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You’ve seen the headlines. The viral demos. AI
writing essays, generating photorealistic images,
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even creating entire videos. It feels like
we’re living in a sci-fi future ... or
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dystopian one. But while we’ve been mesmerized
by chatbots and deepfakes, something much more
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important is happening behind the scenes. AI is
solving problems we thought were decades away,
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from curing diseases to inventing new
materials that could reshape our world.
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And yet… there’s a catch. A paradox.
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Because this same AI revolution that’s supposedly
going to create incredible wealth for companies,
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might be laying the groundwork for
an economic collapse that threatens
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the very progress it's helping to
create. Let’s dive into the most
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overlooked part of the AI revolution and
the economic flaw that could unravel it.
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I’m Matt Ferrell … welcome to Undecided.
This video is brought to you by Surfshark.
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This video is a little bit of a different one
for me. Usually, I focus on the brighter side
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of tech advances that are impacting our lives.
But over the past few weeks I’ve seen several
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YouTube videos that took the spark of an idea
that was quietly flickering in the back of my
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mind and doused gasoline on it. Many of these
videos kept bringing up the incredible financial
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potential for companies that are building the
hardware that’s powering the AI revolution,
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like NVIDIA with its GPUs or
Tesla with its Optimus robots.
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It always came down to something like
company X is valued at a $Y market cap
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because of the incredible future potential
of what they’re doing with AI or robotics.
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But let’s start with what most people are missing
in that conversation. When you hear "AI," what
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comes to mind? Maybe the latest news about ChatGPT
4.1? Maybe MidJourney or Sora? I’ve been using
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tools like ChatGPT and Perplexity more and more
to help with early research and parsing the news
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for YouTube videos, or for looking through large
documents and research papers to find the exact
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sections I’m interested in. I use it kind of
like Google search on steroids. Those tools
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are amazing (and sometimes horrifying),
but they’re just the tip of the iceberg.
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Large language models (LLMs) may be getting all
the buzz, but AI tools go far beyond that. Take
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materials science, for example. Scientists
used to spend years, sometimes decades,
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trying to find the right compounds for better
batteries, solar panels, or superconductors.
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But now? AI is accelerating that process
exponentially. DeepMind recently predicted
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the properties of over 2.2 million new inorganic
materials compared to the roughly 50,000 inorganic
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materials previously cataloged by the Materials
Project. Microsoft’s MatterGen goes even further.
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It’s a generative AI trained specifically
to discover new materials. What used to
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take entire research teams years now takes weeks
or even days. The implications are staggering:
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better batteries, faster
electronics, cleaner energy.
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What's more, this doesn't just stay
in the lab. A recent collaboration
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between AI researchers and Microsoft have
newly discovered materials to prototype
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batteries with up to 70% less lithium. It’s
already influencing next-gen consumer tech.
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Then there’s medicine. AI is helping detect
cancer earlier, design drugs faster, and even
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assist in gene editing. Companies like NuMedii are
using AI to find new treatments for diseases like
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cystic fibrosis and sickle cell anemia. A recent
study found AI could improve early-stage cancer
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diagnosis, which could literally save millions of
lives. AI is also being used to simulate complex
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drug interactions, saving billions in research
and helping to get treatments to patients faster.
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And it doesn’t stop there. From product
development to climate modeling, AI is
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driving innovation at a pace we’ve never seen
before. For example, PepsiCo (of all companies)
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used AI to reduce product development
cycles by 40%, leading to lower emissions
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and better aligned consumer preferences.
And BMW now uses AI not just in design,
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but to optimize entire supply chains, shaving
off inefficiencies that once cost them millions.
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So if all of this sounds like
great news... it is. Or at least,
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it should be. But here’s where
the story starts to twist.
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Before we unpack the economic twist that could
flip this whole story on its head, let’s take
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a second to talk about protecting your digital
world in the age of AI. I was just on a trip to a
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geothermal conference and between the conference
Wi-Fi hotspots and the hotel Wi-Fi, I leaned
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heavily on Surfshark VPN to keep my connection
from going upside down on me in terms of security
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and privacy. I’ve been using Surfshark for what
feels like forever and get so much use out of it.
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Surfshark is a fast, easy to use VPN full of
incredible features that you can install on
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an unlimited number of devices with one account.
