A single paragraph hidden in the footnotes of a US Congressional bill has sparked debate over Morocco’s claim to sovereignty over Ceuta and Melilla, Spain's autonomous cities in North Africa.

A report from the House of Representatives influential Appropriations Committee clearly describes both North African enclaves as being “in Moroccan territory” but “under Spanish administration”, whilst encouraging Secretary of State Marco Rubio to consider the future status of both territories. 

This comes as a column in an Israeli newspaper has claimed that shifting geopolitics and deteriorating diplomatic relations between Madrid and Washington could make Moroccan claims on Ceuta and Melilla stronger.

READ ALSO: Why are Ceuta and Melilla Spanish?

The column has been picked up and reported in the Spanish press, with online outlet 20 Minutos running the headline: "Should Spain be concerned about Ceuta and Melilla? The Morocco-US-Israel axis looms over the waters of the Strait".

The Spanish territories of Ceuta and Melilla are Europe’s only landmasses in continental Africa. Melilla first fell under Spanish rule in 1497, and Ceuta, which was a Portuguese territory from 1415, was given to Spain under the Treaty of Lisbon in 1668.

Their borders with Morocco are the only physical borders between Europe and Africa and they have for centuries existed as places of contested sovereignty that ebb and flow alongside other political tensions in the region.

Now the US footnote has brought that back into focus.

The full paragraph in the budget bill reads as follows: “The Committee notes that the cities of Ceuta and Melilla, which are under Spanish administration, are situated on Moroccan territory and have long been the subject of a claim by Morocco. The Committee supports the Secretary of State’s efforts to encourage a diplomatic compromise between Morocco and Spain on the future status of Ceuta and Melilla”.

This is the furthest the US has gone in publicly entertaining Moroccan sovereignty claims.

A confluence of factors — war, diplomacy, economics, new alliances, along with the US budget bill — indirectly affecting the tiny overseas cities mean that some see an opportunity for Morocco to reclaim them.

One Spanish paper asks: "The perfect storm over the waters of the Strait?" Another talks of "diplomatic fears that Trump may settle scores with Sánchez via Ceuta and Melilla following the “first warning” at the Capitol".

This follows repeated instances of Prime Minister Pedro Sánchez's government refusing to toe the line from Washington and champion a left-leaning foreign policy.

One column, in Israel outlet Ynet, claims that these tensions between Madrid and Washington could put Spanish sovereignty in danger.

The columnist, Amine Ayoub, described as a pro-Israeli Moroccan columnist, writes: "Spain's refusal to allow the United States access to its Rota and Morón military bases during the Iran campaign, its consistent failure to meet NATO defense spending targets, and Prime Minister Pedro Sánchez's confrontational posture toward the Trump administration have collectively generated something rare in North African affairs: a genuine crack in Spain's strategic armor over Ceuta and Melilla."

"The geopolitical earthquake shaking Washington's relationship with Madrid has opened an unexpected window for one of the Arab world's oldest territorial grievances," Ayoub writes.

When contacted by 20minutos, Ayoub denied having conveyed any official position from the Israeli authorities and insists he wrote a purely personal analysis. He also suggested that Rabat is not planning any diplomatic manoeuvres in the near future.

Israel and Spain have in recent years clashed very publicly over Gaza, with the latter arguably being the most progressive country internationally in recent years.

“I wrote my opinion on how Israel could help Morocco in Ceuta and Melilla,” Ayoub said.

“Morocco could be pushed by the United States and Israel to reclaim the two cities for reasons of national security in the Strait of Gibraltar area and having a partner like Pedro Sánchez’s current Spain, although Rabat has no short-term interest in the matter,” he added.

The Trump administration has moved closer to Rabat in recent years, especially during his second term. His is the first in American history to recognise Morocco’s full sovereignty over Western Sahara, another contested territory in the region.

Similarly, Rabat has remained within the Abraham Accords dispute ongoing conflict and humanitarian crises in the Middle East.

