A week ago, former Italian Prime Minister Matteo Renzi took a research trip to Silicon Valley where he met, among others, Elon Musk, Tim Cook and Airbnb CEO Brian Chesky. It was a trip meant to gather ideas for upcoming political campaigns. But even though one could generally predict the type of takeaways that a politician comes away with by meeting these tech giants, instead it was a somewhat unexpected theme that Mr. Renzi focused on upon his return to Italy: the Universal Basic Income–UBI.
Should this come as a surprise? Kind of, but not entirely. In fact, only a couple of weeks ago a New Yorker piece, Doomsday Prep For The Super-Rich, focused on a topic closely related to the increased buzz surrounding UBI: there is an unvoiced but mounting concern, (even fear) among tech billionaires and east-coast elites about the inevitable ire of Main Street once it becomes clear that Silicon Valley’s amazing innovations—and the resultant beyond-the-level-of-avarice riches—will irreversibly kill jobs and turbocharge an already intolerable level of income inequality.
Some of the weird, sci-fi responses to this concern are featured prominently in the article (“I keep a helicopter gassed up all the time, and I have an underground bunker with an air-filtration system”, says one, while “a forty-year-old former Facebook product manager living in San Francisco, bought five wooded acres on an island in the Pacific Northwest and brought in generators, solar panels, and thousands of rounds of ammunition.”). But other members of the financial elites, instead of prepping to escape to a Pacific island or to hide in a bunker, devote their attention to systemic fixes for this problem: “If we had a more equal distribution of income, and much more money and energy going into public school systems, parks and recreation, the arts, and health care, it could take an awful lot of sting out of society. We’ve largely dismantled those things”, says a former hedge-fund manager, Robert A. Johnson, from his office on Manhattan’s Park Avenue.
So that’s the root of the problem: inequality. If inequality is recognized as a problem—not, as some theorists would argue, as a prerequisite of growth—it’s hardly surprising that Matteo Renzi heard tech entrepreneurs such as Elon Musk talk about UBI as an increasingly realistic policy hypothesis.
Universal Basic Income can be configured in many different ways. But the broad concept is that every citizen should be granted a basic living income, no matter his working circumstances. The concept is not new, but we probably can’t point to another time with as rich and flourishing a conversation on the topic as the present. Tests, proposals and actual programs based on UBI are surfacing on almost a daily basis.
For example, last January Finland embarked on a 2-year test program that will transfer €560 per month, to a group of 2000 randomly selected people. In Oakland, California, venture capitalist, Sam Altman, CEO of YCombinator is fine-tuning a pilot-program that will provide between $1000 to $2000 to around 100 Oakland residents for a year and then compare their economic behavior to that of another cohort who won’t receive anything. The test results will lay the groundwork for a follow-up, longer-term study. “We want to run a large, long-term study to answer a few key questions: how people’s happiness, well-being, and financial health are affected by basic income, as well as how people might spend their time”, wrote Sam Altman in a blog post.
The San Francisco Bay-Area is emerging as the incubator of basic-income talk and experiments. Elon Musk made news for his ideological support of the concept and former E-Bay founder Pierre Omidyar granted almost half-million dollars to fund the largest basic-income test to date through GiveDirectly, a New York-based charity that has already raised $24 Million (their goal is $30Million) to finance an experiment involving 325 villages and about 26,000 people of Western Kenya. Some of these people will be financially supported and studied over the course of 12 years.
In Europe, French presidential candidate Benoît Hamon’s socialist platform includes a gradual plan that would result in a €750 monthly universal basic income by 2022. Italy’s political party 5Star Movement also has a somewhat comparable but way more limited and less expensive proposal in their program.
But it’s not only progressives supporting the idea. Libertarians in the US are especially partial to the concept of basic income as a way of simplifying the welfare system and getting rid of entitlements (like Social Security). Similarly, in the past it was libertarian economist Milton Friedman’s proposal of a negative income tax that prompted Richard Nixon to consider it in his program (although it was never actually adopted). Recently, even Marco Rubio’s US presidential bid mentioned a proposal vaguely resembling a basic income idea.
To be honest, though, the differences in goals and means between progressives and libertarians/conservatives are immediately clear. While libertarians and conservatives see UBI as a way to simplify bureaucracy, reduce the intrusion of government and possibly decrease overall government spending (or at least be budget-neutral), progressives are instead motivated by the systemic consequences of what they see to be the inevitable process of technology replacing human jobs. In this context, if robots are replacing humans income will transfer massively from providers of labor to owners of capital and, therefore, a new redistribution system will be necessary. While most commentators have suggested that Universal Basic Income would be paid by taxes on the 1%, another approach was recently surfaced by Bill Gates, who proposed taxing robots who are stealing human jobs, just one of the several ideas about reforming the tax system in a more progressive way.
Yet former Italian Prime Minister Matteo Renzi is still not embracing UBI. In his first statements after the US trip he declared: “We don’t need a citizenry income. We need citizenry jobs” (I am translating from Italian). Jobs, in his view, have always come back in different forms after major technological revolutions (which is possible, although techies mostly don’t think so). He also thinks that jobs are uniquely necessary for self-esteem, to preserve the dignity of the individual. And how can we disagree with him?
Critics of Universal Basic Income have similar thoughts, warning that these programs could transform individuals into idle loafers who, once their basic living expenses were covered, would rather spend their time watching television than looking for jobs and being creative. This is a serious concern, obviously and it is the rationale for conducting tests such as the one noted above that GiveDirectly is leading in Kenya. Through these tests, scholars and scientists are right now collecting data on human behavior that will inform better educated decisions for future policies.
The problem is that if this technological revolution that we are currently experiencing—the Artificial Intelligence revolution—happens to confirm itself as different from the previous ones and actually lead to a irreversible net-loss of jobs, we will all have to be ready to setup a comparably revolutionary safety-net system to protect the masses left behind. It is not that artificial intelligence will bring down the gross domestic product (it might even increase it). It’s just that the income generated by production will increasingly only benefit the 1%.
So, again, it’s just a problem of redistribution of that income. Tomorrow’s democracies will be facing the dilemma of finding new ways of taxing the wealthy and at the same time spending that increased revenue in a productive way, by wisely financing and supporting useful services (education, health care), while creating new jobs in the process.
Governments might also be recognizing that the time has finally come for reducing the 8-hour working day, freeing up time that individuals could now spend on re-educating themselves (education services), taking better care of themselves (health care services) and being creative (startups, entertainment services). The State would end up being an even bigger employer and entrepreneurial accelerator than it is today. And again and again, this would require a reform of the tax system in more progressive terms.
There is no other way around it, it seems to me.