What you are saying is not intuitive. Software engineers are a cost to software companies. With automation the profits would increase so I’m not sure how it can lead to recession.

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torginus 2 days ago | parent | next [-]

Something not being intuitive doesn't make it untrue - if AI makes engineers 10x as productive it means that we need 1/10th the engineers to produce as much software as we do - it might induce demand but demand might not keep up with the production. SW Engineering might become a buyers market instead of a sellers market.

One example I mentioned is SaaS whose value proposition is that it's cheaper than to hire a dedicated guy to do it - if AI can do it, then that software has no more reason to exist.

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graeme 3 days ago | parent | prev | next [-]

They used the word in an irregular way. They meant a decline in software company revenue, not an economic recession.

You might well see more software profits if costs go down but less revenue. Depends on Jevon's paradox really

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simianwords 2 days ago | parent [-]

No this doesn’t make sense either. Why would Amazon‘s profits go down if their engineers are cheaper?

	▲	torginus 2 days ago \| parent \| next [-]
		In AWS's case - if AI can replicate what AWS offers as a value add - then you migh go with a cheaper cloud provider. Like, you have the option of either using AWS RDS, or hiring a DBA and devops who administer your DB, and set up backups, replication and networking. If AI (or a regular dev with the help of AI) can do that, it might mean your company decides to take the administrative burden on, and save the money.
	▲	graeme a day ago \| parent \| prev \| next [-]
		I didn't say profits down. The OP was talking about revenue for some companies potentially declining.
	▲	2 days ago \| parent \| prev [-]
		[deleted]

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golol 2 days ago | parent | prev [-]

More middlemen = more revenue/GDP, right?

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simianwords 2 days ago | parent [-]

I don’t think middle men are counted in GDP because GDP only counts final value and not intermediate.

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gls2ro 2 days ago | parent [-]

Trying to understand this and please correct me if I am wrong:

A is producing something of value 100. That is complex to configure so B comes along and they say: Buy from me at 150 and you will get both the product and the configuration.

C comes and say: there are multiple products like this so I created a marketplace where I do some offering that in the end will cost you 160 but you can switch providers whenever you want.

Now I am a customer of C and I buy at 160: C gets 160 retains 10 but total revenue is 160 B gets 150 retains 50 but total revenue is 150 A gets the 100

Here is the question: How big is GDP in this case?

I think it is 160.

Now A adds LLM for about 4 extra that can do what B and C can (allegedly) removing the intermediaries and so now the GDP is 104.

Am I wrong with this?

	▲	torginus 2 days ago \| parent \| next [-]
		Yes exactly. There's the joke of one economist paying the other $100 to dig a hole, then the other one giving back the money to the first one to fill it back up, thereby increasing the GDP by $200.
	▲	simianwords 2 days ago \| parent \| prev [-]
		This is technically correct but missing some details. The real GDP after accounting for cost of living has not changed much because while GDP has decreased, cost of living has also decreased (because A is now priced at 104 instead of 160). But it’s even better because we have this extra money that we previously spent on C. In theory we will spend this extra money somewhere else and drive demand there. The workers put out of employment due to LLM will move to that sector to fulfill it. Now the GDP not only increased but also cost of living reduced.