Why AI Advancements are a danger sign for the economy
One thing that we are sure of in 2025 is that AI is here to stay. It will be a prominent part of our life in the coming years.
All those Terminator movies or Alien movies that we saw are sort of appearing a bit true, with people flying in the air and taking out some cool gadgets and stuff happening soon
On one hand, I am very excited with the AI advancements that are coming through as a data scientist.
On the other hand, I am worried as well.
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AI automation is happening everywhere. The speed of research is at its peak. Every other day, we are getting some impactful paper, which the frequency used to be like 6 months or even a couple of years, but now it is just weeks away.
The job market is at its worst.
People are losing their jobs at a rapid pace.
For the folks who are not losing their job, the work culture has become really toxic and high pressure.
Job postings for beginner-level jobs or internships have just disappeared
I hear from a few economists and historians that whenever a new revolution has come into humanity, new jobs and new domains have been created. This line is quite true, as we have seen in the past. When the great depression happened, or when the internet came in, when computers came in, when cars came in, new jobs and new industries were developed, and new opportunities were created.
So, when AI comes in at fully throttle, we will have new industries, As the common folks think.
And here, you are wrong.
That saying holds for most technological revolutions — agriculture, the industrial era, the internet — but AI is different in a few fundamental ways.
1. Speed of Disruption > Speed of Adaptation
Historically, job transitions happened over decades, allowing time for reskilling. AI, however, is evolving at an unprecedented pace. The time window for adaptation is shrinking, making it harder for workers to pivot.
New research is coming every day. Phew!
2. AI Doesn’t Just Automate Tasks — It Replicates Human Thought
Previous tech advancements replaced physical labor but created new cognitive jobs (e.g., factory automation led to a rise in engineering, management, and design roles). AI, however, is encroaching on both manual and intellectual tasks — writing, coding, legal analysis, and even creative work. This challenges the assumption that human workers will always “move up the value chain.”
3. AI’s Self-Sufficiency Reduces Job Creation
Unlike past technologies that needed humans to operate, maintain, or improve them, AI can optimize itself (AI Agents). This means fewer secondary jobs emerging around it.
4. AI Empowers Corporations More Than Individuals
In previous revolutions, new tools empowered individuals (e.g., the printing press enabled independent publishers; the internet created bloggers and YouTubers). AI, however, is largely being developed and controlled by a handful of tech giants. The economic benefits may concentrate at the top rather than be distributed broadly.
5. White-Collar Jobs Are at Risk, Not Just Blue-Collar Jobs
Unlike past automation waves that primarily affected low-skill jobs, AI is targeting high-skill professions — law, medicine, software development, and finance. This leaves fewer “safe zones” where humans can retreat.
Maybe Blue Collar
6. The “Human Touch” May Not Be Enough
People often argue that uniquely human traits (empathy, creativity, critical thinking) will always be valuable. But AI is rapidly improving in these areas — chatbots providing therapy, AI-generated art, and even AI comedians. The line between “what AI can’t do” and “what humans must do” is blurring.
Trust me, ChatGPT was the icebreaker; after that, anything is possible now. As a data scientist, I really can’t think of a use case that can’t be automated using AI!
But AI would be only able to automate engineering and other knowledge-based jobs, right?
If I invest in real estate, I should be safe. No?
That’s not how the economy works, my friend.
Economies are deeply interconnected, and if AI wipes out high-paying knowledge jobs, the effects will ripple far beyond just those professions. Let’s break it down further:
1. The Collapse of High-Paying Jobs = Demand Shock
The people earning high salaries today don’t just hoard money — they spend it on real estate, luxury goods, dining, travel, entertainment, and services. If AI eliminates these jobs, here’s what happens:
Real Estate Bubble Bursts — Cities like Bengaluru, San Francisco, and London thrive because of tech and finance salaries. If those jobs disappear, who’s going to pay insane rents or invest in properties?
Luxury Market Crumbles — No one’s buying ₹2 lakh Jordans or high-end gadgets if they’re struggling to pay rent. The demand for luxury depends on disposable income.
Hospitality & Leisure Take a Hit — Who’s dining at fancy restaurants, staying in 5-star hotels, or taking expensive vacations if their job is gone? AI won’t be eating at fine-dining places.
Retail & Consumer Goods Slow Down — Without stable jobs, people cut back on non-essentials. Fewer smartphones, laptops, branded clothes, or even basic home renovations.
2. If IT Crashes, Cities Like Bengaluru or Hyderabad are in trouble
Bengaluru’s economy is built around IT salaries. If those salaries disappear:
Tech parks empty out → Less demand for commercial real estate.