Spanish diplomatic sources, however, admit they saw this coming, telling El Espaňol: “We just had to wait; Sánchez has been seeking confrontation with Trump from day one,” sums up a veteran source, who interprets the text as “a first warning from the Capitol”.

That's not all. In March the American Enterprise Institute's Michael Rubin, described Spain as "a colonial power running colonies across the Strait of Gibraltar" and suggested Washington recognise Moroccan claims.

Furthermore, Mario Díaz-Balart, chairman of the House Subcommittee on National Security, claimed recently that Ceuta and Melilla "are not in the geographic territory of Spain" and it should be "established, negotiated, and discussed between friends and allies."

The faculty, administrators, and trustees who establish graduation criteria at America’s most prominent colleges and universities have made a clear set of judgments about what every educated citizen should know. Their choices suggest that familiarity with diversity, equity, and inclusion (DEI) is more essential than an understanding of economics, American history, and the Constitution.

City Journal’s College Rankings track graduation requirements across a wide range of prominent colleges and universities, including top public flagships, elite private research universities, leading liberal arts colleges, and the Ivies. While none of the 120 schools currently ranked requires an economics class to graduate, and only 15 percent stipulate a course in U.S. government or American history, 51 percent mandate coursework organized around the conceptual vocabulary of diversity, equity, and inclusion. These schools—which have long produced a disproportionate share of the nation’s lawyers, judges, editors, executives, and senior civil servants—make clear to their students that material centered on race, gender, power, and inequality is essential, while material on the U.S. Constitution, American history, and sound economics is not.

Strikingly, every type of higher education institution in City Journal’s College Rankings prioritizes DEI coursework over basic civic education. Among private schools (Ivy, “Ivy Plus,” private research universities, and private liberal arts colleges), course requirements in U.S. government or history are virtually nonexistent, appearing at fewer than one in ten schools. Despite legislative mandates in nine states obligating students to take U.S. government and American history, fewer than one in three public universities makes these classes necessary for graduation. 

By contrast, mandatory DEI courses are widespread, appearing in the general education curriculum of 27 percent of Ivy League and Ivy Plus universities; 45 percent of private research universities; 57 percent of private liberal arts colleges; and 59 percent of public flagships. For example, Georgetown University now demands that all students complete a “Seminar in Race, Power, and Justice” to develop “a baseline vocabulary for discussing racial difference and marginalization.” The “Difference, Power, & Equity” prerequisite at Williams College “encourages students to confront and reflect on the operations of difference, power and equity” and seeks to “provide students with critical tools they will need to be responsible agents of change.” Students at the University of Vermont must take a class on “Race and Racism” that teaches the “meaning and significance of power and privilege.”

Regardless of one’s view of these priorities, nothing prevents coursework in U.S. government, American history, and DEI from coexisting within a general education curriculum. As Figure 1 shows, however, they almost never do. Only three of the 61 campuses mandating a DEI course for graduation also require a class on U.S. government or American history. In practice, then, colleges and universities are not crafting graduation requirements that supplement a dedicated focus on civic education with insights from DEI—instead, they are supplanting curriculum on U.S. government and American history with courses that emphasize identity, power, and inequality.

Figure 1: DEI and U.S. Government/American History Requirements at Prominent Colleges and Universities

The consequences of these curricular priorities are increasingly hard to ignore. Today’s college students know very little about American history or the functioning of American democracy. ACTA’s 2024 survey found that 60 percent could not correctly identify term lengths for senators and U.S. representatives; 48 percent wrongly believe that the president has the power to declare war; and only 31 percent know that James Madison was the father of the Constitution. We should not be surprised that an approach to higher education that makes U.S. government and American history optional is producing students who are historically uninformed, civically illiterate—and hostile to basic norms of free expression. In 2025, the Foundation for Individual Rights and Expression’s annual College Free Speech Rankings survey asked students whether six controversial speakers from across the political spectrum should be “allowed” to speak on campus. None of the speakers were endorsed for a campus appearance by a majority of students. Further, 34 percent said that “using violence” to stop a campus speech can be “acceptable.”

