Artificial Intelligence (AI) is rapidly transforming the economy, boosting productivity while simultaneously threatening widespread job displacement. As AI progresses, a growing number of workers face unemployment or precarious employment, fueling political pressure for Universal Basic Income (UBI)—typically understood as unconditional payments aiming to guarantee a basic standard of living.

Image created using AI.

However, behind this policy response lies a fundamental truth: income provided by UBI is redistributed wealth, funded predominantly by taxing others. Taken to its fullest extent, this scenario envisions UBI becoming the total income for many individuals, fundamentally transforming the economy’s reliance from earned wages toward government transfers.

Traditional UBI proponents emphasize unconditional, unrestricted payments that uphold dignity and autonomy by letting recipients decide how to allocate funds. Yet, as more recipients rely entirely on UBI, governments develop incentives to condition or control spending to ensure funds are used “appropriately” on essentials like food, housing, or healthcare. This urge shifts UBI away from unconditional cash to a conditional benefit—introducing a powerful mechanism for centralized control.

This shift often involves digital platforms and payment channels that tie disbursement to monitored transactions. Here lies the connection to Central Bank Digital Currencies (CBDCs). CBDCs are digital currencies issued by central banks with features that allow:

Real-time monitoring of every transaction,

Restriction of spending categories, and

Immediate freezing or withdrawal of funds on policy breaches.

Together, conditional UBI schemes and CBDCs form comprehensive financial surveillance infrastructures, akin to models already tested worldwide. This emerging economic governance framework could severely limit financial autonomy, erode privacy, and enable government-imposed behavioral controls dictating permissible expenditures.

I refer to this envisioned digital UBI currency as UBIDs (UBI Dollars). UBIDs encapsulate the transition from basic income to surveilled and programmable money, marking a grave shift toward state surveillance over private economic life. The potential for abuse is immense, threatening freedoms traditionally guaranteed by cash anonymity.

To recap: AI-induced inequality fuels political momentum for UBI. The government’s concern about “correct” fund usage arises because for many, UBI represents their total income—hence the interest in ensuring funds cover necessities and don’t foster dependency on non-essential spending. This practical rationale drives UBI’s digital conditionality, paralleling CBDC surveillance features.

Ultimately, societies face a trade-off: balancing economic security in the face of AI disruption against preserving financial privacy and personal autonomy. UBI and UBIDs combined compel a reevaluation of the social contract, challenging governments to navigate technological progress without undermining fundamental freedoms.

Or, perhaps, they will choose to undermine once fundamental freedoms. I would not be surprised.

References

1.    Bélisle-Pipon, J.-C. (2025). AI, universal basic income, and power: Symbolic violence in the tech elite’s narrative. Frontiers in Artificial Intelligence, 8, Article 1488457. https://doi.org/10.3389/frai.2025.1488457

2.    Bank for International Settlements. (2021). Central banks embrace digital currencies. BSR. https://www.bsr.org/en/emerging-issues/central-banks-embrace-digital-currencies

3.    Cato Institute. (2024). CBDC spells doom for financial privacy. Free Society. https://www.cato.org/free-society/fall-2024/cbdc-spells-doom-financial-privacy

4.    County Health Rankings & Roadmaps. Universal basic income. Retrieved November 6, 2025, from https://www.countyhealthrankings.org/strategies-and-solutions/what-works-for-health/strategies/universal-basic-income

5.    Drexel University Center for Hunger-Free Communities. Universal basic income. Retrieved November 6, 2025, from https://drexel.edu/hunger-free-center/research/briefs-and-reports/universal-basic-income/

6.    Hoynes, H., & Rothstein, J. (2019). Universal basic income in the United States and advanced countries. Annual Review of Economics, 11(1), 929–958. https://irle.berkeley.edu/publications/scholarly-publications/universal-basic-income-in-the-united-states-and-advanced-countries/

7.    International Monetary Fund. (2024). CBDC data use and privacy protection. IMF Notes, 2024(004). https://www.elibrary.imf.org/view/journals/063/2024/004/article-A001-en.xml

8.    Joseph Rowntree Foundation. Is universal basic income a good idea? Retrieved November 6, 2025, from https://www.jrf.org.uk/social-security/is-universal-basic-income-a-good-idea

9.    Santens, S. (2025, April 29). AI, automation, and the urgent case for universal basic income. ScottSantens.com. https://www.scottsantens.com/ai-automation-and-the-urgent-case-for-universal-basic-income-ubi-forward-future/

10.Stanford Basic Income Lab. (2019). What is UBI? Retrieved November 6, 2025, from https://basicincome.stanford.edu/about/what-is-ubi/

11.Wired. (2019). Universal basic income, explained. https://www.wired.com/story/universal-basic-income-explained/