Yes, if we're concerned about the potential consequences of releasing AGI, we need to consider the likely outcomes if AGI is released. Ideally we think about this some before AGI shows up in a form that it could be released.
> it needs a certain socio-economic response and so forth.
Absent large interventions, this will happen.
> Are children equally demoralized about additions
Absolutely basic arithmetic, etc, has gotten worse. And emerging things like photomath are fairly corrosive, too.
> Is there a way to counter the demoralization?
We're all looking... I make the argument to middle school and high school students that AI is a great piece of leverage for the most skilled workers: they can multiply their effort, if they are a good manager and know what good work product looks like and can fill the gaps; it works somewhat because I'm working with a cohort of students that can believe that they can reach this ("most-skilled") tier of achievement. I also show students what happens when GPT4 tries to "improve" high quality writing.
OTOH, these arguments become much less true if cheap AGI shows up.