what I’d love your feedback on.

i’m writing this because I’m concerned. and I’m fascinated.

I’m scared, but not like “boo” and certainly not like “ohmygodIcompletelyforgotthismeetingwastoday and I am wildly unprepared for it”.

If you’ve seen The Big Short, I’m scared like Steve Carell, portraying a very real Mark Baum, as he tries to wrap his head around the house of cards that caused the 2008 financial crisis.

And I’m sharing this with you to find out if I’m off my rocker or not. I’m asking questions because I truly want to know what you think.

Consider your thoughts, opinions, and feedback cordially invited.

It’s the dialogue I care about having.

1. open ai is the Wright brothers taking flight.

It changes everything. And, planes enable every corner of modern society.

We still need the pilots, engineers, manufacturers, supply chain, contractors etc… to prop up the service that planes provide (sorry about the prop pun, it was an accident at first but I left it in because I felt like it).

2. ai will replace jobs and it will also create jobs.

This is the biggest domino that I see. 

It’s going to be a rollercoaster, and we really haven’t even started yet. The bumpiness of this transition holds the opportunity for solutions that I’m most passionate about.

But we’ll get to that in a minute.

3. if output is now exponential, where do we cap it?

If we can accomplish in 1 hour what it used to take a full 3 months (or more) to produce, why work 8 hours a day? 

“Because we can accomplish MORE dumbass!” I hear you scream (by the way, you sound a lot like Red Foreman. I never noticed that before).

Right, well that’s what I’m saying. When is “more” enough? This is an extremely important question.

Hands down, bar none, the biggest impact of AI’s contribution to “more” is what it means for efficiency. Sure, more efficient planning, building, production, marketing, selling, distribution, service. More money earned for less time spent. Yep, I’m with ya. Sounds great.

But: “more” is about to mean something entirely different than we’re used to, and that’s why we need to ask and answer the question “when is enough?”

This is where I see the unexpected, rapid side effects of AI’s role in creating more output. It makes me think of the Guggenheim’s Can’t Help Myself exhibit by Sun Yuan and Peng Yu from 2016. The art piece involves a robot tasked with containing a red, viscous liquid.

“…an industrial robot, visual-recognition sensors, and software systems [to] examine our increasingly automated global reality…When the sensors detect that the fluid has strayed too far, the arm frenetically shovels it back into place.”

Can’t Help Myself by Sun Yuan and Peng Yu of the Guggenheim.

4. compensation structures will crumble.

Right now, people sell their time for money. Mostly, to an employer. People either provide a service with their time or they develop assets that provide compensation for their time spent.

We have an economic baseline of monetary value built around time. Time spent creating, time saved or enjoyed from buying. 

Our benchmarks for the output we can produce, and the money we can earn, rely on a common understanding of value. It’s a major factor in determining compensation packages; not to mention, the price of goods.

Now what?

5. the workforce is aging out; some are being eliminated and others are leaving for opportunities like the creator economy.

AI is already showing signs of replacing the skills people have invested years of their lives and many thousands of dollars into. 

Everyone will need to adapt to using new tools, apps, and systems.

At work and, yep, even in their personal lives.

I used to think a college degree was THE requirement for high earning potential.

I’m seeing more and more people using other methods to learn new and valuable skills. I, myself, have used good ol’ Youtube University, online courses, webinars, masterclasses and more to update, and even replace, legacy skills learned in college or in early parts of my career.

Because what was taught, or used, is now obsolete.

The expiration date on things taught is about to accelerate a whole lot faster. Like, a lot, a lot.

6. finding and sharing files is already a problem

Finding anything at work takes 3x longer now. Most of our companies’ file libraries don't have the right (or any) labels, content tags etc... for modern file-searching. The problem isn't that our jobs might get replaced; it’s that we don't know how to find what we need so we can keep kicking ass, like we’re used to doing. 

Worst of all, it can feel like we’re slipping. I see it with colleagues every day. Most of the stuff in those file libraries? It isn't wearing name tags... the files don't know to say "polo" when the search bar says "marco".

