Instead of a universal productivity boom, AI will eliminate repetitive white-collar jobs. This will shrink the consumer base, reducing overall demand and creating a powerful deflationary force, further entrenching a feudal economic structure with fewer 'lords' and more 'serfs.'

Unlike past industrial shifts, AI's impact won't be contained to specific industries. Once AI can perfectly replicate a human worker behind a keyboard, video, and mouse, it will trigger a simultaneous displacement wave across all remote-capable jobs.

Just as NAFTA brought cheap goods but eliminated manufacturing jobs, AI will create immense productivity via a new class of "digital immigrants" (AIs in data centers). This will generate abundance and cheap digital services but risks displacing vast swaths of cognitive labor and concentrating wealth.

AI will primarily threaten purely cognitive jobs, but roles combining thought with physical dexterity—like master electricians or plumbers—will thrive. The AI-driven infrastructure boom is increasing demand and pushing their salaries above even those of some Silicon Valley engineers.

Contrary to long-held predictions, AI is disrupting high-status, cognitive professions like law and software engineering before manual labor jobs. This surprising reversal upends the perceived value of higher education and traditional career paths, as the jobs requiring expensive degrees are among the first to be threatened by automation.

AI is rapidly automating knowledge work, making white-collar jobs precarious. In contrast, physical trades requiring dexterity and on-site problem-solving (e.g., plumbing, painting) are much harder to automate. This will increase the value and demand for skilled blue-collar professionals.

The decline of white-collar jobs, which form the backbone of discretionary spending and credit markets, will create a contagion effect impacting every asset class worldwide, as the system was built on the assumption of their stability.

Historically, technological advancements primarily displaced blue-collar workers first. The current AI revolution is unique because its most immediate and realized disruptions are targeting white-collar, knowledge-based roles, breaking a long-standing pattern of technological impact on the labor market.

Most AI applications are designed to make white-collar work more productive or redundant (e.g., data collation). However, the most pressing labor shortages in advanced economies like the U.S. are in blue-collar fields like welding and electrical work, where current AI has little impact and is not being focused.