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The dead economy theory

owenmcgrann.com

961–970 of 1001 posts

Re: The dead economy theory

#961
post #457

The article doesn't seem to take his train of thought quite far enough. If AI suddenly makes it possible for a law firm to be run with a skeleton crew, then what's stopping all those people you fired from starting new law companies, where AI also does most of the work, and competing with you for the same market? And ultimately, if AI gets to be so good that it can competently do a lawyer's job, what reason do big law…

> If AI suddenly makes it possible for a law firm to be run with a skeleton crew, then what's stopping all those people you fired from starting new law companies, where AI also does most of the work, and competing with you for the same market? Money. They won't have the money to pay for the tokens, or the best models, because they'll be unemployed. They also won't have the connections to get the clients. When you're…

Getting clients as a lawyer depends very much on personal traits and extensive knowledge and experience within interpersonal relations and business that are never put into print or digitized, and thus impossible for an AI to access.

Re: The dead economy theory

#962

Earlier quoted context omitted.

Sorry that's no realistic. People start businesses, including law firms, all the time with little to no capital. Assuming token costs will be prohibitive assumes: A) tokens will be really expensive and B) you need to fund tokens before you have revenue. Your asserting AI makes the economy more capital intensive, when I think you'll see in practice it's the opposite.

> People start businesses, including law firms, all the time with little to no capital. Those people are usually very talented and work 16/7. And they need to convince other similar people to work for them, usually at a lower-than-market rate. The premise here is "talented humans working hard" will stop being a valuable thing due to AI.

Law firms are not factories or retail shops. Most of them are just one guy, or a partnership.

They're similar to IT, in that you can be successful as a one-man business.

Re: The dead economy theory

#964
"Turn three: the company that fired its workers to save money discovers that its customers were, in aggregate, other companies’ workers."

as AI become more agentic i think this will be gradually replaced by AI buying stuff from other AI...

either people + AI is better so people just merge with AI or pure AI is better and AI takes over

Re: The dead economy theory

#965
post #370

> Who is the customer when the customer is the thing you’ve eliminated? Seeing how US economy is K-shaped, the answer is the rich. Assuming of course the service is right.

how do we call it when there is only top bar of K-shape?

Y shape of course.

Re: The dead economy theory

#966
post #457

The article doesn't seem to take his train of thought quite far enough. If AI suddenly makes it possible for a law firm to be run with a skeleton crew, then what's stopping all those people you fired from starting new law companies, where AI also does most of the work, and competing with you for the same market? And ultimately, if AI gets to be so good that it can competently do a lawyer's job, what reason do big law…

You realize that the limit of this is that the only people worth existing is the people with capital? > I foresee a wave of entrepreneurship coming. AI will empower more people to provide useful services directly to other people, with less middlemen and menial work, and more direct problem solving. Why do I need to buy products/services from this startups when I can just reverse engineer their product and use all my…

Why you would anyone eats at a restaurant when they can buy the ingredients at the supermarket and download recipes from the Internet?

Why software companies pay for software instead of making it themselves?

Same reason

Re: The dead economy theory

#967

Earlier quoted context omitted.

Why would everyone want to do everything themselves? No comparative advantage at all and infinitely capable robots?

The entire discussion is predicated on the arrival of an AI future where AI can do any human labor at incredibly low costs and all but eliminating the value of human expertise. If getting something done resembles "doing everything themselves" then that future did not arrive.

The "incredibly low costs" part is part of the classic AI discussion, but it's not part of this AI discussion.

The article makes clear, it is describing not a hypothetical future trend, but the trend that we are seeing today, where you don't actually get that much more productivity by replacing people with today's AI, you actually probably lose more than a bit, but it's still a good deal for business anyway, because they would rather pay AI companies than people about the same amount of money to do about the same amount of work.

Re: The dead economy theory

#968
All this rambling with citations but no coherent original thought weaving several conflicting ideas together. Illustrative example: AI is simultaneously going to take all the jobs yet it sucks and nobody is getting any real productivity out of it yet these evil CEOs will somehow manage to push "adequate AI" to disrupt everything to justify their unrealistic valuations yet respected economists predict only 0.X% impact over the next years etc etc...

It's just a grab bag of arguments thrown into one long rant, and as some comments here point out, some very obvious contingencies (which even have supporting data now) have not been considered.

All this and not a single mention of the very obvious thesis that the real problem is Capitalism.

Seriously, go through each point and see how it can be traced to Capitalism. Why do these CEOs keep telling everybody there will be social upheaval and yet continue building this technology? Because Capitalism demands infinite growth in profits, and if they don't build it someone will! Why do people feel lost without a job? Because Capitalism tells them they are worthless without any "productivity" (Hmm, wonder why "starving artists" were a thing. Maybe that's also why they were so derided: the system didn't like people who found self-worth independent of economic "productivity.")

Now, Capitalism is the problem, but also potentially the solution. Here's a dynamic that doesn't seem to have been covered in these discussions:

1. The majority of economic activity is generated in supporting the economy itself. We know what happens when everyone loses a job: the economy shrinks drastically (the "Bust.") TFA claims "plenty will still happen" and "GDP might even grow" but handwaves away what that would be.

2. The wealthiest are so wealthy because they essentially take a cut of the economy. So their wealth depends on the economy growing. They are ruthless capitalists and don't care about us, but Capitalism demands growth and they are monomaniacally driven by it.

3. As such their interests are aligned in keeping the economy growing and labor compensated and spending. Yes, they have their doomsday bunkers just in case, but none of them wants that life (where's the growth?!?) and they know it.

Add to that governments, all influences considered, are also overwhelmingly invested in keeping the population happy.

I don't know what the solution will look like, but all the parties involved -- the people, the elites, and the governments -- are heavily incentivized to keep things stable. Something will get worked out.

Re: The dead economy theory

#969
post #457

The article doesn't seem to take his train of thought quite far enough. If AI suddenly makes it possible for a law firm to be run with a skeleton crew, then what's stopping all those people you fired from starting new law companies, where AI also does most of the work, and competing with you for the same market? And ultimately, if AI gets to be so good that it can competently do a lawyer's job, what reason do big law…

> I foresee a wave of entrepreneurship coming. AI will empower more people to provide useful services directly to other people, with less middlemen and menial work, and more direct problem solving.

Yes, and there is already preliminary data showing this trend: https://news.linkedin.com/2025/breaking-the-trend--small-bus...

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