Will universal basic income end inequality? Maybe.

by Ben Magnan


Universal basic income (UBI) is a provocative idea that’s enjoying a huge surge of attention right now. The concept is simple: a government would provide unconditional payments (proposed amounts range from $10,000 to $25,000 a year) to its citizens that would cover their basic necessities — no job required. Advocates have heralded UBI as a solution to the financial insecurity that plagues workers and to the widening wealth gap seen in developed nations. As the world swirls with concern about technology’s impact on work, some big thinkers believe that guaranteed basic income is an essential ingredient in a future where robots take many more of the jobs humans do now.

UBI inched closer to reality in June 2016, when Switzerland was the first country in the world to hold a public referendum on it (it was voted down). The same year, two significant pilot experiments launched — one with 100 families in Oakland, California, who will receive $1,000–$2,000 per month for six months to a year; and another with 2,000 families in Finland, receiving 560 euro (roughly $589 USD) per month for two years.

The upside of a world with UBI could be enormous. It would eliminate poverty outright, beneficial for everyone but especially for children. And governments might be able to scrap the thicket of rules, bureaucracy and enforcement that surround current public-assistance programs.

But the barriers to its implementation are considerable.

For starters, its costs would be huge (for instance, providing a UBI of $10,000 a year to all 300 million Americans would add up to $3 trillion). Another major obstacle is ideological, even philosophical: UBI undercuts the principle of labor having value. It would represent a fundamental shift for financial security away from it being a reward earned through effort, and towards a lofty ideal of it as a human right.

What’s more, UBI may not be enough to solve the complex, deeply entrenched problems it is intended to address. As an example, in the US, social inequities are often rooted in deeply entrenched prejudices, like institutional racism and sexism. In light of these challenges, we might consider a few other solutions that also take aim at the underlying issues of inequality, insecurity and the uncertain future of work. While they’re not as simple or sexy as UBI, they might be more effective and sustainable.

1. Let’s match the savings of lower-income workers when they invest in assets — like small businesses, homes, retirement accounts and post-secondary training — that encourage their future financial security.

As it turns out, we already do this for richer people: The US spends more than $500 billion every year, primarily through its tax code, to help upper and middle-income individuals build wealth. The home mortgage interest deduction costs $70 billion alone.

Rewarding aspiration and investment is good public policy. While current efforts in the US are heavily weighted toward households that are already wealthy, we can foster economic fairness and growth by setting up a government program to match what low- and moderate-income families deposit into their savings accounts. Skeptics who wonder if the poor would indeed save should look at the track records of nonprofits that work in this area. For example, the San Francisco-based EARN has helped 6,000 Bay Area families — each with an average annual household income of $25,000 — to save more than $7 million of their own money.

2. Let’s increase the bargaining power of workers.

If one believes that human labor has great value, the establishment of platforms that protect and leverage this value is critical to ensuring that workers can continue to receive fair wages even as the world of work changes rapidly. The efforts of Saru Jayaraman, who leads the Restaurant Opportunities Center United, are one example. Aside from being a driver for higher minimum wages nationwide, she has redefined the role of restaurant employees by eliminating tips and increasing wages, and by making cooperative worker ownership a norm. Another pioneer is Sara Horowitz, who founded the Freelancers Union after seeing the need for economically vulnerable gig workers to organize.

Work like Jayaraman’s and Horowitz’s strengthens employee power in two important ways. The first is their unflinching affirmation of the value of human labor as an essential ingredient in a civil society. Second, they reject the traditional divide of owner and worker. Instead, they’re building models for a future where organized workers can also be entrepreneurial one-person firms themselves or aspiring co-owners of the businesses where they are employed. A new era of workers organizing outside the bounds of traditional movements could begin to redress the imbalances that now exist between industry and labor.

3. Let’s build a new post-secondary education and training system.

The traditional higher ed system — in which a small number of people attend relatively expensive universities — works only for the privileged and for the limited group who are able to use it to break cycles of poverty. We must explore options that expand opportunities for more people.

One way is through online education. Online providers, like Coursera, EdX and NovoEd, offer courses from established universities that provide skills and credentials. Through IDEO U, design firm IDEO is providing online instruction in human-centered design. Philanthropy University provides free courses to NGO workers. Students attending the online, tuition-free University of the People, which is accredited by the US Department of Education and the Council for Higher Education Accreditation, can earn associate’s or bachelor’s degrees in computer science, business administration and health studies, as well as an MBA. The fees for these options range from free to pricey, but none come close to the cost of attending the existing private colleges and universities.

Some of the most exciting initiatives highlight the flexibility of online education to respond and pivot to evolving demands. EdX has an open source development platform, which is being actively used by nearly 100 institutions, including Stanford University and McKinsey, to create custom learning environments. Udacity, through what it calls “nanodegree programs,” has a growing number of specialized offerings that prepare workers for specific tech jobs. Now is the time to reset the relationship between industries and educators, and ask them to work cooperatively to keep education relevant as we enter a period of rapid economic change. A new system could result in greater efficiency in labor markets, and it would help to position the education sector — and society — to adapt to new kinds of work and employment.

Of course, these are just three alternatives among a universe of options — including the possibility that UBI lives up to its hype and promise. The experiments in Oakland and Finland will be important in helping policymakers and the public see whether UBI can deliver the economic and behavioral changes its supporters believe it will. But in the meantime, let’s not delay in brainstorming and testing other ways to rebuild opportunity for everyone.

Originally published at ideas.ted.com on January 13, 2017.

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