Companies claim AI is revolutionary for productivity, yet economic studies, including one by OpenAI itself, show no correlation between spending on AI and increased revenue per employee. The hype about transformative efficiency is not reflected in actual economic output.

Critics of AI-driven economic collapse argue these scenarios wrongly assume a static economy. Historically, massive productivity gains from technology have lowered costs, expanded markets, and created entirely new industries and forms of consumption, rather than just eliminating jobs.

The assumption that AI will create trillions in corporate profit overlooks a key economic reality: only 1% of global GDP is profit above the cost of capital. Intense competition in AI will likely drive prices down, meaning the vast majority of economic benefits will be passed to consumers, not captured by a few monopolistic companies.

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.

AI infrastructure leaders justify massive investments by citing a limitless appetite for intelligence, dismissing concerns about efficiency. This belief ignores that infinite demand doesn't guarantee profit; it can easily lead to margin collapse and commoditization, much like the internet's effect on media.

A common mistake is assuming what's good for the economy is good for the stock market. AI could massively increase productivity, but competition could pass all gains to consumers via lower prices. It could also enable new companies to destroy incumbents, making the net effect on today's stock market uncertain.

Metrics like new app creation are spiking due to AI tools, but this increased activity doesn't ensure value. This mirrors the smartphone era, where the explosion of photos devalued the marginal photo. AI's productivity may simply create more low-margin noise.

Simply making your team more productive with AI (e.g., doubling PRs) won't increase revenue unless you redesign your business model to leverage that new capacity. The goal isn't to do old things faster, but to find entirely new things that are now possible, like letting customers order cars via email in 1995.

Unlike cable or power companies that benefit from regional monopolies, AI intelligence is a globally competitive, frictionless market. This dynamic is 'so much worse' for business because it allows for perfect arbitrage, driving the price of intelligence toward zero and making it incredibly difficult to build a sustainable, high-margin business on the infrastructure layer.