Housing prices drop → No high-salary earners = fewer buyers.
Local businesses suffer → Restaurants, cafes, gyms, and malls thrive on IT employees spending money.
It’s the same story with Silicon Valley, Shenzhen, and other tech hubs.
3. “AI Won’t Affect Me” is a Dangerous Assumption
Even if your job isn’t directly replaced by AI, it’ll still affect you because:
Your employer may downsize due to automation.
Your customers might have less money to spend.
The entire economy could shift in unpredictable ways.
Who is going to buy the Air Jordan worth 2 lakhs if people don’t have money? If the sales go down, the entire workforce involved in from manufacturing to shipping to selling would get affected.
If high-paying jobs vanish too fast, economies won’t have time to adjust. That’s where the real danger lies.
Not just the money flow, AI might also impact other factors in the economy & society.
Other impacts
1. The Psychological Toll of AI Job Loss
- People tie their identity to their jobs, and losing work due to AI could lead to mental health crises, depression, and anxiety.
- A generation that worked hard to build careers might suddenly feel obsolete.
- The stress of constantly upskilling to “stay relevant” could lead to burnout and job dissatisfaction.
2. AI and the Future of Wealth Distribution
- If AI makes work obsolete but only a few corporations own AI, they could control entire economies.
- Will AI-driven companies become richer than nations?
- The gap between the ultra-rich and everyone else could widen to an extreme level.
For example, Nvidia’s market cap is very close to India’s GDP , The 5th largest economy in the world
3. AI and Government Responses
- Will governments introduce Universal Basic Income (UBI)?
- Will AI-driven job losses force higher taxation on AI companies?
- What kind of new policies will we need to prevent economic disaster?
4. The Rise of “Neo-Feudalism”
- If AI controls wealth creation, could we return to a world where a few AI-powered elites own everything?
If you have observed recent U.S. elections, Elon Musk is now sort of a pseudo-PM for the USA.
- Would most people become “digital peasants” dependent on handouts while AI does all the valuable work?
- A world where only a few powerful AI companies own production could create a new age of economic inequality worse than ever before.
5. AI and Political Instability
- Economic collapses fuel social unrest — if millions lose jobs, could we see AI-driven protests, riots, and revolutions?
- Governments might regulate AI aggressively to prevent chaos.
- Could we see AI-driven surveillance states where governments use AI to control populations and prevent uprisings?
Too many uncertainties for the future, and everyone is asking the same question:
What will happen in the next 5 or 10 years?
AI is reshaping work, education, and society at an unprecedented speed. Here’s what the near future might look like (purely my take)
1. The Gig Economy 2.0: AI-Driven Micro-Startups
Large companies will outsource projects to AI-powered micro-startups with just a few people.
As managing employees requires a lot of perks and money, most of the company would be opting for third-party services.
We are already seeing a rise in content creators, and they are making huge amounts of money.
2. Knowledge-Based Learning Becomes Obsolete
Memorization will be pointless — AI will provide instant answers.
Schools will shift focus from rote learning to problem-solving and critical thinking.
Knowing how to use AI effectively will matter more than traditional education.
3. The Education System Will Take a Massive Hit
Degrees will lose value as employers prioritize skills over formal education.
Traditional universities will struggle, with many shutting down.
Self-paced, AI-driven education will replace lecture-based models.
Students registering at KOTA (IIT JEE) coaching classes had reduced by a huge margin.
4. The Creative Renaissance (and Its Dark Side)
AI-generated content will dominate art, music, and writing.
Human creativity will still have value, but authenticity will become a premium.
Misinformation, deepfakes, and AI-generated propaganda will rise.
5. Society Will Struggle to Keep Up
AI’s rapid progress will outpace governments, businesses, and education systems.
Job displacement could trigger economic instability before new opportunities emerge.
The gap between those who control AI and those who don’t will widen.
Final Thoughts: A Crossroads Moment
AI is no longer just a tool — it’s a force reshaping economies, jobs, and entire industries at a pace we’ve never seen before. The world is standing at a crossroads. Will AI lead to greater prosperity and innovation, or will it drive economic collapse and extreme inequality?
One thing is clear: AI won’t wait for us to adapt. The decisions we make today — how we regulate AI, how we reshape education, how we prepare for mass job shifts — will define the next decade. If we get it right, AI could unlock a new era of human potential. If we don’t, we may find ourselves in a world where opportunity is scarce, wealth is concentrated at the top, and the very structure of society begins to crack.
The future is unwritten. The question is — are we ready?
AI will lead to an Economic Collapse; be prepared was originally published in Data Science in your pocket on Medium, where people are continuing the conversation by highlighting and responding to this story.
