The AI Layoff Trap
arxiv.org
arxiv.org
A purely machine economy would be far more efficient. Therefore in the limit we should eliminate reliance on human labor and consumption to build a more perfect and efficient world.
What can possibly go wrong
That's not how the capital class thinks of human consumption.
Perhaps it's then smart to make the humans have a brain/computer interface, to make then dream/think they are living in a normal society so they don't revolt.
Do you like what I've done with the place?
Recently, I tasked it to study a new Czech building permit law in conjunction with some waste disposal regulations and the result was just tragic. The model (opus 4.6) just could not stop drawing conclusions from obsolete regulations in its training dataset, even when given the fulltext of the new law. The usual "you are totally right" also applied and its conclusions were most of the time obviously wrong even to a human with cursory knowledge of the subject.
I ended with studying the relevant regulations myself over the weekend.
To be fair, humans are also often like this. If some rule/law/model was deeply ingrained into them, they often cannot stop thinking in terms of that rule, even if they are clearly in a new context (like a new country).
At least that is what happened to me in australia and I only had a year of driving practice back then, but driving on the right side was already deeply ingrained and I had to be really aware of what I did.
But to be clear, I am not arguing models have real understanding of anything - I know they don't. My point was humans can be similar in pretending to have understood something, but if their core was modeled different, they will fall into old patterns again quickly.
I think it's reasonable to worry that way before machines are more reliable than the average human (let alone more reliable than a highly trained human) they can pose a significant disruption to the job market which will send shockwaves throughout society
But recommendations to tax efficiency are unironically that (just dressed in more serious language). “Please stop giving us what we want so efficiently, we want to work more for it!”
You're trying to make it sound ridiculous, but most people aren't pure consumers. They're laborers and consumers. Policies that hurt while wearing the consumer hat may be more than justified by the benefits while wearing the labor hat.
Companies produce goods which people consume. If you hand everything over to the oligarch class, how will people consume products built by companies???
The company itself has an impact on our society and needs to be "governed", so it seems reasonable for them to pay for that governance. Actually, it seems unfair that you can claim no profit and get out of paying for that governance.
I'd be really interested to know if companies pay the true cost of their impact to society, or if individual income tax has to pick up the tab.
In systems with progressive income tax, the total tax income from a company with 1 employee making X$ is more than if the company had 2 employees making X/2$, so essentially 'punishing' using highly skilled labour over more less skilled ones.
There are no perfect taxes, and current tax systems have adapted from a lot of practical concerns. Some of those is that's it's easier to tax money as they are moving around vs when they are sitting still (wealth or property tax), and it's easier to tax people than abstract entities like companies, since people have a harder time moving. And for the same reason, it's easier to tax the middle class than the owner class, since the richer you are the easier it is to move yourself and those you care about to wherever taxes are low these days.
All these practical concerns have made it such one of the most common ways for the state to get a share of the productivity of its society, is from income tax. But this is not a 'economic law' that if must be like that. If more and more of the productivity and wealth creation in society is produced such that there is little employment income involved, we will have to find other ways to tax it.
As the value of labor plummets, more GDP will accrue to capital. But to whose, exactly? Let's categorize individual investing performance as a function of luck, corruption and skill. Only skill is meritocratic, and there is no good reason to reward the other two. Things have trended away from skill in recent decades.
As AI automation progresses, it provides more of the skill. Eventually all investing decisions will be AI-based, democratizing the process but effectively leaving luck and corruption in control of who wins.
At that point, there's just no good reason to reward individual investment performance. Since luck averages out, corruption will largely determine who the 100 trillionaires are.
The solution is to tax away the portion of investment returns that are not based on skill, which will trend towards 100%.
Everyone is efficient, thus, the efficiency has to support what we'd call our economy/society.
I can foresee a token tax in the future in some ways, but then that would kill private LLMs if hat came true so i'm not sure anyone has an answer, but neo-luddism seems short sighted.
Go to Miami, Florida, and see how virtually all public projects magically go to Cuban-American-owned companies — even huge multinationals with far greater skill, capacity, and efficiencies can't seem to land the good work.
I think part of that is safety and labor cost, but I think another part is that construction is contracted almost always.
If it were up to me, I'd be flipping burgers right now. But I literally can't do that, it doesn't pay enough for that to be a job I can take. Id have to, like, find roommates.
Don't be so sure: https://www.nytimes.com/2026/04/08/business/economy/blue-col...
Yes there is some demand for labour in fields like agriculture , and many rather not pick the work and survive elsewhere, because feudal lords rather pay peanuts for the hard work.
If everyone is going to increase productivity by some factor k per employee, then kx is the new norm of overall productivity of x employees.
If you lay off some percentage Y of your work force, then your expected gains will only be k(x(100-y)/100). In other words, you will not recognize the same productivity gains as your competitors that chose not to lay off.
Yes I realize it is more complex than that, because of reduced opex, but there are diminishing returns very quickly.
