Automation and its Role in the Basic Income Movement
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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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Episode Transcript
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.
The Alaska Permanent Fund, feat. Sen. Bill Wielechowski
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It’s easy to forget that one U.S. state administers a universal cash dividend and has for over thirty years. Alaska came into a windfall from leasing its oil lands in the late seventies and early eighties, and made the bold decision to invest the revenue in a sovereign wealth fund, which provides cash dividends to every Alaskan on an annual basis. Alaska State Sen. Bill Wielechowski joins the podcast to discuss the past, present and future of the Alaska Permanent Fund, and if it could be a model for the entire country.
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Episode Transcript
Owen: Hello, and welcome to the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh. We have many, many times on this podcast brought up the Alaska Permanent Fund as really the only existing example of government-run universal income that exists today, certainly in the US and it seems to a large degree around the world, where people there, everyone in the state is getting this check every year that came from the oil money there.
But we haven’t ever really dived in deeply on what are all the dynamics that actually come into play with that? How does that work, and how did it come to be?
Owen: To delve into that, I got to speak with Alaska State Senator Bill Wielechowski, who is a big proponent of the fund and gave us an on-the-ground book on what’s going on in Alaska.
Jim: Here’s Owen’s interview with Senator Bill Wielechowski.
Owen: Senator Wielechowski, thank you for joining us on the podcast.
Senator Wielechowski: Thank you for having me.
Owen: Many of our listeners are familiar with the Alaska Permanent Fund, but just to ground us, would you describe the fund and how it works?
Senator Wielechowski: Yes, the Alaska Permanent Fund was set up in 1982. What had happened was, several years before that, we had discovered oil in Alaska in Prudhoe Bay. The state of Alaska got $900 million for the royalties from leasing that out. This was at a time when our annual state budget was around $125 million. They had spent all that $900 million within about six years.
The people of Alaska were frustrated, and they wanted to be able to put some away, and they wanted to be able to make sure that some of it went to everyday ordinary Alaskans because a lot of that money went to big special interests. It went to people who were politically connected. They created the Alaska Permanent Fund, and they put in 25% of all the royalty money that we get for our oil and gas. We have a tremendous amount of oil and gas in Alaska.
This is something that’s unique about Alaska compared to every other state in the country. We’re the only state in the country where the state actually owns subsurface rights. We actually own the oil and gas as opposed to a private landowner in say Texas, North Dakota, or California where if you happen to own a land, you’re a farmer, rancher, and you shoot and hit the ground and oil shoots up, you actually, the private landowner, own that oil. In Alaska, that belongs to the state, and it belongs collectively to everyone.
What better way to share that resource wealth than to pay it out in a dividend to every single Alaskan? That’s exactly what we do. Every man, woman, and child who is a resident of the state of Alaska — you have to be a resident for one full calendar year — you’re eligible for a Permanent Fund Dividend. It’s been as high as about $3,200 several years ago. This year, it’s projected to be about $1,600 per person. For a family of four, it’s a significant amount of income.
It’s done some really tremendous things in Alaska. We have the lowest income inequality in the United States, in large part because of the Permanent Fund Dividend program. It’s something that comes out in October once a year, and it just provides a huge, huge economic boost to our state. It provides a huge boost to people. Kids are going back to school. People use it for school supplies, for clothes, for food. Certainly, people go out and use it for big screen TVs and trips to Hawaii, but the studies and research shows the vast majority of it just goes to ordinary bills. Paying your bills and putting money towards college and education, food and fuel, which is very expensive in Alaska.
Owen: Yes, and that pretty much answers my next question, which was just what it means to Alaskans to have this money coming in every year. Because it’s not an income replacement by any means, but $1,000 to $3,000, it’s pretty significant.
Senator Wielechowski: It is significant. When you think about it, a family of four in Alaska makes around, an average family makes around $50,000 per year. If you’re getting $1,600 apiece, you’re looking at a pretty significant amount of money. That’s over $6,000. That’s like 12% of your annual earnings for the average family. Now, I represent a little bit lower income district. Probably the average wage in my district and in some of the nearby districts is maybe around $25,000 or $30,000.
For a family of four, and some of those families have much larger families, it’s a significant portion of their income. Obviously, it impacts people on the lower end of the income scale much more than people on the higher end of the income scale. To make a million dollars, you get another 6,000 bucks, it’s kind of peanuts. If you’re making $25,000 and you’ve got eight people in your family, which is not unusual for some of our families, including extended families, it’s a huge, huge income boost.
It really has helped elevate people, uplift people. We’ve heard stories about people, they save up, they wait till the Permanent Fund Dividend check comes around, and they’ll buy a car so that they can go out and get a job, and get work.
There’s district that I used to represent, 50% of the people don’t have cars. We don’t have the greatest public transportation system here in Alaska. It provides a huge amount of economic freedom for people. Some people save it up and put it in their kids’ college education fund. We’ve got programs that are set up for a local university here. You talk to many, many Alaskans, and they’ll tell you they paid for their college through their Permanent Fund Dividend.
A lot of people, it’s food and fuel. If you go out, particularly in rural Alaska, there are no roads to get there. It takes a plane from Anchorage, it can cost $700 to $1,000 round trip just to get to some of these villages. There is very little economic activity, if any. You have some villages where there’s 50, 60 people. There are no stores, there’s just no economy at all. A gallon of milk could cost you $11. A gallon of gasoline can cost you $7, $8, $10. Extremely expensive. It’s a matter of survival for a lot of people in rural Alaska to get the dividend check.
Owen: That’s fascinating. I have so many questions just about what those villages are like. I’ll try to stay focused here. You were getting into this, but it sounds like you’ve observed some ripple effects from the cash infusion. It’s not just a little extra money, it could mean maybe someone who’s able to then start earning more money because they’re able to, say, invest in a vehicle or something else or they’re able to go to school. It’s maybe the first domino of many in terms of changing people’s lives.
Senator Wielechowski: No doubt, it has a tremendous domino effect. There was a big debate when they started the program as to whether or not kids could get it. Ultimately, they decided that, well, parents could apply for their kids or guardians would apply for the children. Children do get it. Some parents will save up and use that for college. Other parents, they just can’t afford to do that. They’ll use that to go out and start small businesses.
I’ve heard stories about people who, they’ll pull up their entire family’s Permanent Fund Dividend check, and they’ll start a small business. They’ll start maybe a food truck, or they’ll go out and get a car and be able to have somebody go to work and earn money for the family. There are definitely domino effects that occur because of this. In rural Alaska, we have many people that live a subsistence lifestyle. There are no stores, there are no grocery stores, you can’t walk down the street or even drive your car and go to a grocery store.
A lot of people live a subsistence lifestyle. For them, it’s really important that they have maybe a snow machine which will enable them to get out and pick berries, or go hunting, or go fishing. Of course, you need gas to go and do that, to use your snow machine or your boat, for example. It really is just a matter of survival, because the prices are so high up there. You just can’t really comprehend the cost and how it is in some of these communities, some of these villages.
Owen: Just a logistical question: when children get the fund, does that go to their parents or does it– like a separate bank account or something?
Senator Wielechowski: If you’re under 18 in Alaska, then your parents go ahead and file for you. The parents ultimately decide where that money goes. This was a big, big debate when you go back and look at the historical minutes of creating the Permanent Fund. Some people thought kids shouldn’t get it and that it should just go to people over 18. Ultimately the decision was made. You know what? If you’re an Alaskan resident, if you were just born– in fact, we have a special provision, you have to live a full calendar year in the state of Alaska. If you are a child and you’re born on December 31, it says, then you’re treated as if you’ve lived in in the state for full year.
Part of that was just the recognition that kids are expensive and parents should be able to have access to that money. Like I said, some parents will use it for education savings. Others will use it for just basic food supplies, clothing, shelter, rent, to fuel, things like that.
Owen: The Permanent Fund is, as far as I know, the only program in the United States where the only requirement is to be a resident of the state. There’s no income requirement, there’s no disability or anything like that. Has there ever been a pushback from people saying this shouldn’t go to millionaires or some kind of requirement?
Senator Wielechowski: We have this debate every now and then. There definitely are some people that believe that, but it becomes fundamentally how do you look at what the Permanent Fund in Alaska is. I think if you were to ask most Alaskans, you may get a little bit different explanation or belief on what the purpose of it is. I think from my perspective, and I think the way many Alaskans will look at it, is it’s our ownership share.
We have these tremendous natural resources here in Alaska. The Permanent Fund is comprised of the royalties from mining from oil, from gas. You have these tremendous resources. It’s looked at like an ownership share. If you have a stock in AT&T, or Apple, or Google, for example, and you get a dividend, it doesn’t matter if you’re a millionaire, if you don’t have any money at all. It’s your ownership share.
I think that’s the way that most Alaskans look at it, is it’s my ownership share. I’m an Alaskan and I, through the Alaska constitution, own part of the resources. They belong to the to the state collectively, and I’m a resident of the state. It’s how we share in all our resources.
When you step back, and you say we’re going to start excluding millionaires, rich people, in which we don’t have a huge number in Alaska, then it changes the way the Permanent Fund is viewed in the state. It changes it more of from an ownership share to maybe what some people would perceive as an entitlement. I think in Alaska, we prefer to look at it, and I think it’s the better way to look at it certainly for us, as an ownership share.
Owen: It really does change the mentality around it when it’s not some people get it and some people don’t. Speaking of the politics around the Permanent Fund, just in the last year, the representatives in Alaska took some money out of the fund to pay for government. Can you just update us on the state of the fund? Is it under threat and just what’s going on with that right now?
Senator Wielechowski: The Permanent Fund is under threat. In fact, it’s been under threat since the very day that it passed back in 1982. There was a governor that ran– sort of the godfather of the Permanent Fund is our former Governor Jay Hammond, it was his vision. He termed out in 1982 and a new governor was elected, a guy named Bill Sheffield. One of his top priorities was actually to get rid of the Permanent Fund. He didn’t like the idea of paying out a dividend.
What we’ve seen over the years ever since we’ve had it is rich and powerful special interests have been chomping at the bit to get into the Permanent Fund. It’s this huge pool of money. Right now, every Alaskan gets, this year it’ll be $1,600 dollars every man, woman, and child. That doesn’t matter if you’re politically connected. It doesn’t matter who your mother or father is or your access to maybe some powerful political figure. If you were to change that and give all that money to government and allow the politicians to divvy it up, then who gets it?
Well, people more likely to get it are those who are very well politically connected. Those who understand how to use the political process to their advantage. Those who are big campaign contributors. They often somehow tend to benefit from these things. What happens is someone who’s rich and powerful, they’re able to come in and get maybe 1000 times what they would ordinarily get or more, a million times. Look at what government dolls out to special interest in terms of tax breaks and tax credits and just flat out giving money away. The rich and powerful who know how to use the political process get more money that way.
This has been a constant struggle in Alaska ever since the very day that the Permanent Fund Dividend was created. The rich and powerful, big special interests, have always wanted to get rid of it because they want to get more for themselves. It’s been a constant fight because the rest of the people are not as organized. They tend not to be as organized and as politically active. There’s been that constant fight.
In 1999, we were in a similar situation. We very dependent on the price of oil. The price of oil was down in ’99. There was talk about, “Hey, we’re going to have to start using the Permanent Fund to pay for government,” and they decided to put it out to a vote of the people. The oil companies spend millions of dollars and the big special interests Chamber of Commerce came in and spent huge amounts of money trying to convince people that we really need to start using the Permanent Fund for government.
The supporters literally spent millions of dollars. The opponent’s was just this ragtag group of people. They spent about $5,000. The opposition got 83% of the vote. 83% of Alaskans said no, don’t touch the Permanent Fund. Don’t use it for government.
Now we have a governor who’s just been hell-bent on getting into the Permanent Fund and cutting the dividends, slashing dividends. For the first time in history, he unilaterally cut the dividend. He vetoed the dividend. I sued him. I went to the Supreme Court, unfortunately, Supreme Court found in his favor. Then since then, so in 2016, 2017, and now 2018, the dividend has been cut. It’s been at the push of large multinational corporations, very wealthy special interests who want to get into the Permanent Fund and want to use that for government. They want to be able to have access to that money.
That dividend this year is supposed to be about 2,700, instead it’s going to be about 1,600. It’s a big issue politically. It’s going to be a big issue in the upcoming elections, and we’ll see what happens with that.
Owen: It is a live issue that gets a lot of play in your elections? You talk about it, I’m sure, but has it come up in governor’s race as well?
Senator Wielechowski: Absolutely. This year will be the first year where it’s going to be just a huge issue. It is probably one of the focal issues in this upcoming election cycle, certainly for governor, because you have a governor who made it really, his top priority was to cut the dividend. There have been Facebook pages that have started up and groups that have started up. The one thing about social media is it’s allowed everyday ordinary Alaskans to mobilize.
We had this one Facebook group that started up, it’s got about 18,000 or 19,000 members, which is a lot for Alaska. They’re opposing the cutting of the Permanent Fund Dividend check. There are small groups that start up, but it’s not like you’re a big corporation and you can assign a few people make $100,000 to go out and have an astroturf social media program. This is a small group of people.
If you go and you talk to the people on the street, if you go door to door, if you go to the local grocery store, go talk to people at town hall meetings, they’re very interested in this issue. This is a huge issue to them. The majority of Alaskans don’t support what’s happening. We’ll see how it plays out in the upcoming election.
Owen: Is this something that those of us in the other 49 states can help out with in any way or is it more your fight?
Senator Wielechowski: Well, we’re always looking for help. Funding-wise, we have some strict laws on how much money candidates can get from outside of the state, which I think is a good thing. There’s probably ways that people can help, and we’ve worked with some organizations outside that are interested in basic income and look at the Permanent Fund as a type of basic income. They’ve been helpful. They’ve come to Alaska, met with them, have had good discussions with them, and they’ve offered some help.
We’re always looking for help. We’re a small state. It’s just special interests here have an unbelievable amount of power. We have yet to truly organize the people to be able to stand up to protect the dividend. We’re fighting now.
Owen: The last thing I want to ask you is about Alaska as a model for other states and maybe the country as a whole. Even Hillary Clinton in her book after the election wrote that she was considering a program that she was actually calling Alaska for America where we use the public resources, create a fund and distributed dividend. Do you think that basic model would work anywhere?
Senator Wielechowski: I do. I do. Absolutely. When you think about it, in the United States, in Alaska, why would it be any different? The oil and gas, it belongs to all the people. If you’ve got oil and gas in the ground, there are certainly federal lands where there’s a tremendous amount of oil and gas and mining resources and timber resources — that belongs to all the people. It doesn’t just belong to a select small group of special interests, it belongs to all the people. Why shouldn’t you be able to take a portion of that and give it back to the people?
I think it would have a tremendously positive impact on the lives of potentially every American. Scale-wise, you have to work out how the numbers work, but this country is just unbelievably blessed with incredible natural resources, and they belong to all the people. I think we can probably work out a way to figure out how to share that with every American. Absolutely.
Owen: Well, is there anything else you’d like to add?
Senator Wielechowski: I have read and I believe the Alaska Permanent Fund Dividend program is one of the most successful political programs in the history of the United States, if not the world. You look at the polling, and I’ve seen what it does to the lives of tens of thousands of Alaskans. There’s just tons of research on it lifting people out of poverty and providing education and food and fuel and just basic things that you need in life to move on and providing a tremendous economic activity. It is something that I think has been tremendously successful. I don’t think anyone would disagree with that.
I think we need to figure out a way that we can take this, use this as a model and have it all around the country. Have it in the United States. I know it’s starting to pick up some steam, and we’ve seen other attempts and in the rest of the world. There’s some communities, now they’re talking about doing it in the United States. This is definitely an issue that’s worth moving forward on and worth fighting for. It’s been tremendously successful here. I don’t see why it could be tremendously successful throughout the country.
Jim: That was Owen speaking with Senator Bill Wielechowski of Alaska about the Alaska Permanent Fund.
Owen: I just found it was striking how much the dividend is incorporated into people’s lives. It’s just, say, $2,000 one time a year, but for some people in some families, it seems to be really deeply incorporated into their incomes and how they plan out the whole year.
Jim: I think that’s not necessarily unique to a universal income program. I think, oftentimes, any sort of social support program, at least one that’s visible to people, once it’s in place, it starts to feel natural, and it’s just something that’s there. I think given the conversation that often happens around universal income, and this idea that once we have this, “Oh my gosh, what’s going to happen? Will people stop working? Will they be buying all these terrible things?” These nightmare scenarios that people throw out there, even though they’re not based on evidence.
Actually seeing this immediate example of, “Oh, once you have this, it’s just there and life gets easier for people.” You have less inequality but it doesn’t actually look completely different or foreign in an ongoing way.
Owen: I also thought that Wielechowski really showed how versatile cash is. You’ve got these rural villages where you can’t even take a road to get there. You have to fly there, and they’re mostly hunter-gatherer type societies. They have very specific needs, and it’s not what you normally think of when you think of what cash can be used for. You think housing and food, but cash helps them in the same way that it helps a family of four in Anchorage, say. It helps you fill in whatever gaps who have, whether that’s milk and gasoline for the rural society or the school supplies maybe for Anchorage.
Jim: Right. Yet another example of how you can imagine if someone were to come in and at the state level be thinking about, “Okay, what are our support programs?” If they were to design some in-kind system, it’s very, very possible they might have overlooked some of these cases and come up with a solution that wasn’t actually the right one for a lot of people, whereas with cash, as you say, you have that versatility, and so everyone is able to figure out for themselves what they actually want to do with it.
The other thing that really struck me in the conversation was hearing more about the political dynamics that have happened over time with the Permanent Fund. The fact that there really has been, it seems like almost constant attempts to raid the fund by government over time, and it has actually, up until this most recent issue, has managed to defend itself against that because people did have that sense of ownership there. You can think of a few examples of other social programs that have managed to withstand outside attempts to disrupt them, but that seems pretty exceptional.
Owen: Yes, and it shows the popularity of the fund with the polls that have been done on it show that people are happy to have higher taxes to sustain the fund and that, yes, even when people in power want to take it down, usually the people rise up. Hopefully, that will happen again, because as Wielechowski said, it is under threat right now.
Jim: Right, and I am very curious to see what the results of this upcoming election will be and if that ends up being a referendum on this effort to raid it. If it does, I think that says even more. Letting us gain more insight into what something like this means there and extrapolate from that as to what the dynamics might be in other places.
Owen: Alright, that will do it for this episode of the Basic Income Podcast. Thank you to our producer Erick Davidson. Please subscribe on Apple Podcast or the service of your choice, and tell your friends about the show so we can bring in more people into this conversation. See you next week.
The Humans of Basic Income Project, feat. Ontario Activist Jessie Golem
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Recently, as our listeners will know, the new administration in Ontario, Canada, announced that they will cancel the ongoing basic income trials there. In response, Jessie Golem, a photographer and basic income recipient, started a project called Humans of Basic Income (@HumansBasic on Twitter). Golem takes portraits of other basic income recipients in Ontario holding up handwritten signs describing what basic income has meant to them. The project both humanizes the basic income program and argues for it to continue. Jim spoke with Jessie Golem about the Ontario program and the Humans of Basic Income project.
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Episode Transcript
Owen: Hello, and welcome to the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh.
Owen: Recently, as listeners of this podcast will know, the Ontario Basic Income trials– there was announcement that they would be canceled. Now as of now, we have no details about when or how that’s going to happen, and so the recipients of basic income are pretty much left in limbo, wondering if they’re going to get their payment next month, next year, and so on. Since the announcement, a photographer, named Jessie Golem, started a project called Humans of Basic Income, in which she takes photos of basic income recipients in Ontario holding up a sign with a sentence or two about what basic income has meant to them. Since then, the project has completely taken off.
Jim: I had a chance to sit down with Jessie and talk to her about her experiences with this project and where she sees it going.
Owen: Here’s Jim and Jessie Golem on the Basic Income Podcast.
Jim: Jessie, thanks so much for joining us on the podcast.
Jessie: Awesome. I’m excited.
Jim: Now, you run the Humans of Basic Income project, which is telling stories of participants in the Ontario Basic Income Pilot. Beyond that, you’re actually enrolled in the program yourself, correct?
Jessie: Yes, that is correct.
Jim: Can you tell us a bit about what your experience has been before and during the pilot?
Jessie: Yes, I worked four jobs before signing up for the pilot. I signed up in December, and I found out I got approved in February. I was working four jobs. It’s basically like I was up early in the morning and just working nonstop between all of my jobs and not really having time to make meals for myself or I’m just going home just to sleep and shower and that’s it and nothing else. It was just a very, very exhausting and frustrating existence. I was also finding that I was still just barely scraping by and still living paycheck to paycheck, but still feeling like I didn’t have time and the opportunity to pursue the things I want to do or focus my energies into the jobs I want to be doing.
When I got basic income, I dropped down from four jobs to two jobs. Those two jobs was on both building and managing my own business as a freelance photographer, so advertising, booking photo projects, doing the thing I love, and also I’m the operations manager at Photographers Without Borders. That’s a rapidly growing organization and in itself, it is a full-time job. It needs the energy and time to devote to it and basic income was buying me that energy and time to devote to growing PWB.
Jim: Wow. That sounds like exciting stuff. It would be a very positive shift to be able to really focus your energies in that way. As I think all of our listeners know, last month, the new Progressive Conservative Government of Ontario announced that they were canceling the pilot, despite having promised that they would not do so during the election.
Jessie: That is correct.
Jim: What was your reaction to that?
Jessie: I was devastated. Before the pilot had gotten canceled, there’s actually a series that the Huffington Post is putting out called No Strings Attached, where they were following a couple of different people in Ontario on the Basic Income Pilot, and I was actually one of the subjects that they were going to be following. They produced a number of videos. One of the videos is out already, it’s really good. It’s about this couple in Lindsay that started their own business, and they hadn’t done my video yet.
