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A counter balance to AI's velocity?
Recently the Russian-American investor Vitaliy Katsenelson at IMA applied his mind to the AI wave.
A summary of his memo:
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A simple formula for economic growth = Population + Productivity.
While AI is an exceptional productivity lever, it creates a tug of war with the other half of the equation: employment (or more specifically, income from employment).
The Efficiency Paradox
In the best-case scenario, AI-driven efficiency lowers costs and sparks ‘insatiable’ new demand. Software that was once too expensive to build becomes viable, creating new niches and jobs.
The darker side? If demand doesn't scale with productivity, the shrinking pie effect takes over. Laid-off workers spend less, pay fewer taxes, and buy less from the very companies that automated them.
Speed vs. Physics
The ‘we’ve been here before’ argument (think: farmers moving to factories) misses a new crucial factor: velocity.
Past transitions took generations. Today, AI is building itself. Claude Code reportedly wrote 90% of its own latest version. We are replacing skills at a speed that may outrun our ability to adapt.
The Constraints
Two forces will dictate the pace of this disruption:
Human Inertia: Self-preservation and fear of change act as a natural brake on corporate adoption.
Physical Reality: AI runs on electricity, literally, not just ideas. The massive requirement for data centres and power grids is a multi-year construction bottleneck.
The Investor’s Reality
The stock market is rewarding ‘AI speed.’ When Block (prev Square) announced a 40% workforce reduction in favour of efficiency, their stock surged. This provides a clear, if ruthless, roadmap for CEOs everywhere.
As the range of outcomes widens, Katsenelson suggests the most valuable investor asset isn't a prediction but humility.
The system will adapt, but the question is whether it can keep up with its own creation.
Full article: https://investor.fm/on-ai-eating-the-world/
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You do the strategy, let automation do the work.
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