> it doesn't destroy jobs forever, people get new, better jobs in a more efficient economy.
Still doesn’t explain how new jobs are created. Efficient economy doesn’t mean more jobs. You could displace a thousand workers and create a single new better job, but that means nothing.
For a simple model, let's say you hire programmers for three reasons:
1. Because you have (X) work to get done to run your business. Once that work is done, there is no more work to do.
2. Because they get work done that makes more money than you pay them, but with diminishing marginal returns. So the first programmer is worth 20x their salary, the 20th is worth 1.01x their salary.
3. Because you have some new idea to build, and have enough capital to gamble on it. If it succeeds before you run out of money, you'll revert to (1) or (2).
Let's assume AI comes along that means a programmer can do 4x the work. If most programmers are in the first bucket, then you only need 1/4 as many programmers and most will be fired.
If most programmers are in the second bucket, then suddenly there's _much_ more stuff that can be built (and money made) per-programmer. So businesses will be incentivized to hire many more programmers.
For programmers in the third bucket, our AI makes more likely to get built in time, thus ups the odds of success a little.
How you think the market is structured decides how you think AI will effect job creation and destruction.
> So the first programmer is worth 20x their salary, the 20th is worth 1.01x their salary.
> If most programmers are in the second bucket, then suddenly there's _much_ more stuff that can be built (and money made) per-programmer. So businesses will be incentivized to hire many more programmers.
How do these two reconcile? If hiring more programmers is diminishing returns, why would a business hire more?
Because you've moved the frontier of who's making you money out. Now the 20th programmer is still worth 5x their salary, and you hire up to the 30th programmer to hit 1.01.
Still doesn’t explain how new jobs are created. Efficient economy doesn’t mean more jobs. You could displace a thousand workers and create a single new better job, but that means nothing.