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.'

The potential for an AI-driven, post-capitalist world of abundance is real. However, the path there will likely be as destructive as a world war, as the rapid upending of the economic order will throw society into chaos before stability is achieved.

While economic principles suggest AGI will be hugely deflationary, Sam Altman points out a paradox. The massive, urgent investment required to build AI compute could drive a strange, inflationary period where capital is extremely valuable, creating profound uncertainty about interest rates.

As AI commoditizes execution and intellectual labor, the only remaining scarce human skill will be judgment: the wisdom to know what to build, why, and for whom. This shifts economic value from effort and hard work to discernment and taste.

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.

Emad Mostaque argues that as AI makes intelligence abundant (e.g., free expert medical advice), our economic system, which is built on scarcity, interprets the resulting job displacement and disruption as poverty, even if overall well-being improves.

Rather than UBI, Vinod Khosla suggests governments should use AI to offer essential services like healthcare and education for free. This drastically reduces living costs and improves quality of life, offering an alternative path to social equity.

The internet leveled the playing field by making information accessible. AI will do the same for intelligence, making expertise a commodity. The new human differentiator will be the creativity and ability to define and solve novel, previously un-articulable problems.

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.