Body: <p>As AI continues to advance, it’s replacing human labor in industries ranging from manufacturing to more cognitive fields like data analysis and healthcare. While the benefits of AI—such as increased efficiency and cost savings—are widely discussed, I’ve been concerned about a deeper issue: what happens when AI displaces so many jobs that it disrupts the entire economic system?</p>
  <p>In a functioning economy, people earn money through work, and that income drives demand for goods and services. If AI eliminates a significant portion of the workforce, many people will lose their income and their ability to purchase/consume what’s being produced. This would harm businesses, as reduced consumer demand could lead to declining revenues, and in turn, not allow the companies to operate AI, which would then lead to economic stagnation or collapse.</p>
  <p>Some suggest Universal Basic Income (UBI) as a solution, arguing it would ensure people still have money to spend. But if UBI increases demand, businesses may raise prices, leading to inflation. If inflation outpaces UBI, the purchasing power of individuals could be diminished, making this solution less effective than it appears.</p>
  <p>This creates a paradox: AI is meant to make businesses more efficient and profitable, but its widespread use could reduce the consumer base that businesses rely on. If fewer people are working and consuming, AI might ultimately undermine the economy it was designed to improve.</p>
  <p>So, how can we structure society to avoid this scenario? Is there a way to balance AI’s benefits with the need to maintain a functioning economy?</p>
  
Comments.ContentLicense: CC BY-SA 4.0
Comments.CreationDate: 2024-11-20T12:31:25.920Z
Comments.Text: Hey. I think your post is interesting. The problem is that I don't know if this is really an AI problem and on-topic here. It's more an economics/political problem, although we do accept some social questions here. I'd not close your question for now because this is still related to AI specifically and if there's an AI site that should address this problem, it's ours!
Comments.UserDisplayName: nbro
Comments.ContentLicense: CC BY-SA 4.0
Comments.CreationDate: 2024-11-20T12:32:59.657Z
Comments.Text: I don't understand much about economics, but this part "But if UBI increases demand, businesses may raise prices" may be a problematic assumption. If the demand is increased, does it necessarily lead to inflation? Can't AI actually keep up with the demand?
Comments.UserDisplayName: nbro
Comments.ContentLicense: CC BY-SA 4.0
Comments.CreationDate: 2024-11-20T18:45:41.140Z
Comments.Text: @nbro You’re right that AI could possibly scale production, but scaling isn’t the whole picture. Even with AI, there are limitations—raw materials, energy, and supply chains can’t be infinitely stretched.
Comments.UserDisplayName: Siddharth Chakravarty
Comments.ContentLicense: CC BY-SA 4.0
Comments.CreationDate: 2024-11-20T23:57:16.043Z
Comments.Text: "AI is meant to make businesses more efficient and profitable" This is not how current "AI" works or how AI is generally defined or even developed. This question makes too many assumptions.
Comments.UserDisplayName: Dr. Snoopy
Tags: <futurism><economics>
Title: Can AI Replace Jobs and Still Keep the Economy Running, and not cause this Paradox?
UserDisplayName: Siddharth Chakravarty
ThreadText: # Can AI Replace Jobs and Still Keep the Economy Running, and not cause this Paradox?
  
  (Asked by: username_0 on 2024-11-19)
  
  As AI continues to advance, it’s replacing human labor in industries ranging from manufacturing to more cognitive fields like data analysis and healthcare. While the benefits of AI—such as increased efficiency and cost savings—are widely discussed, I’ve been concerned about a deeper issue: what happens when AI displaces so many jobs that it disrupts the entire economic system?
  
  In a functioning economy, people earn money through work, and that income drives demand for goods and services. If AI eliminates a significant portion of the workforce, many people will lose their income and their ability to purchase/consume what’s being produced. This would harm businesses, as reduced consumer demand could lead to declining revenues, and in turn, not allow the companies to operate AI, which would then lead to economic stagnation or collapse.
  
  Some suggest Universal Basic Income (UBI) as a solution, arguing it would ensure people still have money to spend. But if UBI increases demand, businesses may raise prices, leading to inflation. If inflation outpaces UBI, the purchasing power of individuals could be diminished, making this solution less effective than it appears.
  
  This creates a paradox: AI is meant to make businesses more efficient and profitable, but its widespread use could reduce the consumer base that businesses rely on. If fewer people are working and consuming, AI might ultimately undermine the economy it was designed to improve.
  
  So, how can we structure society to avoid this scenario? Is there a way to balance AI’s benefits with the need to maintain a functioning economy?
  
  **Tags:** futurism, economics
  
  > **Comments:**
  > **username_1**: Hey. I think your post is interesting. The problem is that I don't know if this is really an AI problem and on-topic here. It's more an economics/political problem, although we do accept some social questions here. I'd not close your question for now because this is still related to AI specifically and if there's an AI site that should address this problem, it's ours!  
  > **username_1**: I don't understand much about economics, but this part "But if UBI increases demand, businesses may raise prices" may be a problematic assumption. If the demand is increased, does it necessarily lead to inflation? Can't AI actually keep up with the demand?  
  > **username_0**: @username_1 You’re right that AI could possibly scale production, but scaling isn’t the whole picture. Even with AI, there are limitations—raw materials, energy, and supply chains can’t be infinitely stretched.  
  > **username_2**: "AI is meant to make businesses more efficient and profitable" This is not how current "AI" works or how AI is generally defined or even developed. This question makes too many assumptions.  
  
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  ## 0 answers
  
  