Automate or DIE
In a Nutshell
Governments and major corporations are rapidly cutting tens of thousands of jobs because AI now meets the thresholds of capability, cost, and acceptable risk for office work, making automation the only rational choice under budget and shareholder pressure. Market competition acts like a one-way ratchet: once one organization automates, rivals must follow or lose. The systemic result is shrinking payrolls across both public and private sectors, eroding the consumer wages that ultimately sustain demand.
These notes were generated by AI and may contain inaccuracies.
On October 26th, two announcements were made. One came from a government, and the other from one of the world's largest companies. When you put the two advertisements side by side, you will find that they tell the same story. First, the Netherlands. The Dutch government has announced plans to eliminate approximately 25,000 civil service jobs over the next decade. Bloomberg described this plan as a comprehensive reform led by artificial intelligence. At the end of 2025, the Dutch central government employed a record number of 160,000 people. This represents a 41% increase compared to 2018. Therefore, this reduction represents approximately one in six of those jobs. The police and defense were exempted, but in some ministries, inspection bodies and agencies, the cuts could reach 45% or even 60%. The goal is to save 3.5 billion euros annually, and the official in question stated frankly: "We cannot continue doing what we have been doing." The government says it wants to become simpler, smarter, and smaller.
On the same day, Microsoft offered voluntary exit packages to approximately 60,000 of its employees. At the end of June, Microsoft had approximately 223,000 employees in total. Therefore, that offer was directed to more than a quarter of the company's total. The offer includes employees at the vice president level and below in teams such as Xbox, Windows, Copilot, and Finance. It also includes employees in the United States, Canada, India, and the United Kingdom. They have until early December to make a decision, and those who accept the offer will leave on December 31. This did not come out of nowhere. In April, Microsoft offered exit packages to approximately 8,750 employees who were nearing retirement age. More than 30% of these employees accepted the offer. In July, the company eliminated another 4,800 jobs. Meanwhile, Microsoft expects to spend well over $150 billion this year, mostly on artificial intelligence data centers. Therefore, trace the money. Every dollar saved from payroll is a dollar that can be directed towards automation and machinery. 60,000 people is not a small number in restructuring. From my point of view, this is a company burning its ships, which means guaranteeing there is no way back.
These two entities are not the only ones. By 2035, Denmark aims to use artificial intelligence to provide the equivalent of about 30,000 full-time jobs in the public sector. Last year, Britain said its civil service would shrink as artificial intelligence took over more work, with reports indicating that the cut would exceed 10,000 jobs. In the private sector, Reuters counted dozens of companies that linked job cuts to artificial intelligence in the past year alone. HSBC is eliminating 20,000 jobs, Amazon has cut 16,000 management positions, and Block has reduced its workforce by almost half. WiseTech has cut a third of its workforce. This month alone, Kroger cut approximately 3,000 management jobs.
So why does this happen? Why might a government resort to reducing its workforce? Why would one of the world's most valuable companies terminate the services of a quarter of its employees? Not because these companies are evil or failing. And not because of one bad earnings report either. Rather, it is due to a principle I call "the inevitability of automation." Once you realize that, you'll see it everywhere. But firstly, this principle is derived directly from my book. So, a quick word about him. The book is titled "Zero Labor: Artificial Intelligence, Automation, and the Last Generation of Employees," and it is available for pre-order now. The book lays out the complete framework for a post-labor economy, from the rise of automation to the policies that can take us through this stage. More than a thousand people backed the book on the Kickstarter platform before a single copy existed. If you would like to get your copy, the pre-order link is in the description. Thank you, and now we return to the program.
So here's what "automation imperative" is. Every organization, whether public or private, has a mandate for competence. This mandate never disappears. The only thing that changes is the source of the pressure. In the public sector, the pressure comes from budgets. In the private sector, it comes from two sources: shareholders and market competition. Let's start with the public sector. Every government department exists to achieve a specific goal. The purpose of that department is not to employ government employees. Take the Ministry of Agriculture, for example. The results it seeks are healthy farmland, a sustainable food supply, and food that is safe to eat. Employees are merely a means to achieve that specific end. So, if that department can achieve the same results without any employees, it will. She will have to do so because her budget is limited, and the government and voters are constantly demanding that she achieve more with less. This is exactly what the Dutch announcement explicitly stated. We cannot continue doing what we have been doing. When artificial intelligence can process models, answer questions, and conduct inspections, budget constraints will take care of the rest.
