Comment by keybored
8 days ago
> Laying off people also doesn't reduce cost as much as it might look like. There is a lot of hidden cost shared by everyone (also the companies that did the lay offs are hit by them). Unemployed people still have to eat and pay rent, and someone is paying for that. They spend less money on services and goods, which affects every company in the end.
Poor companies missing out on consumer money.
It’s funny to think about. One might lose their apartment because they can’t pay rent. Then they’re homeless. What does that mean? As long as they are eating, at least some moeny is circulating. Maybe not as much because of dumpster diving and things like that. Meanwhile what was lost? One less family to pay for rent. Which means that an apartment is vacant. And rent is mostly not productive. It is mostly rent on estate ownership.
The first level of destituness (for renters at least) might not lead to less productive money circulating. But less rent money. Then when that happens to enough people you simply have more vacant apartments. Okay, a little loss of productive circulation since no one is wearing out the floors etc.
Becoming homeless is probably not the right approach to think about that. Most people will somehow be able to continue a regular life.
They move to smaller houses or multiple families share a house. => landlords and real estate companies make less money. CEOs might not be able to upgrade ther yacht => more layoffs in the yachting industry
Parents, spouses or relatives will often chip in for rent and food. => less money spent on consumer goods and services. It's easy to cut cost for things like hairdresser, eating out, gardeners, smartphones. Instead of redoing the kitchen, the old one can be DIY fixed.
It's just a downward spiral in all parts of the economy. And in the end a lot of businesses have to cut their AI spending as a result.