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> The price of things that AI can't do at all will go up, because there will be fewer people working in knowledge jobs, and therefore they will be able to command higher wages.

This doesn’t follow. If AI displaces workers the majority of them will find other work. AI will increase the labor supply, not decrease.

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Look up the Baumol effect. When productivity rises in one sector, there is an increase in wages in other sectors.

The flip side of the coin is over time we spend more of our income on the things that don’t have increasing productivity. Think of housing, education, health care, etc

I suspect that the number of workers which AI can't displace due to their unique mental abilities has natural limitations, mostly not enforced by cultures and markets.

With global population growth declining, and negative population growth in most industrial countries, the supply of humans in general, and humans of exceptional abilities in particular, will only decrease.

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