Paper argues AI could collapse consumer demand: 'abundant intelligence, deficient demand'
rvp · x · 2026-09-28
A shared thread summarizes the paper Abundant Intelligence and Deficient Demand, which argues AI may trigger systemic demand collapse.
- The US economy—$13T in residential mortgages, $2.5T in private credit—rests on the assumption that human cognitive labor stays scarce and white-collar workers keep earning enough to spend.
- Top-quintile earners drive up to 65% of US consumption and are precisely the group AI will displace first.
- The paper outlines three mechanisms of systemic failure, starting with a 'displacement spiral': firms automate, incomes fall, consumption shrinks, layoffs follow.
A counterpoint to the 'AI growth = prosperity' narrative—still a theoretical model, but a notable framework in the AGI economics debate.
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