Theme

Each firm keeps the savings and shares the demand loss

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Welcome to August 16, 2026 (theinnermostloop.substack.com)

A firm that automates captures the full cost saving but bears only a fraction of the aggregate demand it destroys. The privately rational choice is to over-automate, and no competitor can unilaterally decline.

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2026-09-15: Legislators reintroduce a 32-hour workweek so AI's gains reach workers

2026-08-21: Residents of a dozen towns move to recall officials over datacenter deals

2026-08-16: An enthusiasm gap tracks who expects to share the gains

2026-08-16: A model shows firms rationally over-automate and share only the demand loss

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Each firm keeps the savings and shares the demand loss
Innermost Loop KB — secondary record
Reporting date: unknown
KB permalink: https://nicholsn.github.io/innermost-loop-kb/themes/over-automation-is-rational
Attributed sources:
- Welcome to August 16, 2026 — https://theinnermostloop.substack.com/p/welcome-to-august-16-2026
This citation does not imply independent verification of linked-source claims.

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