It’s reasonable to wonder what it would take to justify the AI rollout. Let’s do the math and determine if this is an apocalyptic scenario.
How much revenue does AI “sector” require? About 4T$/year
Apple is a very successful company w/ (say) 300B/y revenue and 150k employees. Anthropic, OpenAI, and, say, 3 others would probably want to do that with their combined 15,000 employees (-ish, whatever). Everyone else (AWS, Microsoft, etc) would love to justify their data center rollouts. Let’s see what it would take to make them all happy.
So, McKinsey says to expect $7T over 4y for data center expansion. Call it $2T/y. 5 AI companies hitting Apple size would be another 1.5T/y in revenue that needs to come from somewhere. That’s 3.5T/y revenue that “AI” needs to make in order for the extremely bullish case to justify every bit of investment. Call it an even 4T$/y. That’s a lot!
Where does this come from? About 20% of jobs but wait!
There’s 100m knowledge workers in the USA. 10x worldwide. Assuming avg cost is 100,000, meaning 100T/y “cost” for white collar workers. So AI needs to capture say 4% of white collar salaries to be spectacularly successful in 4 years.
They could do this by capturing all work and charging 4% for it (100@4 scenario), or capturing 20% of the work and charging 20% of the cost for it (20@20 scenario), or, they can try to capture 4% of the work at 100% of the salary and hope it’s worth it somehow for biz (4@100 scenario).
And it’s worth remembering that “20%” might mean that all jobs lose 20% of their work, rather than 20% of all jobs are gone and the rest are unchanged.
What does this look like?
Consider an economy of 5 lawyers under two different 20@20 scenarios:
1 lawyer can just become AI at 20% salary paid to Supio, while 4/5 do their normal thing at normal salary. This is dumb. (0.20 * 1/5 = 4%)
Or all 5 can do 80% normal and farm 20% of their work to AI for 4% of their salary. All 5 still make 96% of their salary and have 20% less work to do. (0.04 * 5/5 = 4%)
In both these scenarios there’s 20% of the work going to AI to make up 4% of the total economy, but one is obviously really awesome.
This is pretty much how people use Claude in coding. It’s a CNC machine, not a replacement machinist.
And finally, this assumes that they generate precisely zero net benefit other than automating existing jobs, which is nearly an impossibility!
Bottom line: You don’t need an apocalypse
To determine the ratio (how many jobs at what cost reduction), it’ll come down to what it costs to run the models to do the work, and I don’t think the 100@4 scenario works out technically, and it just seems better to target something like 20/20 from a publicity standpoint regardless. Everyone wins and GDP growth in the next 4 years can make up the job loss. So no, I don’t think it’s going to capture all knowledge work. I think 20/20 is closer to the truth, with some industries (like mine) hit way harder than others over the next 4 years. But still, there’s a good 20/20 scenario where most people gladly give over a sizeable portion of their salary to alleviate a large chunk of work. E.g., Claude, my main squeeze. This is the “good 20/20” scenario that I’m looking forward to.
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