Mind the gap

AI is starting to disrupt the economy. You would hope that it would do it by increasing productivity first, which in the end, it’s what is intended for. But it looks like first is going to dislocate the job market, and the efficiency, at least initially, will be achieved at the expense of human labor. The chart below shows corporate layoffs announced by year, and 2025 is already showing more layoffs than any other year since 2010, with the exception of 2020, due to COVID. The implications are dire: the bottom 50% of the population is being squeezed by higher inflation and layoffs, and the operational efficiency achieved by substituting people for algorithms or machines, may result is higher corporate profits, benefiting the top 10%, which is the one that owns 87% of stocks. This will likely create social tensions and can be a determinant factor in the mid term elections next year.

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