My chain of thought: foundational model company sells models to companies, those companies build something on top of it that other companies can use (like software dev agents). This means that companies need less people for example for software engineering. But if people cannot find jobs, they cannot consume, if they cannot consume, then companies cannot grow, if they cannot grow, they won't be able to afford agents and so on… Where does my thought process fail? Or would it become like a cast system between those who have jobs and those who never be able to get one?
Won't AI automation cause recession?
byu/Same-Working-9988 inAskEconomics
Posted by Same-Working-9988
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https://www.reddit.com/r/Economics/wiki/faq_automation/
There’s an [FAQ on Automation](https://reddit.com/r/economics/wiki/faq_automation)
reposting a past answer of mine:
As of right now whether or not jobs will be displaced is at best a speculative guess, as we only currently have LLMs that can still be unpredictable and inaccurate at times.
Acemoglu published a paper last year that estimates very modest impacts at the macro-level over the next 10 years which is contrary to what CEOs claim and certainly not comparable with previous economic revolutions.
https://shapingwork.mit.edu/wp-content/uploads/2024/05/Acemoglu_Macroeconomics-of-AI_May-2024.pdf
Wharton did a similar study and came to different conclusions (due to different findings on what portion of the economy could benefit from automation due to AI)
https://budgetmodel.wharton.upenn.edu/issues/2025/9/8/projected-impact-of-generative-ai-on-future-productivity-growth
But they also outline that less than 1% of jobs are able to be 100% automated, and that there’s a lot of limitations with their projections due to the early nature of AI.
But even if we assume that AI will lead to significant productivity growth, mass unemployment isn’t really an actual concern, humans aren’t horses, and unlike horses, they are able to perform a wide range of tasks, at most the automation of certain specific tasks frees up people to work on other tasks. Looking at the revolutions of the past none of these led to mass unemployment and instead just caused other jobs in other areas to be created and for people’s QoL to increase as a result.