There's a simple way to end poverty: the government just gives everyone enough money, so nobody is poor. No ifs, buts, conditions, or tests. Everyone gets the minimum they need to survive, even if they already have plenty.
This, in essence, is "universal minimum income" or "guaranteed basic income"—where, instead of multiple income assistance programs, we have just one: a single payment to all citizens, regardless of background, gender, or race. It's a policy idea that sounds crazy at first, but actually begins to make sense when you consider some recent trends.
The first is that work isn't what it used to be. Many people now struggle through a 50-hour week and still don't have enough to live on. There are many reasons for this—including the heartlessness of employers and the weakness of unions—but it's a fact. Work no longer pays. The wages of most American workers have stagnated or declined since the 1970s. About 25% of workers (including 40% of those in restaurants and food service) now need public assistance to top up what they earn.
The important thing is to create a floor on which people can start building some security.The second: it's likely to get worse. Robots already do many menial tasks. In the future, they'll do more sophisticated jobs as well. A study last year from Carl Frey and Michael Osborne at Oxford University found that 47% of jobs are at risk of computerization over the next two decades. That includes positions in transport and logistics, office and administration, sales and construction, and even law, financial services and medicine. Of course, it's possible that people who lose their jobs will find others. But it's also feasible we're approaching an era when there will simply be less to do.
The third is that traditional welfare is both not what it used to be and not very efficient. The value of welfare for families with children is now well below what it was in the 1990s, for example. The move towards means-testing, workfare—which was signed into law by Bill Clinton in 1996—and other forms of conditionality have killed the universal benefit. And not just in the U.S. It's now rare anywhere in the world that people get a check without having to do something in return. Whatever the rights and wrongs of this, that makes the income assistance system more complicated and expensive to manage. Up to up to 10% of the income assistance budget now goes to administrating its distribution.
For these reasons and others, the idea of a basic income for everyone is becoming increasingly popular. There has been a flurry of reports and papers about it recently, and, unusually, the idea has advocates across the political spectrum.
The libertarian right likes basic income because it hates bureaucracy and thinks people should be responsible for themselves. Rather than giving out food stamps and health care (which are in-kind services), it thinks people should get cash, because cash is fungible and you do what you like with it.
Even a modest amount had incredible effects on people's savings, economic status, health—so people felt in control of their lives.The left likes basic income because it thinks society is unequal and basic income is redistributive. It evens up the playing field for people who haven't had good opportunities in life by establishing a floor under the poorest. The "precariat" goes from being perpetually insecure to knowing it has something to live on. That, in turn, should raise well-being and produce more productive citizens.
The technology elite, like Netscape's Marc Andreessen, also likes the idea. "As a VC, I like the fact that a lot of the political establishment is ignoring or dismissing this idea," Albert Wenger, of Union Square Ventures, told a TED audience recently, "because what we see in startups is that the most powerful innovative ideas are ones truly dismissed by the incumbents." A minimum income would allow us to "embrace automation rather than be afraid of it" and let more of us participate in the era of "digital abundance," he says.
The exact details of basic income still need to be worked out, but it might work something like this: Instead of welfare payments, subsidies for health care, and tax credits for the working poor, we would take that money and use it to cover a single payment that would give someone the chance to live reasonably. Switzerland is planning to hold a referendum on a basic income this year, though no date is set. The proposed amount is $2,800 per month.
As a VC, I like the fact that a lot of the political establishment is ignoring or dismissing this idea.But would it actually work? The evidence from actual experiments is limited, though it's more positive than not. A pilot in the 1970s in Manitoba, Canada, showed that a "Mincome" not only ended poverty but also reduced hospital visits and raised high-school completion rates. There seemed to be a community-affirming effect, which showed itself in people making use of free public services more responsibly.
Meanwhile, there were eight "negative income tax" trials in the U.S. in the '70s, where people received payments and the government clawed back most of it in taxes based on your other income. The results for those trials was more mixed. They reduced poverty, but people also worked slightly less than normal. To some, this is the major drawback of basic income: it could make people lazier than they would otherwise be. That would certainly be a problem, though it's questionable whether, in the future, there will be as much employment anyway. The age of robots and artificial intelligence seems likely to hollow out many jobs, perhaps changing how we view notions of laziness and productivity altogether.
Experiments outside the U.S. have been more encouraging. One in Namibia cut poverty from 76% to 37%, increased non-subsidized incomes, raised education and health standards, and cut crime levels. Another involving 6,000 people in India paid people $7 month—about a third of subsistence levels. It, too, proved successful.
[My concern is that a programme that works in very poor countries like Namibia nd India, may not work in more affluent or more developed countries.]
"The important thing is to create a floor on which people can start building some security. If the economic situation allows, you can gradually increase the income to where it meets subsistence," says Guy Standing, a professor of development studies at the School of Oriental and African Studies, in London, who was involved with the pilot. "Even that modest amount had incredible effects on people's savings, economic status, health, in children going to school, in the acquisition of items like school shoes, so people felt in control of their lives. The amount of work people were doing increased as well."
Given the gridlock in Congress, it's unlikely we'll see basic income here for a while. Though the idea has supporters in both left and right-leaning think-tanks, it's doubtful actual politicians could agree to redesign much of the federal government if they can't agree on much else. But the idea could take off in poorer countries that have more of a blank slate and suffer from less polarization. Perhaps we'll re-import the concept one day once the developing world has perfected it?