🦔UC Berkeley's computer science department just posted its worst failure rates in years. 35.3% of CS 10 students got F's in spring 2026, up from under 10% in prior semesters. Professor Dan Garcia says the primary driver is a "vast increase in academic dishonesty" through LLMs. Students use AI to complete assignments, never learn the material, then fail exams. His office hours, once full, are now empty.
My Take
Companies are firing experienced engineers while the pipeline that produces new ones is being gutted by the same technology. Students use AI to bypass the hard part of learning, show up to exams without the understanding, and fail. One professor discovered a student's linear algebra class had an "open AI" policy for homework and exams. That student then couldn't do basic linear algebra in the next course.
Both ends of the workforce are eroding at the same time. Senior engineers are getting cut to fund AI spending. Junior engineers are graduating without the skills because AI did their coursework. And the companies spending trillions on these tools haven't connected those two facts yet.
Hedgie🤗
🦔UC Berkeley's computer science department just posted its worst failure rates in years. 35.3% of CS 10 students got F's in spring 2026, up from under 10% in prior semesters. Professor Dan Garcia says the primary driver is a "vast increase in academic dishonesty" through LLMs. Students use AI to complete assignments, never learn the material, then fail exams. His office hours, once full, are now empty.
My Take
Companies are firing experienced engineers while the pipeline that produces new ones is being gutted by the same technology. Students use AI to bypass the hard part of learning, show up to exams without the understanding, and fail. One professor discovered a student's linear algebra class had an "open AI" policy for homework and exams. That student then couldn't do basic linear algebra in the next course.
Both ends of the workforce are eroding at the same time. Senior engineers are getting cut to fund AI spending. Junior engineers are graduating without the skills because AI did their coursework. And the companies spending trillions on these tools haven't connected those two facts yet.
Hedgie🤗
Two economists just published a mathematical proof that AI will destroy the economy.
Not might. Not could. Will — if nothing changes.
The paper is called "The AI Layoff Trap." Published March 2, 2026. Wharton School, University of Pennsylvania. Boston University. Peer reviewed. Mathematically modeled.
The conclusion is one sentence.
"At the limit, firms automate their way to boundless productivity and zero demand."
An economy that produces everything. And sells it to nobody.
Here is how you get there.
A company fires 500 workers and replaces them with AI. A competitor fires 700 to keep up. Another fires 1,000. Every company is behaving rationally. Every company is following the incentives correctly. And every company is building a trap for itself.
Because the workers who were fired were also customers.
When they lose their jobs faster than the economy can absorb them, they stop spending. Consumer demand falls. Companies respond by cutting costs — which means automating more workers — which means less spending — which means more falling demand — which means more automation.
The loop has no natural exit.
The researchers tested every proposed solution. Universal basic income. Capital income taxes. Worker equity participation. Upskilling programs. Corporate coordination agreements.
Every single one failed in the model.
The only intervention that worked: a Pigouvian automation tax — a per-task levy charged every time a company replaces a human with AI, forcing them to price in the demand they are destroying before they pull the trigger.
No government has implemented this. No major economy is seriously discussing it.
Meanwhile the numbers are already tracking the curve. 100,000 tech workers laid off in 2025. 92,000 more in the first months of 2026. Jack Dorsey fired half of Block's workforce and said publicly: "Within the next year, the majority of companies will reach the same conclusion."
Nobody is doing anything wrong. Companies are following their incentives perfectly. That is exactly the problem.
Rational behavior. At scale. Simultaneously. With no mechanism to stop it.
Two economists built the math. The math leads to one place.
Source: Falk & Tsoukalas · Wharton School + Boston University ·