For months, the threat of artificial intelligence (AI) replacing human workers has hovered over the American economy like a distant storm. But this week, the storm made landfall, as viral doomsday essays seemed to become reality.
Many Wall Street banks, top economists and even AI CEOs consider this all to still be overblown hype, cautioning that macroeconomics 101 implies the Citrini narrative is false. Others stake out a middle ground, predicting an AI transition that will be difficult but ultimately positive. But the Block layoffs suggest that, at least in the tech sector, the AI scare is moving from market narrative to sudden reality. And America isn’t prepared.
She told Fortune about sending out hundreds of applications and facing endless ghosting and a profound lack of respect for her creative skills. Maybe she’s a victim of an entertainment recession more than an AI victim, she said, but she’s working retail to make ends meet. She also said she’s struggling with a certain loss of identity. “I really felt embarrassed when I showed up to work the first day and like put on my name tag,” James admitted. “It’s very shocking. Like I just fell off a cliff and I don’t, I have no flashlight.”
Then, because of “skyhigh inflation” and sticky inflation, Ganapathi argued, a huge amount of people will persistently experience recession, while another segment of people will insist that the data shows everything is fine in the economy. She said the “huge disconnect between the data and the reality will keep widening, and AI will only make it worse.” It sounds a lot like the “ghost GDP” thesis of the Citrini essay, she agreed. What really matters about this disconnect, she added, is that it means the economy won’t experience a “clean, single-event collapse.” Millions of Americans, in other words, could find themselves in a continuous tumble off a cliff, without the flashlight.
Citadel argues the doomsday thesis relies on the “recursive technology fallacy,” ignoring the physical constraints of energy and compute power that naturally brake infinite AI expansion. Historically, Citadel notes, productivity shocks lower marginal costs, expand output, and increase real income, acting as a complement to human labor rather than a strict substitute. Other critics of the Citrini essay include Tyler Cowen, of Marginal Revolution fame, and Robert Armstrong, the Unhedged columnist at the Financial Times.
Still, as an AI executive himself, Stout said he thinks it’s absurd to argue that the technology can really replace humans. “AI is not just this autonomous thing that goes and does exactly what it needs to do,” he said. “If it is, we’re not seeing it.”
The reason people shouldn’t fear the looming cliff of job loss, he added, comes down to a basic understanding of the insurance industry. Estimating that $25 out of every $100 spent on handling a claim is operating expenses—answering calls, emails and the like—that’s a huge saving in the $1.2 trillion insurance industry. Even then “this particular industry is one where there’s always value of human effort, right? Humans are amazing at judgment.” Every insurance claim will require a visit, and then likely a lengthy conversation, with a claims adjuster, he added. “Humans are amazing at evaluating a very specific, unique circumstance.”
There’s another thing about humans with this AI transition, Singh added: “Humans swing between doomsday and complete disbelief,” while the truth lies in the messy middle. Ultimately, Singh predicted the integration of AI will follow the historical pattern of enterprise technology: “It’s slow, and then it’s sudden.”
“You’re going to have very, very high-paid blue-collar workers,” Mathews said. He argued that a massive social shift is required, as parents must begin guiding their children toward vocational training and technical labs rather than strictly white-collar degrees. And these won’t be one-time jobs just for the construction of the data centers, either; Mathews said the vast majority will require complete retrofitting to handle AI’s intense power and liquid cooling needs.
“It’s hard to imagine two white-collar parents understanding the path to a very successful blue-collar career where an electrician is working in a data center making $250,000, [or] $300,000. It’s unimaginable, but that’s where we’re headed.”
