On this, read Daniel Susskind - A world without work (2020). He says exactly this: the new tasks created by AI can in good part themselves be done by AI, if not as soon as they appear then a few years of improvement later. This will inevitably affect the job market and the relative importance of capital and labor in the economy. Unchecked, this will worsen inequalities and create social unrest. His solution will not please everyone: Big State. Higher taxes and higher redistribution, in particular in the form of conditional basic income (he says universal isn't practically feasible, like what do you do with new migrants).

Characterizing government along only one axis, such as “big” versus “small”, can overlook important differences having to do with: legal authority, direct versus indirect programs, tax base, law enforcement, and more.

In the future, I could imagine some libertarians having their come to AI Jesus moment getting behind a smallish government that primarily collects taxes and transfers wealth while guiding (but not operating directly) a minimal set of services.