But … that’s not all. Even shopping services will
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sometimes gate prices based on your location, so
you can change your location to make sure you’re
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getting the best deal. They also have add-ons to
their VPN service to unlock things like Surfshark
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Alert, which will let you know if your email or
personal details, like passwords, have been leaked
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online in a data breach. Right now they’re running
a special deal … go to surshark.com/undecided,
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or use code UNDECIDED at checkout, to get up to
4 additional months for free. SurfShark offers a
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30-day money-back guarantee, so there’s no
risk to try it out for yourself. I’ve been
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using Surfshark for years and love it. Don’t miss
out on this great deal. Link is in the description
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below. Thanks to Surfshark and to all of you
for supporting the channel. With your digital
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life safely locked down, let’s unlock the real
plot twist in the AI revolution—because the same
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tech that’s driving insane innovation… might also
be driving us straight toward an economic cliff.
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The same AI that’s helping us cure disease
and build better tech… is also replacing
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human workers at an unprecedented rate. Goldman
Sachs estimates that 300 million full-time jobs
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could be replaced by AI in the coming years.
That’s not a sci-fi scenario. That’s from
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one of the largest investment firms in the
world. Customer service, banking, logistics,
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finance … entire sectors are being automated. A
2023 survey by ResumeBuilder found that 37% of
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companies using AI had already laid off
workers, and another 44% expected to in
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2024. Even creative industries aren't immune.
AI tools are already writing marketing copy,
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generating visuals for ad campaigns, and
even scripting rough drafts of TV shows.
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It should be obvious why this concerns me
personally. AI is coming for my job. In
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the earliest days of my career I did UI and
graphic design work and got paid good money
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to work in Photoshop. Now, there are tools I use
today that can isolate the subject of a photo,
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drop it into a completely different
space, blend the lighting conditions,
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and give me a fantastic looking YouTube
thumbnail … all from a text prompt and
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attaching some source photos. No Photoshop
required anymore. I’m still part of that
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process as the human and creator, so in
theory, these tools boost productivity.
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That means fewer people are needed to produce
a given thing. You can do more with less.
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And that creates a chilling question: If
more people are out of work, who’s left
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to buy the products and services these companies
offer? That’s the paradox. Because in economics,
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there’s an assumption: that
productivity leads to prosperity.
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But if AI automates people out of an income,
the demand side of the equation starts to
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collapse. This is what most people, and
most businesses, aren’t talking about.
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Let’s break it down. Companies like
Tesla aren’t just building cars anymore:
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they’re building robots. CEO Elon Musk
has said Tesla’s value will eventually
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rest more on Optimus, their AI-powered
humanoid robot, than on their cars.
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Tesla is betting big on AI not just
for self-driving vehicles, but also
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for fully autonomous manufacturing and service
robots. Their stock price reflects this belief,
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with analysts pricing in trillions in
future revenue from products that don’t
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yet exist. But who will buy those cars
(or anything else) if automation leads
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to mass unemployment? It’s a feedback
loop with dangerous implications.
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We saw this kind of paradox before, in a very
different form. It’s called Jevons Paradox:
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when efficiency gains lead to more consumption,
not less. In the 19th century, as steam engines
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became more efficient at using coal, coal use
didn’t fall ... it skyrocketed. People found
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even more ways to burn it, driving up overall
demand. Efficiency didn’t solve the problem;
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it made it worse. But with AI, we're seeing
the reverse happen: greater AI efficiency
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leads to job loss, which leads to less consumer
spending ... even as companies ramp up production.
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Let’s call it the AI Economic Paradox.
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This isn’t just theory. We’re already seeing
early signs. Companies save money by automating,
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but consumer demand isn’t rising fast
enough to match. Imagine this at scale:
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AI enables a biotech company to
develop revolutionary new drugs,
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but because millions are out of work, no one can
afford them. Or AI invents a super battery, but EV
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demand shrinks because people are struggling
to make rent. Or retail companies use AI to
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optimize supply chains and logistics, reducing
their need for warehouse staff and drivers,
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only to see their revenue decline because those
same workers can no longer afford to shop.
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We’re not just talking about lost jobs.
We’re talking about an entire economic
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structure potentially undermining itself. The
system is designed with a key assumption:
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that automation leads to lower prices, and lower
prices lead to more buying. But that’s only true
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if people still have income. If AI replaces
humans in a way that severs that income,
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and no replacement system is created,
then the whole thing starts to fall apart.
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To be fair, there’s a counterargument:
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that AI won’t just take jobs. It’ll create
new ones, too. And that’s true… to a point.
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The World Economic Forum estimates AI
will eliminate 85 million jobs by 2025,
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but create 97 million new ones in
fields like data science, AI safety,
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and robotics. Remember that scary sounding
Goldman Sachs report earlier about 300
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million lost jobs in the coming years? Well,
there’s a more recent analysis from the company
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looking at the longer-term possibilites. In
that report they project a 7% increase in
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global GDP and a 1.5 percetage point boost
in productivity over a 10-year period.
