Technological Inheritance and the Case for a Basic Income
One or another form of unconditional “basic income” has now been advocated by individuals ranging from conservative economists like the late Nobel Prize winner Milton Friedman to Dr. Martin Luther King, Jr. Modern feminists concerned with “care work” have emphasized versions of it, as have Black activists facing an economy that simply does not provide jobs for millions of people.
Leaving aside numerous questions about how best to structure a basic income, the idea of providing people with income as a matter of right — whether or not they do what society considers “work” — runs into age-old concerns about individual responsibility as well as endless arguments about political and economic equity. Until these are confronted, the prospect of significant change in the direction of any form of basic income is clearly highly uncertain.
A good starting point is the simple reality that most of what we all receive as “income” far, far exceeds what anyone can claim as the result of the “work” they actually do in the here and now. Once this fully documented reality is understood, the moral case for a basic income for all becomes very different from conventional understandings. The starting point is recognition that most “income” is, in fact, a gift of the past.
The easiest way to gain perspective on the critical point at issue is to reflect on the realities facing a person who will confront the question in future — and then come back to current moral and policy issues: Per capita output in the United States grew roughly seven-fold over the course of the 20th century (from roughly $6,630 to $49,100 in 2015 dollars). Although distributed incredibly unevenly, it now stands at roughly $56,300 (in 2015) for one person and, by extension, more than $225,000 for every four people (roughly every family of four.)
If the economic gains of the 20th century continue at the same ongoing pace in the 21st century by 2100 these figures will be roughly $365,000 per person and $1.4 million for a family of four (in today’s dollars; much more allowing for inflation). This does not include the degree to which unforeseen large-scale technological breakthroughs may increase these figures.
Here is the central moral point to note carefully: A person born at the end of the current century will have done absolutely nothing to enable or deserve this enormous gain. All of it will come to that person as a gift from the past, mainly from the accumulation of technological and scientific knowledge she receives just by being born.
Now come back to our own time in history: Nor, of course, does almost all of what a person receives today come as a result of her individual contribution. Thus, self-evidently, a person working today produces many times the economic output for a similar number of hours worked than someone working with the technology of the 1800s.The difference between what a person could produce 100 or 200 years ago is primarily due to technological change — the gains of which come to all of us as a free inheritance (most of which is currently captured by upper income groups.)
The gift of the past includes thousands of years of accumulated knowledge and technology — arithmetic, calculus, electricity, chemistry, physics, automobiles, airplanes, engines, computers, the internet, modern medicine, and on and on. In the 1950s M.I.T. economist Robert Solow demonstrated that nearly 90 percent of productivity growth up to that point in the 20th century was due to technical change (including technology, knowledge, education, and various related factors) rather than as a result of current labor and capital. He later won a Nobel Prize in Economics for the resulting contributions to the theory of economic growth.
“A college-educated engineer working today and one working 100 years ago have the same human capital…,” New York University economist Paul Romer pointed out in 1990. “The engineer working today is more productive because he or she can take advantage of all the additional knowledge accumulated as design problems were solved during the last 100 years.”
Warren Buffet, the third richest person in the world with an estimated net worth of $60.8 billion once observed: “I personally think that society is responsible for a very significant percentage of what I’ve earned. If you stick me down in the middle of Bangladesh or Peru or someplace, you’ll find out how much this talent is going to produce in the wrong kind of soil.”
Leaving aside differences between the various forms of basic income now being explored, it may reasonably be argued that at least a modest portion of what comes from the past — from this “huge overhang of technological inheritance” as the late Stanford University economic Historian Nathan Rosenberg termed it — should be due to each of us simply because we are members of the ongoing human community. And clearly, if the overwhelming source of modern wealth is a collective and common inheritance of knowledge the incredibly inequitable distribution of that wealth in modern society is even more abhorrent and illogical.
In his final book, Where Do We Go from Here: Chaos or Community? Martin Luther King, Jr., wrote: “I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.” A basic income of one kind or another has, in fact, enjoyed support from across the political spectrum. In 1968 more than 1,000 economists from 125 American universities signed a statement calling for “a national system of income guarantees and supplements.” Not only Milton Friedman but the eminent free-market conservative theorist Friedrich Hayek endorsed the idea, as did such leading liberal economists as John Kenneth Galbraith and Paul Samuelson. In 1973 Hayek went so far as to urge: “There is no reason why in a free society government should not assure to all, protection against severe deprivation in the form of an assured minimum income…”
The conventional fear that instituting a basic income will lead to a significant drop in work and productivity has also been challenged by modern research. Between 1974 and 1979 the Canadian government tested a basic income plan in the small town of Dauphin, Manitoba. A subsequent study found that during the trial period hospitalizations dropped 8.5 percent compared to a control group, high school completion rates increased (especially for boys in low income families), women spent more time with new born babies, and, importantly for people worried about the effect a basic income would have on work and productivity, there was minimal impact on the number of hours people worked.
While it may nonetheless be argued that everyone should contribute something to the community from which she takes something, the question of a income free of means testing or a work requirement also appears in a different light when considered in historical and especially technological perspective. If we begin with Solow’s calculations for the first half of the 20th century, up to 90 percent or so of that basic income could be considered a gift from the past. If we take the founding of the country as starting point, or if we begin the technological clock much earlier — i.e. consider all the way back to the invention of arithmetic, writing etc., without which, obviously, very little subsequent technology could have been developed– this percentage would clearly be even higher.
So, for instance, if a basic income were set at $25,000 — and if we subtract that which comes as a gift of the past — no more than, say, $5,000 (using a very conservative 80 percent threshold) has to do with redistributing the proceeds from actual “work” in the here and now. A reasonable case could be made to affirm some moral obligation to contribute something back to society in exchange for the gift from the past. On the other hand, a generous society might just as well say that as a matter of principle no one should go hungry or live a life of fear and insecurity, no matter what. If so, a modest part of the gift of the past would simply be allocated in support of a basic income as a simple matter of community.
Such generosity is likely, human nature being what it is, to come back to the community somehow and in some way, and penny pinching requirements are likely to reduce rather than increase the kind of culture a good society would hope to nurture. In this context, a basic income could also be seen as a dividend for the unpaid care work — the bulk of which falls on women and the poor — that is currently not valued in our economic system.
The development of one or another form of basic income is no substitute for the need for a far greater and more fundamental transformation of the current radically inequitable and ecologically unsustainable system. On the other hand, and, quite apart from whether we should force the very poor — and especially those caring for children and the elderly — to leave such responsibilities in order to work elsewhere (if they can find jobs…), the accumulation of inherited technological and other knowledge represent an extraordinary gift to us all — one that, if acknowledged and embraced, has the potential to help give meaning and shape to a new and more equitable, more caring, more generous, and more community-focused society in general.
Gar Alperovitz, author (with Lew Daly) of Unjust Deserts: How the Rich Have Taken Our Common Inheritance, is Co-Chair with James Gustave Speth of The Next System Project.