While in many ways it feels like we live in unprecedented economic times, through another lens we have been here before. Dr. Carlota Perez charts economic cycles around technological breakthroughs, and she provides needed clarity on our current economic moment. In this episode, she discusses where we are in today’s economy, how we could proceed forward in a productive way, and the stakes in getting this moment right.
For so many people, including both hosts of the podcast, the entry point to basic income was concerns about automation and how it could create an economy that requires many fewer employees. In this discussion episode, Owen and Jim delve into the pluses and minuses of automation’s primacy in the basic income discussion, and what a more rounded rationale for basic income looks like.
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Owen: Hello, and welcome to the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh. Something that comes up very, very often in basic income conversations and media coverage is a strong connection between basic income and automation. The idea that basic income is a solution for or at least is very closely, innately tied together with this idea that automation will drastically change our workspace in the relatively near future.
Owen: Yes, and I think this is how we both initially came to the idea of basic income. We wanted to take this episode to discuss the pros and cons of tying these two things together and why it’s happened so much so far.
We imagine most of our listeners are pretty familiar with automation and a lot of the discussion around that. There are a lot of really good resources that you can dig up pretty easily if you are not. We’ll give a quick overview of what we are talking about when we talk about automation and basic income, but spend most of this episode talking about more of the discussion in how these two have been linked.
In terms of what we’re talking about when we say that many jobs could be a threat, there’s, for instance, a study that came out of Oxford that 47% of jobs are at risk of being automated. There are other similar studies that produce results in that catastrophic range.
Jim: Right, and the idea that not only could automation replace a lot of the types of jobs that you more traditionally think about being automated, these more mechanical rote jobs, but as artificial intelligence gets more sophisticated and smarter, there may actually be a lot of mental work that becomes at risk of being replaced as well. Work done by doctors, lawyers, professions that in the past it really didn’t seem like there was any reason to be concerned around.
All this together creates this pretty terrifying specter of what the future might look like. That if most of the work that gets done today through paid jobs can be automated and will be automated, suddenly we are looking at the scenario where most jobs are gone, most people don’t have a path to paid employment, and therefore we need to do something radically different than what we have today, perhaps basic income.
Owen: Right, and a lot of the most prominent, most public advocates for basic income are people who come at it from an automation angle; Elon Musk, Mark Zuckerberg, Richard Branson, and the presidential candidate Andrew Yang.
Jim: Yes, I think you see, if you are just looking at media coverage, so often it is about these very high profile people who have spoken out in favor of basic income. At least with the view that they think we need basic income with this assumption that we’re moving towards that future that looks like that.
Because of that, because there has been so much coverage of it, because you do have these high profile folks who are talking about it or running for president on it, I think very often that just becomes this internalized idea that those have that these two things go together and that they are tied to one another. If you look at the online conversation, this is very, very common. What people post about on Twitter or wherever else, it’s saying, “Automation is coming soon, therefore, basic income.”
Owen: Right, and I find this anecdotally, I get the reverse a lot of the time where I start talking about basic income and someone assumes it’s because of automation. These two things are very intertwined right now, and there are good things and bad things about that. One good thing is it’s bringing a lot of urgency to the conversation. It would be a little strange if there wasn’t anything driving basic income to suddenly try to introduce this very radical kind of out of nowhere policy, but automation makes people think of it kind of naturally.
Jim: For me, the metaphor that I feel like fits really well here is the boiling frog one. You’ll often hear this in the context of climate change, but the premise is essentially that if you take a frog and you put it in a pool of water, it will sit there. If you gradually crank up the heat on that water, the frog just sits there. Because it’s a gradual increase, it’s always just like, “Okay, I’m just chilling here,” and you can keep doing that up until you cook the frog.
In contrast, if you suddenly increase the temperature a lot, that’s a shock and a jolt, and it causes the frog to hop out. With the challenges that we’re seeing in our economy, there’s so much that’s already not working for people that I think many of us in the basic income space feel that regardless of what happens with automation, we should have basic income today.
But because those things have gradually gotten worse and worse over time, there has never been that big push, certainly at least in DC, to pursue a policy of the magnitude of basic income. Automation suddenly creates this image of change so drastic, so incredibly different than what we see right now that it kind of knocks people into this headspace of, “Oh, wait, we do need to rethink so much stuff.” So it has that effect of creating that temperature spike that jolts people into a different headspace here.
Owen: Yes, and I think that is one of the hopes of the automation conversation is that people get the jolt and then you can maybe then take a step back and say, “Well, we can also look at how much economic insecurity there’s right now.” There’s that widely-cited stat of about half of American families can’t afford an unexpected $400 expense. Once you start talking about that and you see the research on cash transfers, then maybe we can bring some of these people along into the wider, “Let’s just do this regardless of what happens with automation discussion.”
One more thing I will add on the pro side of the specter of automation is that I don’t see it as having a partisan lens right now. I think people of all stripes can see this as an issue that’s coming. We’re talking about this as a rhetorical thing, but it is true that automation may– it already is, probably, and certainly could have drastic effects on our economy going forward and that affects Democrats as well as Republicans. I don’t think there’s one side saying, “This is going to happen,” and another side saying, “No, it isn’t.”
