The problem I see is that the generative AI economy hinges on an injustice: the presumption that all art on the internet - no matter the medium, or means or relative notoriety of the artist - shall be candidate training data, and no burden of attribution whatsoever shall be laid upon those who leverage it.
Most graphic artists that I know bemoan copyright. But, it's a tool that the law has given them.
Also: most graphic artists that I know exist under low economic circumstances - some near poverty - relative to most of the people I know who are building the next great wave of technological innovations with generative AI.
I don't see a struggle over copyright. Artists, who exist towards the bottom of the economic ladder as it is, are doing what they can to survive.
Why is this a special case? When people were viewing it, reposting it, using it to learn... those were all accepted uses. Passing it off as your own wasn't allowed, but outright plagiarism has pretty consistently been unaccepted.
The problem seems to stim from using it in a way that directly competes with the artist, and given your other point about their financial position, is a direct financial threat to them. The morality of the situation seems to be that it is wrong because of the financial harm, but recognizing that such an argument is rarely accepted, it must instead be justified by some other argument, any other argument, that condemns the outcome.
I don't think this is anything particularly unique. How often do we find things wrong because of a logical argument as to why it is wrong, and how often do we find a logical argument to justify our felling that something is wrong?
There is also a element of helplessness. No matter what the government does, pandora's box has been opened and it can't be closed. While it might slow down the development of better AI, it isn't going to stop it and banning existing software isn't going to be possible. The damage has been done, and even if the artists have an overwhelming victory, they are only going to recover a fraction of lost ground only to eventually lose it again.
Proponents of the current economic model like to frame the artist rejection of AI as an obvious case of Luddism. Of course the artists reject this, it threatens their economic station! And: it's not even wrong.
But, it is a high modernist foible: at some point the raw resource is fully exploited and the wave of companies that rode high on its vast-but-unrenewable quantity will reckon with reality. Their businesses are unsustainable (who could have foreseen it!).
In the mean time, artists won't disappear. Most likely what will happen is that they will continue to subsist - they are essential in this economic loop, whether fairly compensated for their labor or not - but with an even lower economic posture than before.
I don't think there is a moral crisis here, but an economic one. Incidentally, an injustice is perpetrated upon an entire class of laborers. I'll leave it to others to decide the morality of that, considering all the trade-offs.
I think there is an ongoing issue. Much like how the privatization of the public domain has led to an ongoing issue of a large percent of our culture being privately owned. I'm not sure the fix to this.
I am by no means happy with the current situation, but I do find the moral reasoning behind the outrage at AI questionable at best as it doesn't seem to be consistent and instead based on what is economically beneficial to those showing outrage. By that same standard, AI is great because it lets me create things at a much cheaper cost.
Artist creating art of popular characters and AI using publicly posted art both seem pretty acceptable to me. Then again I'm the weirdo who goes to conventions to buy originals, the ones actually painted on canvas and not just easily reproducible prints, even though that does mean paying far more than the prints cost.
A memory rises unbidden: we once made comics and posted them to the web, free for all to read. We would even browse the web just to find and read them. Wild.
We find ourselves circuiting the convention hall. It is a brightly lit maze, festooned with endless AI-generated promotions for Marvel supers and yesteryear reboots. The cast of Friends is back, youthful as ever, and apparently we're getting at least three more seasons. We round a corner and..
Here. Yes, here. We remember it now. This whole row was once filled with tables showcasing prints and original works of art. Behind the tables: a spouse, a friend, or the artist in the flesh. Artists, who were remarkable in their day for their contributions to the great pop culture that drew us to the convention. Artists who, despite their labor and their infamy among certain fandoms, never appeared in a legible place on the credit roll. Artists who worked a day job for years, stocking shelves, packing boxes, approving Disney licensee merchandise, so that in the evening they might bend their weary backs, put pen to tablet and spill their imaginations across the screen. Artists who did all that so that we could come to Comic-Con today and appropriate for ourselves an original work of their art.
Where once there were artists, now there is Hello Kitty. Sanrio has taken over the whole row. You can walk up to Hello Kitty and ask it for any combination of officially licensed characters, with optional accessories if you have a few more dollars to spend. A 3D printer somewhere behind the booth's facade fabricates the bespoke toy on-demand in food-safe ABS. An original work of art.
I don't think you need artists for that anymore. Certainly you don't need them for commercial purposes. If they are going to survive as an artist professionally, it will be because of the people that refuse to use AI art for whatever reason, but I don't see how that won't be short lived in the market.
Artists will survive, not professionally, but because they are doing it for the arts sake, even if that doesn't offer them any financial reward.