Despite the chorus of warnings about AI wiping out all jobs, this scenario is unlikely. The reason? Most of our economy is effectively sealed off from rapid technological change.
AI flourishes in only a few free-market sectors. By slashing costs there, it inadvertently shrinks those sectors’ share of the economy—because lower prices mean less total spending. Meanwhile, the heavily regulated industries, where costs keep skyrocketing, remain off-limits to AI-driven innovation.
Regulated Sectors (healthcare, housing, education) are insulated by government rules, professional licensing, and other barriers. They raise prices unimpeded, expanding their share of total economic activity.
Free-Market Sectors (like electronics) allow competition and tech to reduce prices and improve quality. While this benefits consumers, it reduces the revenue flowing into these sectors, shrinking their overall role in the economy.
By driving prices down, AI actually dampens its own relative impact. And because it’s largely shut out of the fastest-growing, regulated parts of the economy, it cannot trigger the mass unemployment doomsayers predict.