Elon Musk's universal high income will bankrupt any nation

Job cuts due to AI: Billionaire Elon Musk has a solution – kind of – for people who have been displaced from their jobs due to artificial intelligence (AI). But that did not pass muster with economist Sanjeev Sanyal. In fact, Sanyal thinks it would bankrupt governments that attempt it. 

Elon’s idea: The federal government expends universal high income through government cheques, which he said 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,” he added.

Sanyal said that AI will certainly cause dislocation, but like all technology, it will create new jobs and opportunities in the medium term. He also rejected Musk’s idea that AI and robotics will create goods and services in excess of demand so that there will be no inflation. 

“Both of these are classic mistakes made by those who think that there is a finite number of jobs to be done in the world and a finite set of consumer demands. By their logic, we have already exceeded everything that even the wealthiest person could have imagined in 1800, so there should be no jobs or inflation in the 21st century. By the same token, Elon Musk's universal high income will bankrupt any government that attempts it,” he said.

Sanyal was asked by a user on X to explain the kind of new jobs and opportunities he was talking about. The economist explained that it was not something to be forecast “just as the impact of electricity was not possible to guess in the late 19th century”. 

“This is exactly why fluid economic systems - with easy insolvency, flexible labour markets, a vibrant stock market etc - will always outperform great planning. The risk taking can be done by private sector or even the state, but the real game is willingness to wipe clean the failed bets in each round of innovation,” he said. 

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The discussion comes amid mass layoffs in companies due to AI. Recently, Snapchat’s parent company cut 1,000 jobs – 16 per cent of its global workforce – due to its growing reliance on AI. According to the company, 65 per cent of all new codes at Snap are now generated by AI. Before Snap, there was Oracle, Meta and Amazon. Oracle cut nearly 30,000 jobs, Meta slashed jobs in hundreds, and Amazon confirmed 16,000 corporate job cuts. Similarly, there were enterprise software firm Atlassian Corp. and fintech firm founded by Jack Dorsey, Block Inc that cut jobs due to AI.

Over 80 companies have announced layoffs due to AI.