STAGE ONE: The AI model is imperfect and still requires an editor. Businesses stop hiring new entry level employees but shift the responsibilities of existing employees from creation to editing. They become slightly more efficient and profitable. Overall employment is stagnant, but the markets rejoice.
STAGE TWO: The models improve to the point where editing is no longer required. Millions of workers are fired. Profits soar, and so does inequality. The political backlash begins in earnest, but the capitalists flood the system with money, and Supreme Court decisions make dramatic reforms impossible. There is no significant expansion of the welfare state to alleviate the misery caused by unemployment; some of the displaced workers find jobs in newly emerging fields, but most don’t.
STAGE THREE: The models become autonomous. They even create and run businesses themselves, subject only to the will of their nominal owners. They are given personhood status by the legal system. Does liberal democracy have any meaning when the economy looks like this? TBD.