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The AI Layoff Trap
You have to fire workers to keep up with the competition even if it means unemployed consumers won’t buy your products.
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1. Rotten to the Core
We’re going to have a fairly technical discussion about economics and AI in a minute, but first I want to give you some candy.
As part of the America 250 BS, the Trump administration held a quiz bowl–style competition for high school kids about “civics.”
And they rigged the game.
One of the semifinalists was a Sikh kid from Connecticut with immigrant parents. The judges made clear-cut “mistakes” in grading his answers so that three white kids—one homeschooled, one from a private Catholic school, and one whose dream is to go to Hillsdale—made the finals.
I know this sounds like crazy talk. It’s not. NOTUS has the entire story.
This is America now. Heritage Americans and MAGA fans first.
No deviationism will be permitted.¹
On the one hand: This is not a big deal. Anyone who has ever watched a $100 Rotary scholarship go to the son of the guy who runs the local chamber of commerce knows this is how things work sometimes.
That’s life.
On the other hand: The rest of us don’t have to play along and pretend not to see what’s happening. Oh, and one last thing in the footnotes.²
2. AI Talk
There’s a new academic paper making the rounds from a couple of researchers at Wharton. It is . . . alarming. They try to anticipate effects from the AI disruption and their thesis goes something like this:
AI will rapidly replace many workers.
The surge in unemployment will crush overall demand for products and services.
At which point the companies that replaced workers with AI will suffer.
This trap is akin to the Prisoner’s Dilemma. Overall, businesses would be better off if they cooperated and slowed their adoption of AI. But individually, businesses will be harmed if they don’t replace workers as fast as possible.
Not gonna lie: It’s a pretty grim assessment. So let’s look closer.
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