A book summary business was wiped out not because AI created perfect summaries, but because it generated "passable" ones in seconds. This destroyed the value proposition of an 8-hour human process, proving that for many consumers, "good enough" is the new perfect when it's instantaneous and nearly free.

Beyond simple productivity gains, AI will eliminate the need for entire service-based transactions, such as paying for basic legal documents or second medical opinions. This substitution of paid services with free AI output can act as a direct deflationary headwind, a counterintuitive effect to the typical AI-fueled growth narrative.

While AI expands software's capabilities, vendors may not capture the value. Companies could use AI to build solutions in-house more cheaply. Furthermore, traditional "per-seat" pricing models are undermined when AI reduces the number of employees required, potentially shrinking revenue even as the software delivers more value.

Current layoffs are driven less by AI-driven automation and more by financial strategy. Companies are cutting labor costs to free up budget for necessary AI investments and to project an image of being technologically advanced to investors.

Firms are attributing job cuts to AI, but this may be a performative narrative for the stock market rather than a reflection of current technological displacement. Experts are skeptical that AI is mature enough to be the primary driver of large-scale layoffs, suggesting it's more likely a convenient cover for post-pandemic rebalancing.

As agencies adopt AI to increase efficiency, clients will rightfully question traditional pricing models based on billable hours. This creates an "arbitrage" problem, forcing agencies to redefine and justify their value based on strategic insight and outcomes, not just the labor involved.

For current AI valuations to be realized, AI must deliver unprecedented efficiency, likely causing mass job displacement. This would disrupt the consumer economy that supports these companies, creating a fundamental contradiction where the condition for success undermines the system itself.

Fears of AI-driven mass unemployment overlook basic capitalism. Any company that fires staff to boost margins will be out-competed by a rival that uses AI to empower its workforce for greater output and market share, ensuring AI augments jobs rather than eliminates them.

Wharton Professor Ethan Malek argues that firms using AI for efficiency gains by firing staff are misreading the moment. In a technological revolution, the smarter move is to view AI as a capacity gain—using the freed-up human potential to innovate, gain new advantages, and outmaneuver competitors.