Economic productivity simply means output per worker. So, we could make 97% of the US population permanently unemployed tomorrow, and as long as the AI replacement labor yielded equal or greater proceeds to the remaining 3%, we’d see a colossal increase in “productivity.”
That would be in the interest of the 3% to do (or attempt), which is what makes the scenario so scary.
Sure, there will be niche sub-industries that will be erased by LLMs, and people who have those niche skills will suffer. This has always been the case with technological advances. And always, it has not disrupted the economy.
What are S-curves.
The fear that technological advances will cause mass unemployment and destroy labour markets has been common throughout history. Yet here we are at full employment. Maybe this time is different?
And instead of the 97% unemployment our intuition tell us would happen, we're instead 30x as productive.
The same will happen when/if AI makes writing software far more effective.