The Junkyard Economy: A Hypothesis on Post-Automation Survival

I was reading a post on X.com by @kimmonismus, and she brought up a discussion I’ve thought a lot about off and on, but she challenged me to really think about this.

Her core argument was stark: we’re approaching an unprecedented economic transformation where AI and robotics won’t just augment human labor but replace it entirely. She laid out two camps – the optimists who believe technology always creates new jobs, and the realists (her camp) who see this time as qualitatively different. Her reasoning: AI is reaching human-level intellectual capabilities, robotics is finally becoming practical thanks to AI, and together they’re making human wage labor obsolete.

What struck me most was her emphasis on the distributional crisis. She asked the question that keeps me up at night: “If there are no jobs, there are obviously no wages to be earned. So how are we going to satisfy our needs?” She pointed out we’re heading into this transformation with no plan – no universal basic income, no AI tax, no safety net. Just darkness and hope.

Who Better to Discuss This With Than Claude?

So naturally, I turned to my LLM Claude to hash this out. And in typical fashion, our conversation took an unexpected turn.

I raised what I see as the fundamental catch-22: If you fire everyone, who buys the products? It’s simple math:

• Company X buys AI + bots to mine minerals = massive third world layoffs
• Manufacturers get cheap commodities, buy AI + bots = massive Chinese layoffs
• US companies get cheap products, buy AI + bots = white and blue collar layoffs
• Result: No one left to buy from US companies
• The whole system collapses under its own efficiency

But here’s where it gets interesting. I don’t think we’ll see some government solution or global cooperation. And UBI, forget it – our debt is insane, and without workers paying taxes due to layoffs, there will never be UBI. Instead, I think we’ll see the emergence of micro-local economies. And Claude pushed me to explain what I meant.

The Ford Example

Picture this: Ford lays off 10,000 workers, replacing them with AI and bots. Now you have 10,000 people with incredible skill sets scattered across different plants – mechanics, engineers, supply chain experts, quality control specialists. All that expertise, suddenly “redundant.”

Meanwhile, junkyards are full of cars and parts. The internet still exists. Cheap AI is available to everyone.

Those displaced workers start pooling resources. They buy broken cars for scrap prices, fix them using their decades of expertise, and sell them locally. They undercut Ford because they have no corporate overhead, no shareholders, no massive factories to maintain. People stop buying new cars and start buying refurbished ones from people they know and trust.

The Economic Cascade

This pattern replicates across every industry. Laid-off restaurant workers create ghost kitchen cooperatives. Displaced retail workers form local fulfillment networks. Former office workers pool their skills for distributed services.

What emerges is a two-tier economy: the “official” automated corporate tier and a scrappy parallel human economy operating in its shadows. But here’s the kicker – this isn’t stable. As more people get laid off, fewer can afford even the efficient corporate products. Corporate revenues decline, leading to more automation to cut costs, leading to more layoffs.

It’s a death spiral. The corporations optimize themselves out of existence.

The Junkyard as Metaphor

What I love about this hypothesis is the junkyard metaphor. All that “depreciated” capital – both human expertise and physical assets – that the efficient economy discards becomes the foundation of a new system. The corporations essentially compost themselves into fertile ground for thousands of smaller, local operations.

The endpoint isn’t a return to pre-industrial society. It’s something new: distributed networks that use modern tools (internet, AI, accumulated knowledge) without massive scale and centralization. Instead of supply chains that break when one ship blocks a canal, you get redundant local capacity. Instead of “too big to fail,” everything becomes small enough to fail without systemic collapse. And instead of answering to shareholders, you go back to answering to consumers and produce better goods and services. Again, this undercuts and outperforms the “efficient” corporation.

The Corporate Full Circle

Here’s the beautiful historical irony: corporations weren’t always meant to be permanent. Originally, charters were granted in the service of a public purpose, and could be revoked if this were not fulfilled. Prior to the 17th century, the first corporations were created in Europe as not-for-profit entities to build institutions, such as hospitals and universities, for the public good.

The East India Company, the world’s first commercial corporation, was granted a specific charter for a specific purpose. Early American corporations were similar – temporary entities created to accomplish public works, then dissolved. It wasn’t until the mid-1800s that corporations gained the right to define their own purpose and exist in perpetuity.

So perhaps what we’re witnessing isn’t the death of capitalism but corporations finally fulfilling their original design – temporary entities that dissolve when they no longer serve the public good. Except this time, they’re dissolving themselves through their own efficiency.

The Thomas Kinkade Hypothesis

I don’t know what will happen. I don’t know how things will look. But there’s something deeply appealing about the picture that emerges from this hypothesis – something that reminds me of those Thomas Kinkade paintings that adorned one in five American homes. You know the ones: glowing cottages, cozy Main Streets, warm light spilling from every window. Critics called them kitsch, but millions saw in them a vision of the life they longed for.

Imagine Main Street coming back to life – not with chain stores but with that diner run by the Johnsons from church, where everyone knows your order before you sit down. Picture restored ’60s muscle cars humming quietly on lithium batteries, lovingly rebuilt by the auto workers who once assembled their modern counterparts. Envision actually working in your hometown again, walking to a job where your neighbors are your customers and your reputation is your resume.

It’s not about going backward – it’s about going forward to something more rooted, more connected. Where the barista at the coffee shop isn’t worried about corporate metrics but about whether Mrs. Chen’s arthritis is acting up again. Where the mechanic isn’t trying to upsell you a warranty package but genuinely wants your kid’s first car to run safely. Where success isn’t measured in quarterly earnings but in whether the community thrives.

In a way, we’d be building the world Kinkade painted – those impossible glowing villages that critics mocked but people loved. Except this time, the glow wouldn’t come from his trademark luminous paint. It would come from community, from purpose, from actually knowing the people you serve. The “Painter of Light” might have been onto something after all – just not in the way he imagined.

The Detroit Model: A Warning for Every City

As for @kimmonismus’s position – this is grim, especially for those in cities. What is a city for? A place to find work at companies scaled nationally or worldwide. If she’s right, let’s look at what happened to Detroit when the auto plants closed.

Detroit went from 1.86 million people in 1950 to just 639,111 by 2020 – losing over 60% of its population. When the factories shut down, 296,000 manufacturing jobs vanished. But it wasn’t just the plant workers who suffered. Every neighborhood business that depended on those factory paychecks collapsed too. The tax base evaporated. The city couldn’t maintain infrastructure. Abandoned factories like the massive Packard Plant became monuments to decay, standing empty for decades.

This is the model for what happens to every major metropolitan area when the primary employers disappear. New York without finance. San Francisco without tech. Houston without energy. Cities exist to concentrate workers for large corporations. Remove the corporations, and what’s left?

The answer is: not much. Those who can flee to the suburbs or other cities will. Those who can’t are trapped in a spiral of declining services, rising crime, and urban decay. Detroit filed for bankruptcy in 2013 – the largest U.S. city ever to do so.

Now multiply that by every major city in America. That’s the darkness @kimmonismus fears, and she’s right to fear it. The micro-local economies I envision? They won’t save Manhattan or downtown San Francisco. They’ll emerge in the small towns and rural areas where people still know each other’s names, where the cost of living is low enough to experiment, where there’s space to rebuild.

The cities? They’ll hollow out, just like Detroit. Because when the corporations leave – and they will, once they don’t need human workers – there’s no reason for millions of people to cluster together in expensive, congested urban cores. The age of the megacity might be ending, replaced by a thousand small communities built on human connections rather than corporate efficiency.