True, but that's always been the case with any product. There have always been imitations and knock-offs of any genuine product, whenever the technology or means to massively produce it cheaply and quickly becomes available. The effect of this is that it floods the market, a larger section of the population get to enjoy an inferior product (whether they care about that or not), but it doesn't take the genuine goods off the market. In some cases we create regulations around it if it becomes abusive, and companies can sort it out legally if they wish, but people who seek the original product will always have ways to find it.
In the case of art, I wouldn't label AI-generated works to be inferior, just different. Once we're able to distinguish them from traditional works done manually by humans, it will eventually settle into its own category, with its own supply and demand. The current problem is that it can pose as something that traditionally takes effort and skill to produce, but we'll find ways around that.
It turns goods into luxury items though. Today, you can still get manually crafted scissors, but they'll be expensive and not something most people can afford. Sure, not 100% of blacksmiths were replaced, but 99.9% of them. That's still a tough prospect if you see your job on the shortlist for getting replaced and you're not part of the 0.01% in that job today.
Can we find a way to tell apart human art from generated art? I'm not so sure in the long run. Today, we have a lot of pointers and with enough focus experts can tell them apart. But they can't in passing, and an average person probably can't without being told what exactly to look for and advanced tools to check those. We're only a few years into it though, so I find it hard to believe that we'll be able to tell whether a digital picture was produced with a digital camera or generated by an AI. You can probably make it much more expensive to fake it (e.g. film yourself with 3 different cameras which are positioned differently, so AI would need to also fake a multi-perspective video reliably), and maybe that'll be the thing (like "organic" diamonds vs industrially produced ones), but I'm not sure if you can put the cat back into the bag.
In the case of art, I wouldn't label AI-generated works to be inferior, just different. Once we're able to distinguish them from traditional works done manually by humans, it will eventually settle into its own category, with its own supply and demand. The current problem is that it can pose as something that traditionally takes effort and skill to produce, but we'll find ways around that.