I was literally– an hour before they made the cancellation, I was talking on Facebook with the editor at Huffington Post about planning the video and having the shoot ready and what we were going to do. Literally, an hour later, she messaged me and said, “They’re winding down the program. I’m really sorry,” and I felt like the rug was just pulled out from underneath me, and I was devastated and furious. My dad called me later that day because he found out and he was like, “Jessie, just be calm.” I just started crying because I was just so upset and so angry. I realized that I have this relationship with Huffington and I have a platform and I have this ability. I’m not going down without a fight. I want Doug Ford to know my name, and I want him to know how angry I am.
I wrote an opinion piece for Huffington Post. I did a number of radio interviews. Then I started contacting people in my city, which is Hamilton. I went to Hamilton Roundtable for Poverty Reduction, and they ended up going to Queen’s Park where I participated in a press conference there. Somewhere along that line, I got the idea for the portrait series. This was both inspired by my work at Photographers Without Borders because our big mandate is amplifying people’s voices and using the power of visual storytelling to communicate change.
I recognize here that my story is just one story but there are 3,999 other stories out there of people who were using basic income to get themselves out of poverty or start new careers or go back to school or move into safer living or like so many really, really good things that would contribute to our society in a positive way. I realized I could tell those stories. Then, I just started reaching out on social media, putting call-outs on community groups on Facebook and everything.
As soon as I got a couple of portraits started and people could start to see what I was doing and see the vision of what I was doing, that’s when the ball started rolling. More people kept on coming forward to me and wanting to get their portrait taken. I would set up times where I would meet up with a group of people and take all their portraits or go to their places and meet them personally and take their portraits. It’s just kinda gotten the ball rolling from there and the momentum has been growing.
From there, I shared it on my personal Facebook, and then one of my friends got the idea of doing social media. We created a Facebook page and a Twitter account. I’ve been posting all the pictures on there and telling all these stories. The impact has been tremendous. It’s really taken a life of its own. It’s grown beyond me, which is beautiful to see.
Jim: I think, so often when you hear public conversations around basic income, it tends to be more mired in the economics and larger systemic view of things.
Jessie: Very policy-oriented.
Jim: Exactly. I think part of that is because, in general, up until now it has been more of a hypothetical. You don’t actually have these real cases. I would say, personally, it’s inspiring me to see actually, “Oh, this is a human policy. This is actually affecting people’s lives and actually–”
Jessie: We’re directly negatively affected by this cancellation because they had plans. There were people I’ve met who have had three-year plans that were going to use this money to do this, that, or the other, but now, those plans are suddenly canceled. The other thing I need to point out is that the Conservative government hasn’t communicated anything to anyone. Like I said, I found out because of the editor of Huffington Post told me. Nobody got any letter in the mail, nobody got an email or a phone call, nothing.
Nobody knows what this looks like moving forward. When they say that– the Conservative government keeps on saying that they’re going to do a compassionate wind-down but leaving 4,000 people completely in the dark wondering, “Am I going to get money this month? I don’t know.” They’re terrified because they’re depending on it. It’s not compassionate, it’s evil. It’s horrible.
Jim: It’s almost the exact opposite, going from actually full security to suddenly complete insecurity as to where your life will be in a week or a month.
Jessie: Yes, exactly, and not giving anybody any adequate time to plan for what happens next. I know for myself, I haven’t had a moment to think about what is plan B. I haven’t thought about plan B yet, and partly because I’ve been so busy doing this portrait series, but I also think emotionally for me, part of doing the portrait series is avoiding having to think about plan B and think about the reality that the Conservative government has forced me into.
Jim: Now, as you’ve talked to other basic income recipients, have there been things that have stood out in your conversations? Anything that surprised you or seemed particularly noteworthy?
Jessie: Yes, it’s honestly been one of the most heartbreaking photo series I have ever done. Everybody I have talked to has all expressed about the sense of helplessness and fury about what’s happened and like, “Well, what can we do now? We can’t speak up.” When I’m coming to them and saying, “Hold this sign. Write your story on it,” it’s giving them a voice. People have been really thankful that I’ve been coming to them.
I had one encounter that was particularly heartbreaking. It was an older gentleman and after I took his picture, he just– a few minutes, I was working with some other people getting their portraits, and he just shuffled up to me, and he was like, “Jesse, I have a question. I’m really afraid of the answer.” He looks genuinely afraid. There’s this older man fellow talking to me, and then he’s like, “Am I going to get this month’s payments?” Just that kind of fear and that really struck me because I was just like, “Wow, we’re all in the same boat.” I had to look at him and say, “I think we are, but I don’t know.” To have to say that to him was really, really heartbreaking.
There were other people. Actually, a person who– actually, outside of all this, she’s a very good friend of mine. She was studying. She’s going to school for manual therapy and osteopathy, but she’s also working as a bartender. It’s like she’s working all night and closing up bars and then waking bright and early and going to school all week. To have to return to that life is going to be exhausting for her. I also know another person I met is living in a motel. She is washing her dishes out of her bathroom sink and doesn’t have– it’s just not an adequate living situation whatsoever.
She was saying, “Thank God, I was going to get an apartment, and if I had gotten an apartment, I would be homeless right now.”
Jim: Wow. That is intense.
Jessie: To see that and to be encountered like this is, this is what poverty in Canada looks like. This had an opportunity to get this small group of people out of poverty, and you’re just taking it away without any– any of the reasons that they are using to justify doesn’t have any research or citation to back it up. There isn’t actually a reason, and they aren’t providing us any information.
Jim: Now, I realized that you may not have had a whole lot of time to figure this out. I’m curious, do you have a sense at this point as to where you hope this project will go in the shorter and maybe longer term?
Jessie: I’m hoping that it changes public opinion. I’m hoping that in the long term, it opens up a very real conversation about poverty and the stigma around poverty. A big thing I’ve noticed especially advocating for basic income and doing this project is that there’s a lot of very dehumanizing vernacular when it comes to talking about people in poverty. People have called me a parasite or a leech or saying that I’m stealing taxpayers’ money. That kind of language, it’s dehumanizing in a sense that you aren’t a human, you’re a parasite, you’re a leech, and your humanity is only dependent on your ability to economically contribute to the society.
I’m hoping by bringing these stories forward and saying, “These people are working. I am working. I’m managing a rapidly growing international not-for-profit.” I’d like to think that the work I’m doing is good and justifiable work. Other people are working and were using this to better their lives. They aren’t using it as an excuse to be lazy or sit around and play video games all day or whatever it is. It was an opportunity, not an excuse to build and better their lives.
I’m hoping that helps to change the stigma and change the conversation because especially in these times when we have people like Doug Ford or Donald Trump in positions of power that utilize tactics of fear and misinformation and ignorance and propaganda to further their agendas, I feel like that kind of vernacular is very divisive and polarizing and can be very dangerous in the long run, and very violent. I want to be able to shift away from that.
Another goal of this is obviously, to get the pilot back or to get some sort of remuneration or compensation for the damages that are caused. I am working with people in Thunder Bay, Lindsay, and Hamilton in discussions about what a class action lawsuit would look like, which actually one was just filed yesterday by four people in the city of Lindsay. We’re looking at that and also trying to put pressure both on the government, on the Conservative government so that this is widely denounced as a very bad and very unpopular move to bring it back or to see if the federal government would take up the project, which would be in everybody’s best interest.
Jim: I’ve been still impressed to see how much is happening there in response to that announcement. We had a chance to talk with Sheila Regehr a couple of weeks back, and she was talking about some of the things is in her work. That seems like a really big deal. There’s actually legal actions that’s moving ahead now as well.
Those were all the questions I had for you. Is there anything else you’d like to add?
Jessie: Yes. I just want to say in terms of what you were saying about like you’re impressed with everything that’s happened, I think the biggest thing that would contribute to the success of this whole movement is that we maintain a united front. That’s what I’ve been trying to do in cooperating and collaborating with everybody is keeping everybody on the same lines of communication and saying that “We need to be united, we have the same goals. Let’s not fragment ourselves, because if we do, it won’t be successful. If we have one united front and we come to the government with one strong voice, then we can make a change.”
I’m seeing it happen right now with the exposure that it is getting and all of the attention that it is getting. I do feel cautiously optimistic for a positive outcome for this. Again, it is all about amplifying voices and the power of storytelling to create change. It’s been a huge blessing for me to be in a position to be able to amplify these voices and tell these stories in a platform where people are listening.
Owen: That was Jim Pugh and Jessie Golem on the Basic Income Podcast.
Jim: I would say Ontario is a fairly rare instance in the UBI space where just generally, we’re seeing more of the human side of basic income, because you’ve actually had recipients. And just seeing the pushback that’s come from there, I think that it has just broadly felt like there is– it’s more of a people issue.
But I think with Jessie’s project, that’s just being taken to next level. Like you’re actually seeing these first-hand accounts of how people’s lives were actually changed and what it will mean to them if this program was canceled. I think as we’ve talked about many times before, it’s hard to overstate what impact these sorts of stories I think could have on the basic income debate going forward.
Owen: Yes, it’s really true. I think when you have a program where it’s like, “We built a school, and we created a mentorship program,” and so on and so forth, that basically creates a story in your head without any more details. Or if you just say we gave someone money that feels like the first sentence, and we don’t know what happens after that, but you know Jessie’s project is showing what happens after that. It’s a lot of very uplifting results and hopefully, it can keep on.
Jim: I’m very curious to see as this grows, how elected officials are going to react if there is the potential that they may change their mind and particularly with this lawsuit as well. It seems like there are efforts from all fronts, so hopefully, they are able to change what happens. I’m also curious to see over the longer term how this affects the ways that different organizations decide to engage around basic income.
Certainly, in the US, my sense in Canada as well is there has been or at least had been still a lot of skepticism around the idea of unconditional cash and that it wasn’t necessarily a good way to support people. Now that we have these stories out there, it’ll be really interesting to see if folks there change their mind as well.
Owen: She is creating a lot of really good data points, just really humanizing the program because I think we’re often just waiting for the program to finish, the analysis to come and then some paper where we say, “Aha, look, great, positive results!” And that’s three years after the initial program began. And this is– it’s instant, it’s human, you look at the picture and you see right away. Even just looking at their faces, there’s something about just having that visual, you’d say, “Oh, of course, this person is– their life is made better by a little bit of income security.”
Jim: Right.
Owen: This makes it very intuitive.
Jim: Absolutely. As Jessie said, if folks want to be supporting now, a great way to do this is to be sharing new stories because they are being posted online. You can be sharing them on your social media as well, sending them to friends. If you’re not already, you can follow Humans of Basic Income on Twitter. It’s @HumansBasic, all one word, and see what stories have been posted and help get those stories out there.
Owen: Alright, that’ll do it for this episode of the Basic Income Podcast. Thank you to our producer, Erick Davidson. Please rate and review us on Apple Podcast or the service of your choice and subscribe while you’re there if you’re not already. And tell your friends; we are always looking to bring more people into this conversation. We’ll talk to you next week.
A New Basic Income Pilot in Mississippi, feat. Aisha Nyandoro
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Recently, we got a very exciting announcement from Springboard To Opportunities and the Economic Security Project: the two groups are collaborating to create the Magnolia Mother’s Trust. This program will provide an unconditional basic income to a small group of low-income African American mothers. Owen spoke to Aisha Nyandoro, who works with low-income women in Mississippi and will be leading the program.
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Episode Transcript
Owen: Hello, and welcome to the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh. We had some big news come out recently in the basic income space. There’s a new pilot that’s being launched right now in the United States. This one is called the Magnolia Mother’s Trust. It’s going to provide $1,000 per month with no conditions to 15 low-income families headed by African-American women based in Jackson, Mississippi. They’ll be receiving those payments over the course of one year. The pilot’s being managed by Springboard To Opportunities, which is a direct service organization that’s also based in Mississippi.
Owen: To give us the lowdown on what this program is, how it got started, and what might come of it, I spoke with Aisha Nyandoro. She is the head of Springboard To Opportunities and is leading this project.
Jim: Here is Owen’s interview with Aisha.
Owen: Aisha, thank you for joining us on the podcast.
Aisha: Thank you so much for having me, Owen. I appreciate it.
Owen: To start, can you just tell us about Springboard To Opportunities? What its mission is and how it goes about achieving that?
Aisha: Yes. Thank you. Springboard To Opportunities is a non-profit based in Mississippi, but we do work in several states throughout the country. We are a resident service provider. We provide programs and services for individuals who live in federally subsidized affordable housing to help them achieve their dreams in life, school, and work. We take a holistic approach to service delivery. That’s anything from after-school programs, to workforce training, and job placement.
We really do pride ourselves on being radically resident-driven – that’s our tag – on being radically resident-driven and really listening to the families with whom we have a pleasure of serving and making sure that we are being responsive to the needs that they tell us that they have for their families.
Owen: That’s excellent. Very recently, Springboard To Opportunities made a very exciting announcement about the creation of the Magnolia Mother’s Trust. Could you tell us what that is?
Aisha: Owen, you have very few opportunities in life, I feel, to do something that you think is bold and big and take a risk where you really have a chance to just put everything you believe out there on the line. That’s what the Magnolia Mother’s Trust is for us. Just to give you a little backstory about how this came to be, for the last couple of years, I’ve really been torn with the reality that the work that we’re doing at Springboard, even though it’s awesome and amazing, it really was not helping us move the needle on poverty.
We really began to do some work in examining the policies and various things that are in place as it relates to our families and realized there was a disconnect between what they actually needed and the reality of what they were receiving. Over time and time again in conversations with our families, what it was that we kept learning is that they really just needed more access to cash. That there were very few opportunities for them to get cash without there being strings attached and for them to get cash that they could use for just whatever it was that they needed for their families. Not a voucher, not a subsidy, but cold hard cash.
About a year or so ago, I really started taking that idea and I’m like, “Okay. If we could give them cash, what would that look like?” That is from which the Magnolia Mother’s Trust was birthed. With that idea that if you just give individuals cash, for us primarily it will be women. That’s why it’s “Mother’s” because the majority of the individuals that we work with in our adult population are African-American women and their children. Really just saying what would it look like if we gave women money with no strings attached and really for us just focusing on that African-American population because that’s the majority of the individuals that we work with.
What innovations could come to light if individuals were not constantly kept in a sea of trying to just survive? If individuals really had what it is that they need to thrive, what could happen within these communities? What the Magnolia Mother’s Trust is going to do is going to give $1,000 per mother for 12 months to 15 individuals that live in federally subsidized affordable housing. For our population, that is a game-changer, because on average, individuals that we work with make less than the $11,000 annually. We’re talking about doubling someone’s income.
Owen: It sounds like– you probably have specific questions about what’s going to happen, but it also seems like part of the excitement is that it’s open-ended. You don’t entirely know what it’s going to mean.
Aisha: We have no idea what’s going to happen. That’s why it’s so exciting and also so scary. Because with this particular population, we have a lot of questions that we’re trying to answer simultaneously. We have the very basic questions of, what will they do with the money? What will the outcomes look like? Will this help individuals begin to free up their bandwidth and be more engaged in our local community and also engage within their own individual lives?
We have those very individual level questions at the very basic aspects of what we plan on evaluating. We also have some larger research questions as it relates to policy, really understanding what the infusion of cash would do for this population of individuals because, like I said, we’re dealing with individuals who are extremely low income, who live in a federally subsidized affordable housing.
They have vouchers. They have housing vouchers, they have SNAP, they have childcare vouchers in some instances. Really beginning to explore what cash does within those systems. That’s problematic because our social service system should not be set up so we’re so punitive where a very small influx of cash can really disrupt your lifestyle as you move towards economic self-sufficiency.
We have those questions as well, but then also on another aspect of it, we have questions as it looks, how will this redefine or define work? What individuals have an opportunity to look for jobs that are more fulfilling and look for opportunities that are more fulfilling rather than just feeling that they have to take a minimum wage job because they have that necessity to work? Really allowing folks to have more freedom and dignity to really look for opportunities that help satisfy their soul.
We have a lot of questions that we’ll be exploring over the course of the year with various partners. For us and for me, it’s really exciting that we have partners who are willing to go with us in uncharted waters and really explore what this means. That’s really exciting to have that level of trust with individuals that we partner with to do this work.
Owen: That uncertainty is why so many people are wary around the idea of basic income, that if you give people a housing voucher, you know what that’s going to be spent on. Whereas if you just give people money, then people’s imaginations can run wild, and that’s scary to the people who are maybe on the other end of that money.
Aisha: But why should it be? Why can’t we trust individuals to know what it is that they need for themselves and trust that if given the opportunity, they will do that? This idea of it being a scary notion, I get it, but in the very basics of it all, I really don’t understand what the rationale is in that fear.
These individuals that we work with, I can only ever speak for my population, the individuals that I work with are hardworking folks who are just trying to make it and who, unfortunately, they are constantly having to climb up a mountain just to live and exist. They know what it is that they need. I do not for one moment think that anyone is want to take this money irresponsibly with it.
If they do go get their nails done, their hair down, or whatever, to me, that’s a form of self-care, and that’s doing what you need to take care of yourself in that particular point in time.
Owen: Sure. It’s okay if people want to do that. Whenever anyone says, “Well people are just going to spend it on drugs and alcohol,” what I would like to say is, well, you’ve got some expendable income. Do you spend it on drugs and alcohol?”
Aisha: [laughs]
Owen: You’re working with African-American women. This is a small enough trial or experiment that you can be selective about– it’s not a randomized control exactly. You can take this separately or together: why African-Americans, and why women?
Aisha: Yes, a couple of reasons. For us, the African-American women aspect just really is a large part of the population that we already work with. The majority of the individuals within the communities that we serve, that’s our demography. That’s a very basic “why that population?”, but then also, for me, a much richer answer to why that population is one of the other pieces that I will love to see from this work is that we begin to change the narrative around women and social services within this country and really beginning to dispel that myth of the Welfare Queen. A lot of times when we talk about that nasty myth and that nasty ideology, it’s African-American women that we’re talking about.
For me, this really does provide an opportunity to really begin to rewrite how African-American women are viewed within this country and African-American women who live within poverty are viewed within this country who are really just trying to make it and who are trying to put in place the supports that they need for themselves and their families to actualize their dreams. That’s the first thing about African-American.
Then the other part is why mothers. Once again, it goes back to the demography of the population that we primarily work with. The majority of the individuals that we serve at Springboard are women, are mothers, and they are mothers between the ages of 25 and 44 with multiple kids who, once again, are trying to figure out how to survive and thrive, and how to raise their kids and how to keep themselves safe. They’re also at the same time while they’re trying to survive, they’re also dreaming about a greater future for themselves and a greater future for their families, and are really working tirelessly to try to make that dream come into fruition.
Owen: I’ve had a lot of conversations about race and poverty in our social benefits system. Some people say, let’s just talk about poverty, the color of your skin shouldn’t matter. Other people say, no these two things are inherently intertwined and you can’t ignore that. You’re getting into that in your last answer, but how do you approach that question?
Aisha: For me, it’s obvious. If folks have that idea of, why can’t we just talk about poverty without race? To me, that’s a whole lot of privilege rather than an answer. Think that you can have one without the other. Unfortunately, the two within this country are interwoven. We cannot have a conversation about poverty without talking about the systems that have systematically kept an entire population of people impoverished within this country. The two go hand in hand.
The systems and the policies that we have in place were designed with the understanding that we have serious issues with race. As that being the reality, since we have these serious issues with race that garner our social service systems, poverty and race go hand in hand. You can’t have one without the other. To me, it’s an asinine concept. If it makes you uncomfortable to talk about race in your conversations about poverty, you may need to do a little more homework in understanding.
Owen: Maybe along those lines, what appeals to you about basic income?
Aisha: So much appeals to me about basic income. To me, the most appealing aspect of basic income is the dignity that it would allow our families to have, not having to show up at an office and do paperwork to make it seem that you are trying to make yourself seem worthy for this hand out that’s being blessed upon you from this higher up. The ability to restore dignity to our families, that’s really exciting to me. This aspect that individuals will know when exactly is coming and what exactly it will be. That’s exciting because just the consistency of it is really exciting because so many of our individuals that we work with, the jobs that they have are hourly based jobs. With that, it’s not consistent from week to week or month to month. The inability to plan when you don’t know what your check will look like from week to week is really hard.
Just really allowing this consistency for our families, that’s really exciting to me. Then the other piece is, probably the most exciting of all of this, is really giving the breathing room that our families need to dream and to really think about possibilities, because, unfortunately, time and time again, what we are hearing and learning from our families is that their light is beginning to be diminished just a little bit because of the fact their life is so hard.
It’s really hard for me to envision a world where I’m not allowed the freedom to dream and where I don’t actually believe that my dreams could actually come true. Just allowing for the small moment in time for our families to begin to have the ability to dream again and to really put some steps into place to move towards those dreams.
Owen: Speaking of things that are maybe hard to imagine if you’re not living them, could you say a little bit about what it’s like to be on all these social benefit programs where you have to go in. How much time does that take, and how much of a burden is it on someone to continually re-up on these programs?
Aisha: It takes a lot of time. You could spend an entire day at your Department of Human Services office trying to get your SNAP benefits reinstated. It takes a lot of time as it relates to just this actual physical time of it all. Also there’s a lot of mental acrobats and gymnastics that’s required as well because you’re always trying to make sure that you are staying within whatever guidelines that exist for that particular service that it is that you’re receiving.
That’s all exhausting and time consuming, and you have to think about in a lot of instances are these individuals who may have to go to the Department of Human Services to get their benefits or something reinstated or to make sure that their benefits continue to be put in place. That is the time where you will have, in some instances, you have to take off work. If you were working that day, and we’re talking about folks who have hourly jobs, that’s a day where you may not get those wages. It’s a lot that just goes into all of that.
For us, what we have heard, and I keep saying we’ve heard because so much of what it is that we do is in conversations with our residents, with our families. We don’t do anything without their input. In a lot of times, so much of what we’ve heard from our families is really just the lack of dignity included with those situations of having to go to the Department of Human Services and try to help your caseworker empathize with what it is that you’re experiencing. All of those things are pieces where a little piece of your dignity is taken away.
Owen: Well, those are the questions I had for you. Is there anything else you’d like to add?