What colleges and universities choose to make mandatory may be just as important in shaping students’ perceptions, judgments, and moral instincts as what they leave optional. Studies of corporate training programs, for example, have found that DEI initiatives can generate a backlash effect, increasing racial resentment and negative perceptions of the workplace among some employees. More directly, experimental evidence suggests that assigned DEI coursework can meaningfully influence student attitudes. In a 2024 study by researchers at Rutgers University’s Social Perception Lab and the Network Contagion Research Institute, students exposed to short excerpts from widely assigned DEI authors became more likely to perceive prejudice in ambiguous situations and expressed stronger punitive impulses toward imagined offenders. If even brief exposure to assigned DEI material can measurably increase suspicion and strengthen retaliatory instincts, sustained semester-long exposure in a required course is likely to produce deeper and more lasting effects.

Of course, none of this is inevitable. These outcomes reflect a series of intentional curricular choices. These choices can be revisited and reversed. Two recent proposals have identified a path forward. Last month, citing polling data on socialism’s growing popularity among young Americans, Samuel Abrams argued that colleges and universities should add economics to their graduation requirements. A few days later, ACTA’s National Commission on American History and Civics Education called on colleges to require a foundational course in U.S. history and government centered on the Declaration of Independence, the Constitution, the Federalist Papers, the Emancipation Proclamation, the Gettysburg Address, and the major texts of the civil rights movement. These proposals build on long-standing traditions in general education, can be implemented at modest cost using existing faculty, and would meaningfully strengthen students’ civic and economic understanding.

But adding these courses to the required curriculum is only part of the solution. Colleges and universities should also reconsider whether to include DEI coursework among the small set of subjects every student must complete to earn a degree. Courses on race, inequality, identity, and power can remain widely available, but mandating such courses while leaving economics, constitutional government, and American history optional reflects badly skewed educational priorities.

Colleges and universities can correct this imbalance. Trustees, presidents, and faculty senates determine what every graduate must know. Many have recently used that authority to force-feed DEI courses while deemphasizing basic economic and civic literacy. The same authority, exercised differently, could restore a more balanced and beneficial core curriculum.

If institutions refuse to act, legislatures can—and should. The curricular data from public flagships discussed above show that state mandates can compel schools to make U.S. government and American history part of general education. The Civics Alliance’s American History Act offers a particularly promising model, providing legislators with a detailed framework for reestablishing American history and constitutional government as foundational elements of undergraduate education.

Public universities often adapt in ways that violate the spirit (if not the letter) of laws mandating curriculum. In California, some institutions have diluted the state’s American Institutions requirement by letting students satisfy it through courses in Africana Studies, American Indian Studies, or Chicano Studies rather than through direct study of American history or constitutional government. Similarly, publicly funded universities in 12 states that have enacted statutory bans on DEI programming still require DEI coursework. Legislation can set the direction of reform, but only sustained oversight can ensure that reform is implemented faithfully.

A university that makes the Constitution optional but DEI mandatory has lost sight of its civic purpose. Reviving that purpose begins with restoring the curriculum.

LLM (google/gemini-3.1-flash-lite-20260507) summary:

• Project Approval: officials in northern utah have authorized a massive hyperscale data center campus in box elder county
• Capacity Scales: the facility is planned to reach a nine gigawatt capacity which represents more than double current state energy usage
• Public Opposition: local community members and environmental groups have expressed concerns regarding potential impacts on water air quality and regional resources
• Institutional Governance: data center operations occur within existing legal frameworks that dictate how electricity and water rights are managed
• Water Rights Markets: developers generally acquire water by purchasing established rights from agricultural users rather than depleting common pools
• Conservation Technology: modern facilities utilize closed loop cooling systems that significantly reduce net consumptive water loss compared to agricultural practices
• Energy Autonomy: current state legislation enables new projects to generate independent power which mitigates negative pressure on existing residential electrical grids
• Policy Effectiveness: broad moratoria are ineffective compared to transparent regulatory systems that specifically manage resource scarcity and allocation

Courtesy George Frey/AFP via Getty Images

In a remote part of northern Utah, where sagebrush extends for miles and the nearest homes are few and far between, officials just voted to approve one of the largest data center projects in American history.

