There’s no denying artificial intelligence (AI) can replace a lot—including, in the end, think tankers pondering its effects.
WASHINGTON, DC – JULY 23: U.S. President Donald Trump speaks during the “Winning the AI Race” summit hosted by All‑In Podcast and Hill & Valley Forum at the Andrew W. Mellon Auditorium on July 23, 2025 in Washington, DC. Trump signed executive orders related to his Artificial Intelligence Action Plan during the event. (Photo by Chip Somodevilla/Getty Images)
Getty Images
But before panicking about job devastation, we’d do well to clarify what’s actually happening and changing in labor markets—and to recognize who benefits from unjustified alarm.
For starters, a better unemployment gauge would account for labor force dropouts, discouraged workers, and young people taking jobs they never thought they’d “stoop” to. We probably need to add those folks back in.
And indeed, AI is rising amid what’s often called an affordability crisis. Millennials and Gen Z claim the inability to buy in places like D.C. at age 30 on one income like the boomers did. Competing diagnoses and cures abound, with each generation claiming the other has advantages they never did. Meanwhile, pensions are largely extinct except in government, 401(k)s are too often spotty as replacements, and rent absorbs a huge chunk of paychecks for those without equity.
Such rifts need airing. So does the phenomenon of major tech firms perceived as laying off thousands while lobbying for more H-1B visas, prompting politicians like Ron DeSantis to rage at what they see as duplicity.
None of this is new to some of us in the policy world. We’ve long pointed to decades of regulatory failure and excess in the likes of housing, education and health care, making necessities and luxuries alike less accessible and more expensive than they should be. But cultural narratives rarely start with blaming red tape.
If one is tone-deaf to these and other stresses as ever-capable AI arises and generates feverish news articles about job displacement, one tends to get dismissed no matter how valid economists’ point that new jobs arise to replace the old. Life may get better and society wealthier, but fears still resonate.
Meanwhile, from Biden to Trump, the federal government makes it clear that it has no intention of relinquishing control over AI. The technology itself is deeply tied to federal R&D, military objectives, massive procurement initiatives, subsidies, public-private partnerships and other industrial policy forays—each framed as responsible innovation by whomever is in power.
The background hum of our AI universe is already largely federal. The first time artificial intelligence was meaningfully defined in statute was in the John S. McCain National Defense Authorization Act (NDAA) for Fiscal Year 2019 (read it and be amazed), followed by Trump’s 2019 “Maintaining American Leadership on Artificial Intelligence” and the establishment of the AI Initiative, then his 2020 “Guidance for Regulation of Artificial Intelligence Applications.” Then came Biden’s “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence”; and just this past month, we saw Trump’s July 2020 trio of executive orders on the “AI technology stack.”
So between AI’s labor effects and Washington’s desire to steer what is perhaps the most important innovation of our time, the bigger danger is political predation—the exploitation of both the anxieties and the leisures AI affords. No Goldilocks “just right” solution will be tolerated when there are votes to win, wealth to redistribute, and powers to preserve. Hands off AI? Out of the question.
In other words, even if AI is now—and remains—easily absorbed by markets and society with negligible job loss, it’s too juicy a power lever for politicians to ignore. Job displacement, whether real or manufactured, too readily becomes a tool for advancing a custodial administrative state—with the Universal Basic Income (UBI) as its crown jewel. That “solution” is often touted by politicians and even tech gurus themselves.
This isn’t even hypothetical. As the COVID-era CARES Act demonstrated not for the first time, any crisis can serve as the rationale for stipend payments to the able-bodied. And it’s not just progressives; one need not look far to find Republicans or even libertarians advocating some form of UBI.
Progressives itch to get 51 percent of voters hooked on UBI. Wait a few years after that, and Republicans will line up to “protect” it, just as they do Social Security, Medicare, Medicaid and Obamacare.
That’s the real threat of AI; not society can’t absorb it and thrive, but that we won’t be allowed to. Instead, we’ll get a bigger, more permanent custodial state—either gradually or quickly when the next economic shock hits. As with COVID’s Economic Impact Payments, AI’s job-loss narrative can be exploited to justify locking in permanent income subsidies in further synergy with a sector that is largely already governed from the top down.
The real AI emergency isn’t jobs. It’s that Washington will exploit job-loss fears to fabricate and aggravate an artificial crisis—and then entrench the resultant new powers permanently. Watch and see: the less Washington is needed, the more desperate it gets. For the bureaucracy, it’s not your job that’s on the line. It’s its own.
For more see:
“Trump’s AI Action Plan: Deregulation on paper, industrial policy in practice?” Competitive Enterprise Institute, July 2025.
“Universal Basic Income and the Custodial Administrative State,” Competitive Enterprise Institute, June 2021.
“Careful: Misbegotten Government-Business “Blueprints” Can Lobotomize Artificial Intelligence,” Forbes, July 2023.
“Universal Basic Income: What’s The Plural Of Apocalypse?” Forbes, June 2018.
Artificial Intelligence Will Merely Kill Us, Not Take Our Jobs, OMB Regulatory Comment & Social Science Research Network, April 2020.