Jim: On a related note, I think that the advantage of these two being seen as tied together is if there’s suddenly a big incident of automation causing massive job loss all of a sudden, then if those are tied together, maybe there will be a natural response by elected officials to say, “Oh, okay, maybe we should pass the basic income now.” If that can be teeing up basic income as a response there, then maybe there’s a lot of value in that.
Owen: Yes, and I think the challenge for us right now is to get basic income into the zeitgeist enough that that is the response as opposed to something else I guess.
Jim: Besides the reasons that we should be tying this together, we wanted to talk a bit more about the reasons why tying this together could potentially have some downsides and could be dangerous when thinking about the long-term trajectory of basic income.
One is that if we are explicitly saying that when we have this massive job loss we need basic income, it’s setting basic income up as a response to a future threat rather than the response to challenges today. In that scenario, even though you could say, “Oh, we should do basic income now so we are ready for that point,” generally, that’s not the way a policy-making in this country works.
People pass things when they feel like they are necessary. So it could mean that we run up against some pretty challenging obstacles when thinking about how do we actually move policy to provide people with basic income forward if we’re saying, “We just need to be ready for this,” as opposed to, “We need this right now.”
Owen: Right, and I feel like that can be especially dangerous here because I think automation happens more slowly than people tend to think it does because it’s happening at different speeds in different ways across all different industries. It’s hard to have one moment where it’s like, before, automation wasn’t a threat and now it is, and it’s a headline in the news and everyone is talking about it. I feel like it’s much more at a local level.
I spoke to a candidate for governor in Michigan, who is no longer a candidate, but he was talking about how after the recession when a lot of car manufacturers lost their jobs, a lot of those jobs didn’t come back because of automation. So you have these kind of mini-moments, but I don’t think we have a broad national moment to point to. I think framing it as a future threat, you might not ever know the moment when that threat arrives.
Jim: I think another thing is, if your entire framing is that basic income is a response to automation, you risk occluding the other really, really important and good reasons why we should have basic income. A lot of the things we talked about in the past: the way that basic income would address racial inequities in our current system; the way that basic income could empower women in a way that’s not currently possible; the way that basically income could encourage more people to pursue the paths of lives they wouldn’t have otherwise had an opportunity to.
If the way that you talk about basic income is solely in that automation frame, it would be very dangerous that people just wouldn’t even appreciate those other things. Not only does it mean that you potentially lose those strong arguments, that may then affect the specifics of whatever policy ends up being proposed.
Assuming we do get to a point where people are ready to pass something here, if it’s being designed solely with the idea that, “Oh, automation is taking jobs from people who have them today, let’s figure out something to do about that,” as opposed to, “Let’s make sure that we design this program in a way that is achieving those other benefits that we think could be really transformative about basic income.”
Owen: Yes, along those lines, if you’re only solving for automation, then saying, “Okay, we have all these truck drivers who are making $70,000 a year plus benefits, and they just lost those jobs, but we’re just going to give them a $1,000 a month and not worry about them,” that doesn’t sound like much of a response. So you would probably have a good counter to say, “Well, we should do jobs training or something else instead.” I think only focusing on automation again leaves out all the good it can do, and it does seem like an insufficient response to widespread job loss.
Jim: If you are one of those truck drivers or anyone else that we talk about or think may be in a position where their job is at high risk of automation — admittedly, I think that doing more studies and getting more experience around what the specific response is — but it is very hard to accept some hypothetical idea that really puts your livelihood at risk.
That is something that– it just creates cognitive dissonance for most people when you say, “Oh, sure, you have a good job now, but five years from now, maybe a computer will be doing that, and you don’t have training, and you’re going to be in this terrible spot,” a lot of people won’t even listen to what you have to say after that. So you’re potentially setting up your rationale as one that immediately shuts down a lot of the potential reception that might exist out there for this idea.
Owen: Yes, and I guess another case where climate change is a good analogy and that it’s hard to have people understand a distant threat to themselves. Another way that this idea can make people kind of shut down or even get angry is that it feels like you’re surrendering to some inevitable future where the robots are coming and there’s nothing we can do about them. You hear people saying, “Well, couldn’t we just not build those robots? Couldn’t we design an economy that actually supports people?”
Those are worthy conversations as well, but I think again, it’s just leaving out all the reasons why a basic income would be completely transformative regardless or including the idea that automation could be coming for a lot of jobs. Where I’ve seen this most visibly for me is in the labor space, where people are saying, “You’re just going to let our jobs go away. You’ve already moved on from a world where we have these jobs.” And that gets people angry and makes people defensive.
Jim: I’ve heard a number of basic income advocates, when they’re presented with that argument that, “Oh, we can just choose not to automate,” they’ll say, “You’re saying you’re standing in the way of progress.” If you automate, it means you’re being more efficient. It means that overall you’re doing more with less, which should be a good thing.
They’ll say, “Look at history. Anytime you try to stand in the way of progress, it’s never actually worked out.” This is a bad approach to respond to automation, that they believe is very soon coming. I think that particularly now you’re actually starting to hear some proposals in how we might respond to that in a way that doesn’t actually respond against progress but does ensure that we are setting up workers and empowering people so that when there is potential for automation, it would only be done if it did leave people well off.
