I remember when George McGovern, the Democratic presidential nominee in 1972, promised that if elected, he would send each citizen a check each year for $1,000. In today’s dollars, that would be nearly $8,000—hardly a small sum. For high-income recipients, most of that $1,000 would have gone right back to the U.S. Treasury when they paid income taxes. But for those with little or no income, the McGovern payment would have functioned as a “negative income tax,” or what would have amounted to a universal basic income.

Support for a universal basic income has not been limited to the left. Milton Friedman—a key advisor to Barry Goldwater, the 1964 Republican presidential nominee, and to President Richard Nixon—advocated for a negative income tax in his 1962 book Capitalism and Freedom. Friedman’s primary argument was that a negative income tax would not erode the incentive to work, unlike many welfare programs, such as food stamps and Medicaid, which recipients fear losing if they enter the work force. In true libertarian fashion, Friedman noted two other advantages: the reduction of administrative overhead inherent in traditional welfare bureaucracies and a respect for the freedom of recipients to choose how they could best use their benefits.

Both the McGovern and Friedman proposals fell into obscurity during the Reagan and Clinton eras of welfare reforms. Those reforms, of course, emphasized a return to personal responsibility and incentives to find work. Friedman proposed a negative income tax with precisely these goals in mind, but perhaps Presidents Reagan and Clinton simply could not accept the optics of sending out checks to those in need. 

Now this half-century-old idea may be on the verge of a comeback, thanks to the threat of artificial intelligence eliminating jobs.

Technology’s give and take

Daron Acemoglu and Simon Johnson, the M.I.T. professors who shared the 2024 Nobel Prize in economics with James Robinson, describe how technological progress can create both labor displacement and labor reinstatement in their book Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity.

The process of labor displacement can be inevitable. For example, village blacksmiths lost their livelihoods when the car replaced the horse and buggy. But in this case, labor reinstatement followed, as jobs emerged in automobile manufacturing and associated industries (such as highway construction). We saw this again with the advent of the personal computer. While office typists were displaced, new employment sectors emerged in software engineering, digital marketing and hardware distribution.

It is often assumed that technological change eventually leads to a net increase in productivity, prosperity and demand for new types of work. Yet some technologies do not follow this virtuous cycle. Consider automated call-answering systems, where customers waste time waiting for resolutions that a human respondent could have provided in seconds. Similarly, consider the automated checkouts in grocery stores. Has shifting the task of scanning the items to the customer made the food industry more innovative? Or has it simply increased corporate margins while depriving young people of work? In both of these examples, technology has eliminated jobs without creating new ones. Those displaced by these technologies were not likely to be reinstated by the medium- or long-term effects of these technologies. 

More sobering was the first Industrial Revolution, which began in the late 18th century, characterized by the exploitation of workers and environmental degradation. Growing up in the coal regions of Pennsylvania, I learned, from stories about my ancestors, how mining companies exploited child labor, paid meager wages and left behind a landscape scarred by open-pit mines. Eventually, labor unions won greater protection for their workers, but the transition was agonizing. We used to joke during the air-raid drills of the 1950s that if Russian bombers flew over the coal regions, they would see the unfilled pits and assume the area had already been bombed.

We must also remember the displacement caused by globalization, as supply chains crossed borders and industries were outsourced. Much of the current wave of populism stems from a backlash among manufacturing-sector workers who saw their livelihoods vanish or their salaries stagnate. As an economist, I must agree with the 2015 Nobel laureate Angus Deaton, who notes in his book on American capitalism, Economics in America: An Immigrant Economist Explores the Land of Inequality, that economists were naïvely optimistic about the effectiveness of “trade adjustment assistance,” including worker retraining programs, for those hurt by these global shifts.

Do we just do nothing?

Are we on the verge of an even more costly revolution with the rise of artificial intelligence? I have traveled in robotic electric cars in Guangzhou, China; eventually, this technology will dominate our own roads and cause large-scale labor displacement in the transportation and freight industries. Beyond increasing shareholder profits, will these developments lead to a significant increase in overall productivity and a reinstatement of displaced workers?

Put another way, what if the artificial intelligence revolution fails at labor reinstatement? Do we just do nothing in the midst of rising unemployment, sharp increases in poverty and growing despair among large categories of wage-earners? 

These questions bring us back to the idea of a universal basic income. But how would we finance it? We might look back to the American economist Henry George, who in the 19th century advocated for a land value tax. George argued that land, as a natural resource, belongs to the community; therefore, its unimproved value (excluding buildings) should be taxed to fund a “citizen’s dividend.”

Another proposal comes from the late American economist James Tobin. The “Tobin tax” would be a small levy (perhaps 0.5 percent) on all outward and inward foreign currency exchange transactions. While Tobin’s original motive was to discourage short-term currency speculation and give central banks more autonomy over interest rates, such a tax could also serve as a significant revenue stream.

However a universal basic income policy is financed, the time has come to think seriously about its implementation. Paraphrasing the late German economist Rudiger Dornbusch, in the world of economics, crises take longer to happen than we can possibly imagine, but when they do come, they happen much faster than we could possibly imagine. Let’s not let that happen with A.I. and labor displacement. Certainly, there will be political resistance, and opponents are likely to brand it as another form of “welfare dependency.” But the massive labor displacement that could be wrought by the A.I. revolution is a new challenge, much different from President Lyndon B. Johnson’s war on poverty in the 1960s.

In academia, we discuss the ethics of artificial intelligence regarding privacy, integrity and intellectual property. These are vital issues, to be sure, but the elephant in the room—the prospect of a permanently high level of unemployment—remains largely unaddressed. We must ask ourselves if our current and impending economic structures still serve the common good, or if a new social contract is required to ensure that technological progress does not come at the expense of human dignity.

Paul D. McNelis, S.J., is America’s contributing editor for economics and a visiting professor of economics at Boston College.