The new welfare state

Are we beginning to see a new kind of welfare state evolving? Consider this news article, from AFP:

One income for all: far-fetched, or future fact?
It is a utopian idea, literally, but is enjoying a renaissance as politicians and policy wonks grapple with technology-driven changes that could redefine our very understanding of work.

If robots and machine intelligence threaten to render many white-collar jobs obsolete, then what will people do for money?

Enter the concept of a "universal basic income", a flat sum paid to all regardless of your existing wealth or ability to work. It is one of the rare ideas that has support from both the libertarian right -- which favours tearing up the welfare state -- and the left wing.

In France, Benoit Hamon has emerged as the surprise Socialist candidate for April's presidential election first round, on a radical programme that includes such an income -- to be funded in part by a new tax on industrial robots.

National or local governments in other countries such as Finland, the Netherlands, Canada, Scotland and Brazil are already evaluating how such a revenue might work in practice.

Finland is furthest down the road. On January 1 it started a two-year trial to give 2,000 unemployed Finns a monthly unconditional payment of 560 euros ($590).

At the least, advocates argue, a basic income could replace the thicket of unemployment benefits currently on offer in many advanced economies. Those can, perversely, discourage people from retraining in new fields or taking on lower paid work that society needs, such as care for the elderly.

While I question how much support this idea has from the "libertarian right", I cannot say I am completely opposed either.

Consider how much the U.S. government overspends each year. Most of that money goes to welfare programs, such as Social Security and Medicare. However, giving everyone a base income would run the U.S. over $3 trillion a year (based on my own back-of-the-napkin estimate), and that is a very conservative estimate.

Even if you end all the special interest payouts, and cut military spending, you might be able to get to $3 trillion a year. The current budget is at $3.9 trillion, with about $597 billion of that going to the military. Not much wiggle room there.

However, with the current regime of money-printing, wherein we print far more than we need in order to pay the banks to sit on money, wouldn't it make more sense to just hand that money to the people instead? If you want to stimulate the economy, give it to the people, not the banks.

If we combine what the federal government and the Federal Reserve are doing, eliminate our current welfare programs, and toss out unnecessary government spending, we could easily come up with $3 trillion, and maybe even more.

It could even be politically palatable, even though it will run counter to many of the special interests currently supporting our political class. You give everyone money, you get more actual votes than if you just give it to somebody for a campaign donation.

Now for the downside: Inflation. With created money going directly from the government to the economy (why save money if you will just get more from the government?), we will quickly get Zimbabwe-style inflation.

On the other hand, if you have a self-producing economy, whereby most or all things needed are produced without human involvement (for example, by robots and/or artificial intelligence), then it MIGHT be possible to create a system where humans are primarily a consumer class funded by the government. In other words, with supply and demand still properly balanced, we might be able to sustain such a system.

At this point, this is all just theoretical, but it could become necessary in the near future. We may need some seriously outside-the-box thinking before this century is over.