The US economy is a white-collar services economy. White-collar workers represented 50% of employment and drove roughly 75% of discretionary consumer spending. The businesses and jobs that AI was chewing up were not tangential to the US economy, they were the US economy.

“Technological innovation destroys jobs and then creates even more”. This was the most popular and convincing counter-argument at the time. It was popular and convincing because it’d been right for two centuries. Even if we couldn’t conceive of what the future jobs would be, they would surely arrive.

In a normal recession, the cause eventually self-corrects. Overbuilding leads to a construction slowdown, which leads to lower rates, which leads to new construction. Inventory overshoot leads to destocking, which leads to restocking. The cyclical mechanism contains within it its own seeds of recovery.

This cycle’s cause was not cyclical.

AI got better and cheaper. Companies laid off workers, then used the savings to buy more AI capability, which let them lay off more workers. Displaced workers spent less. Companies that sell things to consumers sold fewer of them, weakened, and invested more in AI to protect margins. AI got better and cheaper.

A feedback loop with no natural brake.

Overqualified labor flooding the service and gig economy pushed down wages for existing workers who were already struggling. Sector-specific disruption metastasized into economy-wide wage compression.

The pool of remaining human-centric had another correction ahead of it, happening while we write this. As autonomous delivery and self-driving vehicles work their way through the gig economy that absorbed the first wave of displaced workers.

The US residential mortgage market is approximately $13 trillion. Mortgage underwriting is built on the fundamental assumption that the borrower will remain employed at roughly their current income level for the duration of the loan. For thirty years, in the case of most mortgages.

The white-collar employment crisis has threatened this assumption with a sustained shift in income expectations. We now have to ask a question that seemed absurd just 3 years ago - are prime mortgages money good?
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People borrowed against a future they can no longer afford to believe in.

The “Shared AI Prosperity Act” would establish a public claim on the returns of the intelligence infrastructure itself, something between a sovereign wealth fund and a royalty on AI-generated output, with dividends funding household transfers. Private sector lobbyists have flooded the media with warnings about the slippery slope.