The proposal, backed by Canadian investor Kevin O’Leary, would transform a large swath of Box Elder County into a massive “hyperscale” data-center campus. At full buildout, it could reach a capacity of nine gigawatts—more than double the state’s current electricity consumption—and cover an area the size of Washington, D.C.

The project—like many others across the country—has become a lightning rod. County officials had delayed the vote after pushback from residents, and crowds packed local meetings to voice concerns. Environmentalists warned of dire consequences for water, air quality, and the surrounding region.

And yet, as Utah governor Spencer Cox put it last week, the site itself is about as ideal as it gets. It is remote, adjacent to a major natural gas pipeline, and far from residential neighborhoods. “If you can’t put this here,” Cox said, “then we can’t put them anywhere.”

These tensions are not unique to Utah. Across the country, data centers are becoming a flashpoint in local and national politics, with communities raising alarms about water use, electricity demand, and the broader implications of artificial intelligence. Some policymakers are now calling for moratoria on new data centers. In a few cases the backlash has taken a dark turn, with threats and vandalism aimed at public officials and industry leaders.

Something about the issue has clearly struck a nerve. But the debate over data centers is not just heated—it is becoming increasingly detached from the policies and institutions that actually govern the centers’ impacts on surrounding communities.

The discourse tends to treat resource use in the simplest possible terms. Water is treated as if it were simply “taken” from a shared pool. Electricity demand is assumed to translate directly into higher residential energy bills. These framings are intuitive, but they are often divorced from how these resources are actually governed in practice. Data centers don’t operate in a vacuum. They operate within legal and institutional frameworks that determine who can use water, how power is supplied, and how competing demands are resolved.

The real issue, then, isn’t whether data centers use too much water or energy, but whether the policies and institutions that govern those resources are equipped to handle these new demands, and where they fall short. That is the conversation we are not having. Instead, the debate defaults to panic, moratoria, and blunt prohibitions, making it harder to see where real reform is actually needed.

Consider an issue that has drawn some of the most intense scrutiny: water use. Data centers rely on water to keep servers from overheating. That demand has drawn concern, especially in arid regions. In Utah, opponents of the Box Elder project have pointed to the rapid decline of the nearby Great Salt Lake and warned that the new data center could exacerbate already strained supplies.

In recent months, a growing body of analysis has pushed back against claims that data centers are uniquely water-intensive. In aggregate, they are not. Compared to agriculture, golf courses, or even beer production, total data center water consumption is relatively modest. In many regions, it is a rounding error. Earlier facilities relied on evaporative cooling, which continuously vents water to the atmosphere. But newer data centers, including the proposed Utah project, use closed-loop recirculating systems that cycle the same water repeatedly.

But the relevant question is not how much water data centers use in total. A data center could account for a tiny share of statewide water consumption and still trigger serious local conflicts if it draws from a scarce aquifer or competes with other users for a common supply. Conversely, it could use a meaningful amount of water without much controversy if that water is acquired through existing rights, transferred from lower-value uses, or returned to the system in ways that preserve downstream flows.

In other words, the impact of data center water use is not determined by gallons alone. It depends on the policies that determine how water rights are governed.

In Utah—as in much of the American West—water is not an open-access resource. It is governed by well-defined rights that can be bought, sold, and transferred. New users must acquire water not by simply diverting or pumping at will, but by purchasing rights from existing holders. This process forces a comparison between competing uses and creates a mechanism—price—for deciding which ones persist.

In the case of the Box Elder project, its developers have so far secured rights to 1,900 acre-feet of water—roughly what a mid-sized Utah farm might use annually to irrigate 400 to 500 acres of alfalfa or hay. Those rights were acquired from an agricultural user, not carved out of a common pool at others’ expense. The data center’s water use doesn’t increase total withdrawals from the system; it transfers an existing allocation from one user to another. The developers say they plan to purchase rights to roughly 3,000 acre-feet in total for the project.