I think a great example of this is the recent proposal from Senator Elizabeth Warren where she says that corporations, publicly traded corporations should be required that 40 percent of their board seats are elected by workers of the company. It’s actually giving workers in this company a voice in how the company governance.
In that scenario, you can imagine it would be a lot harder for a company to suddenly say, “Oh, we’ve got this new tech that allows us to replace a million people. We’re going to go do it,” if those million people actually have chosen as some sort of leaders in company governance in a way where they have a strong say in the direction of the company. Maybe they figure out some sort of solution that moves towards that and also helps out the workers, but it’s a lot harder to then imagine this sudden shift where tons and tons of people are left with nothing.
Owen: Yes, and just continuing that example for a second: maybe the solution is, okay, we can’t stop technological progress as much as we’d like, but maybe those workers get an equity stake. I feel like that’s– a lot of what people just want is for the workers who are maybe getting screwed over in the future is to just give them a share of that pie because then it’s more okay if the money is not just getting siphoned up to just a handful of already very rich people who already own these companies.
Jim: The final reason why using automation as the rationale for basic income makes me nervous is that it sets up basic income as a policy that is against something. That this terrible thing that’s happening, therefore basic income, rather than basic income because this opens up this transformative world of possibilities for us.
The thing that comes to mind when I think about this is– let’s imagine a popular movement that could hopefully exist in the very near future, a big popular movement, millions of people involved advocating for basic income. What are the signs you’re going to see at those rallies? Is it going to be “Robots are coming, basic income now”? Or is it going to be “True freedom, racial justice, gender equality, therefore basic income”?
From my experience, I can’t think of a single movement that is really done in that oppositional way. I can think of a protest, but if we’re actually talking about this powerful grassroots movement that’s going to shepherd this policy into existence, it has to be about what basic income is for and not what it’s against.
Owen: I think automation works really well, it’s kind of the cherry on top of, “Here’s all the reasons why this would be wonderful and transformative and exciting for our society and also by the way it would help inoculate us against this potential future threat which is being discussed about a lot.” Just, “The robots are coming, and we need to rally against them,” I feel like that’s a difficult sell.
Jim: Right, maybe it’s a wake-up call, but I think as your raison d’être for basic income, I think there’s the challenges that we just laid out.
Owen: I feel like automation is such a part of this conversation, and we don’t need to shut that down or say that you’re wrong for talking about automation, especially because it is bringing a lot of people into the conversation. It’s just important to be conscious as an advocate for UBI or just someone who likes to talk about it or listen to podcasts about it that it is just one part of a real panoply of reasons to be talking about this.
Jim: Well, that’ll do it for this episode. Thank you to our producer, Erick Davison. If you liked what you hear, please do rate and review the Basic Income Podcast on Apple Podcast or the podcast service of your choice, and please do tell your friends about this. We are always looking for new listeners. We’ll talk to you next time.
Basic income advocates often talk about what a transformative impact universal basic income could have on society — but what issues and challenges will it actually solve? Jim and Owen share their thoughts on whether basic income is the solution to poverty, automation, wealth inequality, and more.
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Owen: Hello, and welcome to the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh. We are here with you today with a discussion episode.
Owen: So, we’re going to be going through a number of different high-level issues and asking ourselves and each other “does basic income solve that issue?”
Jim: I think this is something that we touch on often in conversations on basic income, covering what areas basic income might make a big difference in peoples lives, but Owen and I were talking and really thinking that there hasn’t been a clear discussion on, for specific areas: Is basic income actually the answer to this problem? Is it not the answer? Is it part of the answer? And so, we thought it could be good to just really talk that through in a number of different directions.
Owen: So, let’s jump in. First one. Jim, would you say basic income solves poverty?
Jim: I would say partially. What about you?
Owen: I said yes. Alright, you go ahead. [laughing]
Jim: The reason I would say partially is that I, when talking to people, I typically say, basic income solves absolute poverty. This idea that, I mean there are people out there who are in destitution, who can’t afford their basic needs, and that if they were getting unconditional cash every month, they could. And so, in that respect, yes.
The reason I said partially is because if you’re talking about actually eradicating poverty, I do think there’s more to it than just making sure that people can cover their needs on an ongoing basis. If you look at social work and what it means to have a pathway out of poverty, there are more steps to that. There’s understanding the language of the middle class. A great book that was recommended to me recently is “Bridges out of Poverty,” and it actually talks about some of the barriers that we don’t even realize are there a lot of the time.
And so, I think that I see basic income providing that floor, which is a necessary step to get out of poverty and to keep people from falling into destitution. But I actually think we will need more than that if we want to have everyone fully included in the economy.
Owen: Yeah, I guess I was thinking partly just on a strict definitional level. If you can get above the poverty line, you are technically out of poverty. But, going a little bit further than that, the sorts of effects you see with cash transfer programs are the resolving of the symptoms of poverty. People have better educational outcomes, better healthcare outcomes. So that starts to convince me that the problem is lack of cash and when you provide cash then, maybe not all your problems are solved, but the damage done by poverty itself starts to heal up.
