I’ve argued that artificial intelligence is significantly different from other technological advances and more likely to shrink the job market than to expand it. I continue to support this conclusion. This essay explains how AI leads to Universal Basic Income (“UBI”) and, inevitably, a fully transfer-based income system.

Artificial intelligence (AI) is rapidly transforming the global economy, raising profound questions about labor markets, wealth distribution, and the future of social welfare. As AI drives unprecedented productivity gains while simultaneously displacing human labor, it creates widening economic inequality and increasing social instability.

Image (ironically) created using AI.

UBI—generally understood as unconditional cash payments to all citizens—emerges as a highly discussed policy proposal aimed at addressing these disruptions. However, if the logical conclusion of AI-driven displacement and wealth redistribution is fully realized, an economy could evolve where 100% of individual income ultimately comes from redistribution—a total reallocation of wealth funded by transfers from some to others.

AI revolutionizes productivity by automating cognitive, administrative, and manual tasks at scale. Unlike previous automation waves mainly targeting physical labor, AI threatens broad swathes of employment, from manufacturing to services to white-collar work. The consequences:

• Labor’s share of national income declines as fewer workers earn steady wages or salaries.
• Profits, rents, and capital gains accrue to AI technology owners, investors, and corporate elites who control automated systems.
• Economic inequality deepens, pushing many, if not most, workers into precarious or transitional roles.

This structural shift fuels a “K-shaped” economic recovery pattern: a rising class of asset holders and AI beneficiaries prospers, while a growing underclass faces wage suppression and job losses.

Widening inequality breeds electoral dissatisfaction, sharpening demands for public action. Populist and progressive movements call for “free money” mechanisms like UBI to guarantee minimum income security (E.g., see Zohran Mamdani – DSA/Nazi/Muslim – Mayor-elect NYC). But financing universal payments is a daunting fiscal challenge:

• Increased social spending often requires public debt, as tax revenues from the wealthy alone cannot sustain generous UBI levels.
• Growing government deficits spark inflation and erosion of currency value, disproportionately hurting low- and middle-income groups.
• Inflation pressures incentivize corporations to accelerate AI adoption, aiming to reduce labor costs and hedge against rising expenses.
• This reinvigorates labor market disruption, funneling more workers into economic uncertainty and reinforcing inequality.

Thus begins a cycle: inequality → demand for redistribution → debt and inflation → more AI adoption → greater inequality → renewed redistribution calls.

UBI is fundamentally a redistributive policy financed mostly by government transfers funded via taxing individuals, corporations, and capital owners. Under UBI:

• The income individuals receive is effectively taken from others by the state and redistributed equally among citizens without regard for employment status or income.
• This system deviates from classical wage income, instead creating a decoupling between labor contribution and income received.

Extending this logic to its conclusion leads to an economy where, for some, many, or most all personal income is sourced from redistribution rather than earned directly through labor or entrepreneurship. In this scenario:

• Workers displaced or economically marginalized by AI depend entirely on government transfers for their livelihood.
• Asset owners continue to hold wealth and control production, but income distribution to individuals predominantly flows through public welfare mechanisms.
• The labor market shifts from an income-generating system to one fundamentally mediated by political decisions over redistribution.

This endpoint represents a profound transformation in the social contract, where income guarantees replace labor earnings as the primary economic foundation for most individuals.

AI doesn’t only accelerate displacement; paradoxically, it also enables more efficient administration of social programs like UBI through automation, blockchain, and data analytics. However:

• Financing UBI sustainably demands new tax policies on AI capital, data usage, wealth, and corporate profits, raising complex policy challenges.
• Society faces questions about incentives, motivation, and social purpose when income decouples entirely from employment.
• Political power shifts as governments gain immense influence over income distribution.

Ethically and socially, this redistribution represents an attempt to safeguard dignity, public order, and economic security in a world fundamentally reshaped by AI, but it carries risks of dependency, reduced labor participation, and concentration of state power.

AI’s ability to displace large portions of the workforce while concentrating wealth necessitates mechanisms to maintain social and economic stability. UBI is emerging as a policy response reflecting widespread demand for income security amid technological upheaval.

However, taken to its logical conclusion, the AI-UBI dynamic entails a fundamental economic realignment where:

• The vast majority, if not all, of personal income arises from the redistribution of wealth extracted from fewer productive actors benefiting from AI capital.
• Income, wages, and employment links diminish as redistribution becomes the dominant mode of delivering economic resources.

This transformation evokes deep questions about future economic structures, governance, and societal values in the AI era.

References

1. Hoynes, H., & Rothstein, J. (2019). Universal basic income in the United States and advanced countries. *Annual Review of Economics, 11*(1), 929–958. https://doi.org/10.1146/annurev-economics-080218-030237

2. Bélisle-Pipon, J.-C. (2025). AI, universal basic income, and power: Symbolic violence in the tech elite’s narrative. *Frontiers in Artificial Intelligence, 8*, Article 1488457. https://doi.org/10.3389/frai.2025.1488457

3. Economic Strategy Group. (2025, January 23). *Universal basic income (UBI) as a policy response to current challenges*. Aspen Institute. https://www.economicstrategygroup.org/publication/universal-basic-income-ubi-as-a-policy-response-to-current-challenges/

4. Santens, S. (2025, April 29). AI, automation, and the urgent case for universal basic income. *ScottSantens.com*. https://www.scottsantens.com/ai-automation-and-the-urgent-case-for-universal-basic-income-ubi-forward-future/

5. Anonymous. (2025, October 16). A critical review of universal basic income as a response to technological unemployment. *HackerNoon*. https://hackernoon.com/a-critical-review-of-universal-basic-income-as-a-response-to-technological-unemployment

6. Institute for Fiscal Studies. (n.d.). The economics of universal basic income. Retrieved November 6, 2025, from https://ifs.org.uk/articles/economics-universal-basic-income