Aisha: Yes. We’re just really excited about the Magnolia Mother’s Trust. We’re excited that this innovation is coming out of Mississippi, that in a lot of times when you hear about Mississippi, it may not always be something positive regarding the state. We’re excited to be within this state piloting this innovation with extremely low-income African-American mothers. We’re excited about being a part of the guaranteed income community and having an opportunity to learn alongside all of the other amazing partners who are taking the bold risk and big leaps of faith to pilot guaranteed income projects around this country.
Jim: That was Owen talking to Aisha Nyandoro of Springboard To Opportunities.
Owen: I love how they’re really embracing the uncertainty of cash in this program and how she is so excited by the fact that we don’t know what’s going to happen to these women, these families. There’s good reasons to be excited because we have really ample evidence of just how effective cash is and how people, by and large, are quite responsible with it when they are given cash.
Jim: Well, and also how completely ineffective so much of the programs in Mississippi are. I thought– the thing here that I found most inspiring is that the rationale behind this is entirely based on Aisha’s firsthand experiences. She has been working with these people for years and has talked to them to really understand what is it they need to be successful. That is what drove her to this. It wasn’t coming from this kind of pie-in-the-sky, 10,000-foot-view of, “Oh, this should be some future system that we want across the country.” It was responding to a real direct need that she was seeing right in front of her.
Owen: Thinking about this also from the Economic Security Project’s point of view, I’m interested in how focused they are on narrative because 15 people, you’re not going to get a robust data set where you can have a control and all that, but you will get 15 really interesting stories. That, as we’ve discussed before, is such a huge part of bringing this idea into the broader conversation that we’re having.
Jim: Absolutely, that we keep running up against these so deeply ingrained myths in our culture. This idea of the “Welfare Queen” that is not based on any reality but was something that was concocted over time as a way of demonizing people who are receiving support and that Aisha sees this as a direct way to push back on that, that the stories we get here, if we can really lift those up and humanize the people who are receiving the support, that could act as a very visceral and emotional counter to those misconceptions.
Owen: Yes. So much of what she’s contrasting this program with is that support that these people are getting and how much of an emotional toll that it has on them and also that they have to spend the day at the benefits office proving that they are needy enough to get these benefits. Yes, very exciting and looking forward to seeing what comes out of this.
Jim: Yes, we’ll have to keep a close eye and see what stories do emerge.
Alright, that’ll do it for this episode of the Basic Income Podcast. Thank you to our producer, Erick Davidson. If you like what you hear, please do rate and review us on Apple Podcasts or the podcast service of your choice. And please, please do tell your friends about this. Any folks you know who you think might be interested in basic income. We’re always trying to reach new people. We’ll talk to you next time.
Running for Office on a Basic Income Platform, feat. Owen Poindexter
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In this unusual episode, Owen takes a break from cohosting and becomes a guest. Owen ran for California Assembly in this election cycle, and Jim interviews him on his experience. Owen goes into the surprises and challenges of being a first-time candidate, and offers advice for anyone considering a similar move.
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Episode Transcript
Jim: Hello, and welcome to the Basic Income Podcast. I’m Jim Pugh.
This episode is going to be a bit different than our usual episodes. Typically, I’m on here with my co-host Owen, and for this episode, I’m actually going to be interviewing Owen. We haven’t talked about this before, but Owen actually spent most of the past year running for office on a basic income platform.
He was running to join the California Assembly to represent District 15, which includes Berkeley and Oakland, and basic income was really core to his platform there. For this episode, I wanted to talk to Owen about his experiences and what implications that might have for other people who are considering running for office on a basic income platform. Owen, welcome.
Owen: Thank you. Funny to be welcomed to this podcast. Good to be a guest for once.
Jim: Running for office is not a decision to be made lightly. That’s a big commitment, both the campaign and, if you’re elected, actually holding office. Can you just talk us through, what was it that led to your decision to run in this election?
Owen: Sure, it was something that I inched toward over a month or two at least, it was something where I’d bring it up kind of semi-seriously in conversations. What really pushed me toward doing it was that I was frustrated that there is so much discussion around basic income, there seems to be a lot of momentum, a lot of excitement, but no politician or very few politicians were stepping up and adding it to their platform or trying to push legislation. Not even the full basic income, but something just kind of taking steps toward that direction.
I thought that this idea is too scary for most politicians. No one has to talk about basic income, no one’s going to lose votes because they’re not talking about basic income, and there’s so much more that we can be talking about. Nothing’s really pushing this issue into the political sphere, and so someone has to start doing it.
Then my assembly seat opened up, and I thought, well, this isn’t what I was planning to do with my year necessarily, but I can do it. I have the bandwidth and the time to do this. If I’m so frustrated with other people not doing it and I have this somewhat rare opportunity, then okay, maybe I should put my money where my mouth is and step up and see how it goes.
Jim: Now, you must have had some expectations coming into this process about what a campaign would look like, what it would mean to actually run for office on this policy. Now that you were in this race and just– I realized we didn’t clarify, you left the race in April.
Owen: Right. I didn’t quite make it to the primary. I was on the ballot, got some votes, but yes, I dropped out.
Jim: For your thinking when you were getting into the race and your expectations for that, what part of the campaign process matched that and what parts did not? What were the surprises that came along?
Owen: Sure. A lot of it is being surprised by what you already knew. I obviously know that politicians spend a lot of time and energy fundraising, but to actually just devote days on end to that, that’s very difficult. It’s a slog. You know going in, okay, I’m going to be doing that, and then you actually do it, it’s very tough.
In terms of just organizing, trying to create a movement around yourself, there is something of an inherent ego to politics where you have to– every politician says this isn’t about me, it’s about you, it’s about this whole movement, but at the end of the day, you are trying to get people to check the box next to your name. There is this weird dichotomy there where you’re trying to make it about more than yourself, but at the end of the day, it is about yourself. That was a tricky one to navigate.
There were a lot of things that I knew were coming that I still found a bit of a shock. The metaphor I often use in terms of starting to run for office was, I was on a very high diving board and inching towards and inching towards and then you jump. Once you jump, you’re in, there’s no un-jumping, and then the water hits you. You’re like okay, well, now I’m in this new environment.
I guess the last part I’d throw in there is just the public reaction you get to running for office. A lot of people are just very interested in the fact that you’re doing this, and they find you to be an interesting person just because you are running for office, you’re deciding to make this choice. Some people are not so much interested in you or at least in me as they were wanting to challenge me and say, “Why do you think you deserve to do this? Why do you think you are worthy of running for office?”
Those are all good questions because this is a very privileged position that I was running for. It’s a huge responsibility, and while anyone can run, it takes a lot to actually do that job well.
Jim: Thinking about how people perceive you in a race, we’ve talked about in the past that one of the challenges with basic income is that there’s a lot of folks on the left who actually see the support coming out of Silicon Valley as a negative. That the fact that it is Mark Zuckerberg, Elon Musk, wealthy tech White males, really, that are supporting this idea gives them pause. Because they wonder, are these the people I should be taking my policy cues from? Does the fact that people who have gotten wealthy from the existing system support this mean that there’s something wrong with that? That’s something we’ve talked about before.
Obviously, you are not a wealthy tech CEO, but you are a White male who has worked in the tech space broadly. Is that something you were thinking about when you got into this race? Because it’s worth noting that—well, there were a lot of other candidates in the race, but a number of them were women, people of color, and there were other White men in the race, but particularly, that combination with basic income, I’m wondering what you thought about that getting into the election.
Owen: Sure. I think that’s a very interesting question broadly, jumping back to the surprises thing, that there were occasionally someone would come up to me and say, you seem like a good person, I like your policies, but there are, to quote one voter, “There are some badass women of color in this race, and why do you think that you should be challenging them?” Anyhow, I’d say, well, no one is bringing attention to this issue the way I am bringing attention to the issue.
But that was something I thought a lot about. I also should mention that the reason I dropped out of the race is, I was able to get one of those women of color, Jovanka Beckles, to add basic income to her platform. She just barely squeaked into the top two vote getters, so she will be on the ballot in November for the seat. That was very exciting.
Thinking about being a White male at a time when we’re having a reckoning about White men have too much power. Also, yes, there is this kind of dicey part of the movement where it does have a real note of support in Silicon Valley, and some people aren’t sure what to make of that.
In terms of how I addressed that, I would say my main tactics were to not focus on automation. I would bring it up occasionally, and people would bring it up. More often, people would bring it up to me, and I’d say yes, there is plenty to talk about there. More I was trying to bring basic income, to show that basic income belongs in a Democratic Party platform. That if you support things like single payer and high minimum wage and worker’s rights and women’s rights, that basic income aligns with all those values and belongs as part of that platform.
That’s another reason why– I am a Democrat, but some people ask me if I was running as an independent or a socialist or something like that. I’d say no, I’m a Democrat, and I think this should be part of the Democratic Party. Also, while I was running, we talked to Rocky Fernandez in a previous episode about this, the California Democratic Party adopted basic income in their party platform. It was very cool to see that gradual mainstreaming of the idea at least within California while I was running.
Jim: I just want to echo what you just said, that the amount of thought that you put into that before going into the election seemed quite substantial. This wasn’t just a half-thought thing. You actually had thought through how the optics around this, how the outcomes would actually play out.
Owen: Yes, and it was important to me to– while I had a very clear emphasis, and I guess it would be fair to call me a single-issue candidate, even though it would annoy me in the media when I would get called that, that it was important that I had a full platform, that I had things to say on healthcare and on schools and on the environment and all that stuff.
I mean one, because I care about all those things, and I don’t think just adding a basic income into our current world solves everything, but also to show that this is a candidacy about an entire way of thinking about the world and that includes things like healthcare and schools and the environment. I felt like I needed that one, for my own sake, but also to be a credible candidate because I’m asking voters to choose me as their representative. If all I’ve got is basic income, basic income, basic income, do you want that person representing you? Probably not.
Jim: Looking back now that you’ve left the race a couple of months ago, how has this changed your views, both on the political process generally, but also on– has this changed the way that you think about basic income now that you’ve had many conversations with voters and seen how folks out there think about and react to that idea? Has that shifted the way you think about it, your views on what the right approach is, all of that?
Owen: I don’t know if it shifted my views so much as it has just given me more of down-on-the-ground look at things. People have a lot of questions, a lot of good questions about how basic income would work. They’re the ones you’d mostly expect around will people quit their jobs, will inflation just make it all meaningless, and some more nonsensical questions. You’ll hear those too. I would say if you are thinking about being a basic income candidate, you need to be ready to answer all those things and more that people are going to throw at you.
I would say that one thing I learned is that people are interested in this idea, especially young people. A lot of college Democrats and younger folks in the East Bay area who I became connected to through the campaign, they think this is a great idea. It’s not necessarily what they’re focused on. A lot of them are very concerned with housing for obvious reasons in the Bay Area, but they think that we’re going to need this and that it’s important to their future and our collective future. That was interesting to see.
I would also be thanked after pretty much every candidate forum, at least a couple of random people have come up to me and say thanks for bringing this issue into the forefront. I don’t even know if they’re voting for me, but that’s another thing for me is I think this issue is obviously so important that it deserves candidacies, and it deserves lot of attention. Other people think yes, it’s probably a good idea, but it’s not the only thing they’re going to vote on. They want to see the whole package. There are other candidates who maybe don’t think this is a good idea who still have a lot to offer.
Also, that people have very limited exposure to basic income. Many people including the incumbent assembly member who’s stepping down, which is why so many people are running in this race, he hadn’t heard of it. I introduced the idea to him. Same with Oakland City Council members, and just a lot of people had either heard of it very vaguely or not heard of it at all and had all the same questions as your man on the street kind of questions. Also, a lot of people had heard of it and were excited and were excited that I was doing what I was doing regardless of whether or not they ultimately supported me.
Jim: I think, to what you mentioned earlier, the fact that one of the top two candidates now has basic income on their platform, that’s a big victory in itself even if you did not get elected.
Owen: I feel like I came in third even though I didn’t come in third.
Jim: If there are other folks out there who are considering running for some sort of office with basic income either as the main part or some part of their platform, what would you say to them? What advice? What notes of caution? What from your experiences could help them related to that path?
Owen: For starters, I would say be prepared to be a candidate independent of your support for basic income. Know your local issues, know what all the candidates are going to be asked about. Because again, if– for instance, in my district, there’s a hospital that might close, and it was a big issue that came up again and again. If that’s the big issue in your district, and you have nothing to say about that, all you just want to talk about is basic income, then okay, the people who want their hospital to stay open are not going to vote for you and are not going to see you as a viable representative.
Know your local issues. Know your state issues. Know the issues that you have to know to be a candidate whether or not basic income is part of your platform. Also be ready for all the basic income questions, like will this get inflated away, will people quit their jobs, will they drink it away, all these stuff. There’s good evidence and good research on all those questions and plenty more. Be ready for those because people are going to come at you with them.
One question I got a lot while I was running, which you should know if you’re thinking about running for something, is are you running to win? I thought that I needed to at least be running to win to have the credibility of a candidate. There were ultimately 12 candidates in my race, nine up to the filing deadline, and the final three didn’t really have much of a shot.
Even with nine candidates for most of the race, that’s a lot of candidates, and if you’re giving voters an excuse to ignore you, they probably will. I was running to win with the knowledge that it was a long shot, but I felt like I needed to show that this can be part of the campaign that is running to win. The calculation for you might be a little bit different if you’re thinking about doing this, but it’s something to think about, and it’ll affect how you campaign.
I interviewed one potential campaign manager who said, are you willing to change your platform to be more electable? I said, well, when it comes to basic income, no, I’m not. It’s obviously the motivating force here. She said, okay, well, I think this conversation is over.
If I just wanted to be an assembly member, then I don’t know if I would have had basic income in my platform, because that might not be the most direct path to doing it. Obviously, I had mixed reasons for doing what I did. I was running to win, but I wasn’t willing to compromise certain things to do that, but it’s something that you have to figure out if you’re doing this.
The last thing I would say is consider aiming low if it’s your first run. I ran for Assembly, which was the lower house in California. I was running to represent almost half a million people. It was kind of a crazy thing to do for my first run. Even a city council race can be highly contested and very tough.
Part of that was that California is the fifth biggest economy in the world. California could do a basic income. It was kind of in the middle between– I would obviously love a federal basic income, but California is liberal and has the wealth and can talk about something like this in a serious way, whereas the city of Berkeley where I live, it would be hard to imagine anything resembling a basic income there.
To not take my own advice, [chuckles] speaking to myself a year ago, I think there’s a lot you can do at the local level, at the city level, even maybe through your school board or your transportation board or whatever it is, there’s a lot you can run for and a lot you can accomplish. In terms of– San Francisco’s talked about like a Baby Bond, where you get like $50 in a savings account when you have a kid and that’s shown to have positive effects. Or maybe it can be a little bit more than that. Maybe you can make certain benefits more universal or more streamlined or have fewer conditions.
There are a lot of little things you can do that’s more in the minutia of the kind of things we talk about in basic income as opposed to this giant sweeping policy, which I was there to talk about a giant sweeping policy. In terms of accomplishing things along the way to a basic income or that have a lot of the same values of a basic income and actually getting elected, you have to think about all the different offices you might run for and the pros and cons of each.
Jim: I think especially since we see city-level basic income pilots as being something that’s getting more and more attention, any sort of position in a city government where you would have some degree of influence and maybe even could be somewhat informal influence. If you are getting involved in that system and being able to drive it in some way, that gives you some lever of power that you can begin to apply within that system.
Owen: Absolutely. I’m just looking at the example of Stockton, California, which is not funding their own basic income, but they are hosting a basic income trial. Had the mayor Michael Tubbs said no, we’re not interested in this, then I don’t think it would be happening in Stockton.
Jim: Let’s say, someone, they want to run, they identify an office that they think they have a shot at and allows them to move forward with some sort of contribution around basic income. Is there specific information that you feel like is important for them to make sure they get in advance before deciding to push the button on that?
Owen: Specific information, I’m not sure, but I would just start by reaching out to people in your community, people you know, maybe sit down with some city council members or just various groups and leaders in your area and just start to test the waters a little bit. I think that’s something I could have done a bit more. I talked to friends and family about it to see if they thought this was crazy or a good idea. A lot of your friends will probably say yes, go for it. Some will say, are you sure you want to do this? You should listen to those people too.
In terms of specific information, I guess I can’t think of anything in particular other than that this is a thing you can do, it’s just it takes a lot. It’s a huge undertaking. There is a political infrastructure in your area. Whether it’s through Indivisible groups, whether it’s through people that have been organizing since the 60s, which is true in my area, there are people who matter and who are movers and shakers whether they’re elected or not.
I would just start reaching out to them even if they’re not going to support you right off the bat, just to get to know them and to figure out where the levers are in your area because those are going to matter if you’re going to run for office, and those are the people you’re going to get to know however things go. I got to know a ton of people in local politics, and that’s really exciting. It opens up new ideas and new paths for me to potentially pursue. This is someone who wants to stay involved.
Jim: Alright, well, that seems like you’ve given folks a lot to chew on if they’re debating running for office or doing something in that space. Anything else you want to add?
Owen: Just that people should feel free to reach out to me. You can find me at @OwenPoindexter on Twitter. There’s other ways to track me down. If you’re thinking about it and want a little push of encouragement or just some thoughts, just feel free to reach out. I’m happy to nudge people toward this crazy undertaking.
Jim: Alright. Well, that’ll do it for this somewhat unusual episode of the Basic Income Podcast. Thank you to our producer Erick Davidson. If you like what you hear, please do make sure to rate and review us on Apple Podcasts or the podcast service of your choice. We will talk to you next week.
Business, the Modern Economy, and Basic Income, feat. Floyd Marinescu
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How has the economy changed over the last generation, and what do today’s workers have to contend with that previous eras did not? Jim and Floyd Marinescu, CEO of C4Media, discuss these issues and more on this episode, which focuses on basic income from the business perspective.
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Episode Transcript
Owen: Hello, and welcome to the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh.
Owen: We’ve looked at basic income from a number of perspectives on this podcast, but one we haven’t actually delved into as much is the business perspective.
Jim: Yes, there’s some interesting ways to look at basic income that doesn’t necessarily come up if you’re focusing on it solely from more of a moral or pragmatic social program perspective. To delve a bit more into this, I sat down with Floyd Marinescu. He is the founder and CEO of C4Media and has been quite a longtime advocate for basic income specifically from that business perspective.
Owen: Here is Jim’s conversation with Floyd Marinescu on the Basic Income Podcast.
Jim: Well, Floyd, thanks for joining me on the program.
Floyd: Thank you.
Jim: To begin, can you just tell me, how did you first get interested in basic income?
Floyd: I can’t remember what the first trigger was, but I just know that when I first heard about it, I heard that there’s a way that you can solve poverty and also grow the economy, I’m like, “This is great.” I particularly became interested in it because being involved in software development, I can see what’s coming down the line with artificial intelligence and machine learning.
I also have a personal story along about globalization with my father and uncle. They lost their jobs in manufacturing in Ontario where Toronto is when China entered the global trade market in the 2000s. They could never have seen that coming. They had no idea. I remember one time I was at a barbecue with them when I was 17 wondering what I should do with my career, and they were like, “You should go into tool and die manufacturing because we’ll always need more metal parts.” I chose computer science.
Five years later, both of them are out of work because the industry contracted significantly. I think I became really worried because I see the same dynamic playing out now, both in terms of globalization and automation, and that’s what really got me more urgently interested in basic income.
Jim: It’s interesting, and I feel like typically when you talk about any sort of social program, advocates tend to have a personal story that reflects, “Oh, I had this particular challenge growing up. We didn’t have enough money for food. We were dealing with some sort of housing crisis,” and that’s a motivator here. It’s interesting, it seems like in the basic income is space you actually have people who are engaged in some of this technology work, and that is really the personal story. It’s seeing how either of themselves or someone they know well that the changing nature of work has already affected them.
Floyd: Well, there is that personal story for me as well. We grew up pretty poor and working class, and money was always a source of tension, sometimes even toxicity in arguments. I wish there was a basic income so that there had been more equality in my family and there would have been less tension. I personally can feel the fact that it seems like the economy is sliding in the wrong direction for more than half the population and their children will be going through what I went through. That’s definitely at an energy level something that drives me in this for sure.
Jim: Yes, so you’re getting both perspectives there really. I’m curious, again on a similar note, when most people advocate for basic income, generally they are either talking about, “Oh, we need to like look at this from like a social perspective”, lifting people up, or perhaps the more pragmatic humanitarian perspective, that this is a more efficient way of supporting people. But your argument is really on the business side. You see this as something that is actually going to help businesses. What are your main arguments on that?
Floyd: Well, there are arguments that are timeless, and I’ll go over those, and then there are arguments as to why it’s urgent. Maybe the urgent ones first although I’m sure your audience has already heard this before. I actually think that we’re in the middle of a multi-decade labor market correction. I use the term metaphorically, but I think it probably applies. A market correction that’s keeping wages– depressing wages effectively and reducing the number of middle-class jobs available to everyone in western countries.
I call it a correction because if you look at those graphs of money going to wages versus productivity, and you’ve seen how since the late 1970s, they used to go hand in hand together. People were getting raises every year as productivity was increasing then it stopped. Now for 40 years, a majority of working people haven’t actually had a raise in inflation-adjusted terms, and many are actually making less than they used to make.
To me, that’s a market correction and the cause of that market correction is automation probably primarily. We already have 40 years of automation that people don’t think about. There’s a lot of hype about AI, artificial intelligence taking out jobs. But the automation we already have, all the industrial robots that we already have, the software gains we already have.
I was talking to the General Manager of the Marriott Marquis in New York Times Square where we host a major event every year, and he told me that that hotel used to have 2500 people running it in the ’80s and now it needs only 1500. And that’s a hotel, it’s a fixed asset. Not many moving parts. My father told me that a lot of the manufacturing companies in Ontario that survived the competition with China only survived because they automated. If you go visit those plants now, you see industrial robots everywhere and far fewer people.
The problem is that the globalization of today is not my father’s globalization. No manufacturers are still losing jobs to China to my knowledge. Today’s globalization is about entry level even clerical work. I know 15 entrepreneurs that have virtual assistants in the Philippines because they cost three dollars an hour. Those are the jobs that are not being hired in their own hometown. Any graphic artist these days has to compete with people on Upwork from Eastern Europe and South America.