Jim: Yeah, I think that’s a good point, and an important thing to note is, if we’re talking about multi-generational effects, then maybe basic income does solve it. Because if you know the children are growing up with enough money to cover basic needs, maybe that could be enough to break the cycle of intergenerational poverty on its own.
Owen: Yeah. And you do see some positive effects on long-term earnings just with some cash transfers, some cash stipends.
Jim: Alright. So next up on the list is wealth inequality. Owen, what say you?
Owen: I said it takes a little of the edge off, but no.
Jim: I also said no.
Owen: Yeah. What I mean by that is basically it helps deal with the lowest ends of poverty but unless you’re just doing a truly aggressive Robin Hood-style taxation system, the rich are still going to be super rich. The poor are still going to be pretty poor.
Jim: I think something that gets missed sometimes, both among basic advocates thinking that suddenly all that will somehow go away, and I think it’s also a big concern that people who are skeptical of the policy have, is that if the proponents are adopting that more utopian perspective on what it will accomplish, that we may miss what else we need to do in order to deal with the other issues in society.
But, yeah, if you look at the situation we’re in, it is what? Eight people in the world have as much as the bottom half together? Giving everyone basic income in no way, shape, or form is actually going to have mostly equal amounts.
But, I said no, but I do think it’s worth pointing out that the more we can provide people a pathway to inclusion in society, the more opportunities that we can be granted. And so, even if we’re not directly addressing wealth inequality, maybe we can be increasing economic mobility, which means that more people have a chance to accumulate wealth over time.
Owen: Yeah, and if you start to think about, “ok, well, why is wealth inequality bad?” And, I’m not going to jump down that rabbit hole, but yeah, some of that starts to get a little better. And we usually don’t talk about the more utopian dreams of basic income where it’s not just $12,000, but $25,000, $30,000, something like that, $30,000 a year per person, which feels far enough down the future that its not even worth talking about, but that’s maybe where you would start to say “ok, this is starting to solve wealth inequality.” But we’re focused on 12 or even less right now.
Alright, Jim, how about automation?
Jim: I’m going to say “partially.” I honestly debated between “no” and “partially,” because I think, we’ve talked about this before, but if we actually end up in a situation where most jobs have been automated, and there really isn’t enough work for everyone, just giving people enough cash to survive is not, nowhere near a sufficient solution.
That, again, it makes sure that people don’t starve, but work has been so central to giving meaning to peoples’ lives that we actually need to think about what are some other changes to the way we approach our lives. And this doesn’t necessarily have to come from the policy world but, if we’re in that world, there’s a lot of rethinking we’re going to have to do, and basic income, I think, is necessary, but it won’t be sufficient.
Owen: Yeah. I’m in the same place. And even beyond just finding meaning in your life, if your making whatever — $60,000 a year — maybe driving a truck, to use the classic example, and your job gets automated away, and you have trouble finding work, but you’ve got $12,000 a year, you’re not living the same life. And especially, let’s say you’re in your fifties and your job goes away and you’re having a hard time finding a new job, now we’re talking about living on a basic income indefinitely, and the amounts we talk about just aren’t sufficient to solve the problem.
I think it’s something. It’s better than nothing. That’s why I said partial. Right now, you get six months of unemployment and then your kind of on your own. So, it’s better than that, but it’s certainly not everything.
Jim: Next up on the list, we had “problems with the social safety net”.
Owen: So, I said partial, and that’ll require some more explanation, but what were you thinking?
Jim: I said, it depends, but you go first.
Owen: Yeah. This might be similar answers here. So, first of all, what problems are we referring to with the social safety net? There are the issues surrounding bureaucracy where maybe some people who qualify for various means-tested benefits don’t end up receiving them because they don’t know that they qualify or maybe they chose not to fill out the paperwork, or they’re made uncomfortable by the paperwork. And, then the paperwork itself creates a ton of bureaucracy that is not particularly helpful to society beyond creating this filter where some people get benefits and some people don’t.
And, then there’s the issue that whenever your means testing, you’re probably leaving out some people who are needy in the same way but aren’t receiving those benefits. And also, for some, there’s a work disincentive. As you earn more money, the benefits phase out and so there’s an effective tax on your earnings, at least for a while.
So, does basic income solve those? It could, but if you are just eliminating all those other programs and replacing them with a basic income, you’re probably creating a lot more problems and probably hurting a lot of the people who do benefit from those programs. Because for all the issues with things like the Earned Income Tax Credit and anything else you could think of, unemployment insurance, they do keep a lot of people out of poverty. They do a lot of the things that basic income is good for. And those are the people who are most in need.
So, yes, on one level basic income doesn’t have those issues, but it is not targeted, and so it’s maybe creating other issues that those programs address.
Jim: The reason I said depends, and I think, yeah, we share a lot of perspectives on this. I think very much the type of basic income you enact is going to matter a great deal on this front. We’ve talked about this before, but if you actually were pursuing a basic income that got rid of all the programs that we had today and just gave people cash, then no, that definitely does not solve it and perhaps makes it even worse just because some people you may leave far worse off than they are today.
