> I think your logic goes wrong because you assume that more productivity implies less desire for engineers.

Yes, this is the central fallacy. The reality is, we've been massively bottlenecked on software productivity ever since the concept of software existed. Only a tiny tiny fraction of all the software that could usefully be written has been. The limitation has always been the pool of developers that could do the work and the friction in getting those people to be able to do it.

What it is confounded by however is the short term effect which I think is absolutely drying up the market for new junior software devs. It's going to take a while for this to work through.