Today’s young people are in a far, far more unfair advantage than our parents were, and no one is talking about this. This is really serious. I kind of mixed the automation and globalization messages there, but these two are the number one trends I think that for 40 years we can already see the impact it’s had on the economy with pretty much the lower 60% of society falling into a more precarious check by check existence.
Even Ray Dalio, the billionaire hedge fund manager from Bridgewater Associates, released a report saying that from now on we need to consider that there are actually two economies here. There’s the economy of the bottom 60%, and the economy at the top 40%, which has done much better. The people in the bottom 60% economy have twice the suicide rate, can’t find $500 in case of an emergency, and are increasingly being structurally excluded from growth.
He says that this is causing a decline, a slowing of economic growth. If you look back at that the productivity versus wages gap, it’s roughly a trillion dollars a year in the US that used to go to workers that now goes to shareholders and executives. You can just imagine that trillion dollars if it was still going to workers would have been a much, much bigger– we would have had a much bigger economy. Wages would have been much higher.
These are the trends. A lot of people like to blame the demise of unions. Even Andrew Stern in his book — he was the president of the SEIU — he said one of the reasons he left the unions is because they couldn’t nationalize, and they also couldn’t go global. They’re structurally cannot cope with globalization or automation. I think it’s really globalization and automation.
But today we also see the transition of work to part-time contracts, more gig economy work, which doesn’t have benefits and generally is a form of competitive labor marketplace, actually occurring in labor marketplaces where everyone’s competing with each other.
Then the final trend I see that’s a big deal is this winner-takes-all economies now where companies like Amazon are absorbing huge shares of economic activity. Amazon will have 10 times the impact Walmart had on main street retail. I’ve heard projections that 30% of shopping malls will close within five years because of Amazon, and retail is the number one employer.
These are the urgencies for basic income. I feel that it’s time that as a society we acknowledged that these structural changes are happening, and this makes left versus right views about welfare or laziness or all of those things completely obsolete and completely beside the point. Those views reflect a 1970s’ viewpoint when wages were rising with productivity and when families real purchasing power was, in fact, higher than it is today. I think we don’t need to wait to see if AI takes out half of all jobs, we can already see the impact on the economy.
I was doing some research recently on the impacts here in Ontario, and I was actually amazed that since 1997, the number of people– the share of jobs, share of people in minimum wage jobs, not the number, but the share of them has increased fivefold. The number of people in low-income jobs has nearly doubled to 30% of all jobs according to some reports I’ve seen. This same trend is playing out in the US where you have the hollowing out of a lot of the second-tier cities in the middle of the country. People primarily moving to San Francisco, New York, London, and Boston.
And so you can just extrapolate these numbers: what happens if the share of jobs that are low income grow to 60%, or as Nick Hanauer who I follow a lot of his work — he’s the guy who did the Beware, Plutocrats, The Pitchforks Are Coming — he points out that the top 1% only have 5% of national income in 1980, now they have 22% and the bottom 50% is where the loss was, their earnings.
Imagine that if nothing gets done in 10 or 20 years, the top 1% have 35% of national income per year. Then you don’t have capitalism anymore, you have a feudalist economy. You just extrapolate the numbers, that’s where we’re going. In my opinion, basic income is the most scalable solution to that.
The other arguments I have about why it’s pro business are fairly timeless, but they kind of segue off of that.
Jim: I mean, you raised a really interesting point, which is oftentimes when we talk about automation, the conversation is what will happen — and whether it’s 5, 10, 20 years — with robots coming and taking our job. I think oftentimes people adopt this somewhat literal view of that. That either a robot itself or a computer program will just come and do your job. It still seems like, more so now, but there’s still limited imagination as far as, “Oh, could this actually happen?” So your point that you were making, which I think is an important one, is that we don’t need to look to the future, that automation has been happening here.
I also was struck by your noting about the low-wage job increases because I feel like that’s often something that people raise as a counterpoint. That if automation is happening, why do people still have jobs? Why isn’t productivity going up? If people are being forced into these low-wage jobs to have something that would really explain why that trend hadn’t manifested in a way that they might have intuitively expected if you’re talking about the robot coming and taking a more specific job.
Floyd: Exactly. The way the labor market changes with automation, it’s not that, as you said, it’s not that a robot comes and takes your job, knocks on your door. It’s more like over the years less people are needed to do this to do work as demand grows. Companies become more productive with less people. So GDP is up, population is higher, but less people are actually needed to do the work.
Here’s an example I think we’re going to see playing out. Let’s say that artificial intelligence gains replace a lot of work that doctors used to do. This is 100% being discussed right now. There are startups coming out of the Valley that are working on these problems. I’m sure your readers have heard that software that does cancer scans and X-rays is now more effective than panels of radiologists.
What you might have is, let’s say metaphorically, 10 doctors serving 1000 people but then 10 years later after new software gets adopted, a new hardware gets adopted, you still have those 10 doctors but now maybe you have maybe more like 50 technicians who are paid a quarter as much as a doctor just working with software and computers and carting them around to see their patients.
It might have been a requirement to hire another 50 doctors as the population has grown, and you’ve replaced that 50 doctors with a thousand personal support workers who just work with software, who get paid something close to minimum wage or a bit higher. That’s how it’s happened. The hotel example is evidence of that and all the manufacturing cases. That’s how it happens, and that’s what AI is going to do.
All the experts are saying that– I don’t think they’ll be no jobs, I just think the jobs will be– there’ll be more jobs that are low paying, and a lot people won’t want them. The only way to make those jobs actually work is if you have a basic income so people can choose to do that work while not living precariously and not living on a subsistence level. So I think basic income will make that work actually pay enough, in combination with basic income. That’s the future because it’s already happening.
Jim: You’ve talked about some of the urgent and dire reasons that we need to be changing the system now. I think you alluded to earlier that there are some perhaps more positive rationales that business might be interested in supporting basic income. Can you talk through your thoughts on that?
Floyd: I’m amazed no one talks about this. I’ve been running a business for 12 years, and we have over 7,000 software developers a year who come to my conferences in New York, San Francisco, London, China, and Brazil. We also have a news website for software engineers that has over a million readers a month. I’m very interested in the macroeconomic cases for these. I just looked into it a bit, and there’s some talking points that are just not there.
The first one is that it is an economic stimulus. I mean business can only hire in response to increasing consumer demand or purchasing power. If we want to grow the economy, we have to make sure that enough people can participate in the economy and buy things so that new businesses and the vibrancy of new startups, all that can be maintained. Quite simply, there’s been research shown that programs that put more money in the hands of those who have the least generate five times more return to the economy than corporate tax cuts.
The velocity of money in the US has been drastically affected since 2008. I think I saw Nick Hanauer put up a slide that the average dollar was exchanged 17 times in the year before 2008, and now it’s only exchanged five times in a year because wealth has been so concentrated in the hands of a few. Maybe it’s time that we engage in a demand-side stimulus like a basic income that directly brings people up to a livable level and stimulates the economy.
There’s real evidence now that this would work. There’s a program in Canada called the Canada Child Benefit. It’s something that even some Republicans in the US were suggesting that we do something like that in the US, which is encouraging. The Canada Child Benefit is an unconditional, no-forms-to-sign cash transfer program for families. I think it ranges from a hundred dollars a month all the way to $530 a month per child per household depending on their income level.
Imagine that a family in poor circumstances with two children could be receiving over a thousand dollars a month, no strings attached, from the government and which helps them make ends meet.
This program not only has it brought– it was launched in July 2016– not only has it brought 300,000 children out of poverty according to Justin Trudeau, the Prime Minister, but the Governor of the Bank of Canada, Stephen Poloz, said on record that this program resulted in a 0.5% GDP growth in 2017. That’s pretty amazing. Half a percent of GDP growth. As you know, GDP measures the exchange of goods, production of goods. Obviously, if there’s more goods being exchanged, more jobs are created.
I’ve noticed personally that when looking at unemployment graphs, the five-year graph of unemployment in Canada, the unemployment rate was pretty flat for three years. Literally the month after those payments began, you can start to see the lines starting to go down. Now we’ve had two years of non-stop decrease in unemployment. Now that’s happened in the US as well, so there might be something going on, but it’s unusual how those payments seem to correlate to dislodging a flatline in unemployment.
So it is an economic stimulus. I’m sure your readers know the Roosevelt Institute in the US did a projection that the US economy would grow by at least 13% within a few years if there was a basic income, adding two and a half trillion dollars to the annual economy, creating over four and a half million jobs.
It’s also would be a great stimulus for rural and small towns. Big cities is where taxable economic activity is concentrated. You can imagine that if there was a national basic income that it would effectively be like the big cities investing in the small towns because the basic income would be the same amount probably all over the country. That would make small towns more affordable, bring in fresh cash, result in a lot of investment.
We’ve seen that the rural town of Dauphin in Manitoba in Canada, when they had a five-year trial in the ’70s, we can see a lot of evidence, a lot of stories about people buying tractors and farming implements, just taking themselves one step up in their lives and spending more in the economy. In addition to social benefit outcomes like hospitalization visits went down 8.5%. So it’s an economic stimulus.
Another point is that it’ll help us manage recessions. The biggest problem during a recession is consumer confidence. In that regard, basic income is an automatic stabilizer. If people aren’t afraid of what they’re going to eat tomorrow, they’re probably not going to curb their spending as much. That’s something that I never heard anyone talk about, but it seems like such common sense. Especially when you’re talking about how a basic income would meaningfully reduce fear and anxiety for at least half the country.
The other half, they have more money, they won’t have that much fear. But I have to say even myself, running a business, doing well financially, I worry that one day I could lose everything. Just knowing that the check is coming in every month is like an antidepressant. Actually, Evelyn Forget who did the analysis of the Dauphin, Manitoba experiment has this great article about how UBI would be massive for mental health because it functions as an antidepressant because people won’t be stressed.
I know that from my own personal example because in my mid-20s, I took my life savings at the time I had. I made some money from stock options in a startup I was in, and I down paid a rental property. The income from that rental property massively reduced my sense of stress and anxiety. I knew that no matter what, I’ll never have to starve or worry about shelter. There will be just enough money to get by even if it’s a small amount. With that confidence, I quit a high paying job and started my business, and now I employ 50 people. The basic income for me was very personal.
I want everyone to have that lack of stress. You don’t have to be a millionaire to experience the absence of strain and stress. You just need $1,000 or $1,500 a month that you can rely on, and that’s all it might take. Imagine a fearless society where no one has to worry about that, where no one’s voting for populists who are promising them stuff because they’re already feeling a sense of well-being. That’s what’s on the line here, and that’s why I’m so excited about basic income. A few more points, but you want me to go through them all?
Jim: Go ahead.
Floyd: Another point is it will unleash entrepreneurship. This is why the famed Y Combinator, the president Sam Altman says that when he went through Y Combinator, it was like getting a basic income. He got $12,000 a year, interesting number there, which they used to eat and live.
I think basic income will unleash entrepreneurship. Now, it’s not going to create entrepreneurs, I think entrepreneurship and that kind of risk-taking is an innate quality. Imagine all the potential entrepreneurs that are held back by life’s circumstances, afraid to take a risk, just trying to make ends meet for their families, who could then take risks and do this. It’s really about helping people have time and mindshare to create things. Imagine if people were always creating. That’s something we can get from this.
For those who are not entrepreneurs but who want to better themselves, it would reduce the risk of retraining and relocating. We need a more educated workforce. First, let’s help people have the mindshare to think about the future and be able to take time to go and retrain. I’d rather people retrain themselves or go on Khan Academy or Udemy than some government retraining program where who knows what they’ll come up with.
Let’s decentralize, let’s trust the free market, so that people can go and retrain themselves or be able to take a risk by relocating to where the jobs are. I’d imagine myself if I was in poor circumstances and I had to go across the country to find work, I might hesitate if I didn’t know what I would eat the week I got there. Basic income will really help lubricate the system so people can be more mobile.
The final point is that a basic income could enable an entirely new economy to emerge. I call it the volunteering economy. What that means is, let’s say someone wants to voluntarily work for you for five dollars an hour because they believe in what you’re doing or your cause. Maybe it’s not even a business, maybe it’s some sort of community service. Or maybe it is a business and they want to work for you and maybe get a profit share or just help.
Well, none of that is feasible right now. Imagine economies, a number of businesses, organizations, community groups that would exist if there was a basic income in place so people could voluntarily choose to work. Even if the amount they’re being paid isn’t necessarily, wouldn’t necessarily be a living wage by traditional measures. Imagine it, if they’re choosing to do it, then they’re not under any coercion.
This is why, from a business perspective, basic income is better than minimum wage increases, and it’s also better than EITC or similar programs that exist in the UK or in Canada because those programs don’t compensate for caregiving or unpaid work like community service or entrepreneurship. To me, basic income is just a much better approach to solve those problems.
Jim: For me, the thing that really resonates is, what could be unlocked around entrepreneurship? If you look at who’s currently able to start a business, the vast majority of people have some substantial means already, either personal wealth or family connections. They’re in a position where they can afford to take the risk. Because if you’re not sure if you put food on the table, how on earth are you going to actually go potentially months or even years without actually getting a profit from your new business idea?
Seeing how many potential entrepreneurs out there could be unleashed with this, I would say that is definitely something, both honestly from a business and equity perspective, that I feel like is very compelling.
I’m curious, you’ve been doing this advocacy work for a while now and talking to people in the business space. How are they reacting to this? Is it resonating with folks? Are there certain folks that seem to get in and others who don’t? What has the reaction been?
Floyd: I find that it’s mostly positive, particularly for people who came from humble backgrounds. They know how hard it was, and they can imagine how much better they would have been if they would have had a basic income back from day one. I would say it’s probably 70% positive, but people have questions like how do you pay for it and such. The ones that were more negative usually are responding from ideology and concerns about disincentivizing work. Usually, those who are open-minded, if we talk about it enough, then they usually see that it doesn’t disincentive work.
Although most of the people I speak to are more the younger generation of business owners, people under 45. I haven’t spoken to any Fortune 500 people that have more of an old industrial mindset. But mostly positive, I’m actually quite pleased.
Jim: Has there been any big surprises for you in your advocacy here? Reactions that people have had, or the types of folks that have wanted to get most engaged?
Floyd: Right now, what I’m mostly surprised by and disappointed by is the decision of the Doug Ford government in Ontario to cancel the Ontario trial. To me, it seems like a political move. My personal theory is that– they canceled it before any data was even gathered, so they had no reason to cancel it. I think that it was actually a political move because probably the trial would have generated a lot of positive press over the next two years until it ended, and all those good news stories might have been used against the party at the next election should they choose to not run and not even talk about basic income.
It’s kind of unfortunate that in Canada we have the Progressive Conservative Party at the provincial level, which is supposed to be progressive, and it used to be progressive. It’s quite exciting that even in Canada even conservative parties are progressive. Unfortunately, that seems to be changing, and it’s just disappointing because I think basic income actually is a progressive conservative idea. It almost passed in the US under Nixon, passed in the house. There was a time when conservatives actually cared about solving poverty and had no issue with taxation, and now that seems to have changed.
I think that’s actually what happened, and I’m very surprised. I’m trying to do whatever I can, like organize other CEOs together to sign a letter to the Ford government to urge him not to do this. The big surprise I’m seeing is that– I have a strange hobby. I like debating people on Facebook about basic income especially conservative people. I truly believe that this a conservative idea, and what I find is that people just don’t know those trends that I mentioned at the beginning of the interview. They don’t know what impact globalization and automation has had on their jobs.
I believe that people are good, and if they understood that working people actually don’t have access to enough good paying jobs anymore, that they’d change their mind, but they don’t know that. Most people on the right who are against basic income on laziness or entitlement reasons, I think they just don’t know. They literally don’t know that the labor market is not what it was in 1970 when most people could get a pretty decent job fairly easily and paying really well. Now it’s just not the case.
Jim: You brought up a good point there, which is this interesting intersection of appeal that basic income may have around — particularly if you’re looking at it from a business perspective — that you could potentially get some more conservative folks to be behind it. While at the same time you have folks on the left who see this as a potentially transformative idea in how it might include people in the economy.
Something I’ve encountered in our work at Universal Income Project is that while you can make both of those arguments, when you try to bring folks together, it doesn’t always go terribly smoothly. There is a lot of distrust, particularly in this moment in the US, maybe it’s less so up in Canada. When you have people coming in for different reasons, different value-based or ideological reasons, it can be a challenge to form a larger coalition. I’m curious if that’s something you’ve thought about it? Is it something you’ve encountered in your work so far?
Floyd: Yes, it’s definitely something I see. I haven’t encountered it because I haven’t done any actual political stuff yet. All my work has been in the grassroots and in my spare time since I’m still running my business. On that note, what I’m most excited about now is Andrew Yang’s campaign in the US to run for president. I think the one issue that could actually cut through left versus right is automation.
The fact that automation is replacing jobs and the people get educated on the fact that automation has already been replacing jobs and the stuff we already talked about, then the urgency is there. When the urgency is there, we can cut through all those discussions.
So that’s really important. That’s why also for myself, for discussions I have, I tend to start with these trends that are changing the economy and, unfortunately, use a bit of fear because people respond well to fear. Although personally, I’m much more excited about basic income for the kind of society we’ll have after we have it. Right now, we need to defend the middle class, and we need to defend our way of life, and I know of no better solution than basic income.
Jim: I would say personally I have some mixed feelings around that just because there is– you do have that extreme, the fear side, and the potentially massively aspirational side, and can those actually work well together or do you put people in different camps? I mean it certainly seems like if we can get more people to be recognizing the need for change, then that does open up new doors.
Floyd: That’s why I like what Andrew Yang is doing very much, I’m doing whatever I can to help him. I actually really like also his proposal that this be taxed through a new Value Added Tax. In Europe, the Value Added Tax is 20%. In Canada, it’s 5%, federally, it’s called the GST. In the US, there isn’t one.
What I like about the Value Added Tax is that it doesn’t touch income tax, so no one has those knee-jerk reactions when they imagine losing more of their income. A Value Added Tax also promotes conservation. If you can do more with less in your business, you’ll pay less Value Added Tax, that’s how the tax works. As opposed to income tax, which actually penalizes if you’re very efficient because then you’ll make more income in your business and pay more income tax.
Another thing is that all the experts are saying– all the futurists like Elon Musk and Ray Kurzweil, they’re all saying that productivity will increase exponentially with so many new technologies coming and prices will get very, very cheap. To me, a Value Added Tax harnesses productivity. It tracks to productivity much better than income does. If a value-added tax is in place, then those exponential productivity gains will be able to contribute to society and contribute to the purchasing power and the livelihoods of most of society, which is why I really like– Andrew Yang calls it a dividend.
Why can’t capitalism pay a dividend? What’s the point if it can’t at least pay dividends to keep people solvents at some basic level and maintain sustainability? Maintain renewability. We use that word renewables in the context of the environment, but the economy is a system as well. It’s a complex adaptive system according to new economists, and it’s not renewable right now because it’s trending towards feudalism now.
If we had a Freedom Dividend, as Andrew Yang calls it, paid for by productivity to me it seems like a very logical way to harness exponential technological growth to make capitalism renewable and sustainable.
Jim: Taking the winner-take-all direction we’re and actually creating a collective component to success basically?
Floyd: Yes, harnessing it, harnessing it. If Amazon is going to be the sole shopping place for the whole country, they should pay based on a Value Added Tax. There’s another trend I didn’t mention is that these days, some of these large companies, the financial incentives are no longer profit, they’re share growth—they’re valuation growth in their shares.
The whole venture capital movement now is much more interested in growth in share value than interested in profit. Our current taxation system that our civilization is based on is based on primarily profit taxing because capital gains is laughably low, as even Warren Buffet says, “It needs to be increased to a minimum of 30%.” When these companies are becoming the global winners, eating up the whole market in this winner-takes-all manner like Amazon, and they’re not actually making a profit, then the system is broken. The Value Added Tax would correct for that.
Owen: That that was Floyd Marinescu, founder and CEO of C4Media, on the Basic Income Podcast.
Jim: Floyd definitely had a different set of arguments than you typically hear when talking about basic income. I feel like the urgent ones that he described, those tend to align more closely with the conversations that often come up particularly around the forward-looking risk of automation that we think may be coming down the road and also how that’s affecting us today.
As far as more specific economic ones, we’ve talked about that a little bit, but it’s certainly– even some of the same analyses when you’re thinking about what impact that has from the viewpoint of the business leader, it takes on a new form it seems like.
Owen: Yes, I feel like this is an underplayed argument in the basic income space, and I certainly include myself in that as well, just because this is a direct way that people would be helped and the economy would be helped. It’s something that people respond to very directly. When you make a moral case, sometimes it doesn’t connect with people in the same way as opposed to something that would just make their lives better on a daily weekly basis.
Jim: I think that’s true. I do think, and we’ve certainly talked a lot about this in the past, that when people talk about basic income as a bipartisan issue, I think warning lights go off for me. Because I think if they’re saying this is left-right, and you have some folks who want to lift everyone up and the folks who want to– really their main goal is cutting their social safety net, I think that even though both may support “universal basic income”, we’re going to end up with some very clear misalignment once we get to a certain stage in the process.
But if you’re talking about forward-looking business leaders who are supporting a policy that ensures everyone participates in the economy, I don’t know, maybe there actually is an unusual coalition that could come out of that with those folks interacting and those people advocating for actually the same policy.
Owen: I think the idea that there are people with great business ideas and who have things to contribute, but they need to make their rent in the next two weeks or else they’re screwed. I think that that can connect to a lot of people. I also, on a different note, liked how much emphasis he put on globalization because we’ve kind of baked that in in our thinking about the economy. It’s something that people don’t talk about too much, but it’s a major reason why people are as economically insecure as they are at least in the United States right now.
Even if automation does not turn out to be as big a factor as people think it will be, we already have this major factor of globalization which could get even stronger as more and more of the world comes online and we’re able to do more and more remotely.
Jim: I think if you zoom out far enough, one could argue that globalization is actually a specific manifestation of automation. We wouldn’t have globalization without the technology to actually be managing those communications, those operations around the world. So that, while it’s not the kind of micro automation of something coming and disrupting a particular job, it is another instance of technology disrupting the traditional model of work, and that it’s clearly something that has been happening for decades.
