Your hypothetical ignores the distribution of programmer talent. Company 1 can pay more per person and hire 10x programmers, who can then leverage AI to produce the same or more as Company 2.

We have seen this in other knowledge industries. U.S. legal sector job count is about the same today as it was 20 years ago. But billing rates have exploded and revenues in the 200 largest firms have increased more than 50% after adjusting for inflation. Higher-end law firms have leveraged technology to be able to service much more of the demand and push out smaller regional competitors.

Of course it does. It ignores a lot of things. Mostly I just want to present the view that things aren't entirely hopeless and the entire industry is doomed to contract by 90% because of AI. Your legal system point also fits in precisely with what I'm trying to convey, just in a different direction.

I think paying significantly more was a very localized thing that happened for AI researchers who were familiar with the alchemy that made GPT4 suddenly work much better than anything else seen before.