AI Job Loss and Competitive Escape Velocity
A lot of people are starting to get worried about AI taking their jobs.
This is natural. AI is getting very good. Very very good. So good, that they are starting to be able to perform core functions of many types of work.
To that effect, many CEOs are wondering if they will finally be able to start laying people off.
The temptation around this is strong. Employees are expensive. AI is expensive too, but it's comparatively much less expensive, and getting cheaper by the day.
The problem with the drive to lay employees off is it is the result of small thinking.
Here's an analogy:
Lot's of people complain about how much more unaffordable life is compared to the 1950's.
For certain commodities, they are right. College needed far fewer hours of minimum-wage labor to pay for it than it does today. Homes and cars were much cheaper for the median worker when comparing price-to-income ratios.
What many don't realize, however, is that if one forgoes all modern luxuries, and reverted their life to the technology of the 1950's, they would actually find similar levels of affordability today.
If you had a car that was much slower, louder, and smellier, with no airbags, no crumple zones, no ABS, no traction control, no UV-protected impact-resistant windows, then guess what? It would be a much cheaper car! Of course, such a car wouldn't even be legal to manufacture anymore.
Similarly, the average home size has literally doubled since that time period. Homes often used to be small enough to be manufactured in a Sears factory and shipped on trains. Now the baseline people expect is much higher.
But if you purchased a small manufactured home today, it would be similarly affordable to small homes of the past!
Yet no one thinks about things this way, because people always want more. The standard is endlessly increasing, the bar evermore raised. Our baseline of technology and luxury has increased so significantly that most people opt for modern living.
The same is likely to be true for companies. A CEO looking to cut costs may be hoping he can cut half his staff and make the remaining ones work twice as hard with AI. But the main consideration here is not what one company does, but what its competitors do.
All companies will be racing now to produce as much as they can with AI. The company that lays people off because it is meeting its 2022 pre-AI productivity levels with half the staff is thinking like the person that believes a 1950's car is still adequate for 2025.
The reality is that output is going to increase exponentially, and the only way to stay competitive with other companies will be to similarly increase output, with staff trained to direct and orchestrate armies of agents to produce valuable work.
Many more features will be getting built, tested, and maintained; many more marketing campaigns can be created; many more products can be prototyped.
One might think that AI should be doing much of this directing too. That day may come, but we are not there yet. In the interim, it is important to remember that economic production is for human ends, so it still requires humans to do the directing. We are bound to see a very large increase in company output, especially as staff get the hang of agent orchestration.
It's possible that we even see a very sharp uptick of hiring right before AI is finally good enough to replace us as orchestrators and employment plummets. But by that point there will likely be so much production and abundance that none of us will have to worry about it.