What will be scarce?

gist

Alex Imas argues that as AI makes commodities cheap, spending and jobs will shift to a relational sector where the human is part of the value. Drawing on structural-change economics, he notes that richer people buy different things, not just more; Comin, Lashkari and Mestieri estimate income effects explain over 75% of past sectoral shifts. He adds mimetic desire, wanting what others cannot have, which he says gives human-made goods high income elasticity. His claim concerns sectoral reallocation in rich economies, not a rising labor share, and he flags the developing world as more worrying.

ideas

• Starbucks rolled automation back. Imas opens with Starbucks, which cut staff in favor of automation, called it a mistake, and is now hiring more baristas per store after handwritten notes, ceramic cups and seating brought customers back.
• Cheaper commodities raise real income, and richer households shift spending. Following Comin, Lashkari and Mestieri, falling prices in automated sectors raise real income, demand moves to high income-elasticity sectors, and Baumol's cost disease then reinforces the shift; Imas cites 2022 BLS data where top-quintile households spent about 4.3 times as much as the bottom quintile overall, with larger ratios in relational categories.
• Exclusion raises willingness to pay, and AI involvement weakens it. In Imas's experiments with Kristof Madarasz, willingness to pay roughly doubled when a random subset was excluded; in his work with Graelin Mandel, human-made art gained 44% from being a single copy while AI-generated art gained 21%, by his account.
• Baumol's cost disease becomes a labor market solution. Drawing on Saffron Huang, Imas says the hard-to-automate relational sector, from care, teaching and therapy to hospitality and craft, absorbs a growing share of spending and jobs because the commodity sector gets cheaper.
• Non-satiating demand pushes against demand collapse. Because status and exclusivity are comparative, Imas argues relational demand keeps growing with income, giving the economy a release valve against the negative-growth scenario from his earlier post; he contrasts his sectoral question with Philip Trammell's asymptotic one about labor's aggregate share.

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