Universal Basic Income and the Welfare State

Abstract

Welfare states are struggling with slow economic and job growth, fiscal pressures from rising benefit costs, demographic changes, and fears of structural economic transformation and job losses caused by information technology and computerization. This combination of factors has led some analysts to explore new ways to deliver welfare state benefits, or reconfigure them. But others speculate that existing welfare state policies have run their course, and cannot be easily repaired to cope with these multiple challenges, especially in the face of slower and less labor-intensive economic growth. Some advocates are calling for introducing a universal basic income (UBI), either as a floor to provide a basic level of subsistence, as a complement to existing welfare state policies, or in some cases as a replacement for the welfare state. Much of the current interest in UBI stems from a belief that technology is rapidly eliminating jobs faster than new ones can be created, and future job growth will be much lower. But the evidence on technological displacement seems too uncertain to justify major disruptions in the welfare state. Rather, the UBI debate might better focus on the over thirty-year strengthening of business’ economic power relations over labor.

Keywords: universal basic income, technology, artificial intelligence, welfare state, displacement

JEL Classification: J08, J68, J80, I38