If instead you had a basic income in addition or as a supplement to what we have now, providing that universal floor that really acts as a backbone, and again, it won’t solve absolutely every problem, but that could make a world of difference as far as actually ensuring that people are getting the support they need beyond what exists today.
Owen: I’m totally with you on that. I do think there are programs we might eventually think about cashing out down the road if they’re proven to be pretty much redundant with the basic income. But, I would want to see the evidence for that in reality as opposed to just what we think.
Jim: Let’s not start a discussion on getting rid of the social safety net until we actually have something clearly better.
Owen: Yeah. Right. Ok. So, Jim, does basic income solve healthcare?
Jim: Big fat no for me on this.
Owen: Yeah. Same.
Jim: Yeah, I don’t see too many proposals for it out there, but there are some people who have talked about basic income as a replacement, not only for a lot of the general means-tested programs that we have today, but also for all government assistance on healthcare. And I think that would be pretty disastrous. Why don’t you share your thoughts?
Owen: I’m pretty much in the same spot there. If healthcare was something where it was like your rent or something, where you just needed to pay a little bit on a regular basis, and it was predictable, and then you were good, healthcare was solved. Then ok, that’s kind of what we’re talking about here. But obviously healthcare’s nothing like that. It’s something where maybe you have your annual check-up, but it comes in big, giant spurts when you actually need it, and its unexpected, and you can’t really plan for it beyond having insurance.
Jim: Yeah. My perspective is that we really should be aiming for a single-payer system. We see with Medicare today, that’s actually an incredibly efficient government program. The overhead costs on that are very, very low, far lower than private insurance, and it’s actually providing people with quality healthcare. So, we already know something that works well here. And we see examples in other countries of how effective that can be, so rather than trying to fit a square peg into a round hole with using unconditional cash for this, let’s actually go with what works.
Owen: Right. And part of the reason that it works as well as it does, Medicare-For-All type systems, or Medicare itself, is that you have more bargaining power if you are the government. If your negotiating prescription drug prices say, and you represent millions and millions of patients, that’s excellent bargaining power. Whereas the more segmented it is, the higher those prices go.
The last one we have on the list: “does basic income solve housing affordability?
Jim: So I said, in some places.
Owen: I didn’t write down a simple answer to this. I said, probably more than it gets credit for but, I guess partial would be my one-word answer.
Jim: I think my perspective on this ties back to what we were talking about last week or two weeks ago around the dangers of inflation on basic income. I think if you could enact a basic income and knew that housing costs are the same, then it doesn’t solve it completely, but it makes a big difference.
I think the trick with housing is that you end up with such odd geographical effects. We see this first-hand here in the Bay Area because the housing supply is so much more limited than the demand is for it, and so you end up with these exorbitant rents. And you could imagine, basically it’s distorting the market, and so with a distorted market, it’s hard to know exactly what will happen.
And so maybe we would have some weird effects where prices could go up significantly if people were getting a basic income, but based on the evidence from the study that was run in Mexico that we talked about previously, when you do have a market for goods, it seems like providing people with extra cash doesn’t cause inflation. So, anywhere where you actually had enough supply and demand on both sides, probably that extra cash is going to really make a difference for people.
Owen: Right. I think some people assume if everyone gets $1,000, landlords just like en masse raise the rent $1,000, and they just soak it all up. And, yeah, you could imagine situations where that could happen. But I think, it’s not like there’s a big, I don’t know of a landlord secret society where they can all collude like that.
And so, yeah, if you’ve got a good market, I think you’re ok. In a crazy distorted market like the one we’re in, in the Bay Area, I think the forces that are causing that distortion are a lot bigger, in some cases, than the basic income would be, and so in some markets around here, I don’t think you’d really see it.
I think you’d really have to watch for it in limited-supply, low-income housing, where the people providing those have a sense of how much money their tenants are taking in on a regular basis and would be able to adjust based on that. So, I think you would need kind of some parallel laws around protecting those renters.
Jim: Alright. That was everything that we decided to cover for this episode. One thing that came to mind as we were talking through this is a quote from my colleague Sandhya Anantharaman, the other Co-Director at the Universal Income Project. She had said at a conference recently that “basic income doesn’t solve every problem, but it makes every problem easier to solve.”
I think there’s a lot of truth to that. I think that so much of what we’re struggling with in society, you can trace back at least aspects of it that stem from people being in absolute poverty. And basic income really does make a difference there.
Owen: Yeah, and that’s what I find most heartening about the research that we’ve seen from various basic income studies. It isn’t just, you’re out of abject poverty, but everything else is the same. You do see a lot of improvement in a lot of other fields. And you also see it in our answers which were partial to almost everything. “No” on healthcare. I said “yes” to poverty, but it’s sort of a modulated “yes”. So yeah, having a little more money makes a lot of life a lot easier. But you still have your life. You still have your problems.
Alright, thank you for listening to the Basic Income Podcast! Please subscribe on Apple Podcast or the service of your choice. Also, if you could take the time to leave us a rating or a review that helps other people find the podcast as well.
Thank you to our producer, Erick Davidson, and we’ll see you next week.