Now, let's look at the private sector, where the pressure comes from two sides. The first pressure comes from the shareholders. In 1970, economist Milton Friedman published an article with a title that sums it all up. The social responsibility of businesses is to increase their profits. Friedman argued that the CEO works for the owners, and the owners generally want to make as much money as possible. Over the next half-century, that idea became the dominant ideology of American corporate governance. It is called shareholder priority. Instead, some call it shareholder capitalism. So, follow this logic. If the company is able to accomplish the same work with half its workforce, keeping the other half means spending shareholders' money on wages the company does not need to spend. According to Friedman's logic, this constitutes a breach of fiduciary duty. In fact, the law gives boards of directors some flexibility here. But ideology doesn't do that, and neither does the market. Of course, shareholders can vote to dismiss the board of directors and change the CEO if they are not satisfied with the performance.
Then there is the second pressure, which is competition in the market. Competition in the free market is a constant driver of efficiency. In Lewis Carroll's book "Through the Looking-Glass," the Red Queen tells Alice that she needs to run as hard as she can to stay in place. Markets operate in the same way. When a company automates a process and reduces its costs, every competitor is forced to match those costs, or find something that customers will pay more for, otherwise it will start to lose market share. Therefore, an executive who rejects automation out of concern for workers puts the entire company at a disadvantage. The market does not reward this kind of virtue. Instead, he punishes her. Note that this works like a gear ratchet. Once automation proves its viability in one company, it becomes mandatory for the rest of the industry. That ratchet only rotates in one direction.
There are two additional forces pushing in the same direction. In 1932, economist John Hicks noted that when labor becomes expensive, inventors look for ways to use less of it. Therefore, high wages do not protect workers. In fact, it makes them a prime target. We have seen this many times, from elevator operators to loading and unloading workers. The tax law also tilts the playing field more towards competition. In the United States, labor was taxed at an effective rate of about 25% when all taxes were taken into account. But after the 2017 tax reform, the effective rate on hardware and software dropped to just around 5%. Therefore, a company that replaces a worker with software not only saves on wages, but also saves on taxes. We are literally driving the automation of the economy.
So, if this motive has always been there, why is all this happening now? This is because the inevitability of automation has always been constrained by three main obstacles. The first is capability, which means whether the machine is actually capable of doing the work or not. The second is cost, which means whether the machine is cheaper than a human once everything is accounted for. So, this is what we call the Total Cost of Ownership or TCO. The third is risk, which means whether we can live with machine errors or whether machines are actually less dangerous than humans. For many office jobs, I believe artificial intelligence has overcome the first two obstacles and in many cases has begun to overcome the third. Those restrictions did not truly stop determinism. Mostly, it just slows things down or gives you a little time while the technology itself improves. That is why I do not believe that Microsoft and the Netherlands are exceptional cases. I just think they are too early in this matter. Every organization feels the same pressure. Some of them move first, and the "Red Queen" hypothesis ensures that the rest will follow suit.
And now, here's the part that should worry everyone. For any individual organization, this behavior is perfectly rational. But if you put all of that together, you get a problem that no single organization can be held responsible for on its own. Years ago, author Martin Ford alluded to this in a book titled "Lights in the Tunnel." Each company can reduce its own labor costs, but all of this combined erodes the wages its customers depend on. And governments are no different. Every public employee who leaves their job means a lower salary across the entire economy. Therefore, the inevitability of automation is not a choice made by one person or one company. It is a rule that everyone in this system must follow. You can't get rid of it by being ashamed, and you can't get rid of it by voting. When everyone follows the same incremental incentives, the only way to change the outcome is to change those incentives.
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