Originally published at The Daily Economy. 

​Artificial intelligence has become the latest excuse for reviving one of the oldest bad ideas in economic policy: a universal basic income. Recent pieces in Newsweek, the LSE Business Review, and Fortune have all helped push the idea that AI may soon wipe out so many jobs that Washington will need to send everyone a check.

That makes for a catchy headline. It also makes for terrible economics.

The right question is not whether AI will disrupt work. Of course it will. The right question is this: after more than 100 local guaranteed-income experiments, what have we actually learned?

The answer is much less flattering to UBI than its promoters would like.

What 122 UBI-Style Pilots Show

A new AEI working paper by Kevin Corinth and Hannah Mayhew gives the best recent overview of the evidence. Per their study, there were 122 guaranteed basic income pilots across 33 states and the District of Columbia between 2017 and 2025. Those pilots allocated about $481.4 million in transfers to 40,921 recipients, with 61,664 total participants including control groups. The average recipient got about $11,765, the average pilot lasted 18.4 months, and the average monthly payment was $616.

That sounds like a mountain of evidence. It is not.

Of those 122 pilots, only 52 had published outcomes. Only 35 used randomized designs. Only 30 reported employment outcomes. So the case for UBI is not being built on some giant pile of clear, clean evidence. It is being built on a much smaller stack of studies, many of them weak, limited, or badly timed.

And here is the kicker. Among the 30 randomized pilots with published employment results, the average effect was a 0.8 percentage-point increase in employment. UBI fans will rush to wave that around. They should slow down.

AEI shows that the bigger and more credible studies tell a very different story. Among the four pilots with treatment groups of at least 500 participants, which together account for 55 percent of all treatment-group participants, the mean effect on employment was minus 3.2 percentage points. AEI also estimates a mean income elasticity of -0.18, which is consistent with standard labor-supply economics. 

In plain English, when people receive more unearned income, work tends to fall at the margin. Shocking, I know. Economics still works.

Credit: American Enterprise Institute

​Why the Evidence Is Weaker

Than the HypeThe AEI paper is useful not just for what it finds, but for how bluntly it describes the weaknesses in the evidence.

The average treatment group among those 30 studies was just 359 people, and the median was only 151. That is not exactly ironclad evidence for redesigning the American welfare state. Among the 26 pilots for which attrition could be measured, the average attrition rate was 37 percent. That is a giant warning sign. If enough people drop out, the reported results can become badly distorted.

The studies also varied widely in payment size, duration, sample composition, and even how outcomes were measured. The mean annualized payment was $7,177, equal to an average income boost of about 39.5 percent relative to baseline household income in the studies. Some pilots relied heavily on self-reported survey data. Some were conducted during or right after the COVID period — when labor markets, safety-net programs, and personal decisions were anything but normal.
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AEI’s conclusion is appropriately cautious: these findings may not generalize to a permanent, universal, nationwide UBI under current or future conditions. That alone should cool off a lot of the AI-fueled policy hysteria.

​AI Will Displace Jobs. It Will Also Create Them

None of this means AI will be painless. Some jobs will shrink. Some tasks will disappear. Some workers will need to retrain, relocate, or rethink their careers. That is what happens when productivity rises and technology changes how goods and services are produced. It happened with mechanization, with computers, and with the internet. It will happen with AI.

But displacement is not the same thing as permanent mass unemployment. That leap is where the UBI argument falls apart. Economies are not fixed piles of jobs. They are dynamic systems of discovery, adaptation, and exchange. When costs fall and productivity rises, resources move. Businesses reorganize. Consumer demand changes. New occupations emerge. Old ones evolve. Some disappear. That churn is real, but so is the adaptation.

The answer to technological change is not to pay people for economic resignation. The answer is to make adaptation easier.

UBI Fails the Economics Test

There is a reason Ryan Bourne at Cato has argued that UBI is not the answer if AI comes for your job. It confuses a transition problem with a permanent income problem. Worse, it assumes that writing checks can substitute for the incentives, signals, and institutional conditions that actually create opportunity.

UBI also crashes into the budget constraint. As Max Gulker at The Daily Economy has noted, UBI is often sold through small pilots and vague moral language, but the national arithmetic is ugly. And as Robert Wright in another AIER piece points out, “universal” quickly means sending money to many people who are not poor while piling enormous costs onto taxpayers. (Bear in mind, the national debt is already rapidly approaching $40 trillion.) 

