Elon Musk Lays Out 'the Best Way To Deal With Unemployment Caused by AI' -- Will It Work?
In a tweet on X, Musk proposed: “Universal HIGH INCOME via checks issued by the Federal government is the best way to deal with unemployment caused by AI.
“AI/robotics will produce goods & services far in excess of the increase in the money supply, so there will not be inflation.”
What do economists have to say about that assertion?
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Will AI Actually Reduce Net Employment?
Many people just assume as a given that AI will eliminate more jobs than it creates. But that’s not how other transformative technologies have worked in the past.
“Automations have replaced human jobs since the Industrial Revolution, yet our quality of life, quality of work and incomes keep improving,” said professor Arie Brish of St. Edward’s University. “Amazon operated around one million warehouse robots in 2025, and laid off around 14,000 employees — yet their total workforce rose around 30,000.”
As the automobile overtook horses and buggies, plenty of blacksmiths and farriers lost their jobs. And new jobs came along, from mechanics to dealerships to factory workers to highway diners and motels.
The key question economists raise is whether AI is truly different from past innovations — or another version of the same pattern.
Universal Income
Even if AI causes a net loss of jobs permanently, not every economist believes a universal income is the solution.
“Universal income would require much higher taxes, but no one seems in a rush to do that,” said Jay Zigmont, founder of Childfree Trust.
Some economists don’t see universal income as going far enough. Mariano Torres, professor at Adelphi University, hinted at Karl Marx’s proposal that workers must own the means of production.
“The solution should address who owns the systems generating this new wealth, and workers’ or the public’s claim on it," Torres said.
Zigmont also noted that income alone doesn’t address the human need for purpose, raising concerns about what a society with widespread job displacement might look like beyond just finances.
Inflation
When governments just start mass mailing income checks, they flood the economy with new money. Money that people are then able to use to bid on the same limited inventory.
We saw this play out in the pandemic, when the BLS reported that inflation soared to 9.1% after two years of stimulus checks.
Musk dismisses this point by arguing that AI will just produce more supply. But Torres remains skeptical.
“The sectors that dominate household budgets, like housing and healthcare, are supply-constrained and highly concentrated. If new income flows into such bottlenecks, prices rise,” Torres said.
Again, look at the flood of money in the pandemic. Home prices rose 38% from the second quarter of 2020 ($317,100) to the same quarter two years later ($437,700), per the Federal Reserve. People offered more for houses, because more money was chasing the same number of houses.
Beware of the argument, “But this time is different.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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