Our AI Fears Have Been Confirmed

A slow-motion car crash.

Photo by Sean Sinclair on Unsplash

There has been this meme floating around the internet for a while about how stupid the ‘AI revolution’ is. All these tech bros have been loudly claiming that AI will take everyone’s jobs and revolutionise the economy. But, as the meme goes, if no one has a job, then no one can buy anything, and the economy collapses. This idea that AI is actually a fatal own-goal for oligarchic big tech has become so common that many have been treating it as true. But we now have evidence to back this notion up.

This takes the form of a peer-reviewed paper by economists Brett Hemenway Falk and Gerry Tsoukalas, titled The AI Layoff Trap. In this paper, they created a model that assumed AI automation will make businesses more efficient by replacing jobs previously held by workers, and then saw what played out. It turns out it will create competitive market pressure so intense that individual businesses will be forced to adopt massive AI automation to compete. But this will create mass AI layoffs, which will ultimately eliminate the consumer demand these companies depend upon by destroying the working and middle classes, and so these companies will fail. As the authors put it, each individual business acts ‘logically’ in isolation, meeting market demand, but collectively they drive the economy towards systemic failure.

Because, yes, economists, that is the lesson here. AI automation is bad because businesses fail, not that the majority of the population will be driven into crippling poverty. Will nobody think about the shareholders?!

If you think billionaires are going to go for Universal Basic Income (UBI) to solve this rather than create a giant permanent underclass ripe for exploitation, you may want to check if there is anything between your ears. Yes, the likes of Sam Altman have championed UBI as a solution for the damage AI will wreak on us, but he has since flipped his stance. Quite simply, it was always a bait and switch. They needed something to soften the blow, to make us welcome their economy-crushing machines, to get permission to build them. But they were never going to follow through.

So, is this what is actually going to happen?

Well, so far, it looks like no, not at all.

You see, AI layoffs aren’t actually happening. As Oxford Economics found, companies “don’t appear to be replacing workers with AI on a significant scale” and instead suggest that they are actually using the AI layoff narrative to cover up their own shortcomings. In other words, the massive Big Tech layoffs aren’t about AI automation, but to pay for bad performance and AI expenditure.

Why? Because AI doesn’t increase productivity on a business or economic scale. One of the best lines from the Oxford Economics report is when it directly asks, “If jobs are being replaced, where’s the productivity surge?” Everyone seems to have forgotten that productivity is something we measure, and if the AI rhetoric is true, that metric ought to be skyrocketing. But it isn’t; it is stagnating.

Other studies have backed this up. Like this one published in February, which surveyed 6,000 CEOs, CFOs and other C-suite executives across various countries. They found that nearly 90% of firms said AI has had no impact on employment or productivity over the past three years. Or what about Goldman Sachs Chief Economist Jan Hatzius, who said in an interview with the Atlantic Council that AI has basically zero contribution to the US GDP growth in 2025. GDP is directly tied to productivity, meaning even large financial institutions don’t think AI is driving productivity gains. Hell, even Anthropic found that using their coding tools did not increase programmer productivity.

If AI isn’t increasing productivity, then the competitive market pressure that the Falk and Tsoukalas’s model was based on cannot occur because there is no individual advantage to automating jobs with AI.

So, good news, we aren’t going to be turned into a permanent underclass as AI takes all our jobs! Yay!

But that doesn’t mean our economy is safe.

For one, its use is deskilling us at a remarkable rate. We have known that overexposure to AI in the workplace damages expertise and skill for a while now, thanks to studies like those from JYX and Carnegie Mellon. Even Anthropic found that coders using its tools lost coding skills and comprehension. But researchers and professors are starting to notice a striking, consistent trend in recent findings: workers using AI at work are deskilling at disturbingly rapid rates.

Why is this a problem? Well, thanks to constant hallucinations (which aren’t going to stop any time soon, read more here) and shocking high costs, AI can’t replace workers. So, this deskilling will inevitably harm the economy.

But, as I have covered before, AI has also placed a ticking time bomb at the core of our economy too. No AI lab is profitable; they are all running on venture capital and debt. In fact, they have already generated over $1.2 trillion of AAA-rated debt. That not only means that AI is now tied to more debt than banks, but it has also flooded the bond market. A bond is effectively debt sold as an investment. The riskier the debt is, i.e., the more likely the debtor is to default, the lower-ranked it is, with AAA at the tippy top, considered investment-grade, and good enough for our financial system to invest in.

But wait, did you catch that? How can debt be tied to companies which are miles away from profitability, with debt being the only thing keeping them going, be considered AAA rated? Surely, that is risky debt. It sounds like this debt has been mis-sold.

Missed bond payments caused the 2008 subprime mortgage crisis.

But here is the kicker, AI debt almost certainly makes up a larger proportion of the bond market than subprime mortgages did in 2007 (read more here).

You don’t need to be an economist to add one and two together here.

AI is a massive threat to our economy. However, can we stop pretending that it is because these hollow plagiarism tools are themselves a threat because they are so capable? They aren’t; they cannot replace us, and it is moronic to suggest otherwise. The real threat is big tech grifting the stock and debt markets to turn their value into a perpetual-motion machine and, as a result, undermining the financial systems our economy is built on.

I am sure Brett Hemenway Falk and Gerry Tsoukalas meant well with their paper, but it absolutely reeks of billionaire big-tech propaganda. AI itself is not a threat; it is the maniacs wielding it, and those enabling them, that are.

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Thanks for reading! Everything expressed in this article is my opinion, and should not be taken as financial advice or accusations. Don’t forget to check out my YouTube channel for more from me, or Subscribe. Oh, and don’t forget to hit the share button below to get the word out!