Guaranteed Income?

Terry H. Schwadron

Oct. 16, 2017

Strange bedfellows are coming together to consider experiments towards the idea of a universal guaranteed income — the idea that individuals would a fixed, unconditional, minimum yearly government stipend for all members of a designated group or country. As a practical matter, this idea is largely still one of talk, but there are some pools of action that draw from the politically most conservative to the most liberal.

Real experiments are under way in areas of Finland, Kenya, California, Canada and as of last week, under consideration in Hawaii.

What appeals to conservatives is an extension of the proposals to have block grants to states for services like Medicare and Medicaid; they see the idea of a single strand of aid to provide for health, housing, food stamps, the whole social service shootin’ match, with federal withdrawal from administration. It would then be on individual recipients to otherwise make their own way.

And it appeals to people like Facebook’s Mark Zuckerberg and inventor Elon Musk to give recipients a basic guaranteed salary to foster more thought, creativity and invention, apart from the travails of having to make basic ends meet.

Most of the thrust for this thinking has been out of the fears or expectations that artificial intelligence and robots will be replacing many of our jobs, from driverless trucks and deliveries to cleaning to manufacturing, teaching, writing and many more areas. What happens as we lose society’s jobs to machines? The universal guaranteed income notion is that we identify basic needs and clump them together as a minimum wage for individuals put out of work.

There could well come a day when there simply may not be enough work for all those who want a job.

James Livingston, a neighbor and historian at Rutgers who is my neighbor, wrote No More Work, a book on this subject, showing that there is a long history of thought and experiments for such an approach, including by Richard Nixon, Dick Cheney and Donald Rumsfeld (they called it “negative income tax.”) He argues that “jobs” have become dissociated from “income” in our society and should be treated separately.

Scientific American magazine said in a July article that the idea has been around in one form or another for centuries, and argued in different eras by people like Thomas Paine and Milton Friedman. The magazine quoted Olli Kangas, who is directing the experiment in Finland where 2,000 people selected at random among those collecting unemployment insurance to receive about $640 a month for two years. “The changes that are taking place in our societies are so big and so profound that we have to change our social policy systems. The systems we created during the era of industrialization don’t respond anymore to the requirements we have in modern society, with digitalization and globalization taking over. Something must be done,” he says.

Finland’s 28 million program is an actual social engineering research study complete with a control group of about 173,000 unemployed people matched to the test recipients for age, education, employment history and other characteristics who receive conditional jobless benefits. One goal of the experiment is to assess whether it incents a search for work to the opposite. Getting the minimum salary, after all, is limiting.

In California, Y Combinator, a Silicon Valley start-up seed funder, launched a small guaranteed income pilot project in Oakland this year, giving a small group of recipients chosen randomly about $1,500 a month, first step towards building to 100 recipients. The company’s question is whether it provides freedom towards creativity, and follows what they do with their free time and how their health and well-being is affected.

Alaska has long distributed $1,00-$2,000 annually to all families with no strings attached basically from royalties of oil drilling in the state. Studies show that most families keep the money for emergencies.

Hawaii state lawmakers voted last night to explore the idea of a universal basic income in light of research suggesting that a majority of waiter, cook and building cleaning jobs vital to Hawaii’s tourism-dependent economy will eventually be replaced by machines. A crucial question — who exactly would pay for the program? — has yet to be determined. But support for the idea has taken root. “Our economy is changing far more rapidly than anybody’s expected,” said state Rep. Chris Lee, who introduced the legislation.

The state wants to explore the data, and to debate whether it will help or worsen issues like homelessness.

Other experiments consider whether a guaranteed income is a potential remedy for extreme poverty found in places like Africa and India. Paul Niehaus, a professor of economics at the University of California, San Diego, is co-founder of GiveDirectly, a nonprofit underwritten by Google and other philanthropists that has distributed more than $70 million among some 80,000 households in Kenya, Uganda and Rwanda since 2011. Families receive a year’s budget, about $1,000 each, in two or three installments. While immediate results are positive, no one knows long-term effects. The group plans a couple of experiments with longer guarantees of monthly subsidies and some with fewer payments that might allow for investment in a local business.

Of course, no matter how you set it up, one big problem is deciding who pays, who receives, whether this would simply replace other government social services, and whether there is any local oversight. Given our recent debates over health care, block grants and Medicaid and food stamps, this will be a difficult conversation. Still, conservatives like Sen. Mike Lee (R-Utah) has argued that there is no reason why the federal government should maintain 79 different means-tested programs. In that sense, creating a wage floor might be seen as an effective way to fight poverty while reducing government spending and intrusion.

Think a universal basic income might Make America Great?

Related blog here: https://medium.com/@yogyatasomani/automation-a-money-generating-model-cc09ba0f5241

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