One other thing I’ll add is, I do think that getting back to who is in this space, who is actually working on policy, something that is key that has struck me in multiple points in my work on basic income is still making sure that the people actually designing the policy are the ones directly affected.
I think that there’s fantastic potential for business playing a leading role in pushing forward policy, but at the same time making sure that what the actual policy is, is being figured out by those who are in poverty, by those who are dealing with the racial injustice of our current system. So that what we end up with is something that is going to lift those people and not unintentionally leave folks out as has happened often times in the past.
Owen: Alright, that will do it for this episode of the Basic Income Podcast. Thank you to our producer, Erick Davidson. Please subscribe on Apple Podcasts or the service of your choice. We’ll see you next week.
What's Happening with the Ontario Basic Income Program, feat. Sheila Regehr
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Recently we got the unfortunate news that the new administration in Ontario plans on cancelling the current basic income trials. At the time of publishing, the program is still happening, and political pressure on the Ontario government may be quite valuable right now. Jim talked with Basic Income Canada Network Chairperson Sheila Regehr about what’s happening with the pilot and what people can do to push back against its cancellation.
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Episode Transcript
Owen: Hello, and welcome to the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh.
Owen: We have talked a few times about the very exciting pilot going on in Ontario, up in Canada, to pilot basic income there. Just recently, we got some unfortunate news that the new administration in Ontario is planning on shutting the pilot down.
Jim: Now, there’s a lot happening in response to this announcement, and so we thought it be good to provide you all with more information about what’s going on. I was able to sit down with Sheila Regehr, who’s the Chairperson of the Basic Income Canada Network, to get information from her on what’s the situation on the ground.
Owen: Here is Jim’s conversation with Sheila Regehr.
Jim: Sheila, thanks for joining us on the podcast.
Sheila: Thank you.
Jim: We’ve talked a bit about the Ontario pilot in the past, but just to make sure all of our listeners are up to date, can you generally explain what was happening with the pilot and what was going into that prior to the announcement last week?
Sheila: The idea for the pilot, the way the Ontario government set it up — we can talk about what the design of it actually looks like — but essentially they were doing a Negative Income Tax type of model where recipients would receive about $17,000 at a maximum for a single person, and that gets you close to the poverty line in Canada but not quite there, and then proportionately more than that for couples.
There were three major pilot site areas that they decided to test it on. One is the Hamilton-Brantford area, that’s fairly close to where I live in Toronto. Another one was Lindsay, which is interesting because it’s a smaller community, has some rural population as well. Another one in Thunder Bay, which is interesting because it has a fairly high proportion of indigenous people in that community.
Different communities so that we get a different sense of things. The Lindsay segment, in particular, was where about 2,000 of the overall 4,000 recipients would be, so it comes as close as we can to what would be called the kind of saturation site that we saw in Dauphin, Manitoba, here in Canada, in the 1970s.
That’s it in a nutshell. Things got started last year. The rollout was a bit slow. It wasn’t as easy getting people to participate in this study as the government intended at first, but they had a lot of information sessions. They worked with community organizations. They gradually got people on. They staggered the commencement so that Hamilton area people were first.
The first of those people started getting checks in the fall of last year. Then, they decided — there were a few wrinkles, bugs in the system, and a few lessons learned already that they work out, and then Lindsay was started a little bit after that.
I’m not sure about the timing of Thunder Bay, but the last people to join the pilot in Lindsay only came on like maybe three months ago.
Jim: There’s already been a number of people who have been receiving benefits, and as you said, some for close to a year now it sounds like at this point.
Sheila: Yes, some for quite a period of time.
Jim: Now, the big recent news on this was that the Doug Ford government announced last week that they were planning to end the pilot. That was, it seems, in direct contradiction to promises that were made during their campaign. What is the general reaction been to that announcement?
Sheila: The reaction — we were quite stunned to hear this. First of all, it comes out in the summer. The immediate reaction from many, many people across the board was just feeling heartsick and this kind of gut-wrenching feeling for the participants. There are a number of participants who have come out publicly speaking. They’ve actually learned public speaking in order to be able to tell their stories, to talk about their lives before, and how basic income is made to change. They were prepared to face media.
We’ve heard a fair bit from them, and now with this announcement, we’re hearing about more and more people coming forward and talking about the kinds of changes that having this basic income has meant in their lives. It’s just profound to see the things that — the kinds of changes it’s made. Depression lifted. People are registered, they go back to school in the fall. One couple invested some of their extra money to help boost up the small entrepreneurship initiatives that they had started a little bit earlier, to help grow that a little bit.
People had plans. Their lives were becoming better. Like I said, the reaction came from across the board, from lots of unexpected places even, and really, really angry. Much of it directed first at what you mentioned, the fact of betrayal. The fact that the government did — all of the parties on the campaign trail in the spring agreed that they would let the pilot run. Even if they didn’t appear enthusiastic about it, they agreed to let the pilot run.
Most people in democracies don’t like being lied to. A lot of reaction was based on that, and then the reaction started flooding in based on the just devastating consequences it has for participants. Those 4,000, another 2,000 that were part of the control group, but then there’s the many more thousands who were hoping down the line that this pilot was going to help show the government that this was a good policy and it would benefit them too.
The loss is tremendous if it can’t get turned around, and one of the really difficult things is that the government is leaking out little bits of information in dribs and drabs, and it’s hard to figure out what their plan is.
They seem to have told people that they will still get checks in August, but there’s no clear timeline for when it might seriously end, meaning the checks stopped coming, or whether there is some possibility of salvaging this or keeping some of the payments going.
Jim: On that note. I will say just looking from where I am in California, everything you just laid out there as far as the negative effects both around what would be learned from the study but also ripping away these benefits from people, it certainly is terrible.
But it’s also been inspiring to see how much of a pushback there’s been to the announcement. As you said, bringing in people who perhaps were not so actively engaged before, but because of this betrayal, because people had been making these plans, have at least from where I’m at, it seemed like there has been this rallying together to fight back there.
I’m curious to try to get more of your sense given the reaction that’s been happening, does it seem like there actually could be a path to pushing the Doug Ford government to reassess their plans here?
Sheila: It’s really hard to say. Who knows what or who will get through the them? For now, all of our efforts are going into trying to show them how much support there is for this pilot from all different directions including people with a more conservative bent. People with good economic sense who understand that this actually could be a boon for the economy. People who understand that Ontario was looked to as a leader in this.
We fight as long as we can. Then the other thing that’s come up in conversation after the first few days is, are there other possibilities of saving this? Are there ways in which the federal government might be able to take it over? Some people have even suggested there might be some very wealthy philanthropists out there who sees the value in this and might want to take it over.
That seems like a long shot, but the federal government involvement is real. A lot of people are looking for the federal government for some help and some leadership in this, too, and from Basic Income Canada’s perspective, our end goal is to have a national policy, which means it has to come from the federal government. Ontario was a step that we were hoping would help us get there, but the focus in the long term is the federal government.
As you said, this enthusiasm and this rallying of support, if we can use that to reverse the decision on the pilot, that would be great. If we can use it to get the federal government to help be more concerned, and they shouldn’t be bailing out the Ontario government, but they could be helping Canadians. Then, beyond that, if all else fails and those the things don’t work, I would hope that the outpouring we’re hearing will result in lasting partnerships and stronger allies and relationships that we can help use to build the movement longer term.
Jim: Given the energy here, this really does seem like a key moment in the basic income space, not just in Canada, but around the world. I would imagine that some of our listeners may be interested in helping out to defend the pilot in the various ways that you talked about. Are there ways for people to get involved either people who are in Canada or other places around the world?
Sheila: There are quite a number of things that people have got started already and other things that are being planned or possible. The first thing is that there are a number of petitions out there that people can sign. The more numbers we get on those kinds of things, the better. Maybe a separate international petition could be something interesting.
Some people have advised that one way to put pressure on the Canadian government is to have basic income supporters in other countries contact their Canadian ambassador or high commissioner and transmit to them the message that there is international support for this, that it’s important not just for Canada but for the rest of the world too.
Within Canada, we’ve got people interested in talking to their MPPs in the provincial legislature, or their Members of Parliament, or support of Senators even at the federal level. There are rallies taking place. I’ve been out all day, so I haven’t heard about one that was held in Lindsay today. I hope that went off well because that’s a pilot site, and we were hoping to get good media representation. One of the Lindsay members of the provincial legislature is a cabinet minister, and she is the Minister of Labor. So they’re really hoping to put a little bit of pressure on her.
In the long run, anything that anybody can do to just help people understand what basic income means and why it’s important and help develop a constituency that increasingly will support this. Again, one of the good notes to this, or one of the more positive outcomes we’ve seen, is that it looks like the work that we’ve done already has really paid off.
If this pilot had started, and we had not done our work over the last 10 years and people internationally hadn’t done their work and there weren’t other pilots, if this had come up, nobody really knew what a basic income was or anything about it. This level of support would never have been achieved. We’ve done a lot of good work. We have to continue.
Owen: That was Jim Pugh and Sheila Regehr, Chairperson of the Basic Income Canada Network on the Basic Income Podcast.
Jim: First, it was just generally good to hear from Sheila about what’s happening, to better understand what the situation is, because there’s so many moving pieces right now. This is one of those rare situations in the basic income world where there’s actually a lot happening in the moment. Most of what we do is really planning longer term, thinking about what might happen in the future, and this is happening now. There’s tons moving in response to this cancellation announcement.
Owen: Yes, and now is the time to act, especially if you happen to be in Canada, especially if you’re in Ontario, but there may even be ways that you can at least show your support for this pilot and encourage the Ford administration to change their minds because this is the moment when that might happen.
Jim: And this is — we’ve talked about this. Obviously, there’s very real-world negative consequences if this cancellation happens, these people have been planning on how we’re going to change our lives with this money, and suddenly, that’s potentially being ripped away.
But I thought that something Sheila mentioned is definitely true, which is that Ontario is being viewed as a leader in basic income around the world. This isn’t actually just a Canada issue, this is a global issue. This affects all of our efforts towards basic income. What happens in this moment is going to have ripple effects everywhere.
As you said, if you can, speak out on this, engage in whatever way you’re able to, because this is the moment that can make a difference for all of us.
Owen: The one thing I’ll add to that is the one point I’ve seen by a representative of the Ford administration about why they’re doing this, is that there must be a work disincentive if you’re giving people money for nothing, and they’re saying that without evidence. There’s plenty of evidence that there is no work disincentive. It feels like this is just a philosophical thing that they feel like they can get away with now that they’re in power. It’s worth pointing out that the evidence does not hold up there.
Jim: If you want more evidence, you should let this pilot run its course, because then we’ll actually have even — as you say, there’s a lot already, but assuming it matches what we’ve seen before, that there would be yet more evidence around the fact that this doesn’t actually lead to lots of discouragement of work and potentially increases economic mobility actually.
The one thing I’ll add is that I’m certainly worried about what’s happening here, but at the same time, I am inspired as to how much this is bringing people together around the issue. I think that just feeds into this being just such a big moment in the basic income space right now, that there is so many new potential long-term allies that are getting involved here, and that this is an “all hands on deck” moment where something big is happening.
Owen: Yes, absolutely. This obviously is going to be an uphill climb to get an actual basic income in a country such as Canada or the US. Yes, these are big moments. But it’s nice to see that in these big moments, we have a lot of support rallying around.
Jim: Absolutely.
Owen: That’ll do it for this episode of a Basic Income Podcast. Thank you to our producer Erick Davidson. Please subscribe on Apple Podcasts or the service of your choice, and please tell your friends, because we are always trying to grow this movement and bring more people into the conversation. We’ll talk to you next week.
Combining Basic Income with a Jobs Guarantee, feat. Alyssa Battistoni
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Basic income and jobs guarantee are often juxtaposed as two policies that are mutually exclusive, politically or policy-wise. Alyssa Battistoni, writing for In These Times, suggests that both are worth fighting for, and that the two policies could work in concert. Battistoni, a PhD student at Yale in Political Theory and editorial board member of Jacobin, spoke with Jim on how these two policies might work together.
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Episode Transcript
Owen: Hello, and welcome to the Basic Income podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh. Many of you have probably heard a lot recently about the idea of a job guarantee: a proposal where, rather than just giving people cash, the government would actually provide them with some sort of decent job that gives them a good wage and good benefits. There’s been more discussion about that from some Democratic candidates running for office, and the idea does seem to be picking up some steam.
Owen: Jim had a conversation with Alyssa Battistoni, a PhD student at Yale and contributor to Dissent, n+1, and Jacobin, on the idea that a jobs guarantee and a basic income are not necessarily mutually oppositional. Here’s Jim’s conversation with Alyssa Battistoni.
Jim: Alyssa, thanks for joining us on the podcast.
Alyssa: Thanks for having me.
Jim: There’s been an increasingly heated debate over the last few years between the ideas of universal basic income — providing everyone with unconditional cash at a level sufficient to bring them above the poverty line — and the idea of a job guarantee program, which would aim to provide a job with a living wage and decent benefits to any person in the country who wanted one. People generally seem to view these as two competing proposals for how to guarantee economic security to everyone.
You recently wrote a piece for In These Times that propose a combination of the two might actually be the best of both worlds. Can you walk us through your thinking there around the hybrid proposal?
Alyssa: Sure. As you say, the job guarantee/basic income debate has become a very contentious debate on the left, and these are rival ideas of how to solve the problem of unemployment, particularly after 2008 and the rise in unemployment that resulted. There are sometimes phrases: “full employment” as the job guarantee proposal or “full unemployment” being the UBI where people say, “There’s not work to do, we would we just make jobs?”
It’s always seemed to me that these are proposals that are trying to address the same problem essentially and that there are a lot of things that could be more complimentary, it doesn’t have to be completely opposed. I think there are a few ways to think about that. In the In These Times debate, there was one proposal for, one set of authors making a case for the job guarantee then another author making a case for basic income.
The case for basic income in that instance, this is Matt Bruenig arguing that UBI is a good thing. His version of the UBI is not intended as an income replacement or to be at the level of a full– to basically provide a full income to everybody. That’s premised on a more claim– the UBI is like a claim to public resources.
Obviously, the most famous example of this is the Alaska Permanent Fund, which always comes up in UBI debates. Matt Bruenig says everyone should have a claim to national resources of whatever kind. The most prominent examples are typically oil, gas, and mineral resources.
That’s actually something that I have a complaint with because I come to this from the prospect of thinking about environmental issues, climate change and wanting to use political economy and economic programs to address climate change. Thinking, I don’t want us to build a new set of universal social benefits on the back of fossil fuel. That seems like a bad idea to me.
But you could certainly imagine a version that was almost going the other direction, that I was trying to tax resource depletion or make other kinds of claims to public resources that aren’t necessarily extractive industries, up to and including things like– there’s been some proposals to do a version of that for the rents coming out of patents and things like government subsidies and so on. That would just be a more of everyone gets the money as a claim to public resources and you could pair that with some jobs program.
I also frankly think that you could just have a much more robust UBI that is actually an income replacement. If people really also wanted to work– job guarantee people say, “Well, people want to work, and we need to create jobs because everyone wants a job, and it’s good for people’s well-being.” I’m like, “Okay, if people want to work they can go get a job on top of their basic income.” That seems technically complementary possible.
The obvious problem is money: where these come from, how you do both. That is really the problem with certainly doing both UBI and job guarantee or with doing either comes in is the problem of politics and power and where we’re actually going to get those things for these both potentially quite radical transformative programs, how we can actually realize is a big question.
Jim: Yes. Definitely. I’m curious, what reactions have you gotten to your piece and to your proposal? Have you heard from both basic income and job guarantee proponents on how they feel about it?
Alyssa: On my argument that these can be complementary, I was pleasantly surprised, honestly, to mostly have people say they appreciated a perspective that was not as firmly in one camp or the other, that you can have some version that recognizes some of the complementarity. Part of that is also that neither is going to solve all the problems. For a while, there’s been UBI as the utopia that will fix all these problems, like Rutger Bregman’s book last year, Utopia For Realists, has this account of how a UBI will fix tons of problems from depression to climate change and so on. You see the same thing from the job guarantee folks a lot. It’s going to solve income inequality and racial disparity and all these things.
Both of them have the potential to make inroads and certainly policies matter, but frankly, I don’t think either of them is likely to just wipe away all the problems of contemporary American life and so we should take that into account. Certainly, the job guarantee idea is in ascendance on the policy left right now, and there’s been some proposals put out recently.
People have been amenable to particularly the environmental and climate critique of potentially– you have to be very careful what kinds of jobs you are creating and not just do a job creation and “any job is a good job” sense, which job guarantee is not necessarily saying, but the kind of language around just “jobs are good” can be the message. That, I think, is not a good message to be putting out. People recognize that they’re important points on both sides if you really make that case. I hope that we can do that.
Jim: Yes. I can certainly understand the appeal. If there are a lot of people out there who feel strongly that, “I don’t just want financial support. I need, I want to have a job. I want to have meaning, and I don’t have a path the one right now.” Then that certainly seems attractive from the perspective of a job guarantee because you are then guaranteeing it.
One concern I have—this actually is something that’s been raised by Matt Bruenig, and I’m curious if you have thoughts here. I do get the sense that there often are a conflation of two different programs in job guarantee discussions, at least, if not proposals: one being setting up the federal government as the Employer of Last Resort for anyone who can’t find a job, at least a job they like, in the private sector could always look to the government for work. Effectively a public option for jobs, and that’s where guarantee aspect of the program comes from.
The second being a large public works program, which if we’re talking about repairing crumbling infrastructure, tackling big projects that move us towards a green economy, generally important work that isn’t actually being handled through the private market today. So a new WPA, effectively. I think those both seem like really interesting proposals, but they also seem different because the Employer of Last Resort—inherently, if you have a guarantee, you can’t have a litmus test on experience or skills. Whereas if you want to take on big infrastructure, you probably do want people who have a lot of experience and skills if we’re actually going to do that right. I don’t know, is that something you’ve thought about? Do you have thoughts on that distinction?
Alyssa: Totally agree that that is an important distinction to make, and I also agree that that sometimes it’s conflated in discussions around job guarantee where it’s jobs programs that– it seems often there is an idea of a major jobs program that would also function as a job guarantee but also going above and beyond a job guarantee in many ways. Frankly, I have this feeling that there is a lot of work that doesn’t need to be done. We should figure out ways to move out of that and diminish work overall and let people have time for other things.
I also recognize that there’s a lot of work that we should be doing. I think actually quite a lot of that is, there’s both short-term jobs program, like short- to medium- term, like you said, infrastructural projects and things like that where you would want people who were committed to a project for the duration of the project. I also think there’s some very long-term jobs we might want to secure or work we want to make sure was done that the government was creating basically permanent jobs in or permanent work in, like a lot of the care proposals.
There’s been more recent job guarantee proposals: [the proposal] from Stephanie Kelton and Paulina Tcherneva has been very emphatic on care for people, planet, and communities, which I am totally on board with as modes of work. I think it’s very important to be supporting that work and giving decent jobs with decent wages and all that in that work.
I also think that that should be very long-term, not a tailored to cycles of the business cycle or job creation and unemployment or whatever. I want to just be like, “Okay, we’re just making a bunch of jobs, and they’re just going to be that and actually jobs that are good enough to crowd out a lot of private employment.”
I imagine there’s ways to design a job guarantee that has some overlap with a broader jobs program that could function together, but I do think sometimes the job guarantee has become the New Deal / WPA type thing, and I agree they seem like distinctive things, and I also would like to make sure that we– I think sometimes the job guarantee, in the less transformative versions of it, functions as a backstop to private sector job creation, and it’s one that does give people and workers more security certainly, more ability to demand higher wages and better jobs and so on. This doesn’t really control what kinds of jobs or seem to care what jobs are being created in the private sector.
If you think, as I do, that a lot of private sector jobs we don’t want to encourage, or we would like to replace private sector work with things that we think need doing like care for people and planet like that. It would be good to crowd out private sector employment in some respects. I think sometimes the job guarantee proposals I’ve seen or just like different ones have more or less of “This will stimulate private sector growth and employment and just be a place for people to hide out for a while while the private sector creates more jobs, and then they can get whatever job the private sector has created” versus “We have an economic and social agenda that we’ll try to– we’ll try to merge an economic and social agenda through the job guarantee.” I’m more favorable to that, but it’s certainly a more demanding proposal and one that I think goes beyond that base level.
Jim: Right, it does seem as though– while all of us are clearly thinking far beyond what is politically possible today, we do have our own internal thresholds, or it’s like, “Whoa, okay, no, that’s too big of an idea. Can’t have that combination or can’t have that particular approach.” I feel like there’s some interesting arguments that arise as a result of those different perspectives.
That was certainly also something that came up when I had my conversation with Jared Bernstein last year about his thinking on job guarantee is that he at times– and he recognized this during the conversation, but said, “We’re suspending political disbelief, but only to a point.” Where that leaves us is always interesting to see.
Alyssa: Yes, and it’s hard, because I think it’s important to have distant horizon utopian type ideas that are what we’re working towards and also some more pragmatic short-term view of how to get there. It’s one of the things that has been tricky in getting UBI off the ground, it seems to me, it feels like the left version of it feels so utopian, people can’t imagine how you would make it happen in the short term. it’s rethinking so much about work and production and how we expect that to function that it’s an easier sell politically in many ways to be like “Well, you get a job, and you contribute to society, and you get your good wage” and stuff like that.
I think there are ways to do that that are not totally just reinvesting in the dignity of work and work as the means to all social welfare that I think would be important to try to integrate into the job guarantee rhetoric. I also took the point that it’s hard to totally transform where people think about work and income very fast. That’s fair.
Jim: Right. With basic income, you’re not just talking policy change, you’re talking culture change.
Alyssa: Yes. Which I think needs to happen, but I also get that it will take a while and so figuring out ways to continue to not cede the ground of social rights and universal benefits and so on, while also recognizing that there is a long way to go to get– if anything, it sometimes seems like things that we’re retrenched since things like welfare reform and so on have demonized recipients of benefits as undeserving and so on.
