Yes, that's exactly the scenario we need to avoid. Automated gay space communism would be ideal, but social democracy might do in a pinch. A sufficiently well-designed tax system coupled with a robust welfare system should make the transition survivable, but the danger with making that our goal is allowing the private firms enough political power that they can reverse the changes.

It suggests to me that AI

This is a fallacy. Specifically, I think you're committing the informal fallacy confusion of necessary and sufficient conditions. That is to say, we know that if we can reliably simulate a human brain, then we can make an artificial sophont (this is true by mere definition). However, we have no idea what the minimum hardware requirements are for a sufficiently optimized program that runs a sapient mind. Note: I am setting aside what the definition of sapience is, because if you ask 2 different people you'll get 20 different answers.

We shouldn't take for granted it's possible.

I'm pulling from a couple decades of philosophy and conservative estimates of the upper limits of what's possible as well as some decently-founded plans on how it's achievable. Suffice it to say, after immersing myself in these discussions for as long as I have I'm pretty thoroughly convinced that AI is not only possible but likely.

The canonical argument goes something like this: if brains are magic, we cannot say if humanlike AI is possible. If brains are not magic, then we know that natural processes can create sapience. Since natural processes can create sapience, it is extraordinarily unlikely that it will prove impossible to create it artificially.

So with our main premise (AI is possible) cogently established, we need to ask the question: "since it's possible, will it be done, and if not why?" There are a great many advantages to AI, and while there are many risks, the barrier of entry for making progress is shockingly low. We are talking about the potential to create an artificial god with all the wonders and dangers that implies. It's like a nuclear weapon if you didn't need to source the uranium; everyone wants to have one, and no one wants their enemy to decide what it gets used for. So everyone has the insensitive to build it (it's really useful) and everyone has a very powerful disincentive to forbidding the research (there's no way to stop everyone who wants to, and so the people who'd listen are the people who would make an AI who'll probably be friendly). So what possible scenario do we have that would mean strong general AI (let alone the simpler things that'd replace everyone's jobs) never gets developed? The answers range from total societal collapse to extinction, which are all worse than a bad transition to full automation.

So either AI steals everyone's job or something worse happens.