> If all the things people are doing are done so much more cheaply they're almost free, that would be good for us ...
Doesn't this tend to become "they're almost free to produce" with the actual pricing for end consumers not becoming cheaper? From the point of view of the sellers just expanding their margins instead.
I'm sure businesses will capture some of the value, but is there any reason to assume they'll capture all or even most of it?
Over the last ~ 50 years, worker productivity is up ~250%[0], profits (within the S&P 500) are up ~100%[1] and real personal (not household) income is up 150%[2].
It should go without saying that a large part of the rise in profits is attributable to the rise of tech. It shouldn't surprise anyone that margins are higher on digital widgets than physical ones!
Regardless, expanding margins is only attractive up to a certain point. The higher your margins, the more attractive your market becomes to would-be competitors.
> Regardless, expanding margins is only attractive up to a certain point. The higher your margins, the more attractive your market becomes to would-be competitors.
This does not make sense to me. While a higher profit margin is a signal to others that they can earn money by selling equivalent goods and services at lower prices, it is not inevitable that they will be able to. And even if they are, it behooves a seller to take advantage of the higher margins while they can.
Earning less money now in the hopes of competitors being dissuaded from entering the market seems like a poor strategy.
The premise wasn't that there weren't competitors already, I don't think. With most things the price is (usually) floored by the cost of production, ceilinged by the value it provides people, and then competition is what moves it from the latter to closer to the former.
> The higher your margins, the more attractive your market becomes to would-be competitors.
Only in very simplistic theory. :(
In practical terms, businesses with high margins seem able to afford government protection (aka "buy some politicians").
So they lock out competition, and with their market captured, price gouging (or close to it) is the order of the day.
No real sure why anyone thinks the playbook would be any different just because "AI" is used on the production side. It's still the same people making the calls, just with extra tools available to them.
This is also pretty simplistic. All the progress that's made on a variety of fronts implies that we don't have loads of static lockin businesses that bribe bureaucrats.
Doesn't this tend to become "they're almost free to produce" with the actual pricing for end consumers not becoming cheaper? From the point of view of the sellers just expanding their margins instead.