Could universal basic income be part of the solution in an AI economy?

At the German government's 2026 "Digital Summit" in early November, Chancellor Friedrich Merz was asked by a journalist to square a difficult economic circle: If artificial intelligence could make hundreds of thousands of people redundant in the next few years, might it become necessary for the government to give people a basic income to ease the ensuing economic disaster?

Surprisingly, Merz didn't respond with a flat dismissal — as might be expected from a conservative politician known for his neoliberal, market-friendly views.

"I've always been a bit cautious about this issue in recent years," he said, as reported by the news outlet RND. "However, I'm also well aware that the issue of AI will change our working world so fundamentally that we'll have to give serious thought to many of these issues in the coming years — including the question: Is our productivity not good enough?"

What makes this ambiguity notable is that much of Merz's policies since becoming chancellor last year have involved making Germans work more: His government's planned pension reforms would see Germany's retirement age being raised. In July this year, he announced a crackdown on sick leave. And in spring last year, having barely taken office, he caused much consternation by criticizing the concept of a "work-life balance" and declaring, "We in this country must work more and more efficiently."

But those policies seem to contradict the impending realities of the labor market in an AI world. This week, the head of Germany's Federal Employment Agency, Andrea Nahles, warned that the introduction AI would cost Germany as many 800,000 jobs in the next 15 years. Though she also said AI could eventually create a similar number of jobs, clearly the socio-economic upheaval would be considerable.

Nahles is not the only leading figure concerned about job losses caused by AI. Karsten Wildberger, Germany's minister for digital transformation and government modernization, takes any opportunity he can to warn that Germany must prepare for the economic disruptions of AI.

And even for Wildberger, a former CEO of a massive retail company, part of the future economy might come down to giving people free money. He was convinced, he told the Neue Osnabrücker Zeitung in March, "that an unconditional basic income can be part of the solution to cushion the upheavals in the labor market."

Campaigners have cautiously welcomed this new openness from unexpected quarters. "It shows that in the face of technological transformation we also need to look differently at the question of how we need to secure people's economic stability," said Kirsten Herrmann, board member at the non-profit Mein Grundeinkommen (My Basic Income), which runs various projects examining the social and economic impact of UBI.

"But I also think that individual statements by politicians don't amount to a political change, of course," she told DW. "It just means that we need to enter a serious and constructive debate about what kind of a role a basic income can play."

The idea of a universal basic income (UBI) is very old: The English Renaissance philosopher Thomas More mentions it in his 1516 book Utopia, for instance. But since the 20th century, it has largely been seen as an idealistic notion adopted by leftists — that is, until some of the world's most high-profile tech bosses latched onto the idea as a way to offset the utopian advances that they said AI would bring. In 2017, Elon Musk, who had co-founded the corporation OpenAI two years earlier, predicted that a universal basic income would at some stage become inevitable.

Since then, leading figures in the AI sector, including Dario Amodei, CEO of Anthropic, and Sam Altman, the other founder of OpenAI, have all gone on record in support of UBI (though Altman's interest has cooled somewhat since he launched a massive UBI experiment in the US in 2019).

But Herrmann says it's a "double-edged sword" when such figures mention the idea. She is not convinced that organizations like hers and people like Elon Musk want the same thing. "On the one hand, it's always nice when the debate about a basic income gets attention from prominent voices," she said. "On the other hand, the basic income that people from the tech business talk about is a kind of neoliberal basic income: They talk about what to do when there are no more profitable jobs for people, because they still actually do need people to do certain things, whereas we talk about a basic income that is meant to give people a secure economic base — before the crisis in the job market happens."

What makes the comments of Merz and Wildberger all the more eyebrow-raising is that mainstream German economists have long since rejected the basic income idea. Dominik Enste, director of the democracy, society, and economic ethics department at the German Economic Institute (IW) in Cologne, dismissed the idea out of hand — AI or no AI. UBI was, he said, just too expensive, especially in a country that already has plenty of social welfare costs.

"Many economists have calculated that implementing this in many countries is financially unfeasible — in Germany, for one, simply because of the need to fund commitments that have already been made (including pension payments)," he told DW in an email.

However, he also added: "We will have to change our social security systems if work is replaced by AI and, if necessary, tax AI-generated income. But it will be a conditional basic income that still provides incentives to earn a living."

Other economists are more positive about the idea. "How this plays out depends on many choices we make, and on who makes these choices, in whose interest," said Maximilian Kasy, professor of economics at Oxford University and author of a book on the impact of AI on society. "But a lot of the current thrust is to replace workers to increase profits and increase corporate control, though this is not the only path possible."

Kasy also thinks that is a good idea, "especially if it's financed in a progressive way (so that only those at the lower end of the income distribution are net recipients)," he told DW by email. "The 'small print' matters very much, though!"

If the warnings of Wildberger, Musk, Altman et al. are to be believed, AI is already causing a bigger upheaval than any other technological advance in history: Partly because of the speed of the innovations, but also because of the scale of the potential impact: AI innovation is affecting the jobs of the traditional urban middle classes across the entire world. In 2024, the International Monetary Fund (IMF) predicted that some 40% of employment in the world would be shaped by AI innovations, and as much as 60% in rich, industrialized nations.

For her part, Herrmann thinks we are not yet asking the truly fundamental questions about the socio-economic implications of AI: Not just how do we replace the lost jobs and keep the capitalist system going, but what do we actually want to use AI for? As she puts it: "Who actually profits when we become more productive through AI? And how do we redistribute that profit to everyone?"

This, she argues, is why there needs to be more debate about how exactly AI is used in the world of work: "Which jobs are going to be replaced by AI is not some law of nature," Herrmann said. "It's something that we can shape politically and socially — and then the bigger question is: Who gets a say?"