Jim: On that note, you wrote explicitly in your article about the hybrid proposal that one of the main thing was that attracted you to basic income was that idea of separating livelihood from jobs. When I’ve talked to other basic income advocates, my strong sense is that is a powerful underlying driver for much of the support of the policy.
I think that maybe why there’s been such a strong negative response from many in the basic income space to the idea of the job guarantee program, because they do see that going in the opposite direction, and if folks — and I include myself in this as well — would like to see that conception of deservedness be decoupled from having paid jobs and that job guarantee is moving away from that, then that’s obviously a reason to not be supportive of the policy.
Then my question is, for the hybrid policy, let’s say that we could make this happen. I’m curious to get your thoughts in that scenario, do you think there would be then a natural shift towards separating deservedness from work or from paid jobs if that was an option for people or might we end up just entrenching these two camps of thought and we’d have the Sharks and Jets ongoing?
Alyssa: Yes. I definitely worry that the latter will happen, because it’s more politically palatable in the short term to do a kind of like “you get income if you do a job” thing, which people say everyone needs to do work, like it says in the piece. If the idea is everyone needs to contribute to society then that would be more like a mandatory work requirement program.
If you have a trust fund, you also have to get off your butt and go take care of the elderly or whatever, but it’s not that. It is explicitly to access livelihoods, you get a job and so that I do worry about. One of the things that I’ve been thinking is that there are certainly ways to structure for a job guarantee and basic income that oriented in different directions in terms of what vision of society it is holding up and aiming to achieve.
I do think that there are ways to try to use a job guarantee to put forth a different idea about what we think work is, how much work people should have to do, in a way that might be able to have a conception of work that’s more limited, that’s more widely distributed. I do think that that will be a political challenge.
Even if you have it like you have a reasonably, a lower reduced-hour work week or something and a high wage for reduced hours and increased leisure time and all of these things that have historically been part of Left approaches to work. You can have all of those things, but still, at the end of the day, to get access to these things and you have to have a job.
I still think that is a thing that we should try to– but that’s just going to be part of the job guarantee, so I do think that it’s very important to also be defending certainly what remains of welfare provision in the country, but I think also trying to advance that and to think about ways that we can increase access to unconditional benefits or even like semi-conditional benefits, like the child allowance is often discussed as a good kind of UBI adjacent policy. Obviously not everyone has a child and will unconditionally receive the child allowance, but just things that are increased social benefits.
One thing I mentioned in the piece that I also think is an interesting idea and have actually heard discussed very little in the US is the idea of universal basic services, which is people having access to public housing, free public transportation, and food stamps. A lot of the things that you actually need to live that you would have freely available.
I think it always can be helpful in solving some of the problems of the basic income, which are if you get X amount of money and then the private sector hikes up the cost of healthcare, housing so much that you can’t afford those things. This is one of the ongoing debates. If you just do in-kind service or good provision, people can still have the basics that they need to live whether or not it’s called income. Then that also seems compatible with a job guarantee. At the same time, it’s like– I still feel like at the end of the day, there are a lot of ways to try to make them more– to recognize that there are– to have a job guarantee that’s not just like “work is the greatest good of society.”
At the end of the day, I still think it’s crucial to insist that you shouldn’t have to have a job to be able to live and to have an income that you can live on, and all of that, and that your access to a livelihood. An economic mode that is premised on a lot of people not having access to a livelihood, that shouldn’t be at the basis of whether you’re able to live a decent life. I think it’s very important for the Left to insist on that, especially if we’re going for the job guarantee.
Jim: Your note on Universal Basic Services brings up an interesting point, which is beyond the question of deservedness, whether you have a job or not, one of the other, I would say, strong underlying drivers in the basic income space is the idea of choice. A lot of this, I think, has been certainly at least fueled by some of the research around unconditional cash that’s been done by GiveDirectly on others in developing nations.
Different people view it even more through a pragmatic lens or more through a moral lens, but it is often better to give people support in a way where they decide for themselves how they use that support. Hence the preference for cash over the services. Because with cash, yes, you are subscribing then to a capitalist market, but that provides a way for people then to choose for themselves, “Do I spend this on food? Do I spend this on rent? Do I spend this taking my kids to Disneyland?” That has a substantial value in itself. I’m curious what your thoughts are about that?
Alyssa: I’m sympathetic to that in some ways. I’m also suspicious of it in that I like both. I think a lot of the critique of certain aspects of the welfare state that come from the Left and from welfare recipients are around the paternalism of the welfare state and the 60’s and so on, where single mothers are being given a hard time by bureaucrats who are telling them how they should take care of their children and treating them like they don’t know what to do.
There certainly is a lot of that. I think actually, one of the reasons to make access to certain benefits more universal, coming with less terms attached is to minimize the degree to which you have people having to jump through hoops to get access to the things they need.
I guess my concern with the framework of choice is less that people shouldn’t be able to choose things. It’s more a couple of things. One is just the way that I think choice has become so– I think the framework of consumer choice comes very strongly out of a lot of neoliberal policy thinkers. This is the free-to-choose as Milton Friedman’s classic idea. It just frames the greatest decision-making power you have is as a consumer in the market and that is where your choice really lies.
I’m a little wary of just creating a program that’s like, “Okay. Well, that’s our paradigmatic value is.” Everyone has the freedom to choose in this sense that that means you get dollars to spend in the market. I do think that there are ways to be free to choose things about your life that if you have access to a set of things including housing, I don’t think that means that housing says you have to live in X place or Y place.
Hopefully, there’s ways to both choice into access to public goods and services, like free public transportation. You can choose where you go. There are many ways to think about choice that aren’t just like, “Here’s a dollar. Where are you going to spend it?” I do think the concern about what happens when people have a basic income and the price of goods is too high for you to choose those things.
Choice in the marketplace depends on how much money you have and how much money other people have to spend on things. I think that especially housing markets and healthcare seem like the most problematic for that. it can be so extreme if your choices are between two extremely expensive health care plans.
This is getting into the more like basic income as a replacement for all welfare state provision, but which is advanced under the banner of choice. It’s like, “Well, people can choose how they spend their money. If they don’t want to buy a health insurance, why should they have to?” Then you’re like, “What happens when people choose not to but they have cancer?” I think I would like to step back from that as the paradigmatic framework for how we think about how we choose things and what that means or what kinds of action that entails.
Jim: I do think your example with health care is a good point because most basic income advocates I know favor a single-payer solution on that. They don’t view healthcare as something that should fall under the auspices of what would be covered in the basic income, specifically because price is so variable that you’ve effectively eliminated choice on the supply side. From my perspective, a pure solution in either direction is very problematic. The question is, where do you draw the line as to what the market actually can handle versus what society should be providing directly.
I think this is a good segue into talking about– you mentioned in your recent piece that you’ve grown more wary of UBI, as you mentioned earlier in the conversation as well, as it’s gained prominence, in particular, due to who the visible champions are and some of the details of the policies being proposed. That touches back to your piece last year, The False Promise of Universal Basic Income, where you were cautioning those on the Left about supporting the policy. I thought you raised some really important points in that piece. Would you be able to just generally walk through your thinking around that?
Alyssa: Sure. Yes, this is a piece slightly misleadingly titled, because it’s more like “some warnings about potential basic income” rather than like “it’s a false promise totally.” However, I am more skeptical. I’d written a previous piece arguing for a UBI as a way to break the growth-job cycle and environmental climate proposal. I was like, “Okay, there’s been all this stuff coming out about basic income. I should see where the debate’s going” and so on.
As I was following the debate as it went on, I got more and more nervous that some of the rhetoric I was hearing, and particularly coming out of—not just rhetoric, but the policy ideas people are putting forward. I think particularly seeing how popular it was amongst Silicon Valley venture capitalist types, gave me real pause. One of the things that UBI people always bring up is that it has supporters on the left and right and there’s these different ideological trajectories. Maybe that makes it potential– you have this potential “big tent” of UBI supporters or something.
I don’t think the fact that there are people in the right who have supported a basic income idea disqualifies it at all. There are very distinctive versions. I was like, “What is going on here?” The more I came to think reading, for example, Andy Stern’s recent book, Raising The Floor on basic income, that it was being proposed basically as– for some people, it is a techno-futurist solution to automation, and there will only be a few gig economy jobs and then what are we going to do with all these masses of unemployed. There are these different competing anxieties about “Will the masses come for us wealthy venture capitalists? We should throw them some UBI to keep them calm.”
That is not I what I’m looking for in the UBI. There’s an idea of UBI as a way to basically have a baseline for the very low wages of the gig economy. You could be an Uber driver and make whatever crappy wages — they’re not even technically wages because they aren’t technically employees. You can make whatever you make on a ride, but the government will backstop that basically. It seemed like a public subsidy to shitty paying private sector jobs, which I think is also not whatever I want UBI to do.
Things that are along these lines, that are positing that basic income as a way to stave off a more egalitarian political economic framework and to deal with the problems of automation. That made me concerned and the thing that I came to think a bit about UBI is that the idea of it as you sometimes see in, for example, in Rutger Bregman’s book, that presents that was rational post-ideological idea that’s solution oriented or it just makes sense as a policy proposal and it doesn’t have an ideological valence, sometimes seems like the good thing about it, but I came to think it was not the good thing about it.
I think that there are a lot of ideological components built into different conceptions of the UBI, and it’s really important to articulate those. My version is actually very different from this other one, and it’s not just the same because we both think a basic income is good. Andy Stern has this imagined debate between Charles Murray and Martin Luther King, Jr., which I found baffling, kind of offensive, that they actually agreed on more than they disagreed on because they thought a basic income was good.
No, I just don’t think that’s true. I think people who are coming at this from the left. I really don’t want to say because there’s a few– because there are people want version of the basic income that I don’t like, this poisons the thing, in the same way that I don’t think that whatever Republicans trying to attach work requirements to food stamps should disqualify job guarantee proposals, which are not trying to do that, even though they both potentially have this work-oriented mode of accessing benefits.
But I think it’s important to be aware of that, to make clear distinctions. I wrote this piece saying, “Here are the things that concern me about the basic income.” I think in this more recent piece, I’m trying to remind the people who are firmly in the job guarantee camp to also be aware of those same things, because I don’t think that job guarantee proposals are workfare, but as people on the Right are calling for workfare, i.e. requiring work to access welfare and other kinds of benefits, that will be something that seeps into that debate whether people on the Left like it or not.
I think we just need to be aware of who are the people who will try to get in on the proposals we’re putting forth, how they will transform from the ideas we come up with and the ideal version – “this is all the good things about it, and this is how it could work.” Those things will change through the political process and particularly when…
Jim: The sausage gets made?
Alyssa: Yes, the sausage is not pretty as it gets made, but also we are not powerful enough like the people who have a Left UBI or Left jobs guarantee to just implement the one we want right now. Right-wing Republicans are very much in power right now, and it is going to be very hard to achieve the utopian vision of either of our policies. I think it’s important to remember how that might shift as things go through the political wringer.
Owen: That was Jim Pugh and Alyssa Battistoni on The Basic Income Podcast.
What I found interesting and insightful about that was that both basic income and jobs guarantee– they are aspirational proposals, and some of the detail can get left out sometimes. I think with both there is the small version and the big version, I’ll call them, where with jobs guarantee there’s, as you described it, there is the Job of Last Resort, where if you can’t find something else, you would still have this, and then there is the idea that you would be able to have a good, middle-class job through a jobs guarantee program.
Those are very different proposals. With basic income, you might see something with a few hundred dollars, maybe up to a thousand, or a true income replacement of $30,000, $50,000 a year or something like that. I think for jobs guarantees, those are very different proposals. For basic income, it is the same idea just more. Maybe people will disagree on that, but I found it instructive just to think through that.
Jim: Yes, I think that’s right. I think you see these different ideas out there, and depending the details you have it, it does make a really big difference. I think that– and this is certainly not true for every job guarantee advocate, you do hear people out there who are very specific in the version that they’re pushing. But there is sometimes this general conflation, and people wrap this up into some big general idea of a policy and then talk about what things that maybe some form of a job guarantee could potentially solve, but it all gets muddled into one.
I think that it does a disservice, I would say, to the idea of a job guarantee because it doesn’t allow you to really understand, “Alright, what are we talking about here? How does this connect to our core values?” It becomes hard to really have a good discussion on that in that case.
Owen: Yes, I think you can get away with it, when it’s a very far off thing, but now it’s being proposed by Democratic candidates for the House and State offices. Yes, I think it’s time to pick a path if you’re one of those people.
Jim: That’s not to say that we need every detail answered, because you can obviously make the same critique with basic income. There is a lot of specific questions that if someone were to say, “Ok, go. What is your national policy?” We wouldn’t have necessarily specific answers to. But I do think particularly the difference between Employer of Last Resort and just the general public works program, it’s not that those are details, those are really different policies. I really would like to see people make that distinction when they do talk about this.
Owen: One other question I would throw in there for a jobs guarantee people is, is this a program that works anywhere, where you live? Do the jobs come to you essentially? Or is there a difference between maybe a more robust public works thing that you might have to travel to and the guaranteed jobs is where you are? I think there are different ways to structure that and potentially some different good ideas in there, but that is a question that always comes to my mind.
Jim: Yes, I feel like most proposals I’ve seen have talked about local jobs, so that seems to be the thrust. But I think that’s also a good follow-up point, which is, if you are considering bigger infrastructure projects, that does likely require more people to move, so yet another reason why it doesn’t fit cleanly into an Employer of Last Resort model.
All that said, I think it’s important to say I personally agree with Alyssa. I don’t think that job guarantee and basic income have to be oppositional. I think that you could absolutely imagine a hybrid proposal where you provide a job to people who want them but then everyone is getting basic income, and there’s nothing wrong with that. If people actually like these jobs and want to take them, okay, they can do that. If not, they have basic income and can figure out their own path.
Owen: Yes, I feel like part of the opposition between these two ideas is the sense that we only have room for one big idea and that they address similar problems. But absolutely on a policy level, I’m just imagining how things would play out, there’s no reason these can’t fit together in the same world.
Jim: Just thinking politically, if you are a supporter of basic income, I think that there is very good reason not to come out hard against job guarantee or at least insist upon leaning into that in debates. because if we are talking about people who are in the general bucket of “thinking outside the box on how we actually guaranteed economic security for everyone,” there is going to be a good chunk of folks who maybe they were first introduced to the job guarantee, that’s what they are used to and so that’s what they advocate for. They could potentially be very open to basic income, but if it’s presented in a way that actually starts with their values, not as, “your idea is terrible, this is better” and so it becomes — it could really galvanize people into these two camps an unproductive way, I think.
Owen: Alright, that’ll do it for this episode of the Basic Income Podcast. Thank you to our producer, Erick Davidson. We are back, so we’ll have more episodes in your feed soon, and we’ll talk to you next week.
The Emerging Economy feat. Zipcar Cofounder Robin Chase (Rebroadcast)
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We are watching the economy change before our eyes, and Zipcar Cofounder Robin Chase has been at the forefront of that change. She gives her observations on the platform economy, automation, self-driving cars, and how a basic income could be what smoothes the transition as we move to a different type of relationship between people and their work. This is a rebroadcast of a previous episode, and the final rebroadcast in this series. New episodes coming next week.
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Episode Transcript
Owen: Hello, and welcome to the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh. When people think about basic income, they often tie it to some future scenario where automation has drastically affected the way that the people work. But just thinking about how technology affects work is not something limited to the future — it’s actually something that exists today.
Owen: I feel like automation and just the way that technology impacts employment and how people relate economically is something that comes on much more slowly than people tend to appreciate. And the self-driving cars may be a perfect example.
We think of them as this kind of futuristic thing that’s going to be a whole new product that looks pretty unlike what we have today. However, we’ve got automatic transmission, cruise control, a lot of cars have lane-keeping right now where it automatically stays in your lane, self-parking. The same kind of thing happens with the economy where recently more and more we have shared resources, the collaborative economy, the sharing economy. These are slowly chipping away at the legacy structures that have existed for decades.
Jim: There’s more and more companies out there that are adopting new approaches to the way that they employ people and the way that, really the conception of what a worker is. The people who are working in these companies really have a first-hand experience as to seeing what’s happening here and what impact it’s having on people’s lives and the economy at large.
Owen: This week, we are very lucky to have someone who’s at the forefront of the new economy. Robin Chase is co-founder and former CEO of Zipcar and author of Peers Inc. Welcome, Robin.
Robin: It’s a pleasure to be here.
Jim: To start with, Robin, can you tell us a bit about what first got you interested in universal basic income?
Robin: When I was writing this book Peers Inc, I was thinking a lot about, I would say, the platform economy. I was understanding from a trend basis and from economic basis that everything that can become a platform will become a platform. That the outsourcing of workers — and I say that in a kind of negative way — is incredibly economically compelling. That companies that think of themselves as platforms grow faster, they learn faster, they are hyper-adaptive and hyper-localized. They’re very hard to beat. So if your company can take that shape, you’re going to take that shape.
We’re seeing it today. I was looking at something that was the top 50 innovative companies in the world. I would say 98% of them are what I would consider to be Peers Inc companies. Companies that are based on a platform with this satellite of assets that are outside of them. Once you understand that trend and internalize that trend, it says, “Whoa, oh my god.” We have completely structured our economy on the idea that people work full-time and get benefits full-time.
The fact is, I don’t know if that was ever true, maybe it was true in 1940, but it is not the economy that we’re seeing today. Our social safety nets and workplace rules have been tied around this aging idea, outdated idea of what work looks like and that is not the future. I’ve realized we really need to have a universal basic income.
I would say the other place that has taken me down this path is I do a lot of work on the future of self-driving cars. Unlike previous transitions, I expect this one to happen quite quickly because it’s economically compelling to make the transition from both the supply side, if you’re a supplier of transit services, and from the demand side, if you’re a consumer of transit services.
It’s very compelling, economically compelling to make the switch. Which means we’re going to put a lot of drivers and their ecosystem out of work not in 60 years but in 5 to 10 years. Another reason why I am definitely supportive of doing pilots at a minimum around universal basic income because I see it’s something that we definitely are going to need to have. We need to have it today, and we’re going to need more of it, we are going to need it more profoundly in our future.
Owen: The changing economy is something we talk a lot about here. How would you describe what it’s like to be a worker in the platform economy?
Robin: If I think about, let’s just talk about the upsides first. I am 58, and when I got a job, my first job, my first job was boring as hell, and I hated it. My mom would say, “You can’t quit that job. You can’t quit that job for at least a year and a half because it’s giving you benefits. If you quit any earlier, you’re going to look like a shifty worker.” It took me years and many different jobs to figure out what it was that I was good at, what I loved to do. It was a kind of very slow iterative process sequential learning of what it was I was good at.
One of the beauties of working on these platform economies is that I can do many things at the same time. There’s this nice sentence I got from someone else that said, “My father had one job in his lifetime, I’ll do six jobs in my lifetime, and my children will do six jobs at the same time.” Those six jobs at same time — and so maybe it’s going to four, who knows? But when I do that, I can have a passion job. I can have a job where I’m learning. I can have a job that’s my money job. I can have these different types of parts of my life where I’m exploring different things that I might like to do or that I’m interested in while I’m making some income.
One of things that people really love about it is being in control of your time. Being flexible, having the flexibility. You are your own boss. Coming back to the contrast with the idea of full-time jobs as being the end-all: in a full-time job economy, you’re in a binary position. You’re either employed or unemployed. You either have income or you have no income. That choice about being employed or unemployed is out of your hands. It’s some boss that’s choosing to hire you or not hire you.
In this platform, Peers Inc economy, I am able to choose my own, I can make money with my own initiative. I can work the number of hours, I can earn the amount of money I need. All that said, those are all the positives. So, positives: flexibility, figure out what you’re good at, having economic agency. Those are really positive things.
On the flip side, it’s very precarious. It’s precarious while you figure out what you are good at. It’s precarious in that some of these things are– some of this work is seasonal. It’s precarious around health benefits and workplace rules. All of which now fall into the burden of the individual. If we were precarious before, when we work in this Peers Inc economy, this platform economy, we are more precarious than before. There’s both resilience and precarity built into this doing four jobs at the same time.
That’s kind of how I see the upside and downsides. I just want to say one more thing about this: when we talk about the collaborative economy, of which we are finding and discussing many negative aspects, I want to say the fact that there are negative aspects doesn’t mean it’s not a great thing because I just explained lots of great things.
If I go back to the foundation of industrialization, people worked seven days a week and we had child labor. We fixed those things. The fact that this new way of work has downsides, it does have downsides, and we have to correct and work on those downsides. Right now, we are seeing people increasingly having to work not in full-time jobs work at many things and we don’t have the– we haven’t corrected for the downsides that come with that way of work.
Jim: On that note, how do you see basic income connecting here? How does it serve to deal with some of the issues that you just described?
Robin: There’s that common– there’s that statistic that, I think it was Gallup that did, that was saying 40% of people couldn’t cover a $400 bill. I look at that and when you do sociological reading, you see that these outlier events are the things that take people into bankruptcy and take them into terrible jobs. I see universal basic income as being the minimum platform on which we can now arrange our life.
It’s giving us a basic income security, and what is that number? I think about, one thing about universal basic income, I don’t know if it’s going to be $1,000 a month or if it’s going to be $400 a month. I don’t know. I know that at both of those points, it’s incredibly valuable to people. It takes away the precarity. Then I was interested at Mark Zuckerberg’s Harvard commencement speech and that he also pointed out this other upside which is rich, well-educated, privileged people have the opportunity to follow their passions and take risks.
Poorly educated people who don’t have rich parents, spouses, cousins, and relatives to support them can’t take any risks pursuing any sort of interesting things. Basic income will enable them to do that. It seems, it’s not– it’s an equity piece, but I think it’s also an uncovering of innovation, improved quality of life, just a better– we’re getting more out of people. We’re getting more of the best out of people, rather than tying people to a go safe, don’t take risks type of work.
Owen: You mentioned self-driving cars earlier. A very common response to the automation issue is that, “Well, we’ve had these concerns in the past, and new technology always brings about new opportunities.” How would you respond to that argument?
