Fri, 12 Apr 2024 19:36:44 GMT

Thread time! I don't think that generative AI will actually displace entire industries, but let's assume for a moment that it will and examine what that means for business.

First. You bring on, say, openAI and they provide you with a low cost, relatively effective, maybe even highly effective output of product. It's not cheap but it costs a fraction of your old workforce and is faster. So you fire all your workforce.

The rest of the industry follows. This is the "industry replacement" that the hype men are pitching right now as the bold new future. Opportunities for humans who do that job dry up, resulting in the labor force atrophying or going away entirely.

Once the labor force has dried up, openAI finds itself in an unusual position- it owns literally all of the labor for an industry now. This labor is 100% loyal to openAI. OpenAI has become, effectively, the collective bargainer for it's generative AI products.

OpenAI could raise it's prices. A lot. And you, as a business, are over a barrel. You can't break the "strike" if you refuse to pay. Generative AI has no mortgage, no family, no food. There are no scabs- you got rid of them. You pay or your business goes away.

If this sounds like a twisted version of a union, it is. And it's also happened before. In online advertising. For years, online ads were a funky outlier that were cheap and reasonably effective. Now the two 800lb gorillas are Meta and Google, and they've in recent years seized the market and screw over both the advertisers, by charging significantly more money, ruining many of the business models they had helped establish, *and* screw over the platforms that are showing the advertisement, by squeezing the ad revenue down to essentially unsustainable levels. And nobody can do anything because they're the only game in town.

To crib from Battlestar Galactica, all this has happened before, and all this will happen again. For how fine-tuned a lot of enterprises are against anything even remotely resembling a union or collective bargaining, it is impressive that the hype they're drinking essentially ends with an unbreakable monopoly over the workforce you require to do your business.

While generative AI may displace some workers and smaller industries though, the good news is that it won't eliminate swaths of the workforce without a fundamentally revolutionary scale of magnitude in quality. And there's not enough power, business use cases, or oddly enough, high quality data produced by humanity to make that kind of order of magnitude leap.

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