That is before getting to the public-choice problem. In theory, UBI supporters sometimes imagine replacing the welfare state with one simple cash transfer. In reality, government programs rarely disappear. Bureaucracies defend themselves. Interest groups protect carveouts. Politicians promise more, not less. So a UBI would likely be stacked on top of much of the current welfare state, not substituted for it. That is not reform. That is fiscal delusion with better branding.

A Better Answer: Remove Barriers to Work

If AI means more labor-market churn, then policy should focus on mobility, flexibility, and self-sufficiency. That means less occupational licensing, lower taxes, lighter regulation, fewer benefit cliffs, less wasteful spending, and more room for entrepreneurship and job creation. The government should stop making it harder for people to pivot.

It also means reforming welfare the right way. My proposal for empowerment accounts is not a UBI. It would be targeted to people already eligible for welfare, not universal. It would include a work requirement for work-capable adults, not detach income from effort. And it would consolidate fragmented programs into a more flexible account that families control directly, reducing bureaucracy and lowering spending over time as more recipients move toward self-sufficiency.

That puts it much closer to the classical liberal insight behind replacing bureaucratic control with direct support, while avoiding the fatal error of turning the entire country into a permanent transfer state. As Art Carden reminds us at The Daily Economy, there is a long intellectual history behind cash-based assistance. But today’s UBI politics are not really about shrinking the state. They are mostly about expanding it because elites fear AI.

Don’t Make Bad Policy Out of Fear

The UBI revival tells us less about AI than it does about politics. New technology arrives, uncertainty rises, and too many policymakers reach for the federal checkbook as if it were a magic wand. It is not.

After 122 local experiments, the case for UBI is still weak. The best evidence does not show a jobs renaissance. The larger studies show employment declines. The broader evidence base is riddled with small sample sizes, high attrition, and limited generalizability. That is a flimsy foundation for a permanent national entitlement.

AI will change work. It will not repeal economics. The best response is not fear-driven universal dependency. It is a freer economy with stronger incentives to work, save, invest, adapt, and prosper.

​Affordability is not an abstract debate for American families—it’s the defining issue of daily life. Grocery bills, housing costs, energy prices, healthcare, and childcare all shape whether families feel secure or stretched.

Families don’t become pessimistic out of nowhere. Confidence erodes when planning for the future feels harder, margins feel thinner, and basic economics no longer seem to work in their favor.

Meanwhile, leaders on both sides of the aisle are increasingly pointing the finger at free-market capitalism for nearly everything—high prices, inequality, corporate power, even government debt. But what’s often labeled “capitalism” today is really a mix of subsidies, bailouts, protectionism, regulatory micromanagement, and monetary manipulation—policies that distort markets rather than allow them to function.

True free markets are not chaos or greed. They are a rules-based system built on voluntary exchange, price signals, competition, and accountability. When people are free to trade, build, innovate, and respond to real prices, costs fall and opportunity expands—giving families the freedom to flourish.

In today’s episode of This Week’s Economy, we explore how free-market capitalism supports families, restores dignity through work, and lowers prices to make life more affordable. We’ll also examine how these principles apply at the federal, state, and local levels. Tune in to the full episode on ⁠YouTube⁠, ⁠Apple Podcast,⁠ or ⁠Spotify⁠, and visit ⁠my website⁠ vanceginn.com for the show notes in my newsletter and more information

Originally published on Substack. 

When a Republican president starts acting like a New York City socialist, it’s time to say the quiet part out loud: Industrial policy has officially infected both political parties.
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The Wall Street Journal reports that the Trump administration plans to take an equity stake in a semiconductor startup founded by Intel’s former CEO should alarm anyone who still believes capitalism means private risk and private reward.

The deal—made through the government’s CHIPS Act slush fund passed during the Biden years—reads less like a market transaction and more like Washington’s latest attempt to play venture capitalist with other people’s money.

And let’s be clear: When government takes equity in a private company, that isn’t capitalism. That’s corporate socialism.
In fact, it’s precisely the kind of policy you’d expect from NYC Mayor-Elect Zohran Mamdani—not a Republican president.
But here we are.