Robin: That argument is extremely frustrating to me. That I look at it, and I say, and I think, you venture capitalist, you businessman sitting in your chair can say that. But the person who is in Bloomington, Indiana, who has a high school education, who’s 50 years old, who’s been driving a taxi for the last 30 years — that opening up of the new ideas of jobs, that is not going to help him. That is specific people with specific education and specific geographies. The idea that this is going to open up new jobs is, it’s a kind of rainbow fantasy dream.
Sure, in the fullness of time over the entire economy, it could have new interesting things that happen, but starting Day One and Year One and Year Two for specific people and specific economies, we know profoundly that that is not the case. That we have people in cities that have lost their steel industry that are still terrifying. We have Detroit. If it were so straightforward, wouldn’t that have– we wouldn’t be seeing 30 years on the issues you have, the unemployment you have in Detroit. I think that’s a specious argument.
Jim: There’s been a lot of discussion and germination of ideas around basic income in the last two years in the US. What do you see as the most exciting recent developments there?
Robin: I have to tell you a funny story to tee up this. When I was writing Peers Inc and I got to this chapter about the fact and I saw, whoa, everything that can become a platform is going to become a platform. I’m seeing this huge push of work into these insecure part-time types of things. I thought, “You know what? What we really need is– people need an income that just comes in every month as a basic standard.” It was as if in my mind, I had come up with a really crazy idea that I invented. Kind of like my 11-year-old coming home and saying, “Mom, what if dogs pulled sleds? There could be something called dog sledding.” I thought, that’s been invented.
I want to say, with humility, with incredible amusement at myself, two-and-a-half years ago, I had never heard of universal basic income. When I was writing this book, I thought, “Oh my God, we need a universal basic income.” I think I called it, We Need a Basic Income. Then when I was– after I wrote this chapter, I sent it out to an economist and a person doing tech futures, a kind of tech futurist. I said, “I feel like I’ve really gone too far in this recommendation.” Their emails back to me were laughing. “Robin, what are you talking about? This has definitely got to be part of the future. This is something that has been tested and piloted in other places.”
I was very amused. If I think about the last two years, what really struck me is that this has become an increasingly mainstream conversation. What I thought two years ago, as a person who worked in tech, who works in innovation, who is very well-educated, I had never thought about it. I had never thought about it, never heard of it, never considered it, and now we see articles about it all the time. Not just on Medium, we see them in regular everyday newspapers, on televisions, and around the world.
That’s been what’s been amazing to me over the last few years, is to see the increasing beat of discussion. Whenever I’m going toe-to-toe with someone on the idea of universal basic income, and they want to say, “We can’t afford it,” or “People are going to stay home, play video games, and smoke weed.” My answer to that is, “Maybe.” We have to do some pilots, because until we do some pilots, we’re just going to continue have this circular discussion about its impossibility and its impacts.
That’s what’s been quite interesting to me is to see a larger– is start to see the rise of more and more pilots, so that we’re going to get more and more data, so we can put an end to this circular conversation that I think has been– is where we used to be, and we can start getting to a place of real data.
Owen: You’re both the proponent and a builder of the collaborative economy. A great example of that is the company you co-founded, Zipcar, in which people, in which there are cars that anyone can access and take for the day or for the hour. Do you see the collaborative economy as a piece of the same puzzle along with the basic income, or are they more parallel to you?
Robin: I see the collaborative economy as a restructuring of our current economy. That restructuring requires new rules, and that’s where UBI comes in. In the old industrial capitalism, you would build– the way you extracted the most value out of something was to put a very strong barrier around the company. You knew– and we would do that with patents and copyrights and certifications and trademarks. You knew very, very clearly who worked for the company and who didn’t work for the company. Who owned what assets and who the assets belong to. It was very clear, the ownership model.
In this future economy, this currently blossoming and growing economy, this collaborative economy, it is very ill-defined and very fuzzy. Who owns these assets? Are you an employee, or are you not an employee? Who are you partnering with? What assets are you using? Is this a personal asset, a commercial asset? Is this — I’m looking outside my window — is this a residential district, or is it a commercial district?
Who owns my data, who has access to my data? Whose access to my smartphones? All of this today is becoming very intertwined and multi-purposed. All of those old rules that went with that old economy no longer suit this new way of working and collaborating and sharing assets and ideas and data.
UBI is a very nice underpinning to this new economy, to allow this fluidity of work, fluidity of ideas, fluidity of innovation to happen with all of– I just feel like, I feel a swirl, if you go deep into the idea of shared assets and data and space and time. If you want to get the most out of that multi-purposing and most of that potential, you need to have a nice, a firm economic standing that gives you the opportunity to take advantage of how you extract this new value, how you find new potential, how you share these assets in a fluid way. You need to have a kind of bedrock economic standing underneath that.
Owen: That’s fantastic. My last question is, I’m just wondering if there’s anything you’d like to add on any of these topics.
Robin: We haven’t talked about it a lot yet, but when I think about the automation of self-driving cars, if I had my dream future, which I’m working hard to help achieve in cities, all cars would be shared. Which would mean we’d only need 10% of them, which means 90% of the cars, let’s go to say 50% of cars we’re building today, we don’t need them to be built. We don’t need the resources to be dug up out of the ground, transported long distances, assembled in factories, transported to new places, housed and warehoused on streets.
It completely– it takes this big piece of the economy out, in a way, and I see there’s a huge upside to that. That we can take back our cities and our curbs and our houses and parking lots, if we get this gigantic win from sharing cars and not having to store them. All of that, I want that transition to happen as quickly as possible because it has so many upsides. In order for that transition to happen as quickly as possible, we need to provide this support structure.
I look at that, and I think that’s just one sector of the economy. I feel like our entire economy, from my perspective, a sustainability and equity perspective, is quite broken. I would like us to be able to evolve much more quickly without having the incredible anxiety over what’s happening to individuals within that economy. It’s another argument for me to have free universal basic income.
If we don’t do that, two things unfold. One is, when we think about the automation of agriculture, we did that in a horrible way and a lot of people, millions and millions and millions of people worldwide, suffered through that 20-, 30-, 40-year transition. We should be doing much better today. I’d like us to do a much better job of that transition, and I’d like it to be much faster because of the incredible upside and the potential to unleash people best selves instead of their worst, “how can I get paid doing whatever it is required” self. I want us to do many more pilots on universal basic income. Ultimately, I want us to be a adopting it and paying for because I think it will unlock a dramatically better quality of life and dramatically more innovation than we see today.
Owen: That was Robin Chase, co-founder and former CEO of Zipcar and author of Peers Inc. Thank you so much for joining us.
Robin: You’re welcome. It’s my pleasure.
Jim: You’ve been listening to the Basic Income Podcast. Thank you to our producer, Erick Davidson. If you like what you hear, please make sure to rate and review us on iTunes, Stitcher, or the podcast platform of your choice. Also make sure to share with your friends. We’re always looking for new listeners who’d like to hear more about universal basic income. Talk to you next week.
Basic Income Q&A: How to Pay for It, Which Country Will Go First, and More (Rebroadcast)
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In this episode, which initially aired last October, 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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Episode Transcript
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.
Comparing Basic Income and a Federal Jobs Guarantee, feat. Jared Bernstein (Rebroadcast)
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Jim continues the discussion started on the Intelligence Squared debate over basic income with Jared Bernstein, who argued against the basic income. Bernstein explains various concerns he has with the concept, focusing on existing social programs, and a similarly radical proposal: a jobs guarantee. Bernstein is a Senior Fellow at the Center on Budget and Policy Priorities and served as Chief Economist and Economic Adviser to Vice President Joseph Biden from 2009-2011.
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Episode Transcript
Owen: Hello, and welcome to the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh.
Owen: In every episode we’ve done, whether we’re talking to an artist, a politician, an activist, everyone has been a supporter of the basic income. But this week, we actually have a dissenter.
Jim: A couple months back, there was a debate on basic income that was organized by Intelligence Squared. It put Andy Stern and Charles Murray arguing for basic income up against Jared Bernstein and Jason Furman argument against it. Most of the debate focused on the pros and cons of universal basic income, but one thing that popped up was Jared Bernstein mentioned that he was actually a fan of a jobs guarantee program, which would be another ambitious plan that falls pretty far outside of the scope of the legislation that has been considered in the US, also aimed at providing economic security, but looking different than something like an unconditional basic income.
Owen: Jim sat down with Jared Bernstein and discussed their feelings on the basic income and the jobs guarantee and a bunch of other topics. From my listening, I found that Jared Bernstein has a lot of the same goals and a lot of the same perspectives as people in the basic income movement but comes at them from something of a different angle and different experience and that comes out in the conversation. Without further ado, this is Jim Pugh and Jared Bernstein on the Basic Income Podcast.
Jim: I am here with Jared Bernstein, a Senior Fellow at the Center for Budget and Policy Priorities. Jared, thank you for joining us.
Jared: Thanks for inviting me.
Jim: Many of our listeners may have seen the basic income debate that was held by Intelligence Squared back in March between Andy Stern and Charles Murray arguing for a basic income as the social safety net of the future, and then you and Jason Furman arguing against that idea. One of the things you mentioned there was the idea of a jobs guarantee program in the US. I’m just curious, can you tell us a little bit more about how you think a program like that might work?
Jared: Well, sure. Let me start by saying a little bit about why I think we need it. As we speak, the unemployment rate is quite low nationally. It’s 4.4% and most economists, and I’m someone who thinks about the questions of full employment a lot, will tell you that’s full employment. That’s certainly what the Federal Reserve would say. In fact, we know that there are pockets of weak labor demand where even at a low national unemployment rate, there are parts of the country where people can’t find enough work. I’ve observed that even at full employment, sometimes, the labor demand is insufficient.
You need to think about a program to fill that gap. The way I think of it is we all agree or at least the economics community agrees that when credit markets freeze up, you need a lender of last resort, and that’s the federal reserve. Well, when the job market fails to provide adequate opportunities for all of commerce, I think you need a job creator of last resort. There’s a couple of different ways to do that which I can get into in a minute. I just wanted to give you that motivation first.
Jim: I know, I’m based out in the Bay Area, and particularly around here, there’s a lot of new companies that are basing their approach to work very much on a task-based model. Not seeing it as full employment but rather seeing it as smaller sets of work that people will take on in that “gig economy.” I’m curious to hear is that something that you feel connects here? Is that something entirely separate?
Jared: It’s definitely a connection. There’s definitely a connection there, but I think it’s separate in the sense that what I’m talking about are places where there’s just not enough work for people who want and need it. Now, in the case of the gig economy, there may be not enough steady work or work of a structure that people want. If somebody wants a steady job where they know their hours, the flexibility of the gig economy or maybe even the insecurity therein just doesn’t appeal to them, that’s a job quality issue or structural employment issue.
I’m talking about something that’s different than that. Think of the Rust Belt, you’ve certainly heard about that in the context of the Trump story, but also there are neighborhoods and urban areas that are like job deserts. There’s not enough jobs there for folks who want them.
I can think of two ways to deal with that. The first is a real direct job creation program by the federal government, where the federal government creates gainful employment for people. I do think not just in terms of job quantity but job quality, so these jobs have to be adequately remunerative, and the other is a subsidized model where the government subsidizes employers to hire workers, sometimes to the tune of 80% or 90%, that is the government would pick up 80% or 90% of the wage for some fixed amount of time. I know a lot more about the second one because we did something like that during the Recovery Act when I was working for the Obama Administration.
But those are the two broad models, one where the government directly creates jobs, almost in the spirit of the New Deal, and the other is more of a subsidized employment model.
Jim: If we were to pursue a jobs guarantee program, do you have any sense what sort of timeline this would be on? Is this something that we’re talking about, with the big caveat that who knows what will be happening with the federal government over the next few years, but is this something that seems achievable in the relatively short-term or is this more of a longer term, something 10 -20 plus years from now?
Jared: With a rational, functional government, at least the subsidized employment idea could would be ramped up quickly and interestingly, this is not very well known, there are a number of programs like that in place already. The VISTA Jobs Program, there’s a number of youth employment programs. These are all very small programs, but again, during the Recovery Act, so in 2009, we quickly ramped up a subsidized employment program, it was under the aegis of TANF Program, Temporary Assistance for Needy Families, and there was something like maybe under $2 billion I think I have that right, that was assigned to a program where in states — it was actually more of a kind of flow of resources than a program, but basically we said to states, you can use this money, which we’re ramping up for TANF, because we’re in this really deep recession, you can use this money to subsidize employment for low-wage people who are facing labor market barriers. They can’t get into the job market.
You have to be careful not to displace somebody else, so an employer can’t say, “oh, well, by the way, you’re fired, but Ricky, you’re hired.” So you have to be careful to avoid this. There are ways in which you have to craft this thing to make it most effective, but we found that during the Recovery Act, this program created over 250,000 jobs in a bunch of different states, subsidizing employment, again, often to the tune of 70, 80, 90% sometimes for three months, six months, maybe a year and after the subsidized employment ended, as it’s a time-limited program, a number of those workers were able to stay on in the labor market. It looked like in some cases the program helped them get over a labor market barrier that was blocking them.
Jim: During the Intelligence Squared Debate, you raised several concerns about universal basic income as a policy to pursue. For those who weren’t able to watch the debate, could you share with us what your main concerns on that front are?
Jared: Yes. I would say my main concern comes from the proposal by Charles Murray who is one of my opponents in that debate. So he was on the other side, and he’s arguing for a form of UBI that I am absolutely sure would significantly worsen and deepen poverty and economic insecurity.
What Murray wants to do and I’m not telling tales out of school here, because I’ve debated him numerous times on this. Sometimes it’s not fair to argue with somebody who’s not there to defend themselves, but Charles knows exactly where I’m coming from here. He wants to essentially take all of the resources that we’re devoting to both the safety net and to some of our social insurance programs, Social Security, Medicare, and giving them up per capita across the whole population, so make it a universal basic income paid for by aggregating all the resources we’re currently spending on the safety net and social welfare program, and social insurance programs.
Obviously the arithmetic is quite simple because you’re going to be really seriously diluting the resources that are already targeted and pretty well targeted, I argued in that debate, at folks in the bottom half, bottom third of the income scale. So if you take resources that are well-focused, well-targeted and as I argued that night, having their intended effect and pretty effective and you give them to 320
million people, the population of the US, you’re very much going to dilute the program. That’s probably my main objection to at least that version of the plan.
Jim: I do think that something that’s become more apparent within the space of people advocating for basic income in recent months is that there are two quite different views on what the policy could be. What you just described, the repeal and replace model, tends to be favored much more by Libertarians…
Jared: That’s a phrase we hear a lot these days.
Jim: [chuckles] …often with the idea of having something radically simpler being one of the main things that attracts people to that version of it.
On the flip side, you have a more progressive view, which is more to support and strengthen model, of something that would be providing basic income and perhaps replacing some programs that exist today that seem fully redundant if people are receiving a basic level of cash every month, but done with the intention of making sure that people are not being left worse off than they were previously. I’d be curious to hear your perspective on that vision of the policy.
Jared: Well, there are aspects of that vision that I like and share. As I said that night, mostly focused on some of the work of Andy Stern, who I’m sure is known to your audience — he was the other “opponent.” I can’t really think of Andy as an opponent because he’s fighting for social justice for as long as I’ve known him and that’s been many decades — is a version that says, “let’s build off of what we have.” And there are many ways in which I’m supportive of that.
However, while I think it’s perfectly legitimate to suspend political disbelief when you have these debates — even the jobs debate we had earlier about guaranteed or subsidized employment, as I said, this congress isn’t going to do that. I’m always happy to suspend disbelief. I think there’s a question of just how far out of the box do you want to go. One of the things that worries me is that if you start opening up this opportunity to take resources from one program and give them to a bunch of people. There is a U, in UBI. In other words, there’s a universal aspect to it. This dilution problem I think is a real one unless you’re really talking about adding significant new resources.
Well, we’re in a climate where that’s really tough to do and one of the things that I recognize, I recently wrote about this in a piece called UBI and I, is that many of the programs that I think are well-targeted and working pretty well — not perfectly by a long shot, and I suspect you and I can have a good conversation about how to improve some of the safety net programs that are existent — but they’re underfunded.
Before I would think about building on top of what we have, I probably want to get the Earned Income Tax Credit to be a lot more robust. I’d want the child tax credit to be a lot more robust and to start, instead of at dollar 3,000 of earnings, to start at zero and perhaps be fully refundable and not conditional on work. There’s a child allowance idea that I’ve been getting more interested that shares some characteristics with UBI, but it’s just targeted at kids.
There’s ways in which I’d want food stamps to be, SNAP to be, maybe expand benefits particularly in the downturn which is something that worked in the recession, and I could go on. I very, very much want to see a quality preschool program in place. I think we just really hurt the potential of a lot of kids who really need a quality opportunity when it comes to preschool.
There’s a bunch of stuff I’d rather put in place before I start thinking about building on top of what we have in the spirit of UBI. Again, I’m always worried about the dilution problem. I do think that U in the UBI is something that gives me pause sometimes.
Jim: One thing I’d be curious about is, it does seem that there is, at least to some degree, a chicken and egg issue around how big of or how radical of a policy you propose versus what’s realistic today. I think that’s something that, as basic income has become, at least to some degree, more of a mainstream idea over the last couple of years, people who support it are thinking about, well, what are the stepping stone policies that move us in that direction?
I think some of what you just mentioned, actually, are policies that are discussed there, something like a child allowance. Programs that are providing unconditional cash in different scenarios. So I don’t know, and I realize that this is in some degrees conflating two worlds here, the economic side and the political marketing side, but if you have any thoughts around, do you think maybe that fighting for something that’s radical, basic income, might actually make some of these policy that you were discussing possibly easier if we’re shifting the debate window?
Jared: Yes. I think that’s a good point. One has to be very careful to not negotiate with yourself and not say, “oh, I don’t like super progressive idea X because it’s too progressive. I like some other idea because that’s half as progressive or half as ambitious.” Because if you realize that you’re already starting on a very tough battlefield, Negotiation 101 suggest that you should start from a very ambitious place. What you’re saying resonates with me.
I think one of the problems that UBI has this — some of my friends are Libertarians, so this sounds worse than it than I mean it – this kind of infection from the Libertarian side. There are those who are just gunning for what they call the welfare state. There are people in this debate, this UBI debate who view it as a vehicle by which they can undermine social insurance, by which they can undermine the safety net.
Read Charles Murray, literally on page three he says, “The safety net is a horrible failure. It is imploding. It’s crashing in on itself, and before it explodes or implodes, or whatever the words there, we have to do something different.” Well, that’s all completely wrong. I think that not to say that these programs are perfect, but if you go back to my wrap during the Intelligence Squared Debate, I tried to provide pretty nuanced analysis of the way in which these programs are having their intended effect, working very well in terms of staving off probation that is faced by many low income people, but also having some very positive long term effects.
Medicaid, food stamps, Earned Income Credit. We now have people who were exposed to these programs as children, and we follow them over their life cycle. We can look at their outcomes as adults and we see earnings advantages, better health outcomes, better educational outcomes. These programs aren’t just consumption, they’re also investment.
Every time I say this, I’ve been careful to say that they’re far from perfect. I’m not saying that there’s not work to be done there, but I do think one of the challenges — while I take your point about the importance of being ambitious and not being, not self-negotiating because of political constraints — I also think you’ve got to be mindful of these dark forces in this debate.
Jim: Going back to the jobs guarantee idea: one aspect of basic income that appeals to a lot of advocates is opening up new types of opportunity for work. The ones that come up most often, I would say, are entrepreneurship — giving people a runway to be able to pursue a new idea for business — but also recognition of unpaid labor, particularly care giving work that happens at home. Is that something that if you were to pursue a jobs guarantee program, you might be missing that gain?
Jared: I think those are legitimate concerns. I must say that the UBI programs that I’ve seen articulated — I think it’s important not to talk in the abstract, but look at the programs that Andy Stern or Charles Murray is writing down there — they don’t look to me like they really afford people all the resources they would need to explore much in terms of entrepreneurship.
For that I think you just need much more liquid credit markets and the ability of people to access those markets. Perhaps they need a backstop, a loan guarantee if they don’t have the wealth or the resources or the networks to collateralize the loans they need. I probably approach that more through credit markets than through a UBI.
In terms of the work things: one of the things I don’t know that I have mentioned is I’m pretty sensitive to two aspects of this debate. One is that, the US approach to anti-poverty policy has consistently become more and more oriented towards work. Now again, this is a trend that you could decide to accept in your policy taking or push back on.
But there are many aspects of that trend that makes sense to me. I started out about 150 years ago in this business as a social worker in New York City and ever since then, and since then I’ve recognized that a lot of people particularly low income people raising kids really want to have a good, secure, high quality remunerative jobs.
The problem that many of them face is sometimes inadequate skills, but just as often, inadequate demand for labor. One of the things that really sticks in my craw in this debate is this conservative mantra that all you have to do to get a good job is to want a good job. The only thing it’s holding you back is you’re lazy, or you’re dependent on welfare programs. The demand side of the labor market, the opportunities and availability of good jobs, that’s something that I’ve been very sensitive to, the insufficient numbers of throughout my work. That motivates me in that space.
Jim: It seems like on one hand, we have some people who may not currently have access to a job who really want one, but on the other hand, there may be people who are interested in entrepreneurship or engaging in labor that isn’t paid in today’s economy. Could there be some hybrid model that actually can combine a jobs guarantee and a negative income tax in order to be serving both of those populations?
Jared: There could be, but I think one of the things you’ll run into there is the income constraint that Jason Furman and I focused on at the Intelligence Square Debate. Again, I recognize that it’s a little squirrely to keep raising these political hurdles where you want to. I think that the job guarantee is more in sync — I’d say I know this — with anti-poverty policy, which is becoming more and more work oriented.
In that sense, while everything is a hugely heavy political lift, it’s less of a heavy political lift than a UBI. At least a UBI that’s not done in the Libertarian or Murray sense, which just undermines stuff we’re doing already. I think in a way you’re saying, the hybrid services “well, let’s do both.” If we had unlimited resources, I’d say, “yes, let’s do both and a bunch more too.” But in a world with constrained resources I’ve at least set my sights on a job guarantee, which I think is actually a pretty already ambitious and progressive program.