Jim and Owen answer listener questions from how to pay for basic income, which country will implement a basic income first and how we will get there. You can send your questions to the Universal Income Project on Facebook or Twitter, or tweet at Owen (@owenpoindexter) or Jim (@dr_pugh).
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Owen: Hello and welcome to the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh.
Owen: A while back we asked you for questions about the basic income, and a number of you responded. In this episode, we are just going to go through a few of those.
Jim: Unfortunately, we’re not going to be able to get to everyone’s question, but we did have a few that we thought would be good ones to start with. Here goes.
Owen: Alright. The first one is from Abigail Irwin, it came in through Facebook, “Here is the one big question I keep getting: how is it going to be funded?”
Jim: I would say for me as well, this is a question that people ask all the time. Since we’re talking about such a big program, people are naturally curious about, “Alright, where does the funding come from here?” One thing that I’ve mentioned before that I think is really important to remember is a lot of the conceptions we have right now about what the government “can or cannot afford” are really not based on reality.
That if you look at our economy and how much it’s grown over recent years, there’s actually so much money out there. Our Gross Domestic Product over the last 15 years has grown by four trillion dollars. Just taking a big picture snapshot, it’s important to know that there is money out there.
Owen: Yes and on top of that, I’ll say that while I think it’s important to talk about how are we going to pay for things, the government is very willing to drop billions of dollars on some programs without having this discussion. It’s only around new big programs where we do say, “Okay, well, where is that money going to come from because we haven’t already baked that in.”
Jim: We do see often around things like military spending, spending tens of billions of dollars ready at the drop of a hat is not uncommon, but as soon as we talk about billions or even hundreds of millions of dollars for social programs, people suddenly get very nervous about how we’re going to actually afford that.
Owen: And getting more into, “okay, how is it going to be funded?” — obviously, there are a number of ways you could do it. If you structure it as a negative income tax, you could just have a tax that runs backwards essentially. At a certain income level, you receive money instead of pay money in. That’s one way to do it where you don’t have to touch anything else.
Jim: Something I would add to that is, with negative income tax, one concern that I know people have is that if you’re actually not giving the same amount to different people, that could complicate the logistics figuring out, “alright, how do we actually assess someone’s income in the moment and decide alright, how big is the check we mail to them?” You can actually accomplish exactly the same thing using the tax code. You can structure it so that you give everyone the same amount of money every month regardless of how much they’re making but then make sure that you’re actually clawing back more of that money earlier on, based on how much they’re making when you’re actually assessing taxes. The same way you do now as far as withholding from paychecks.
Owen: Right, and just to offer a crude version of that, you could impose a flat tax and the revenue from that would just be turned into a dividend that would go equally to everyone. So everyone is paying the same percentage of their income into the basic income fund, but the way it works out is that at a certain point, you are paying and receiving about the same amount, and everyone above that ends up paying more, but they still get the dividend.
Jim: To give some more specific, since I want to actually make sure that we do give an answer to this question, there are actually a lot of different ideas for how we fund this out there. Depending on who you ask, you’re going to get different answers. Some of the most common ones that I hear proposed, one is the idea of — I think, particularly as the starting point — looking at the Carbon Dividend.
We’ve talked about that in the past. There was a proposal in California. There is currently, in fact, a campaign in Washington, DC around taxing carbon and paying out to revenue that comes in as a universal income, as universal dividends to people in the region. That could at the very least provide us with a powerful first step towards basic income by saying, “alright we’re setting up the system that gives everyone equally regular payments of money.”
Owen: I think that Carbon Dividend idea is my favorite in this whole space because it does start to address climate change as well. It takes this idea that we have shared resources, in this case, the air and the environment and that we are all invested in this whether we want to be or not. By taxing the use of the environment essentially which is a shared resource then we can all benefit from it.
Along the same lines, though very different, is the Financial Transactions Tax. That’s another one that gets thrown in periodically. We all benefit from the infrastructure of our financial system, and some businesses and people use that quite a lot to conduct business, trade stocks, whatever. By having just a very small fee on financial transactions, you could also do the same thing and fund the basic income.
Jim: Another one that often gets discussed is the idea that a Land Value Tax, where you’re assessing the value of any given piece of property that either a person or a corporation might own, and then saying, “we’re going to set some low level of taxation so that every month or every year, you are paying a certain amount based on the value of that piece of land.” Not just the land itself, but what’s actually on the land.
One thing that I think is really interesting about the Land Value Tax is it actually starts to get closer to the idea of a wealth tax. Something that is taxing not just how much money people are bringing in, but how much they actually own. Land isn’t a perfect measure of someone’s wealth, but it tends to be pretty close a lot of the time. That could help not only with providing the support that you get from basic income but also to share prosperity and share wealth across the country by really looking at that as the source of the funding.
Owen: Right. I think this is an important concept because while income is easy to track, or easy enough, a lot of the disparity that we see in the world is through wealth, and an actual wealth tax is very hard to administer because unless you have some way to track all forms of wealth, people are going to be able to move it around to not be taxed. But land is always there. You can’t pick it up and move it somewhere else. It does tend to be a good proxy for a holding place for wealth, especially in California, where we are.
