AIF Insights No. 27 (2026) | Artificial Intelligence Has a Consumer Problem: The AI Consumer Crisis: De-Agrarianization, Labor Displacement, and the Demand Trap in Cambodia

This paper explores the macroeconomic “AI displacement trap,” arguing that simultaneous global automation destroys the primary engine of economic demand by eliminating human wage income. Using Cambodia as a primary case study, the author shows that rapid de-agrarianization—caused by fragmented land, aging farmers, and changing social aspirations—permanently removes agriculture as a traditional fallback sector, leaving displaced workers without a reservation wage floor. This creates an inescapable macroeconomic collapse loop where lost wages trigger collapsed consumption, shrinking profits, evaporating tax bases, and ultimate state failure. To prevent this structural decline, the paper advocates for regionally and globally coordinated technology governance—such as an ASEAN Consumer Demand Protection Protocol—alongside national AI wealth funds and the preemptive redistribution of AI productivity gains to secure universal household dividends.