[mwilliamson]

Two thoughts:

1. I think it's worth considering how much the Baumol effect is responsible for the price changes described. Specifically: we'd expect those industries that don't benefit from improved productivity (for instance, because AI doesn't actually meaningfully help with most parts of the work) to experience price rises, since they're competing in the labour market with other sectors that have have benefited from improved productivity, and can therefore pay workers more.

Or, to put it another way, you'd expect this effect to some degree in a market operating entirely without restriction.

https://en.wikipedia.org/wiki/Baumol_effect

2. If I remember correctly, in the past, when technological innovation eliminated jobs, the new ones that sprang up generally meant a rise in wages across the board. In other words, the overall effect was low-paid jobs being replaced with higher-paid jobs.

No more. In recent years, the graph of wages of replacement jobs looks more like a U-shape: they tend to either be low-paid or high-paid. For instance, take translating a textbook. A company might decide to fire their moderately well-paid translators with a steady job, and replace them with AI (built by another company, using a smaller number (per book) of high-paid tech workers), plus some low-paid, proof readers to fix up the mistakes. And the latter group is probably precariously employed: the better the AI gets, the less they're needed. And they're probably seen as lower skilled and therefore easier to replace by the company, so perhaps their jobs look more like precarious gig economy jobs.

That's a simplification, but I think the evidence suggests that that U-shape is a pattern that, very broadly, holds true. So, we might not be unemployed, but we might have a lot of people with falling incomes and much lower job security.

(Apologies, writing this in a hurry, so can't find a source right now!)