The institutional details matter even more than that, however. When it comes to the shrinking of the Great Salt Lake, the relevant question isn’t how many gallons a project uses in the abstract. It’s how consumptive that use actually is compared to what it replaced.

For example, with agricultural irrigation, a significant portion of the water applied to a field is lost to evapotranspiration and never returns to the watershed. In a closed-loop data center, by contrast, consumptive loss is near zero, and periodic “flushing” of the system returns water to the watershed that was previously depleted by the agricultural operation. On balance, that means the project may be net neutral, or even a modest net positive, for the inflows to the Great Salt Lake.

Furthermore, the data center operates under the same basic water constraints as any other user. It cannot simply increase its consumption at will. If it needs more water than originally projected, it must secure additional, existing water rights from willing sellers.

The same pattern shows up in debates over energy. The Utah project’s scale has fueled fears that it will overwhelm the state’s electricity grid and drive up rates for existing customers. But recent legislation in Utah creates a framework that addresses precisely this concern, allowing projects like this one to generate its own power on-site rather than drawing from the existing grid. Under this model, the project’s energy demands don’t hit the existing grid at all, and officials say it may even supply excess power back to the grid, which could result in lower prices for residential consumers. Again, the issue is not whether the project uses energy. It is how that energy is supplied, and under what legal and policy constraints.

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These distinctions are rarely part of the public conversation. Instead, concerns about water, energy, and land use are often bundled together and treated as if they call for a single, sweeping response. The result is less a coherent policy framework than a kind of ambient opposition to “data centers” as such, often resulting in calls for moratoria or outright bans.

That is why proposals to simply “pause” data center development are so misguided. As the progressive energy and climate scholar Holly Buck recently argued, bans on data centers do little to slow AI development. Instead, they simply shift it elsewhere, often to places with weaker safeguards, while sidestepping the real policy questions at hand. Writer and policy advocate Nat Purser put it more succinctly: “pausing isn’t policy.” Attempting to address many distinct issues through a blanket moratorium makes it less likely that any of them get addressed.

The policy lens reveals where resource governance systems are working and where they are not. In Utah, surface water rights are well-defined and tradable. The state has also closed the Great Salt Lake basin to new groundwater claims, meaning data centers can’t simply drill new groundwater wells to satisfy their water demands. Instead, they must compete in an existing market for scarce rights.

Not every place looks like Utah. In parts of Arizona, for example, the picture is more complicated. Most of the state’s existing data centers operate within a rigorous “assured water supply” policy framework that requires municipal water providers to demonstrate 100-year supply sufficiency before committing water to new large users. This helps ensure that data centers’ water demands don’t come at the expense of existing users. But a growing pipeline of proposed projects sits outside those boundaries, where groundwater regulation is limited or absent.

The importance of these institutional frameworks is illustrated by a recent episode in Tucson. When the city council voted unanimously to block a data center last year on environmental grounds, it voided a negotiated deal requiring the developer to fund $100 million in reclaimed water infrastructure and commit to returning more water to the system than it consumed. The project proceeded anyway under county jurisdiction—drawing on the same aquifer, but with fewer constraints.

The question is not whether data centers use water, or energy, or land. Everything does. The question is whether the systems governing those resources are equipped to handle new demands—and where they aren’t, what it would actually take to fix them. Figuring that out requires a different kind of debate than the one we’re currently having.

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What if the most important lesson from the rise of GLP-1 weight-loss drugs isn’t medical but economic?

Like millions of Americans, I’ve benefitted from the price war between the two pharmaceutical companies producing these drugs, which are arguably the most important new medicines of the decade. Prices for Wegovy and Zepbound have fallen by more than 70 percent in just the past three years.

The pharmaceutical business model is naturally vulnerable to such competitive price declines, combining as it does high upfront investment costs and low production costs to make each dose. The same dynamic appears in airlines, telecommunications, and high-value manufacturing sectors ranging from steel to semiconductors.

