Providing every American with a poverty-level UBI of $16,000 would cost $5 trillion annually. This figure exceeds the entire US federal tax base of approximately $4.9 trillion. This simple calculation demonstrates that funding UBI through traditional taxation is not a viable solution for AI-driven job displacement.
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Forcing businesses to pay a mandated high wage for a low-value job creates a powerful incentive to automate that role, especially with the rise of AI. A better approach is bottom-up regulation that fosters a competitive labor market, forcing companies to increase wages naturally to attract talent.
A rapid, significant (e.g., 5%) spike in unemployment over a short period (e.g., 6 months) due to AI would trigger an immediate and massive political and economic response. This would be comparable in speed and scale to the multi-trillion dollar stimulus packages passed during the COVID-19 pandemic.
Following Amazon's model, AI-native companies will reinvest all available cash into acquiring more compute power for a competitive edge. They will operate in a perpetual land-grab mode and never need to show a profit, making them impossible to tax effectively and rendering corporate taxation an obsolete funding mechanism for the state.
For current AI valuations to be realized, AI must deliver unprecedented efficiency, likely causing mass job displacement. This would disrupt the consumer economy that supports these companies, creating a fundamental contradiction where the condition for success undermines the system itself.
Coinbase is funding a UBI experiment giving New Yorkers crypto. This is a strategic play, not just charity. It aims to prove crypto's efficiency as a distribution mechanism for government welfare, positioning it to become the foundational infrastructure for future social programs and driving mass adoption.
The enormous market caps of leading AI companies can only be justified by finding trillions of dollars in efficiencies. This translates directly into a required labor destruction of roughly 10 million jobs, or 12.5% of the vulnerable workforce, suggesting market turmoil or mass unemployment is inevitable.
Financial support (UBI) is insufficient for a thriving populace. The real safety net in an AI-driven world is a 'Universal Basic AI'—a personal, sovereign AI agent that acts in the user's best interest. This provides capability and access to resources, ensuring individuals are empowered, not just subsidized.
The official poverty line is calculated as 3x the cost of food, a metric from the 1960s when food was a third of a household budget. Today, food is only 13% of spending while housing and healthcare have soared, making the official metric a poor reflection of modern economic hardship.
Since taxing profitless AI companies is impossible, a new system is needed. Instead of redistribution, money creation itself must be re-engineered. Capital could be generated and injected directly to individuals for simply existing and participating in the economy, fundamentally changing how money enters circulation.
Giving people a basic stipend won't end economic competition. Instead, it will fuel a secondary economy where people compete for each other's stipends through new forms of gambling, entertainment, entrepreneurship, and status games.