And here’s the kicker: if every person and every team keeps storing things in different drives, on different Sharepoint sites, on their own desktops…the files we need won’t show up when we search for them — we won’t have “permission” to view or edit them.

If you’ve worked in a, well… if you’ve worked anywhere, you know first hand how hard it can be to find the thing you’re looking for.

• Think of the time you FINALLY found that form, only to discover it was 4 years old and a newer version was nowhere to be seen.

• You didn’t know James just published an updated form to use. You still don’t, actually; it doesn’t show up when you search for it.

• Ol’ Jimbo thought he stored it in an accessible folder where everyone could find it. 

• The folder’s name doesn’t really describe it as a place where one might look for that form, though…so neither you or the search engine found it.

7. someone will have to teach people how to use the new and changing systems in a way that spans a multigenerational workforce.

I mentioned earlier that this is not a doom & gloom post and I meant it. This is one of the opportunities in all of this. 

We need people passionate about building new ways to create simplified systems, while teaching users of varying levels of comfort en masse (join me! I’m one of those passionate people).

This is another place of relevance for the question about when “more” will be enough. 

We’ve been a product-focused economy for so long that it will be a difficult pivot toward embracing an economy that prefers to focus on user experience.

That’s a hard pill to swallow for consumer packaged goods.

8. financial firms are going to get smacked.

And I mean, royally walloped.

There are fewer people entering corporate. In addition to those aging out, being eliminated, or leaving voluntarily, the birth rate has been declining. While, at the same time, the cost of childcare continues to rise. Dual-income households are opting to become single-income households because it is more cost effective for one guardian to stay home than it is for both to work and to pay for childcare.

That means fewer contributors to workplace retirement plans. Portfolios will start to fall short of projected returns with fewer assets under management.

Livelihoods in jeopardy. Corporate bankruptcy. Devaluation races.

Ok, I admit that part was kind of doom & gloom. But that’s also why I’m so concerned??

Right?

9. there’s a cliff — product demand will tank, causing product surplus, and the “more money” we got from an ai boom will evaporate.

As we keep moving toward an economy built on fulfillment, we’re eliminating the jobs that make fulfillment possible, without reducing the present demand for packaged goods in the supply chain.

I mean, that’s just…that’s not a good equation.

OH and it’s not only the US. 

If we topple the supply chain workers and systems by introducing the tech-advancement-dominoes, the economies of entire countries may fall. Countries where their exports are central to their economic stability. Using AI to genetically engineer food in a lab (this is happening), points to questions about the future of trade.

A future where we don’t rely on importing agricultural and other goods.

Which, wouldn’t be totally all that bad if it weren’t going to happen all at once to countries unprepared for a disruption of that magnitude.

10. opportunity and where we can focus.

Co-Founder and former CEO of Hubspot, Brian Halligan, suggests that software will move past it's role as a "do it with assistance" tool to become a "do it for me" tool. 

This is big. It might seem like a simple statement, but it describes the bumpy AI transition from above and will fracture entire industries.

zooming out, I’ve started looking at this like one big product change at a company.

Zooming in from there, I see 2 primary parts at play:

1. Implementing a new platform or tool.

2. Teaching people how to use it.

At its core, that’s what we’re talking about.

Yes, it will happen to many tools in many systems across every industry. Which is, um, well… yeah, kind of a big deal.

But new AI updates or releases will roughly follow the same pattern every time: set it up + teach it.

Our ability to succeed—to minimize the economic rollercoaster—relies on upskilling our workforce. We need to focus on how to set up and teach changes that will impact every person and every job.

AI will outpace us, that’s inevitable.

Moving from “I can use this software" to “this software will do it for me” is going to be a licensing, provisioning, and file governance hurdle. The future of the workforce includes a much closer relationship between IT and learning & development teams.

But what we can do is communicate, collaborate, and coach.

Getting from here to there depends on it.

so, tell me, do you share my concerns?

Are you open to chatting through solutions?

Or..

Am I completely wrong and need to stop talking about this?

talk soon.

Thank for being here. See you next time.

onward.

-dmac

Thanks for reading Unobstructed!

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