But rapid price decline is rare in the rest of the health-care sector. Why?

Health care’s cost problem isn’t really about the new and innovative being uniquely expensive—it’s that the old and routine fails to get cheaper as it does in virtually every other industry. Health care is an outlier in this regard because pressures that should produce lower prices for established services fail to do so.

For example, declining demand doesn’t reliably mean lower prices. Demand for inpatient hospital services has fallen as recovery times shorten, more procedures move into outpatient clinics, and long-term patients receive care in less costly settings. Telemedicine and remote monitoring further reduce the need for expensive facilities. Nonetheless, hospital prices have risen three times faster than inflation over the last 25 years.

Similarly, consider that for a full decade before Covid-19, hospitals were operating with average occupancy rates around 64 percent—meaning roughly a third of inpatient capacity sat empty. Those years of substantial slack did nothing to moderate hospital prices. By contrast, in commercial real estate, a post-pandemic demand shock led to roughly a 25 percent decline in office lease prices.

Labor trends tell a similar story. Doctor pay has lagged inflation while work traditionally performed by physicians is increasingly handled by lower-cost nurse practitioners and physician assistants. Nearly all patient data is now digitized, enabling enormous potential administrative savings in prescribing, ordering, coordination, and billing. None of this has materialized as lower prices.

Why are GLP-1s getting cheaper while health care remains expensive? The answer lies in what makes GLP-1 drugs different: actual consumers have to pay actual prices.

Manufacturers initially followed the standard playbook: maintain high retail prices (paid by almost no one) while offering modest discounts to Medicare and insurers. But coverage for weight-loss drugs expanded much less rapidly than usual. As a result, manufacturers had to sell directly to consumers; a majority of weight-loss patients pay for their GLP-1s out of pocket. Manufacturers therefore face the same incentives confronting companies outside health care: reduce prices or lose customers and profits.

Exposure to real consumer demand reliably makes the difference. Whenever health-care providers must sell directly to consumers—whether in LASIK surgery, orthodontics, chiropractic services, mental health care, or cosmetic procedures—competitive pressures frequently produce meaningful price reductions.

Without price competition for consumers, providers have little incentive to cut prices—and no incentive to let outsiders observe declining costs. As a result, we’ve had a decade of efficiency gains absorbed by newly integrated hospital systems, pharmacy benefit managers, and expansive revenue-management bureaucracies.

In spite of this, policymakers still cling to the misplaced hope that government agencies and insurers will use bargaining power to force lower prices. Within a few years of Medicare’s enactment in 1965, federal leaders recognized that uncontrolled spending required reform. For decades since, reforms have targeted whichever factor appeared to be driving cost growth at the moment—a recurring game of whack-a-mole. After more than half a century of bipartisan frustration, it’s time to acknowledge reality: effective top-down price discipline is impossible, even when underlying costs are falling.

Emerging technologies—remote care, robotics, advances in biomedical science, and especially artificial intelligence—are accelerating reductions in the resources needed to deliver effective treatment. But if we stay on our current path, these advances will be subsumed by unnecessary costs, new layers of administration, and invented complexity—just like the past two decades of efficiencies were swallowed up.

Simply put, if our goal is to translate declining health-care costs into declining prices, health care needs a different customer. The United States will spend almost $6 trillion on health care in 2026, with the vast majority flowing through insurers and government programs. Redirecting more of those dollars toward patient-consumers—and reducing the role of intermediaries purchasing care on their behalf—will create greater opportunity for disruptive innovators to profit by lowering prices.

One approach is to reverse the decades-long trend of expanding what routine insurance covers, instead reserving insurance for genuine catastrophic risk and leaving more everyday spending in patients’ hands. Another is to convert insurance benefits for defined categories of care into direct cash benefits, giving patients money to spend rather than having insurers effectively purchase services on their behalf. Either approach would reintroduce the price sensitivity that helps discipline costs in every other consumer market.

