You're missing the demand side and the dependents problem. AI, Automation, etc. may replace factory workers but those workers also consumed products. With less

You're missing the demand side and the dependents problem. AI, Automation, etc. may replace factory workers but those workers also consumed products. With less consumers you have less demand thus your revenues are doomed to shrink year on year. Just about every society has dependents who can no longer work and younger workers who support them through tax revenue. With fewer and fewer young workers and more and more dependents you have no good options. Cutting services would be bad for the elderly and likely impossible to pass in a democratic society as they would make up the majority of the voting population. Not cutting services would accelerate flight of workers and worse birth rates as overwork youth don't have time to start their own families.