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Comment by motionlessveloc | Hacker News Reader

As the friendly article points out, the "AI is a bubble" hypothesis and "entry level hiring is collapsing because AI is replacing their jobs" hypothesis are not really compatible.

As always, reality is likely a muddled mix: there is real utility and there is wasted investment that will never pay itself back.

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They actually are compatible, because the idea of replacing workers with AI in large numbers isn't compatible with the kind of economic growth these valuations are predicated on. We are not living in pre-industrial revolution times, where most people are wasting huge human effort on food growth and physical tasks, having room to move into more white collar jobs.

So, if you have massive unemployment because AI really is cheaper than labor, you'll get a massive reduction in revenue for virtually every industry, collapsing all of these valuations. Even for B2B companies, Google isn't going to be making much money selling ads to unemployed people who can't afford to buy anything.

This assumes that displaced workers are going to be unemployed forever. Blue collar jobs are more resistant to AI automation, so we'll see an increase in manual labour and manufacturing.

No, it just assumes that they will be less well payed, without any commensurate increase in anyone else's pay.

You can't have economic growth while employees are getting paid less overall, since employees make up the vast majority of consumers, and so of the demand side of the economy. So less/less well paid employees in the whole economy => decreased demand for all goods and services => no economic growth => no trillion dollar revenues.

This didn't happen in the industrial revolution as it replaced blue collar workers with automation, and the state stepped in to educate and start promoting them to higher paid white collar work. But if automation comes in big force for programming, for example, what better jobs will programmers be free to do? If a programmer who currently spends $1000 per month on fancy coffee has to become a farmer, they will simply stop spending those $1000, and so coffee companies and companies that sell ads for coffee will be poorer.

They're compatible because they are both driven by hype, not reality.

My reality: Before AI Tokens I had to hire someone. External or normal.

After AI Tokens: I don't need to hire someone anymore and if, i need to know why. Because if i have an contractor for 1-2 years and explain a lot to them, i can just explain it to AI.

Also i prefered before already to not hire someone if i had the feeling they don't have potential, now i have even less incentive to do so.

Which means that those contractors (solo or companies) struggle to get work. For the companies that means laying off some/all employees.

The net result is unemployed or effectively unemployed people, who cut back on extra spending (games, patreon, subscriptions, etc.).

That puts pressure on those people/companies which then repeats as they have reduced revenue. So the cycle repeats.

Yeah absolutly. The question though will be if capitalism is able to update its gain function somehow or if the system collapses.

As long as robots are not there yet, there might be enough of buffer in the whole system for non computer jobs to catch but i'm not seeing this either.

It will increase pressure on every industry.

And it might also lead to an increase in speed of adoption because everyone getting fired, will have the tools to fill any niche.

And because of massive overhiring. In that scenario, the sequence of events is: Cheap money (ZIRP), companies hiring developers just to deny them to the competition (there were reports) or for empire building or as a signal to investors (etc), AI and nonzero interest rates come around, need to spend billions on AI with limited money -> lay off overhired developers and say it's because AI replaces them. It's great for companies because it allows to admit no mistake regarding the overhiring and claim to be fully in on the current thing.

Simple enough, no?

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