A common objection is that health care simply cannot work like other markets because so much consumer need is urgent and leaves no room for choice. This argument made more sense in the mid-twentieth century, when acute crises—heart attacks, infections, injuries—dominated both care and spending.

But today, roughly 60 percent of U.S. adults have a chronic disease, which consumes 90 percent of health-care costs. Managing diabetes, heart disease, obesity, or depression is not an emergency; it is an ongoing, iterative process that in many cases requires patients to weigh competing treatment paths, make lifestyle tradeoffs, and choose among providers over months and years.

Since Medicare’s creation in 1965, industries once considered too complex or too essential for normal competition—banking, air travel, telecommunications, and retail—have been transformed to create trillions of dollars of consumer benefit. If we allow it, health care can be next.

LLM (google/gemini-3.1-flash-lite-20260507) summary:

• Underclass definition: historically associated with behaviors like violent crime drug abuse joblessness and dependence on social welfare systems
• Silicon valley concerns: current fears focus on artificial intelligence causing mass unemployment and creating a permanent state of uselessness for workers
• Economic reality: historical technological advancements suggest human labor shifts to new roles rather than resulting in lasting mass unemployment
• Policy risk: proposals for artificial intelligence funded welfare states may inadvertently subsidize and encourage the social pathologies associated with dependency
• Welfare impact: existing evidence indicates that certain financial transfer programs can reduce labor force participation and trap individuals in cycles of poverty
• Political motives: advocates see rapid technological change as a strategic opening to implement radical economic agendas and wealth redistribution schemes
• Competitive solutions: maintaining a robust labor market requires deregulation to lower costs and reducing barriers that hinder worker mobility
• Policy trajectory: prioritizing government dependency over labor market flexibility threatens to create the exact social stratification that programs claim to prevent

Courtesy Christoph Soeder/picture alliance via Getty Images

What is an “underclass”? As Isabel Sawhill wrote in her introduction to a 1989 issue of the Public Interest dedicated to the topic, “violent crime, drug abuse, teen pregnancy, illiteracy, joblessness—these are some of the hallmarks of what has come to be called ‘the underclass.’” In Sawhill’s telling, the underclass were not merely the poor, but the poor who lived on the dole despite being able to work. The group, moreover, often engaged in the “tangle of pathology” Sawhill identified as characteristic of it.

Although it is now largely forgotten, this group for a time consumed a great deal of popular attention and debate. They were the subject not only of articles in scholarly quarterlies but also acts of Congress. The consensus was that the underclass’s position was the result of both social and policy factors, interacting and reinforcing each other to produce a culture of dysfunction.

It is probably a coincidence that Silicon Valley denizens have now repurposed the word “underclass” to describe the result of artificial intelligence causing mass unemployment. As Jasmine Sun put it in her recent New York Times essay on the topic,1 “most people I know in the A.I. industry think the median person is screwed, and they have no idea what to do about it.” As Sun explains it, many of those building the future think that “people have a limited window of time to build wealth before A.I. and robotics are advanced enough to fully replace human labor. At that point, we will get frozen in our current class positions: The rich will be able to deploy superintelligent machines to do their bidding, and everyone else will be rendered useless and unemployable, left to live off welfare scraps.”

Sun notes that most economists and AI experts “do not expect this scenario.” But then she somewhat inexplicably asserts that “a social underclass is a policy choice. Instead of waiting for impact, we need to think seriously—now—about how we plan to support workers through A.I. disruption.”

The economists and AI experts are correct—a permanent underclass is not coming. But the favored solutions of those enamored of the theory—an AI-funded universal basic income (UBI), jobs guarantee, or the like—do threaten to recreate an underclass of similar viciousness to and greater magnitude than the one Americans concerned themselves with in the 1990s. The real danger is not that AI will produce a permanent underclass, but that the panic over technological change will lead policymakers to build one themselves.

