By: Navya Dronamraju
Source: pharmaleader
Introduction to the Role of Technology in Economic Growth and Equity
From generative AI to automation, technological change has become a basic fact of life, with significant potential to address the socioeconomic disparities affecting modern society. However, this potential is hindered by monopolies and opportunity gaps that skew technological benefits toward those who are already advantaged. As Peter Dizikes notes in MIT Technology Review, “the income gap between more- and less-educated workers has grown significantly; [technological advancement] accounts for more than half of that increase” (2022). This widening income disparity is partially a result of the labor market's expansion in fields requiring specialized technical skills, which favors skilled workers. Yet, some economic theories, such as the Kuznets Curve, suggest that inequality may eventually decrease as economies continue to mature (Gallup 2012). According to the Kuznets hypothesis, as a society initially industrializes, income inequality rises due to concentrated gains among skilled workers and capital holders. However, as broader access to education, social mobility, and economic opportunities develop over time, inequality should naturally decline. In this sense, technological innovation could drive a more equitable future if paired with policies that expand access to education, training, and digital resources. Therefore, while innovation currently favors the wealthy, this outcome is largely shaped by existing political and economic structures. Addressing these institutional barriers with Universal Basic Services could allow technological advancements to contribute more directly to a reduction in economic inequality.
Root Causes of Economic Inequities in Global Integration
Assuming technology can universally uplift the overall economy without addressing the systemic inequities that govern access and opportunities is an incomplete interpretation of economic growth. According to Abhijit Banerjee and Esther Duflo, the 2019 winners of the Nobel Memorial Prize in Economics, “workers in the United States can be made better off if society taxes the winners from free trade and distributes that money to the losers,” (2019). Redistribution of gains from trade could revolutionize economic equity efforts, but government reluctance to institute wealth redistribution policies leave workers at the mercy of the political process and prevents them from reaping equal benefits from economic growth. Firms also exhibit similar wealth concentration patterns as wealthy individuals; “the benefits of digital innovations […] have been captured mostly by a relatively small number of large firms,” (Qureshi 2021). These firms obtain the majority of the economic benefit of technological advancement, which grants them lobbying influence (Stiller 2023). These market dynamics create further inequality in the US economy by catalyzing policies that benefit powerful firms rather than community-centric redistributive methods. Despite technology driven economic growth, “half of the world’s wealth is now owned by just 1 percent of the population, amounting to 65 times the total wealth of the bottom half of the world’s population” (Norris et al. 2015) This widening global income gap is caused by the economic and political structures that condition how the technologically-driven economic benefit is distributed across communities.
Policy Recommendations for Redistributing Resources
By offering universal access to essential services like healthcare and education, Universal Basic Services (UBS) can significantly reduce economic inequality. UBS supports low-income households by ensuring that everyone has access to fundamental services, enabling them to allocate their limited resources toward other needs, such as savings or investments in their children’s futures. This financial support can substantially enhance general well-being, lower stress levels, and improve overall quality of life (Buchs 2021). Access to high-quality healthcare is a key component of UBS, as low-income families frequently face high out-of-pocket medical costs, which often lead to financial strain and medical debt (Rakshit et al. 2024). UBS mitigates this burden by guaranteeing individuals receive the healthcare they need without fear of overwhelming expenses, resulting in healthier populations that contribute more to the economy (Coote 2020).
In education, UBS could depart from the current U.S. model by expanding beyond the existing primary and secondary public education system to include universal pre-kindergarten (Pre-K) and higher education. Universal Pre-K improves cognitive and social development in young children, particularly those from disadvantaged backgrounds. Early educational experiences can enhance readiness for school, improve academic performance, and ultimately lead to higher graduation rates, promoting long-term equity and opportunity (U.S. Department of Education 2019). Paired with universal access to higher education, UBS could help eliminate the financial barriers that prevent many students from pursuing postsecondary education, which is increasingly essential for economic mobility. Access to higher education provides individuals with the advanced skills and qualifications needed for higher-paying jobs and a more adaptable, innovative workforce (U.S. Bureau of Labor Statistics 2021). In making high-quality education accessible to every child—whether for early childhood or postsecondary studies—UBS not only advances educational equity but also fosters a more skilled labor force that drives innovation and economic growth. Increased access to quality education is correlated with higher lifetime earnings and reduced poverty rates (Martins and Pedro 2004). By broadening access to these essential services, Universal Basic Services could empower individuals and foster a more just society where everyone has the opportunity to succeed.
Critics argue that Universal Basic Services (UBS) may not effectively address economic inequity, citing concerns about limited personal choice, inefficiencies in public services, and potential strains on public finances (Van Der Veen 2006). Some prefer cash benefits, such as Universal Basic Income (UBI), which offer individuals more flexibility to allocate resources according to their unique needs. While debates often center on the comparative advantages of UBI, evidence suggests that the scale of impact may be limited (Greenstein 2016). UBS offers distinct potential advantages, particularly in mitigating barriers to essential services for low-income individuals. Studies indicate that providing universal access to high-quality services like healthcare and education can reduce economic disparities more effectively by directly meeting basic needs without placing the burden solely on cash allocation choices. For example, access to healthcare under UBS could prevent low-income families from facing crushing medical debts, enabling greater financial stability and healthier communities (Coote 2020).
However, the Kuznets Curve counterargument suggests that inequality might naturally decrease over time as economies mature, without direct interventions like UBS. The Kuznets Curve posits that as economies grow and industrialize, inequality initially rises due to increased income for skilled labor and capital holders. Eventually, as wealth accumulation enables broader access to education and social mobility, inequality should decrease as the benefits of economic growth become more widely shared (Acemoglu and Robinson 2012). By this logic, economic growth fueled by market forces may ultimately reduce inequality without extensive public spending on services. Yet, this theory assumes that structural barriers will diminish with economic development, an outcome UBS directly supports by ensuring access to essential services across socioeconomic groups. Thus, while the Kuznets Curve offers a perspective on long-term inequality reduction, UBS provides a more immediate and targeted approach to achieving economic equity. It is also important to note the lack of strong data for the Kuznets curve in recent years, thereby diminishing its credibility as a counterargument. To address funding concerns, progressive taxation and efficient use of public funds—such as reducing wasteful spending—can help ensure UBS programs remain sustainable. Economist Peter Diamond (2016) argues that the potential drawbacks of a progressive wealth tax may be overstated, suggesting it could be a viable revenue source to support UBS initiatives.
Conclusion
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