Economists Model the 'AI Layoff Trap': Automation That Destroys Its Own Customer Base
A paper from Wharton and Boston University economists formalizes the paradox in which companies that replace workers with AI eliminate the consumer demand their products depend on — and the math shows no equilibrium recovery.
A paper from economists at the University of Pennsylvania (Wharton) and Boston University titled "The AI Layoff Trap" has gone viral, as documented by @SOU_BTC, for formalizing what many have intuited: mass AI-driven layoffs could destroy consumer demand faster than new economic activity replaces it. The model shows that under certain conditions, automation-driven unemployment creates a self-reinforcing downward spiral with no stable equilibrium.
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