As I have written elsewhere, the bearish case for AI’s effects on unemployment tends to make elementary economic errors. As AI becomes cost- and skill-competitive with humans on certain tasks, it will inevitably replace them in those roles. But there’s a reason past technological innovation has not resulted in mass unemployment: people’s wants are infinite, so human labor freed from one purpose by automation can inevitably be redirected to another one. It’s hard for us to imagine the jobs of the future, but it was also hard for people to imagine the jobs enabled by innovations like the airplane or the printing press.

Sun, to her credit, does not go as far as some do in predicting mass unemployment. But she does nod to the idea that the labor-market adjustments associated with AI-enabled automation—the people who will lose jobs and need to retrain—will be substantial and socially disruptive. And she intimates that politicians need to be “gutsy” in proposing big policy ideas to address that disruption.

There are problems with both Sun’s premises and her conclusions. It’s not obvious ex ante how big the adjustment will be—especially because those most at risk of automation (high-skilled white-collar workers) are also those most likely to be able to switch jobs quickly. The examples of adjustment risk that Sun points to—young workers losing their jobs to AI and the effects of offshoring to China on manufacturing unemployment—are substantially contested. AI is a big technology shift, but other such shifts have often had surprisingly small effects on employment even in affected sectors.

But the bigger problem is with Sun’s conclusion that AI presents an opportunity for populist politicians “to push ideas that are usually too radical for moderate voters to swallow,” especially in the upcoming 2028 presidential election. One imagines a redux of the 2020 Democratic primary, in which candidates vied to name the biggest possible handout—a UBI, a job guarantee, Medicare for All, and so on. This time, however, it will all be funded by a punitive tax on AI and the wealth it generates.

The policy goal, presumably, is to insulate those who might otherwise end up in the “permanent underclass” from the consequences of AI-induced unemployment. But shifting toward an AI-funded “post-work” welfare state risks creating exactly the underclass it is meant to abate.

Consider the effect of transfers on employment, which are generally negative. Small programs, exemplified by randomized control trials of unconditional cash transfers, tend to reduce work by small amounts. Larger programs have larger impacts. As Sean Speer wrote here recently, the decline in labor force participation since the turn of the millennium is significantly driven by the growth in Medicaid rolls. Similarly, Speer writes, “the Earned Income Tax Credit, for instance, has increased workforce participation among single mothers by rewarding work. Disability insurance expansions have been linked, at the margin, to lower participation among some groups.” To that, we might add that welfare reform sent millions of single mothers to work.

Of course, many people would still work under an AI-funded UBI. But the hypothetical AI-funded regime would also underwrite the lives of those who already do not work—a population disproportionately prone to drug use, crime, unwed childrearing, and the other pathologies that Sawhill identified back in 1989.

In the days before welfare reform, there was sometimes discussion of people being “trapped” in the culture of poverty—an arrangement memorably depicted by Charles Murray in 1984’s Losing Ground (a book published with the support of Manhattan Institute). It is easy to see how an AI-funded welfare state could replicate that dynamic—producing the very “permanent underclass” it is meant to avoid.

Then, as now, welfare is not the exhaustive cause of the underclass lifestyle. But government dollars can and do subsidize the underclass lifestyle, perpetuating and reinforcing the culture, discouraging people from exiting it, and encouraging others to enter it.

How, then, do we respond to the problem of AI-induced dislocation? As Adam Lehodey has argued here, the competitiveness of automation against labor is partly the result of policy systematically disadvantaging labor, specifically by imposing regulations that make workers less competitive. Removing policies that raise labor costs and cutting barriers to job switching, combined with strategic retraining initiatives, will help keep those at risk of automation nimble and able to provide for themselves.

Sun is right about one thing: progressives will use the specter of AI to push for their preferred economic policies come 2028. But using automation as a pretext for more generous transfers isn’t a way to save people from the underclass—it’s a way to put them there.

1

To be fair to Sun, she does briefly mention that “In the United States, the term ‘underclass’ gained currency in the 1960s to describe the factory workers left behind by the postwar automation boom.” I don’t think that’s really an accurate gloss, but at least she nods to the history.