Alex Imas didn’t arrive at optimism easily. The University of Chicago economist economist occupies an unusual space in being one of the leading researchers on AI’s labor market impact, but also one of its most avid adopters. Unlike many of his peers, he is taking the doomsday scenarios, perhaps best exemplified by Citrini Research’s viral essay on “ghost GDP” and spiraling deflation, very seriously.
If automation eliminates most jobs and the wage share collapses, the people with money—capital owners—will be already satiated, while displaced workers can’t afford to buy anything. Demand collapses. The economy shrinks. While Imas has written that he finds actual negative economic growth unlikely, he said the scenario of high unemployment and a drag on the economy as a result of that unemployment is worth taking seriously.
