> Does a model sucking up all the artistic output of the last 400 years and using that to produce an image generator model destroy the incentive of producing and sharing said artistic output?

Copyright, at least in the US, cares about the effect of the use on the market for that specific work. It's individual ownership, not collective. And while model regurgitation happens, it's less common than you think.

The real harm of AI to artists is market replacement. That is, with everyone using image generators to pop out images like candy, human artists don't have a market to sell into. This isn't even just a matter of "oh boo hoo I can't compete with Mr. Diffusion". Generative AI is very good at creating spam, which has turned every art market and social media platform into a bunch of warring spambots whose output is statistically indistinguishable from human.

The problem is, no IP law in the world is going to recognize this as a problem, because IP is a fundamentally capitalist concept. Asserting that the market for new artistic works and notoriety for those works should be the collective property of artists and artists alone is not a workable legal proposal, even if it's a valid moral principle. And conversely the history of copyright has seen it be completely subverted to the point where it only serves the interests of the publishers in the middle, not the creators of the work in question. Hell, the publishers are licking their chops as to how many artists they can fire and replace with AI, as if all their whinging about Napster and KaZaA 24 years ago was just a puff piece.