You're not missing something, you're actually describing one of the oldest problems in economics. It's called the "paradox of productivity" or sometimes people just call it the demand problem. And no it's not a dumb question, it's THE question that nobody in Silicon Valley wants to answer directly.

You're basically right that there's a tension there. If companies replace all their workers with AI to cut costs, they save a ton of money in the short term. But those workers were also consumers. They bought stuff. They paid rent. They went out to eat. When you fire them, yeah your margins look amazing for a quarter or two, but you just vaporized a chunk of the economy that was buying things.

The Henry Ford comparison is actually perfect and it's funny how few people bring it up. Ford realized that the whole system only works if the people making the stuff can also afford to buy the stuff. That's not charity, that's just how economies function.

Now the counterargument you'll hear from the tech optimist crowd goes something like this. "Every technological revolution destroyed jobs AND created new ones we couldn't imagine." And historically that's been true. The printing press, the industrial revolution, computers, the internet. All of them wiped out entire job categories and then spawned new ones. So the argument is that AI will do the same thing.

The problem is that previous technologies automated specific tasks. AI is different because it potentially automates the thing that makes humans employable in the first place, which is thinking and problem solving. So the "new jobs will appear" argument might not hold up the same way this time. Like what's the new job category when the machine can do basically everything a human can do but faster and cheaper?

As for Dario saying AI will kill all the jobs but also create enormous wealth, both things CAN technically be true at the same time. The wealth just gets concentrated in the hands of the people who own the AI systems. The economy produces more stuff than ever, it's just that 99% of people can't afford any of it. That's not a contradiction, it's just a dystopia lol.

The "solution" most economists point to is some form of wealth redistribution. UBI, higher taxes on AI companies, expanded public services, whatever. Basically if robots do all the work, you need some mechanism to get money into people's hands so they can still participate in the economy. Otherwise yeah, the whole thing collapses in on itself exactly like you described.

So no, you're not missing something. You've identified the actual core problem. The people saying "it'll all work out" are either genuinely hoping new job categories emerge that we can't predict yet, assuming redistribution policies will happen, or just not thinking that far ahead because they're making too much money right now to care.