The scenario where AI automation leads to a recession is economically incoherent. A recession requires a shrinking productive frontier, but AI creates an abundance shock. For this to cause negative growth, wealth holders would have to irrationally stop all consumption and, crucially, all investment.

Whether AI leads to a catastrophic 40% unemployment rate or a desirable three-day workweek is fundamentally the same in terms of total hours worked. The outcome depends entirely on policy and wealth distribution choices, such as creating more public holidays or an 'AI dividend,' rather than the technology's inherent effect.

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.

Instead of outright replacing entire roles, AI is more likely to cause significant wage compression. As AI makes certain skills more common, it floods the labor supply for those tasks, driving down pay for both displaced workers and incumbents in affected fields.

Pessimism about AI-driven job losses overlooks historical precedent. The transition from an agricultural to an industrial economy caused massive job displacement but ultimately created far more new jobs. Similarly, AI will likely generate new, currently unimaginable roles and industries.

Like the Industrial Revolution, AI will ultimately be a net creator of jobs by enabling new business models. The critical societal risk is the interim period where job losses are immediate, but the creation of new industries lags, potentially leading to social unrest and political backlash.

The biggest near-term automation threat isn't from super-intelligent AI, but from mediocre "boring bots." This "so-so automation" is just good enough to displace human workers but fails to generate the significant economic gains seen in past technological revolutions, creating a net drag on the economy.

Even if AI triples productivity growth, the resulting job churn would only equal that of 1870-1930. That period is historically remembered as one of vast opportunity and creation of new industries, suggesting fears of a jobless future are misplaced.

AI's economic impact is far more benign if it automates a small fraction of tasks across many professions rather than entire jobs. If AI handles 10% of everyone's workload, it results in a direct 10% productivity increase for the whole economy, making society wealthier with virtually no job displacement.