It IS a race-to-the-bottom.
Products will be cheaper because they will be cheaper to produce thanks to automation. But less jobs mean less people to buy stuff, if it weren't for a credit-based society.
But I'm talking from my ass. I don't even know if there are less jobs than before. Everything seems to point that there are more jobs now than 50 years ago.
I'm just saying I feel like the telephone operators. They got replaced by a machine and who knows if they found other jobs.
If it is that simple to create products more people can do it => cheaper the products.
A market driven by cheaper products that can also produce them easily is going into a price reduction loop until it reaches zero.
Thus I think something else wil happen with AI. Because what I described and what you describe is destroying the flow of capital which is the base of the economy.
Not sure what will happen. My bet (unfortunately) is on a really big mega corp that produces an AI that we all use.