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The Lens
Every company that adopts AI is acting rationally. Reducing costs, increasing efficiency, eliminating redundancy - these are the imperatives of competition. No individual firm can afford to fall behind. The logic is irrefutable at the level of the firm.
But when every firm simultaneously optimizes for efficiency using AI, the aggregate effect may be catastrophic. Mass automation eliminates not just jobs but the wages that sustain consumer demand. The economy enters a paradox: maximum productive efficiency coincides with minimum effective demand. Every company has cut costs brilliantly, and no one is left to buy the products.
This is not a prediction. It is a structural analysis. The composition fallacy - what is rational for each is rational for all - is as old as economics. AI merely executes it at a scale and speed that overwhelms the usual adjustment mechanisms.
The False Remedies
”New jobs will replace old ones”
The historical argument - that technology always creates more jobs than it destroys - assumes that the transition period is manageable and that the new jobs are accessible to displaced workers. Neither assumption holds when the displacement is simultaneous across sectors and the new jobs require capabilities that take years to develop.
”Skill up and adapt”
The exhortation to reskill places the burden of systemic failure on individual workers. It assumes that the relevant skills are identifiable, teachable, and durable - none of which is guaranteed when the technology itself is evolving faster than any training program can track.
”Universal Basic Income”
UBI addresses the income problem but not the meaning problem. Human beings need not just money but purpose, status, and social connection - much of which has historically been mediated through work. A society that pays people to be idle is not a solution; it is a different kind of crisis.
What We Actually Need
National
Macroeconomic policy that accounts for AI-driven deflation of labor value. This includes rethinking fiscal policy, social insurance, and the relationship between productivity and wages. The goal is not to stop automation but to ensure that the gains from automation are broadly shared rather than captured by capital alone.
Global
International coordination to prevent a race to the bottom in labor standards, where nations compete to attract AI investment by offering the fewest protections to workers. A global floor on the social obligations that accompany AI-driven productivity gains.