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> it’s been stated plainly by many execs that the goal is to replace double percent digits of their workforce with AI of some sort Even if we grant that this

> it’s been stated plainly by many execs that the goal is to replace double percent digits of their workforce with AI of some sort Even if we grant that this is possible, have any of these execs actually thought through what happens when their competitors also replace large chunks of their workforce with AI and then begin undercutting them on price? The idea that "our prices will stay exactly the same, but our salary costs will go to zero and become pure profit instead!" is delusional even if AI can actually replace large numbers of people, which itself is quite doubtful.

nothercastle 1y ago
Presumably if your competitors go to 0 workers before you do they win but in practice that’s unlikely to work. Most companies would be better off buying mature tech once clear savings opportunity materialize.
JumpCrisscross 1y ago
> idea that "our prices will stay exactly the same, but our salary costs will go to zero and become pure profit instead!" is delusional Has anyone said this? The point is such a shift would transfer spending from labour to these AI companies. That satisfies their investors' thesis requirement.
- bitmasher9 1y ago
  Except AI companies are competing with each other for that revenue so total spend will go down.
  - JumpCrisscross 1y ago
    > AI companies are competing with each other for that revenue so total spend will go down You're describing elasticity. None of this is particularly novel. If there is sufficient demand, the thesis is met: returns may not be astronomical, but they'll be positive for at least some of the major players. (Those with the most efficient operations or ability to command a price premium.)
the_bear 1y ago
This is the main thing that's been bugging me about the AI discussion. People seem to forget that capitalism is competitive, and if everyone gains the same advantage, then it's not an advantage. If the cost of labor goes down, it means companies will either need to lower their prices or increase their investment in other areas (e.g. hiring even more people now that they're cheaper). Unless you're a monopoly, I don't see how AI will lead to these massive cost savings everyone is hoping for.
- JumpCrisscross 1y ago
  > Unless you're a monopoly, I don't see how AI will lead to these massive cost savings everyone is hoping for "If the cost of labor goes down" and "companies...lower their prices," that means cost savings for every one of their customers. If they "increase their investment in other areas," that means lower costs of capital for all of their investments. You're arguing that the gains from AI don't look likely to be concentrated. That's good! It's not an argument that AI won't be economically revoluationary (and value adding).

nothercastle 1y ago

Presumably if your competitors go to 0 workers before you do they win but in practice that’s unlikely to work. Most companies would be better off buying mature tech once clear savings opportunity materialize.

JumpCrisscross 1y ago

> idea that "our prices will stay exactly the same, but our salary costs will go to zero and become pure profit instead!" is delusional Has anyone said this? The point is such a shift would transfer spending from labour to these AI companies. That satisfies their investors' thesis requirement.

bitmasher9 1y ago
Except AI companies are competing with each other for that revenue so total spend will go down.
- JumpCrisscross 1y ago
  > AI companies are competing with each other for that revenue so total spend will go down You're describing elasticity. None of this is particularly novel. If there is sufficient demand, the thesis is met: returns may not be astronomical, but they'll be positive for at least some of the major players. (Those with the most efficient operations or ability to command a price premium.)

the_bear 1y ago

This is the main thing that's been bugging me about the AI discussion. People seem to forget that capitalism is competitive, and if everyone gains the same advantage, then it's not an advantage. If the cost of labor goes down, it means companies will either need to lower their prices or increase their investment in other areas (e.g. hiring even more people now that they're cheaper). Unless you're a monopoly, I don't see how AI will lead to these massive cost savings everyone is hoping for.

JumpCrisscross 1y ago
> Unless you're a monopoly, I don't see how AI will lead to these massive cost savings everyone is hoping for "If the cost of labor goes down" and "companies...lower their prices," that means cost savings for every one of their customers. If they "increase their investment in other areas," that means lower costs of capital for all of their investments. You're arguing that the gains from AI don't look likely to be concentrated. That's good! It's not an argument that AI won't be economically revoluationary (and value adding).