AI will inevitably cause mass, short-term job displacement. To prevent a depression from collapsed consumer spending, Universal Basic Income (UBI) is essential. It acts as a bridge, sustaining demand and allowing society to benefit from AI's productivity gains while new industries emerge.

Contrary to common fears, AI is projected to be a net job creator. Citing a World Economic Forum study, Naveen Chaddha highlights that while 92 million jobs will be displaced by automation, 170 million new roles will emerge, resulting in a net gain of 78 million jobs by 2030.

Contrary to the feeling of rapid technological change, economic data shows productivity growth has been extremely low for 50 years. AI is not just another incremental improvement; it's a potential shock to a long-stagnant system, which is crucial context for its impact.

Contrary to fears of mass unemployment, AI will create massive deflationary pressure, making goods and services cheaper. This will allow people to support their lifestyles by working fewer hours and retiring earlier, leading to a labor shortage as new AI-driven industries simultaneously create new jobs.

The narrative of AI destroying jobs misses a key point: AI allows companies to 'hire software for a dollar' for tasks that were never economical to assign to humans. This will unlock new services and expand the economy, creating demand in areas that previously didn't exist.

Rather than causing mass unemployment, AI's productivity gains will lead to shorter work weeks and more leisure time. This shift creates new economic opportunities and jobs in sectors that cater to this expanded free time, like live events and hospitality, thus rebalancing the labor market.

The guest argues that without the massive GDP growth and efficiency gains promised by AI, the U.S. is on a path to being surpassed by China as the world hegemon by 2030. AI is not just an economic boom; it's a geopolitical necessity for maintaining America's global standing.

In a high-impact AI scenario, massive productivity growth leads to gluts of goods and services. This causes prices to collapse, creating massive deflation. This deflation acts as a universal pay raise, dramatically increasing everyone's real wealth and purchasing power.

As AI gets exponentially smarter, it will solve major problems in power, chip efficiency, and labor, driving down costs across the economy. This extreme efficiency creates a powerful deflationary force, which is a greater long-term macroeconomic risk than the current AI investment bubble popping.