> Huh? What luxuries? Us plebes can't fly business class? We can't buy that expensive handbag?

Yes. Why do you need to ask this? This is the K-shaped economy. Demand is dropping (especially in luxury handbags) as the middle class gets hollowed out. Maybe you're well-off enough that you can still pretend neoclassical economics is still holding up. Must be nice.

> they can't afford to buy a family home in a lot of markets but this has to do with generational wealth and a housing shortage in many parts of the USA.

Yes it has to do with generational wealth, that's my point. A shortage is true in some cases, but not all. That's mostly fueled from massive demand from the wealthy. Buying the family home is the most obvious asset that is becoming out of reach. This past year, many other assets have gone the same way. I think that will continue.

> nobody buys the mountain of goods the robots and AI are producing

I don't get why you're appealing to modern economic theory when the whole point of this scenario is that the standard economic relationship entirely breaks down. You can dismiss it as sci-fi, but people are thinking about this scenario. The wealthy no longer need a mass consumer market in this scenario to stay wealthy. They could simply trade proprietary algorithms, real estate, raw resources, and automated services exclusively among themselves. The global economy shrinks down to a private, self-contained club. Everyone else is locked out of the market. This should sound familiar if you're paying attention to the current markets. There would only need to be a few to maintain the status quo, and they remain inside the market in exchange.

The exit from this bleak future is societal unrest, which needs to occur sooner rather than later in order to succeed. That's the source of instability. Later on, not so much.

> Even during the industrial revolution, jobs moved from the farm to the factories.

Yes, but living standards seriously deteriorated for a long time. That's not too far from the exterminism in the above scenario, just not as dire since factories still need far more human labor to run them. If the labor itself becomes redundant, that's very bad.

I'm not saying this will happen. But dismissing it as sci-fi doesn't seem wise when we're seeing the signs of that future already.