Free Republic

A growing number of experts argue that many companies blaming artificial intelligence for job cuts are masking more familiar financial and strategic pressures. The good news for employees worried about the countless predictions of a looming job apocalypse from artificial intelligence (AI) taking work away from humans has not been borne out—at least not yet. However, that hasn’t prevented an increasing number of companies from citing productivity gains made by using those task automating apps as the reason for thousands of recent layoffs they’ve made. But now, a growing chorus of critics have begun denouncing most of those staff reductions...

If AI displaces human workers faster than the economy can reabsorb them, it risks eroding the very consumer demand firms depend on. We show that knowing this is not enough for firms to stop it. In a competitive task-based model, demand externalities trap rational firms in an automation arms race, displacing workers well beyond what is collectively optimal. The resulting loss harms both workers and firm owners. More competition and "better" AI amplify the excess; wage adjustments and free entry cannot eliminate it. Neither can capital income taxes, worker equity participation, universal basic income, upskilling, or Coasian bargaining. Only a...