Lastly, we can touch on general progressive taxation. We mentioned the income tax before but it doesn’t have to be a flat tax. It could be a progressive tax that increases as you go into higher income levels. There’s also a capital gains tax and perhaps others that you could mention.
Jim: Yes. Touching on the capital gains, right now we have the level of that set considerably lower than income. What that’s effectively doing is saying, sitting on wealth, you and the amount of money you get from that, you’re actually paying less in taxes and someone who’s working for the money.
Owen: You see those incentives pretty clearly in the market.
Jim: Right, exactly. That’s actually encouraging people to hoard rather than to spend. Also, again, if you look at the various campaigns that are going on around different policies, you’ll hear people talking about closing tax loopholes as well, particularly for corporations. There’s a lot of ways that companies are able to avoid what is the supposed tax rate that they might owe, due to how complex the tax code is in many places.
Owen: Hopefully, that gives you a sense of how we might fund the basic income. There are a lot of paths to do it, a lot of different sources you might look to. It should be said there’s no one answer to this. I’ve said this before the first step in creating a basic income is deciding that we want one. Once you have that destination, there are a bunch of paths to get there.
Jim: Right. I think it’s important to remember that oftentimes when we talk about these big bold policies, we know they’re going to cost a lot, but in most cases, we don’t necessarily have to go through all the math right upfront. It’s important to just know that yes, the funds exist out there. Let’s think about what this is going to do for people and then if this is actually something that’s going to help folks, let’s fight to make it happen.
Owen: Okay. Next question comes from Darcy Lengthier — hoping I’m pronouncing your name right, Darcy. “Which country will be next?” I have a couple guesses, and they’re pretty unoriginal.
[laughter]
Jim: Yes, we’ll probably have similar answers here. I would say any country that’s currently doing a pilot for basic income is probably pretty high on the list for ones that have potential to enact one. We talked about this before, but Finland launched their pilots in the last year. Ontario in Canada just launched their pilot. We do have the pilot happening in Oakland through Y Combinator, but it’s a little bit of a different situation since it’s a private entity funding it. I wouldn’t read quite as much into that as these programs that are actually being initiated by national governments and what that signifies as far as intentions.
Owen: I think my first pick in the draft would be Canada because they’re doing a pilot, and it feels like this federal government that seems like it would be ready to try something like this at least in terms of a Carbon Dividend or even like an Alaska style, natural wealth kind of thing.
Jim: That said, I think that there certainly are other countries out there talking seriously about it. Particularly for some of the smaller countries, if the people in power decided alright, this is a priority for us, if it was a country that was in a situation that have a reasonable amount of wealth or a lower cost of living for their population, they could potentially move pretty quickly to enact something.
Owen: I wouldn’t put Switzerland at the top of the list right now, but they have already had the referendum. It’s a small country with a lot of wealth. The math is a little easier there.
Jim: I think the big answer is, we don’t know. I think as far as what country will do pilots next, we haven’t talked about it much, but Barcelona is in the process of getting a pilot going. I do know there’s a lot of others that are in these discussion phases if not quite ready to launch.
Owen: The one last thing I’ll throw in there is, if you were to say the five most likely countries or the field, I’m probably going to take the field. I could see this coming out of somewhere unexpected or somewhere we’re not figured out right now.
Jim: Absolutely. Our third question is, “what kind of timeline are we looking at for America as a whole to implement basic income?” That came from Tim Kelly on Twitter.
Owen: Maybe December, January?
[laughter]
Jim: They’re just about there.
Owen: More seriously, I think one step might be to have this become more mainstream within the Left / Democratic Party in the US. If and when the Democrats take back power, maybe we could see something like a Carbon Dividend. I could see that happening in the 2020s, to give a decade.
Jim: If we can have it in 2020, I would be very happy. That is probably a little sooner than I was–
Owen: It’s a bit aggressive.
Jim: I would say, I generally tell people that if those of us who support the policy approach this right, 15 years seems like a reasonable timeline. That said, I think this is a kind of policy where it’s going to be very, very far off until it’s not. I think that there’s going to be nothing linear about the progression of the basic income movement. It’s going to be those of us who are in the space talking about it, getting more people hearing about it. Really writing the playbook for how this might happen, and then it’s going to be a question of when is that moment.
When is that moment when suddenly people are like, “Oh, we need something really different. We actually need to guarantee fundamental economic security for people. How do we do that?” If at that point, we have really set the stage for basic income, it could happen really, really fast.
Owen: I agree. I used to think of self-driving cars and trucks as the moment when everything was going to flip. I have actually backed off that a little bit just because they’re already on the road. This is already happening, and it hasn’t really catalyzed a discussion in a way that means policy is going to happen very soon, but I think we might see something at some point where one day Amazon lays off thousands or tens of thousands of workers. It’s them, plus Google, plus others, and it creates some amount of desperation where people are looking for a policy fix.
Jim: I will say, I don’t think we haven’t seen any significant amount of layoffs around self-driving vehicles.
Owen: Right. That could still happen.
