Economically, the "AI" to where most investment money went to - LLMs - has turned out to be one big value destroying ponzi scheme, hence removing it from the Economy will in overall improve the Economy because things are actually more efficiently done without it than with it.

The area were LLMs shine is entertainement, and in overall Economic terms entertainment can be a good thing or a bad thing - on one side it's a use of time that is not economically productive when said time could instead have been used for productive activities, on the other hand it can indirectly boost other Economic activities because humans work better when they're more relaxed and satisfied. From a lot of what we're seeing, LLMs not only are misused to do work whilst in fact being entertainment (for example, CEOs using LLMs for "research" because it's the ultimate "Bootlicker Yes man" even though its highly unreliable as a research tool, thus leading to a higher rate of bad management decisions) but it also seems to reduce independent thinking capabilities of its regular users.

The second biggest sink of investment money in what is now called "AI" is Generative AI. This comes with job losses and a fall in quality (but it's in areas which don't directly create wealth, hence the Economic impact of that loss in quality is lower). Ultimatelly, the reversion of this area of "AI" being "good for the Economy" or "bad for the Economy" boils down to what one thinks is a "good Economy" - if one sees inherent Economic value in Art for itself, then a fall in the quality of Art and a reduction in the capabilty of producing trully novel Art (which AIs can't do since their models make the initial random noise which is the basis of their output coalesce towards what's statistically closest to that which they have been fed, which by definition must already exist), then a reversion in the use of Generative AI would be an undoubtoubly good thing, otherwise it really depends on the Economic impact of the job losses due to Generative AI versus the gains in speed of production (though with a lowering in quality) of using Generative AI.

As for the rest, yeah, there is a ton of what's called "AI" - let's just use the old terms for it, Machine Learning, aka ML - which does create Economic value which wasn't being created before and if it was lost then there would be a loss of overall Economic value.

This latest kind has by far received the least amount of investment money in this bubble, so this bubble popping and reversing would have very little Economic impact via this pathway.

Anyway, my point is that, as time went by and as the limits and capabilities of the Technology were discovered, it turned out most of the investment money into "AI" went into malinvestments which destroy overall Economic value (but can make a few people extremelly rich, hence why the money went there since they each economic actor only care about themselves, not about the whole Economy), and structural economic shifts to support said mainvestment just spread those economic malallocation further into the broader Economy. This "AI" economic tissue is akin to a cancer in an otherwise healthy body - a self-propagating bad mutation that extracts nourisment from the rest of the body, expanding to extract ever more nourisment whilst destroying the healthy parts - so excising it in it's totallity is not just a good thing but actually a requirement to restore a healthy Economy, and we should not fall into the trap of simplistically thinking of it as "part of the body" when in reality it's a previously healthy part of the body which underwent a carcinogenic mutation that turned it into a parasite that will eventually kill its host.

In simple terms, the harm and hence the damage is already done, and stopping and excissing it from the Economy now would not be the "harming of the Economy" (because that's already done), it would actually be the damage control necessary to save the Economy from suffocating due to excessive malallocation of resources.