I believe there are also diminishing returns on new features/products (in general case). So you won't really need that many people.
The abundance of mass layoffs and job displacement due to funding and building of AI systems is the true definition of AGI.
We might as well get there faster instead of delaying it. You have already seen Oracle and Block attributing their layoffs to AI so it is happening right now.
So why delay any further and just get it over with.
Aren’t you talking about destroying livelihoods? Pushing people into poverty and/or homelessness? What is the benefit exactly?
There isn't much point in having people do jobs they don't like which are trivial to automate just for money, but at the point where there isn't enough economically useful things for everyone to do, the current system falls down.
> What is the benefit exactly?
Well one benefit would be international competitiveness. The country that does it slowest will be the country doing more work for less output.
I suspect if the 'AI-Maximalists' are true, it will need to be a more fundamental rewrite (e.g. UBI, Socialism etc)
> ...but at the point where there isn't enough economically useful things for everyone to do, the current system falls down.
Not necessarily. To quote the Bobs from Office Space: "He won't be receiving a paycheck anymore, so it will just work itself out naturally." No need to change, just let the plebs die out.
This assumes that for example a person who has been an artist for 20 years, can easily enough switch professions to a machinist, and the only reason for them not to do it is because the economy has no need for another machinist. An insane way to think. This is not how humans work.
Let me see any HN dweller go from their cushy home office to butchering animals for meat on 12-hour shifts for example... Oh and btw, no safety net to give you food, housing and healthcare while you learn the new craft!
I think that's the reality of lots of people when they face any redundancy situation - People take up jobs that they wouldn't traditionally want to do in order to survive or look after their family. I don't necessarily see why people on HN would be different.
As of now, there is no benefit to regular working people. Perhaps in the future, great abundance will occur, but as of now, there will only be job loss, fear, neo-luddism, and blame.
Believe me when I say that I know people, some close to me, that are experiencing fear due to automated systems being installed and tested where they work. They are essentially witnessing start of their automated replacement robot workforce.
Whatever is planned in terms of AI being used to help people needs to happen, sooner rather than later, because all I am seeing is chaos in the horizon.
(⧘⟃⨅⟄⧘)≋≋≋⦻
Seems like the obvious answer to the prisoner’s dilemma problem where everyone wants to lay off their workforce, but expects that they’ll be the only ones to get this bright idea.
That "simply" is working overtime here.
Don’t get me wrong, I think the end goal of “Tax those who can pay for it to build a social safety net” is reasonable, I just don’t buy the “negative externalities” argument.
AI isn't promising to be one machine, it's promising to be a general intelligence that could potentially send unemployment over 50%. We're talking about every truck driver, every warehouse worker, basically everyone who sits in front of a screen for a living being unemployed. This really changes things from 'social safety net' to 'prevent civil unrest that threatens continuity of government.'
It's kind of similar to how nobles fucked themselves in the middle ages. One would think having a lot of serfs is good, but no actually. Having a functioning economy would be better, and in the long run feudal economies stagnated.
And that's why I, today, am effectively much more rich than a feudal lord.
> If AI displaces human workers faster than the economy can reabsorb them
Big if.
This isn’t a scientific study, it’s a militant manifesto
Textile workers worried about machinery saying it's going to result in collapse of the economy when they lose their job.
But every time there's a new technology that threatens some jobs because of an increase in efficiency but investment thus can be placed in other locations creating new jobs. different kinds of jobs.
It's not different this time. Each time the luddite movement is wrong. They are solely concerned with their own selfish concerns and the demands to stop the technological improvement will not be heeded.
Your logic equates to "there will always be jobs for humans to do", which is naive. Remember that we're counting down in the number of things we do better than inorganic stuff. At some point our bodies (admittedly impressive when compared to other animals) will be surpassed in enough aspects that there isn't anything where we can provide enough value to live off.
>will be surpassed in enough aspects that there isn't anything where we can provide enough value to live off.
Regardless of that. AI is here to stay. Nobody is going to revoke the constitutions and criminalize AI to prevent this from happening.
What's going to happen will happen.
I did not downvote you. I argued why your model of what the future will look like is wrong. That point still stands.
> What's going to happen will happen.
Username checks out.
We can all hate on the premise (ai is good enough to do this) and/or the solution presented (centrally enforced taxation), but you gotta admit:
the messaging from SV's AI leaders about how "ai will take all your jobs" is confused as fuck, because if so, who will be on the consuming end of things?
Maybe SV's AI leaders and other assorted trillionaires. A capitalist economy that drops any pretense of serving the needs of anyone except a tiny elite.
That is a huge "if" though. I am not sure either that the latter falls from this. When the US transitioned away from assembly lines or agriculture dominated, it's not as if consumer spending consequently collapsed.
When did the US transition away from assembly lines?
I don’t think you have thought through either one of these and I don’t think they are comparable to what we expect to see for AI’s changes to the job market.