When Government Takes an Equity Stake, It’s Not “America First”—It’s Government First

This chip startup—led by a respected former Intel CEO—may well be brilliant. It might innovate, scale, and help rebuild domestic semiconductor capacity.

That’s not the point.

The point is what government is doing:

• picking a firm
• choosing a technology
• subsidizing the risk
• absorbing potential losses
• sharing in theoretical profits
• and distorting competition

This is industrial policy by another name: political venture capitalism, which has failed in every country and every century it’s been attempted.

If this is the new right-wing economic strategy, then the difference between Washington GOP and the socialist left is now just the branding.

The Free Market Doesn’t Need a Babysitter
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Let’s walk through the basics—something both parties seem to have forgotten.

Capital markets exist. They evaluate risk. They price innovation. They take losses when they get it wrong and reap rewards when they get it right.

Investors exist. They specialize in picking promising technology and turning it into real businesses.

Entrepreneurs exist. They build companies because they believe in their ideas, not because the federal government holds out a check.

We don’t lack money.

We don’t lack expertise.

We lack the political will to let markets work without Washington playing helicopter parent.

When government inserts itself as an equity partner, one thing is certain:

Profits are privatized.

Losses are socialized.

And taxpayers always end up holding the bag.

Corporate Welfare: Where Both Parties Quietly Agree

Most Americans miss the quiet truth about Washington:

Democrats prefer social welfare.

Republicans prefer corporate welfare.

And both forms of welfare substitute political judgment for market discipline.

The Trump administration’s equity-stake experiment doesn’t put America first.

It doesn’t put workers first.

It puts politicians and bureaucrats first.

And it places taxpayers on the hook for decisions they never made.

The Semiconductor “Crisis” Doesn’t Justify Central Planning

We’ve heard the justification:

“China is subsidizing chips, so we must do the same.”

No.

We don’t beat China by becoming China.

China subsidizes everything precisely because its political system doesn’t allow prices, entrepreneurs, and markets to guide resources. That’s why it wastes more capital than any major economy on earth. That’s why its productivity is collapsing. And that’s why its growth model is unraveling.

Copying China’s industrial strategy is like copying Venezuela’s inflation strategy:

You don’t learn from failure by recreating it.

If the U.S. semiconductor ecosystem needs strengthening—and it does—then fix the barriers preventing private investment:

• cut spending and taxes
• reduce regulatory burdens
• open energy markets
• allow faster permitting
• stop subsidizing competitors
• end distortions that make domestic manufacturing so costly

In other words, get government out of the way.

A Classical Liberal Rule: If It’s a Good Investment, Government Doesn’t Need to Fund It

True capitalism is not complicated:

• People in the market take risks.
• Investors take losses.
• Entrepreneurs reap rewards.
• Government protects property rights, ensures rule of law, and stays neutral.

Once government becomes an investor, neutrality disappears.

Regulators protect their portfolio.

Competition becomes political.

Access becomes relational.

And innovation becomes something you lobby for—not something you earn.

It’s the opposite of a free market.

It’s industrial favoritism with better lighting.

You Cannot MAGA with a Central Planner’s Playbook

I say this with respect for many good policies Trump pursued in his first term:

You don’t restore American greatness by embracing government equity stakes in private firms.

You don’t revive American manufacturing by funneling taxpayer money to politically blessed companies.

And you don’t build the next generation of semiconductors by outsourcing investment decisions to bureaucrats who’ve never built a semiconductor in their lives.

America’s strength has never come from Washington picking winners.

It comes from a free people out-innovating, out-producing, and outperforming the world because they are free—not government-backed.

If we want faster innovation, stronger markets, and global leadership in technology, the answer is simple:

End corporate welfare.

End industrial policy.

Unleash free markets.
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Let America’s entrepreneurs—not politicians—drive the future.

​This week’s episode dives into key election-related issues that could significantly impact Social Security and the broader economy. With projections indicating that the Social Security Trust Fund could be depleted in six years under another Trump presidency, while a Harris presidency may maintain the status quo, voters must consider the fiscal implications of their candidates' policies. Topics covered include the impact of tax exemptions, tariff policies, and entitlement expansion, all of which threaten the solvency of the nation’s mandatory programs. 

Watch the episode on YouTube below, listen to it on Apple Podcast or Spotify, and visit my website for more information.