Jim: It’s something that I know at this point, a lot of people think could be coming relatively soon, but how that will actually proceed? I think we’ll have to see. I will say I think I’ve been struck by how much people’s perception about the fundamental characteristics of work have changed in the last couple of years. That two years back, I felt like most people believed that the way that we do work would stay — I think stay is actually the wrong word because it was already shifting at that point, but could remain similar to how we did that in the 20th century.
Now, I think more and more people recognized that that model for how our labor space operates just is — there isn’t a way to go back. We are in uncharted territories here. We do need to be thinking more outside the box as far as what are the right policies to provide people with security they need.
Owen: I think just to add a little bit onto that. The moments that might catalyze something might just be something where we realize that we are in uncharted territory, the collectively “we.” Because I think we’re already there. We are already into the woods, and we’ve lost our map. But you don’t necessarily know that until some day, you woke up, and you realize you’ve lost the path. Sort of a strange metaphor for us [laughs].
I think it’ll be as much a realization of where we already are than something where we get to a point and, yeah, we are there.
Jim: We’ve meandered a bit from the original question here. So if we had to name a timeline, I would say I’m going to stick with 15 years.
Owen: Okay, I’m going to go Price Is Right style and just take the under on that one.
Jim: [laughs] 14 years?
Owen: Aggressively optimistic there. On the Price Is Right, you say one year and then you get all the years below that, the below years. This is a very dated reference, I’m realizing. I don’t know think that show is even on the air anymore. Haven’t watched TV in a while. Okay, related question, also the final question, “how do we get there?” So, Jim, how do we get there?
Jim: Well, this is asked by StepUpBG on Twitter, and we covered a little bit of this in the last question. I truly believe that the right approach to move towards basic income is to say that right now, we are laying groundwork. We are doing the things that make basic income more familiar, more understood and so that once we get that moment, we can say, “Alright, we got this. We know what this is. We’re ready to go. Let’s make this happen.”
Owen: I think you find, at least in America, that often the first time people hear of this policy — maybe less so, I’m getting this reaction less and less — but the most common first reaction is some amount of shock towards the idea of just giving people money unconditionally. I think people do need to sit with the idea for a little bit, and it needs to penetrate into more circles and become something that people are less afraid of talking about.
Jim: Right, I think part of that is just talking to more people about basic income and what it might do, having it be a more familiar concept that people they know and trust actually think this could be a really good solution and I think part of that is looking at what are the stepping stone policies that, in practice, can actually show people more what this is about. I think what to makes sense to go back to here is looking at the Alaska model and how the fact that everyone there is getting an unconditional payment every year is actually something that makes this whole thing make more sense to people a lot of the time.
Owen: Yes, and along that, I’m very excited about the trials in Ontario that just started and the upcoming one’s run by Y Combinator because those will be real trials, real stories, real people who are benefiting, so then it’ll be that much less abstract and that much closer.
Jim: I think those stories are going to be important and then what I would really like to see is for some city or state in the US to enact some small universal dividend in the same style as the Alaska model because I think that it’s that combination of hearing the stories of people who are getting full basic income and then yourself receiving this smaller additional income. Suddenly the intellectual leap between everyone getting basic income is much, much less than it is today.
Owen: I’m of the mind that $100 a month, even though we usually talk in terms of around 1,000, something like a 100 could be transformative for a lot of people and, if not transformative, would make a big difference. You would feel it.
Jim: If you’re scraping by, 100 a month is a game changer.
Owen: Yes, and speaking from my own experience, I wouldn’t say I’m scraping by, but I’d love $100 a month. [laughs] That wouldn’t be nothing.
So, how do we get there? I think a lot of what we’re already doing, and hopefully more trials, more support, more talking about it, more and more podcast episodes.
Jim: I think this is one where all y’all listeners can actually play a big role here. Again, make sure you are talking to people about this, looking for ways that you can push the idea forward. That’s actually what’s going to help make this happen.
Owen: So thank you to everyone who sent in questions. Please keep those coming, you can send them to myself @owenpoindexter at Twitter or Jim, you’re @dr_pugh there.
Jim: Or just tweet out the Universal Income Project, @UIProj on Twitter. We’ll get them there too.
Owen: Or you can find the Universal Income Project on Facebook as well.
Thank you so much for listening to the Basic Income Podcast. Thank you to our producer, Erick Davidson. Again, please tell your friends, talk about basic income, talk about the podcast. This could be a good conversation starter for them. Subscribe if you have not already on Apple Podcast or the service of your choice. And while you’re there, please do leave us a rating or review. It’ll help more people find the podcast. See you next week.
Owen and Jim discuss Vice President Joe Biden’s recent objections to basic income, and the practical and philosophical points that come up around basic income and employment. They delve into why a basic income could be good for workers and how automation has both driven and skewed the basic income conversation. They also touch on the increasing precarity of today’s jobs and the highly valuable work that goes uncompensated.
We talk a lot about hypotheticals when it comes to the universal basic income, but with Finland, we don’t have to. Finland is instituting a basic income on a trial basis in place of unemployment benefits for certain citizens. Roope Mokka, Cofounder of Demos Helsinki, explains why this move will encourage recipients to find work, and what is next for the basic income in Finland.
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