Will AI Break the Economic Model We Know?

How Automation is Reshaping Work, Wealth & Society

The hum of the server room is more than the sound of processing power. It is the quiet undertow reshaping our economic reality, one algorithm at a time.

Let’s be specific.

Call centres in the Philippines? Their voices are fading, replaced by AI chatbots that never tire, never pause, handling thousands of queries at once. In Amazon’s warehouses, more than 750,000 robots move with precision, a synchronised dance of logistics, making human labour feel redundant. Law firms no longer rely on junior associates to pore over endless documents. AI tools like Harvey do it in moments.

This is not speculation. It is already happening.

Yet here is what nobody talks about: AI does not pay tax. It does not stop for coffee at the corner café or rent a flat. It does not put children through school, fund the NHS or contribute to the upkeep of roads and libraries. It does not participate in the human economy.

Jobs disappear, and with them, income tax revenues. In the UK, income tax and National Insurance fund more than 40% of government spending. Take away jobs and you starve the system. Worse still, lower employment means higher spending on unemployment benefits, hitting government finances from both directions.

Then comes the deeper risk.

Less income means less spending. At the same time, AI drives down costs, making goods cheaper. Sounds like progress. Until you realise fewer people can afford them.

This is the automation paradox.

Cheaper products. Declining wages. People holding off on purchases, waiting for prices to fall even further. Businesses suffer, layoffs increase, and economies contract.

Japan has fought this battle for decades. Are we next?

And what about inequality? The wealth does not trickle down. It pools at the top. The people who own the algorithms win. The people whose jobs disappear lose. And losing a job is more than losing a pay cheque. It is losing stability, purpose, and dignity.

So where do we go from here?

Universal Basic Income is not utopian talk. It is becoming essential.

Finland, Stockton in California and Sikkim in India have trialled it. The UK is testing pilot programmes. The results? Improved well-being, resilience, stronger communities. UBI will not solve everything, but it creates a floor, ensuring no one is left behind as work shifts. It is a safety net, keeping the engine running while we rebuild the vehicle.

But funding it means rethinking taxation.

Data, automation, platform dominance; these generate enormous wealth. Yet the system still taxes labour as if workers are the primary producers of value. Spain has proposed a robot tax. The EU is tightening regulations on digital giants. Even Sam Altman, CEO of OpenAI, agrees that redistribution will be necessary.

Here is the analogy worth remembering: Horses did not disappear when cars arrived. But they stopped being essential. Are we preparing for a future where a significant portion of the population is economically obsolete?