The Economics of AI (Part I)
I’ve mostly been in the camp of AI is cool and great for big companies but we’re a way’s away from people losing jobs because of AI. I’m a lot less confident about that after playing with ChatGPT for two days. The most insane part is the pace of innovation over the last year.
— ✨ Joe Fabisevich ✨ (@mergesort) December 4, 2022
This is a tweet of mine from five days after ChatGPT was released. It’s now been three years, and I remain confident that AI will touch and reshape everything about our digital world. But in 2026, our digital world is tightly bound to our reality — it’s not some separate space we can cordon off.
While economists debate the impact of AI on labor today, we can see cracks in the foundation forming. People cannot (or don’t want to) fathom the social contract of labor and capital changing, but it’s already starting. There’s no promise it will follow the same rules of capitalism we’re used to — the fundamentals will change over the next few years. I don’t know how much, but I know the system will not make the same promises.
I have many thoughts on this, so I’ve titled this “The Economics of AI (Part I)”. Consider it an introductory post for a subject I’ll be revisiting often as this change transforms around us.
Today, I want to show you an example of how AI is beginning to divorce value from capital.
This is a comment from the maintainer of Tailwind CSS, one of the most popular libraries in web development. Tailwind is what makes websites look good — and what AI systems like Claude and ChatGPT almost always turn to Tailwind by default. Until recently, more popularity translated to more value, and more value meant more opportunity to acquire capital. But people creating value are screaming out to say that this is no longer true.
But the reality is that 75% of the people on our engineering team lost their jobs here yesterday because of the brutal impact AI has had on our business. And every second I spend trying to do fun free things for the community like this is a second I’m not spending trying to turn the business around and make sure the people who are still here are getting their paychecks every month.
Traffic to our docs is down about 40% from early 2023 despite Tailwind being more popular than ever. The docs are the only way people find out about our commercial products, and without customers we can’t afford to maintain the framework. I really want to figure out a way to offer LLM-optimized docs that don’t make that situation even worse (again we literally had to lay off 75% of the team yesterday), but I can’t prioritize it right now unfortunately, and I’m nervous to offer them without solving that problem first.
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This feature is so that people can build MORE things with Tailwind in a FASTER and more EFFICIENT capacity. @mtsears4 Tailwind is growing faster than it ever has and is bigger than it ever has been, and our revenue is down close to 80%. Right now there’s just no correlation between making Tailwind easier to use and making development of the framework more sustainable. I need to fix that before making Tailwind easier to use benefits anyone, because if I can’t fix that this project is going to become unmaintained abandonware when there is no one left employed to work on it. I appreciate the sentiment and agree in spirit, it’s just more complicated than that in reality right now.
To pull out the most important part.
Right now there’s just no correlation between making Tailwind easier to use and making development of the framework more sustainable.
This is the contract breaking. We don’t yet know what shape it will take, but we can see it happening in real time. Not just in software development, but across many industries.