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Sounds like a good trade, right? But here’s the
rub with those assumptions: many of these new
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jobs that people will transition into require
highly specialized skills. And historically,
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when industries transform, workers
don’t always transition easily.
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Take this example: Between 2000 and 2010,
the U.S. lost 5.6 million manufacturing
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jobs. By 2010, only 39% of displaced
manufacturing workers were reemployed,
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and most who found new jobs
earned less than before.
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The AI job boom is concentrated in metro areas
with strong tech sectors, like San Francisco,
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Boston, and Shenzhen. That leaves behind rural
and industrial communities without access to
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retraining or relocation support. Plus, even
the new jobs being created can often involve
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supervising or refining AI systems that are
doing the actual labor. A single AI manager might
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oversee processes that used to take 50 people.
So the net employment effect is still uncertain.
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And here’s something that rarely
gets mentioned: Not everyone wants,
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or is suited for, retraining into tech. We
can’t expect a 58-year-old factory worker in
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Ohio to seamlessly become a machine learning
engineer. So while new jobs may come, the
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distribution of those jobs, and the time it takes
to retrain, may not match the pace of disruption.
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This isn’t just a labor market issue.
It’s a social and political one. If
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we don’t address the mismatch, we
risk pushing more people into poverty,
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increasing inequality, and fueling social unrest.
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We’ve seen what happens when economic
shocks aren’t handled well. The
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2008 financial crisis led to years
of stagnation and a massive erosion
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of public trust. The COVID-19 pandemic
accelerated automation even further,
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particularly in logistics, food service, and
retail, permanently eliminating millions of jobs.
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And now, AI is supercharging that trend.
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A 2022 study published in the journal
Demography found that an increase in
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automation between 1993-2007 led to increases
in drug overdose deaths, suicide, homicide, and
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cardiovascular mortality. These aren’t abstract
numbers. They’re indicators of human suffering.
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Automation without safeguards
doesn't just harm the unemployed,
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it weakens the entire economy. Consumer spending
drops, innovation slows down, tax revenues fall,
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governments struggle to fund social programs, it
creates a cycle that's incredibly hard to break.
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The thing that really kind of freaks me out? The
companies at the center of this transformation
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are not incentivized to slow down. In fact,
markets reward them for doing the opposite.
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So unless governments, institutions,
and society as a whole intervene,
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we may be heading for a future where
innovation explodes… and prosperity implodes.
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So what do we do? There are ideas out there.
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Some are highly controversial.
Others are still in pilot phases.
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One very controversial proposal
is Universal Basic Income,
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a flat monthly payment to all citizens that
ensures a minimum standard of living. This
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would decouple survival from employment and
give people time to retrain, start businesses,
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or just live with dignity. In Finland, a basic
income trial showed increased well-being, health,
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and small business formation, even though
it didn’t significantly increase employment.
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Another idea is an AI dividend, a tax or
licensing fee on companies that automate jobs,
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which gets redistributed to displaced
workers or invested in job retraining.
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There's also re-skilling programs. But
they need to be dramatically scaled.
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And finally, there’s the idea
of decentralized AI ownership:
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models where AI tools are open-source and
co-owned by cooperatives or communities,
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so that the economic value created
doesn’t concentrate in just a few hands.
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These aren’t magic bullets. But they
represent a shift in thinking from
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maximizing efficiency at all costs to designing
for inclusion and resilience. We’re at a pivotal
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moment. The decisions we make now
will determine whether AI becomes
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a force for broad human flourishing…
or just another engine of inequality.
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The AI revolution isn’t coming. It’s already
here. But the most important breakthroughs,
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like the ones in medicine, energy, and science,
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are being overshadowed by flashy demos
and short-term profit goals. We need to
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look deeper. Because the real risk isn’t
AI turning evil or taking over the world.
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It’s all of us using it so recklessly… that
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we destroy the very systems
that let innovation thrive.
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AI could solve some of the biggest challenges
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humanity has ever faced. But only
if we solve the AI paradox first.
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But what do you think? Do you use AI
tools today? Do you think AI will be
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a net benefit or a net negative? Like
I said, this is something that’s been
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bouncing around in the back of my head for
some time now. I don’t have the answers and
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I’d love to hear your thoughts on the topic.
Jump into the comments and let me know,
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and be sure to listen to my follow up podcast
Still TBD where we’ll keep this conversation
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going. Thanks as always to my patrons for
your continued support and helping to keep
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the channel going. Keep your mind open, stay
curious, and I’ll see you in the next one.
