Welfare State and Technological Revolution: a Good Pairing

Image by Frits Ahlefeldt under Creative Commons License

Sharing the gains, supporting the transition.

If technological innovation creates profits while displacing workers, part of those gains should help finance social protection.

Revised October 1, 2026

A market economy can generate prosperity while leaving some people without a viable way to earn a living. Technological change makes that tension especially clear: a company may become more productive precisely because it needs fewer workers.

For those displaced, the problem is not necessarily a lack of effort or willingness. Their skills may no longer match demand, and new opportunities may arrive too late, too far away, or behind barriers they cannot immediately overcome.

The case for stronger social protection begins there. People should not have to absorb the full cost of a transition whose benefits accrue more widely.

Progress Has Uneven Costs

That argument does not depend on forecasts of mass unemployment. Estimates of which tasks could be automated are not counts of jobs that will certainly disappear. The ILO’s 2025 assessment of generative AI points primarily to job transformation rather than wholesale replacement.

But an economy can create new jobs and still leave particular workers worse off. Aggregate growth offers little immediate consolation to someone whose income has vanished. Retraining can help, provided there is suitable work to train for and enough financial security to complete the transition.

The Gains Should Help Finance the Adjustment

If technological innovation creates substantial profits, part of those gains should contribute to the public resources needed to support people affected by the change. Income protection, healthcare, and practical routes back into employment are reasonable uses of that revenue.

This need not mean abandoning a market economy or treating commercial success as an offense. It means recognizing that the distribution of productivity gains is a political choice. Effective taxation of profits can help finance social protection while businesses continue to invest, innovate, and earn returns.

The details matter: who pays, what revenue can be collected, and how support reaches those who need it. A promise to “tax technology” is insufficient without a workable fiscal and administrative framework.

A Welfare State for Changing Work

A system built around the expectation of continuous, stable employment needs to adapt when that expectation becomes less reliable. Support should help people remain economically active, while protecting them when the labor market cannot offer a timely route back.

The welfare state can serve that purpose within a market economy. Its role is to ensure that technological progress does not depend on leaving the costs with those least able to bear them. Innovation creates possibilities; public policy helps determine who can benefit from them.

Buckle Up Your Seatbelt: The World in 2017

The world is shifting. “McCarthyism” and the “War on Terror” will no longer be sufficient models for explaining the complexity of what is likely to unfold over the next few years.

Israel standing with Trump while Trump stands by Putin? In geopolitical terms, Putin’s objectives in the Middle East intersect in complicated ways with those of Iran. And economically, China can no longer conceal its intention to become a major player in this game.

A possible China-Russia-Iran axis is what concerns me most. Internal divisions within the United States may look small compared with the divisions taking shape across the world.

Then there is the surge of incendiary propaganda, coming both from Russia and from groups within the United States itself.

And there is more. Much more.

Watch the news with an open mind, and without assuming that tomorrow will look much like yesterday.

United States 2016 Elections: A Takeaway

Image by DonkeyHotey under Creative Commons License

One of my takeaways from the 2016 election is that Bernie Sanders’s campaign proved that “socialism” is no longer necessarily a disqualifying word in American politics.

But does socialism really belong inside the Democratic Party? I am not sure it does.

At the same time, Donald Trump’s campaign showed that nationalist politics, including rhetoric appealing to racial and cultural resentment, could command a significant place in the Republican coalition. Does that political current naturally belong within the traditional GOP? I am not sure of that either.

What struck me most about the election was that both parties appeared to contain movements larger than the ideological boundaries that had traditionally defined them.

The Democratic Party was being pulled by a growing faction openly questioning capitalism, inequality, and the limits of the existing economic order. The Republican Party was being pulled by a nationalist movement far less interested in the party’s traditional language of free trade, internationalism, and limited government.

Perhaps the most interesting question after 2016 is therefore not simply which party won.

It is whether the two-party system can continue absorbing political movements that increasingly seem to have identities of their own.

My guess is that it cannot do so indefinitely.

I suspect we will eventually see new parties emerge, or at least political movements that function increasingly like separate parties while continuing, for a time, to operate under the Democratic and Republican names.