As it becomes clear that AI could end up causing major job losses, the ways to mitigate the impact are also being discussed in earnest.
Universal Basic Income, or UBI, has emerged as one of the most frequently cited policy responses to the looming threat of AI-driven unemployment. Proponents argue that as automation displaces workers across industries — from trucking and customer service to legal research and software development — a guaranteed income floor would cushion the blow. But mathematician, economist, and podcast host Eric Weinstein is pushing back hard on that framing. In a pointed post on social media, Weinstein argued that the answer to the coming “AI Jobs Tsunami” is not UBI but something far older and, in his view, far more powerful: the Coase Theorem.
“The solution to the coming AI Jobs Tsunami is Coase,” Weinstein wrote on X. “Not UBI. Coase. UBI leads to welfare. Communism. Tyranny. Despair. Human dependency. Coase leads to choice, Freedom, Markets. Human Dignity. Survival. Coase >> UBI,” he added.
It is a provocative contrast, but one grounded in serious economic theory.
What Is the Coase Theorem?
The Coase Theorem, developed by Nobel Prize-winning economist Ronald Coase in his landmark 1960 paper “The Problem of Social Cost,” holds that when property rights are clearly defined and transaction costs are sufficiently low, private parties can negotiate their way to economically efficient outcomes — without the need for government intervention. The theorem is most famously applied to externalities: situations where the actions of one party impose costs or benefits on another. Rather than relying on regulation or redistribution to correct these imbalances, Coase argued that the parties involved, if given clear rights and the freedom to bargain, will arrive at the most efficient solution on their own.
The theorem has a key implication that is easy to miss: it does not matter who initially holds the property rights, only that those rights are clearly assigned. Once they are, the market does the rest.
Applying Coase to AI and Job Displacement
So how does this apply to the AI jobs crisis? Weinstein’s argument, while stated tersely, points toward a fundamentally different architecture for handling technological unemployment than the one UBI proposes.
UBI, by design, is a government-administered transfer payment. The state collects revenue and distributes it to citizens, bypassing the market entirely. For Weinstein, this creates a dangerous dependency — a top-down mechanism that removes individuals from the productive economy rather than finding new ways to integrate them into it. It treats displaced workers as problems to be managed rather than agents with value to offer.
The Coasian approach would instead ask: what are the property rights at stake when AI displaces a worker, and can those rights be assigned in a way that allows markets to find efficient solutions? This could take several forms. Workers, for instance, might be granted property rights over their labor data, their skills profiles, or their contributions to the datasets that trained the very AI systems replacing them. If the individuals whose work, writing, driving patterns, or decision-making fed into AI training have a recognized claim on the value that AI generates, then a market mechanism — rather than a government transfer — could compensate them. The negotiation happens between parties with defined interests, not through bureaucratic redistribution.
Another Coasian lens focuses on the externalities of automation itself. When a company deploys AI to replace workers, it is effectively externalizing costs onto those workers, their families, and the communities that lose economic activity. Under a Coasian framework, clearly assigning liability for those externalities — and reducing the transaction costs involved in negotiating compensation — would push firms and displaced workers toward private settlements and new arrangements, preserving market incentives and human agency throughout.
Why Weinstein Prefers This Over UBI
Weinstein’s critique of UBI is not merely economic — it is philosophical. He sees UBI as a path that saps human dignity and agency, creating a population that is provided for but not empowered. The Coasian model, by contrast, keeps individuals as participants in markets. They have rights, they negotiate, they make choices. The outcome may look different from person to person and industry to industry, but it emerges from voluntary exchange rather than government mandate.
There is also a practical argument embedded in Weinstein’s position. UBI requires an enormous and ongoing fiscal apparatus. It demands political consensus on funding levels, eligibility, and administration — all of which are vulnerable to capture, erosion, or reversal. A Coasian solution, once the underlying property rights are established, is largely self-sustaining. Markets adjust, prices signal, and individuals respond to incentives without requiring continuous government management.
The Road Ahead
Weinstein’s view is likely to be controversial. Critics of the Coase Theorem point out that in the real world, transaction costs are rarely low enough, and information asymmetries are rarely small enough, for private bargaining to reach truly efficient outcomes at scale. Assigning property rights over AI-related labor contributions is also a deeply complex legal and political challenge — one that no country has yet managed to fully address.
But Weinstein’s core provocation deserves serious engagement, especially as the AI displacement conversation matures. Others have proposed similar solutions — Microsoft AI CEO Mustafa Suleyman has said that instead of UBI, there could be universal provision of intelligence, with everyone getting access to compute to turn them into useful outputs for society. The instinct to reach for UBI as the default policy response is understandable, but it may foreclose more market-based, dignity-preserving alternatives before they are fully explored. If the challenge of AI-driven job loss is ultimately a problem of poorly defined rights and misaligned incentives, then Coase — not a government check — may indeed be the more durable solution.