The social safety net in many rich countries was creaking before covid-19 struck. Modelled on the ideas of Otto von Bismarck and William Beveridge, it had often failed to cushion workers from globalisation and technological and social change. In 1999-2019 the number of Americans aged 25-54 outside the labour force grew by 25%, or 4.7m, over six times more than the number who received help from the main assistance programme for displaced workers. As health-care and pension costs soared in recent years, governments cut back support for working-age people. Between 2014 and 2018 Britain’s state-pension bill grew in real terms by 4bn pounds ($5.8bn), even as the rest of its welfare budget shrank by 16.5bn pounds. A dwindling share of middle-income jobs and the growth of the gig economy fuelled fears that labour markets were changing faster than flat-footed governments could.

With the public and some economists cheering on, it is tempting for politicians to stoke the economy with more ad hoc spending, or put in place vast schemes such as UBI. Instead they need to take a measured, long-term view. The safety net must be affordable. Tight budgets, not milk and honey, will define the 2020s. The annual deficit of big advanced economies was 4% of their combined GDP even before the pandemic—and much ageing is still to come. Already bond yields are rising again. Social spending must flow quickly and automatically to those who need it—not, as in America, only during crises when a panicked government passes emergency legislation. And governments need to find mechanisms that cushion people more effectively against income shocks and joblessness without discouraging work or crushing economic dynamism.

The first step towards satisfying these goals is to use technology to make ancient bureaucracies more efficient. Postal cheques, 1980s mainframe computers and shoddy data need to be relegated to the past. In the pandemic many governments temporarily short-circuited their existing systems because they were too slow. In Estonia and Singapore digital-identification systems and a disdain for form-filling became an asset in the crisis. More countries need to copy them and also to ensure universal access to the internet and bank accounts. The call for efficient administration may sound like tinkering but one in five poor Americans eligible for wage top-ups fails to claim them. Nimbler digital-payment systems will reduce the need for costly universalism as a fail-safe, and allow better targeting and quicker response times. Digital systems also permit the emergency option of making temporary cash payments to all households.

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