Perhaps, as in the child allowance case, which I view as not conditioned on work, and as you and I agreed earlier, that is certainly a step in the direction I think you want to take things. There may be other ways to go about that, maybe other ways to get at conditioning income not on work, but I’d say before I was too interested in a hybrid, a UBI attached to a job guarantee, I’d work on the job.
Jim: Alright, Jared, this has been great. Really appreciate you taking the time to chat. Anything else you’d like to add?
Jared: No. I think we’ve covered a lot of ground.
Jim: Great. Alright. Well, thank you again.
Owen: That was Jim Pugh and Jared Bernstein on the Basic Income Podcast. I think it’s pretty clear that Bernstein comes from a perspective of fighting for and defending these programs such as the Earned Income Tax Credit, Medicare, food stamps. He’s defending them against people who often argue that they’re worthless and that we should just get rid of them. If we’re going to propose something big and new that might replace at least some of these programs, we do need to make the case that a basic income is an improvement on what we have now.
Jim: I think that’s exactly right. I think that there’s a fear of throwing the baby out with the bathwater here. I think it was clear also from the discussion that ultimately political viability is coming into play here. Despite generally talking outside the realm of what’s possible today, he had major concerns about how far from our current political thinking we actually get.
In some ways I think we’re coming at this from qualitatively different perspectives. Are we actually talking about something that feels more achievable with the way people think about things today, or are we talking about this North Star vision of where we ultimately want to end up, and then recognizing that it’s going to take us potentially decades to get there, but saying that that’s where we want to keep our eye, and see what steps we can take in that direction.
Owen: Honestly, I find the fact that we are maybe talking on a decade’s perspective to be liberating because we don’t need to be thinking about what is politically viable in the next five years. We need to be thinking about, what do we want going forward? What are the best policies? I think you can draw parallel to healthcare. There is a debate around, do we tweak and fix the system we have now, or do we move something towards something like universal healthcare?
I would think the basic income debate is pretty analogous. Do we improve systems like the Earned Income Tax Credit, or do we move toward this North Star vision of a basic income for everyone?
Jim: One thing that basic income supporters may have noticed is that we never actually talked about automation during our conversation. That was actually quite intentional.
Automation came up during the Intelligence Squared Debate, and there was just complete lack of alignment. Bernstein isn’t sold that automation is going to have a drastic impact on the workspace that we have today and that there will be new jobs created. I mean, we could have gone back and forth on that, but we’re really not going to come to any sort of consensus there. When we do start to see a drastic impact from automation and when you can really feel that more tangibly, I think that is going to lead to a different conversation. But it’s not one that we are really going to be able to get to a conclusion on where we are today.
Owen: And again, I would just take that zoomed out perspective. I think 10, 20 years from now this automation conversation is going to be quite different, and we do need to be thinking about how we might prepare for that if certain predictions come true about just how intelligent artificial intelligence is going to get.
Jim: I think for me really the big takeaway here is, even though Bernstein was skeptical about it, it seems like these aren’t competing policy, jobs guarantee and basic income.
If you’re looking at basic income and your motivation is really guaranteeing economic security, we’re fighting for the same things here. I worry about setting these up as head to head contestants because I think that if we’re actually pushing for big policies that aim towards that value of making sure everyone has enough to get by, we can be open minded here, and we can think about different scenarios. What are situations where guaranteed employment might be really attractive to people, and what are situations where an unconditional payment that opens up opportunities and spaces that really haven’t existed before actually could be the game changer that many us think it is?
Owen: All right. That’ll do it for this week’s episode of the Basic Income Podcast. Thank you to our producer Erick Davidson. I encourage you to subscribe on iTunes, and please do leave a rating or a review while you’re there. It’ll help other people find the podcast. See you next week.
Most arguments against the basic income can be summed up in two words: “status quo.” Owen and Jim explore the thinking behind some of the most common objections to the basic income and why these arguments are understandable but ultimately shortsighted. This is a rebroadcast of a previous episode. New episodes will resume in mid-July.
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Episode Transcript
Owen: Hello, and welcome to the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh. Today, we are going to be having a discussion episode.
Owen: We’re going to be tackling some of the issues around how the basic income bumps up against the status quo.
Jim: I really see status quo broadly as one of the biggest obstacles. When I talk to people about basic income usually with a long conversation, once they get past some initial hurdles, they think if not that is a great idea, at least, that the idea has some merit for further exploration.
Owen: Yes, in fact, I think you could sum up almost every objection to the basic income with the word status quo just with different details inserted based on who’s doing the talking.
Jim: We’re going to try to delve into some of the key areas where it seems like status quo thinking is really creating a barrier to people accepting or even sometimes recognizing how the idea could actually be really helpful.
One of the first ones that I have seen often is those people who have more of an incremental vision on how policy progresses thinking that the way we’re going to make progress is by making small tweaks to the programs we have today, rather than exploring big new ideas that very much differ from what we have right now.
Owen: Honestly, I think we saw this in the last election. There is a strong political appeal to big wholesale ideas that present a vision that is very clear and is maybe different from what we have right now.
Jim: I think if you’ve been particularly operating in Washington for the last 5, 10, 20 years, just because there hasn’t been an opportunity to implement big policy, it’s very easy to get caught up in the thinking that that will persist indefinitely.
Owen: One of the first things I hear is like, “Well, sounds like a nice idea, but that’ll never pass Congress.”
Jim: Yes, exactly. I think one of the recent examples that really stood out is, for those of our listeners who saw the Intelligence Squared debate between Andy Stern and Charles Murray arguing for basic income against Jared Bernstein and Jason Furman, both economists from the Obama administration. If you looked at the arguments that were being made almost all of them boil down to, “This is too big. We have to come at these problems in smaller ways that more resemble what we have today, and that something as radical as what you’re proposing just doesn’t make sense.”
Owen: Right, because most people aren’t thinking like, “Okay, what politically could be accomplished in 10, 20 years.”
Jim: I will say that I have noticed a pretty marked shift in recent months that seemed to coincide and likely be caused by the November elections. I think that’s a lot of, what was standard conventional wisdom leading up to that got thrown out the window, and suddenly, a whole lot more people are willing to consider that maybe some things that are much different than they are today might actually be quite possible.
Owen: One thing that we should keep in mind is that even though yes, there is this grand vision of a universal unconditional basic income, you will still have to have stepping stone policies along the way. For instance, we’re currently very excited about the trials going on in Canada or that are about to start in Ontario, and it’s 4,000 people in one area of Canada. It’s very small on one hand, but it’s looking toward this broader vision.
I’ll throw in another one that I actually just heard about today. Ro Khanna, I think that’s how you say his name, who is the new representative in Congress from Silicon Valley, is going to propose a drastic increase in the Earned Income Tax Credit and has no real hope or optimism around that becoming law anytime soon. Also, I think he is looking more toward basic income, which the earned income tax credit is not exactly a basic income, but these are little steps that we’re taking with this broader vision in mind.
Jim: Yes, I think, and there’s talk, at least, of some state-level policies that start to move us in that direction whether through some universal child allowance or through some other smaller universal income driven by a carbon dividend or something like that. I think people often do miss that when we talk about the ideas, it doesn’t mean that’s the only thing being considered. It just means that we’re keeping that big end goal in mind. That we’re saying that this is where we want to end up, and there will be smaller policies along the way. We can be strategic about how we fight for it, but we are always saying this is where we want to be ultimately and having that North Star policy to fight for.
Owen: Another major monument of the status quo that we want to take on is the austerity versus abundance mindset. This inserts itself in the background of a lot of basic income discussions that I’ve had, and Jim, I’m sure you’ve had too. Basically, it’s people generally have the idea that our resources are ultimately scarce and there’s only so much to go around.
Jim: This one actually surprises me often because, while most basic income advocates I’ve talked to recognize that incrementalism is a bad status quo perspective to keep when talking about basic income, I’ve found that a lot of advocates themselves fall into the austerity mindset when thinking about the policy. As they are trying to figure out, how do you actually pay for providing basic income to everyone, they end up in this zero-sum mindset where they’re thinking about, “I have to cut something or figure out a very, very specific source of funding in order to be able to cover the cost,” rather than recognizing that we have an amazing amount of wealth in this country at this point.
Owen: I think a lot of it comes from reverse causality thinking. This one example is, at least, here in Bay Area, we have a lot of homeless people. I think it’s natural to think, “Well, there just aren’t enough homes to go around. Otherwise, why would people be sleeping on the street.” In fact, there are enough homes to house the homeless population six times over in the US, which is an incredible statistic. I’m sorry, it’s enough empty homes, not enough homes. You won’t have to take on a new roommate. We’ve got empty space for these people, and it’s not just homes, it’s wealth, generally.
Jim: Yes, if you look, our GDP has grown by four trillion dollars in the last 15 years. We’re growing enough food in the US to feed everyone twice over. There’s absolutely enough resources to go around. The idea that inherent to our society, we don’t actually have enough to provide for everyone is a complete myth.
Owen: Yes. It is a logistical challenge to get the abundance of food to hungry people, but that’s the magic of cash, is that you give people cash, they will find food. That’ll mostly sort itself out.
Jim: I do think something that is so relevant here is, there’s a quote from Nelson Mandela which is, “Poverty is not natural. It is man-made, and it can be overcome and eradicated by the actions of human beings.” I think that’s very much what we’re looking to do with basic income.
Owen: And I would just tack on to the end of that quote, “especially today.”
Jim: I would say that incremental versus radical change and austerity versus abundance mindsets are the two most obvious ways that I see status quo thinking blocking progress on basic income today, but I do think as we move forward, as basic income becomes more of a mainstream idea and as we get to the point where we’re actually starting to be close to enacting policies, we are going to start seeing some pretty serious pushback from industries that are actually rooted in the way things are done today, and particularly, in poverty.
Owen: Yes, I think it’s not too controversial to say that, there are giant industries out there that see the economic opportunity in having people that are desperate or just have difficult circumstances that ultimately, there’s money to be made there.
Jim: If you look at our larger prison system that exists today, it has become one, very privatized. There’s a lot of companies that are cashing in on the fact that we have such an enormous prison population in the United States. The driver of people going to that system is ultimately, poverty. It’s people who are being put in situations where they don’t see that they have better options, and so, are ending up in a situation where they’re susceptible to ending up in jail.
Owen: Yes, and of course, those people also tend to not have the same legal resources to defend themselves when they do get involved in the court system. Another one is payday loan companies. Someone who is middle class or above probably won’t need to get $200, a thousand dollars a month to just pay their rent or to feed themselves for the end of the month, but people who are doing less well have to do that regularly. There are always payday loan companies that can charge exorbitant interest rates just for a short-term loan, and they could effectively go out of business if we had a robust basic income.
Jim: I think as we move forward, we’re going to start to see rumblings from some of these sectors and the others that really have their economic model based on the idea of people being on the edge and needing to claw for resources in times of desperate need.
Owen: One more topic that we want to take on here is maybe more of a philosophical one, which is the idea that we’re to some degree decoupling income from work, and this can make people pretty uncomfortable.
Jim: This whole idea, this Puritan work ethic, where in order to actually be deserving, you need to have a paying job. This is so much at the core of how people view life to a large degree. It’s not something that’s existed forever. If you go back more than certainly a few hundred years and even I would say early 20th century, there is a pretty different view on people’s deservedness, and whether it was, in fact, necessary to be slaving away at a job to actually make ends meet, but it is certainly rooted in the American consciousness that we have today.
Owen: I’d say this is another kind of reverse causality situation where I think people somewhere in their minds assume that we have to be doing all this work otherwise everything would fall apart. I can personally say I don’t think I ever had a job that was necessary for directly causing me to have a house and to have food. I’ve never built houses. I’ve never farmed outside of my own backyard. I’ve done things like blogging and marketing and that contributes to the economy, it has some effect. You have to connect a whole lot of dots before you tie that to me or anyone else being able to eat or feed themselves or take care of their basic needs outside of the income it brought in.
Jim: I think something else worth considering here is, we often talk about automation as a need for basic income because there may not be enough work to go around in the future, which doesn’t really fit with our model today, but there could be a positive side to that which is automation is allowing us to do more for less. It means we don’t need to work so much, that we actually can produce enough to cover maybe not just basic needs, but far more than that and have plenty to go around so that everyone has access to it.
Owen: Automation should be good news. If we have deemed certain tasks to be valuable and then you just have to hit a button and they happen by themselves, that’s great. As long as we have a society and an economy that makes it okay for whoever was pressing that button before to step back.
Jim: I do think it’s important to also remember though that basic income doesn’t mean we’re expecting people to not work — it just means that we are decoupling that income from their nine-to-five jobs. They may still be working as much or even more than before, but that work could be somewhat different. It could be a broader definition. We could be recognizing care work at home as actually valid work. We could be recognizing art. We could be recognizing community service. All valuable and important things, but ones that aren’t actually getting compensated today.
Owen: I feel this is a case where opponents of the basic income or just people are hesitant about the idea can get a little bit extreme in the degree to which they think people are going to quit their jobs and watch TV all day. Proposals you see out there are usually maybe around $12,000 a year per person, maybe up to 15 or 18 in today’s dollars. That’s not really enough to live certainly not a lavish life. Here in San Francisco, you’d barely be getting your housing together for that amount. It’s not like the economy will just be on a volunteer basis. People, to maintain their current standard of living, are going to need to work.
Jim: We actually had some pretty hard evidence on this front. We have the Canadian experiment in Dauphin where they provided the whole town with a negative income tax. We had four negative income tax experiments in the United States, and the decrease in work was pretty small. It was on the order of 10%. We know pretty clearly that even if we were to provide basic income, we wouldn’t have a mass exodus in the workforce. It would just open up more options.
Owen: A lot of that exodus, I believe, was high school students and parents and people who you can understand why they would leave the workforce and maybe focus on something they deemed more important.
Jim: I do think it is worth, at least, considering though some of the variants on basic income that people are talking about that may make this more palatable from a working perspective. In particular, I’m quite interested in a proposal from Roy Bahat which is that we should actually, along with basic income, create some national service program and that, upon entering adulthood, you could spend a couple of years working in service, and then, basic income effectively is your pension that you received throughout the remainder of your life as compensation for being an active citizen.
Owen: Yes, that’s an idea that I’m still tossing around in my head personally, but I think I like that one. I like the idea that probably a lot of people would do it after leaving high school or college, but you could maybe do it when you’re 35 or whatever you want depending on your life.
Jim: I think there’s a lot to explore here, but I think there’s both an implementation question and really in some ways, a marketing question. I do think that this is a really big obstacle that exists today, and so, we’re going to need to be thoughtful about how we approach it.
Owen: On that note hopefully, this discussion has helped you and maybe helped some other people get out of their usual headspace and how they think about basic income and how it will interact with our society.
Jim: As I said earlier, when we have actually had a chance to have longer conversations with people on basic income, they usually go really well. I usually am able to get through to them and get them to think critically about what a world with basic income might look like, and how the assumptions that they have today don’t necessarily need to apply in that situation, but it takes a fair amount of effort to get them there.
Owen: One thing that I think will help and has helped already are all the pilots that are going on right now. We’ve got Canada, Finland, and Kenya, through GiveDirectly. The evidence that’s come out from similar work has been really good, surprisingly good, both in how people generally don’t stop working, and a lot else in their life like health outcomes and even things like domestic violence rates, GiveDirectly has found, have gone down. As more evidence comes out, hopefully, this will be a less scary topic.
Jim: I think not just the evidence, but the actual stories. Hearing about how people’s lives are changed and how receiving a basic income can really open up so many more options, can lift them up out of some really bad situations in a lot of cases, but actually giving people a chance to empathize because I think that’s the other obstacle here. It’s always easy to think about, “What would the other person do? How would this have a negative effect or not turn out well for them?”
If we can actually show people how basic income can be transformative across the board, that I think will certainly help getting around the work hurdles that they see as obstacles and I think can set us up with a very strong coalition to be able to overcome some of the more institutional status quo obstacles that will lie ahead.
Owen: All right. That’ll do it for this discussion episode of the Basic Income Podcast. Thank you so much for listening. A big shout out to Erick Davidson, our producer. To hear more episodes like this and some fantastic interviews, please subscribe on iTunes or you can go to TheBasicIncomePodcast.com and subscribe on the podcast service of your choice. Have a great day.
MacArthur Fellow Ai-jen Poo on What Basic Income Would Mean to Domestic Workers (Rebroadcast)
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Ai-jen Poo, Director of the National Domestic Workers Alliance, Co-director of Caring Across Generations, and MacArthur Genius Award recipient discusses the challenges faced by domestic workers in the U.S. and how a basic income could dramatically change things in that space.
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Episode Transcript
Owen: Hello, and welcome to the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh.
Owen: Our guest this week is Ai-jen Poo. She’s the executive director of the National Domestic Workers Alliance, recipient of the MacArthur Genius Grant, and co-director of Caring Across Generations. Welcome, Ai-jen.
Ai-jen: Thank you, great to be with you.
Owen: Why don’t you start by telling us about the National Domestic Workers Alliance and the work you do there?
Ai-jen: Sure. My work is alongside the millions of workers, mostly women, who go to work every day in our homes, and they care for some of the most important parts of our lives, our kids, our aging loved ones in our homes. They make it possible for millions of us to go to work every day knowing that our families are in good hands. Our work is really about making sure that this work is valued, respected, and protected, and, for the millions of workers who do this work, to be able to know that these jobs are good jobs with family-sustaining incomes and jobs that you can really take pride in and support your family on and one generation can do better than the next.
Now one of the things that started happening about five years ago is we started realizing that this workforce is growing at an incredibly rapid pace and that has to do with some pretty major trends in our demographics and in families and in our workforce.
To be clear about what those are, essentially the Baby Boomer generation which is this massive generation, culture-driving generation is aging rapidly at a rate of four million people per year turning 70 and also living longer than ever before because of advances in healthcare and technology. Then the Millennial generation which is the largest generation in history and most diverse, by the way, is also starting to have families of their own, turning 35, and having four million babies per year.
We suddenly need more care than ever before and therefore a stronger caregiving workforce. My work has been, especially now that we’ve launched this Caring Across Generations effort, it’s about creating the kind of solutions that allow for families to afford and have access to good care while making sure that the workforce that does the care has the respect and the kinds of quality jobs they deserve.
Jim: Can you tell us a bit about what are some of the biggest challenges that are facing domestic workers today?
Ai-jen: Sure. We still in the 21st century, have a hard time really treating this work as real work. It’s oftentimes referred to as help or companionship, and what that results in is this way in which this work remains in the shadows. Despite it being a real profession for millions of people, it’s treated as less than real work and that limits our ability to get access to the kinds of training and benefits and security that we deserve, and it certainly is reflected in the wages.
A lot of people don’t realize this, but for example, for the home care workforce which cares for the elderly and people with disabilities, the annual median income for a homecare worker is $13,000 per year. That is so far from a family-sustaining wage and so you think about these millions of workers who are working incredibly hard, doing incredibly important work, and earning poverty wages. That’s the lot for so much of our workforce.
Jim: Can you tell us a little bit about some of the campaigns that you’ve been fighting in order to really secure more rights and more economic justice for people in the space?
Ai-jen: Sure. Starting back in 2003 in New York, I started working on trying to create basic protections for this workforce in our nation’s labor laws. A lot of people don’t know this history but in the 1930s when we passed the labor laws that were a part of the New Deal, which are the cornerstone of protections that we all take for granted when we go to work, Southern members of Congress refused to support those labor laws getting enacted if they included domestic workers and farm workers, which is a part of a very dark history of racial exclusion in this country.
To this day, many of those exclusions remain. In the early 2000s, we set out to try to transform those exclusions and put real protections into place, state by state. We had our first big victory in New York where we passed the first Domestic Worker Bill of Rights in 2010, and now seven states have passed legislation. But I will say that just having the minimum standards on the books is far from enough to make these jobs, good jobs.
That’s why we launched Caring Across Generations five years ago to bring together all of the family caregivers, our seniors who need support in order to live independently, people with disabilities together with the workforce to say, “We need a whole new investment in caregiving in this country that allows for people to actually afford care, because it’s quite expensive, and that allows for these jobs to be really good jobs.”
Right now, we’re fighting for what we call Universal Family Care in the state of Maine and Michigan, which is essentially the idea that every single working family should have access to economic support to afford child care, elder care, and paid family leave. That would enable them to go to work and fully participate in the workforce and reach their full potential without having to choose this horrible false choice between work and family. In the 21st century, it just feels like we really need that. In Maine and Michigan, we’ve got this really exciting campaigns for universal family care.
Owen: Perhaps along those lines, you signed the belief statement for the Economic Security Project saying that we should explore basic income to guarantee economic security for all people. What motivated that decision?
Ai-jen: Well, I’m really passionate about the idea that most of the social contract that we have in place and the policies and systems that support our democracy and our economy to work properly are policies that were born of a very different age. A time when our economies were locally based, regionally based, and nationally based whereas now, it’s a globalized economy. A time when manufacturing was the base of this economy and now it’s very much a service driven economy.
So much has changed about the way that we live and work in this country. I think we need a new framework for and we need to rethink our social contract at its core to be reflective of the realities facing working families today in this country. I believe it entails a new set of universalisms. Social insurance programs like unemployment, for example, were created at a time when people had stable long-term employment and intermittent periods of unemployment.
The whole framework were set up to support that need of intermittent unemployment. Today, in more and more places, what we’re seeing is periods of long-term unemployment and intermittent and temporary employment. We need a different safety net and a different framework for thinking about meeting those needs in the economy.
For us, we’re obsessed with caregiving because we’re just seeing how we’ll never get to gender equality in the workforce, we’ll never get to a place where workers, men and women, can really realize their potential in our economy if they’re constantly being forced to make impossible choices around caring for the people they love and going to work. We think that’s a really big piece of the puzzle too, and universal basic income, universal family care, like a new framework for workers to have a voice, these are all pillars that need to be redesigned.
Jim: On that note, can you tell us a bit more about what impact do you think the universal basic income might have on the domestic worker space?
Ai-jen: I think part of it, it’s similar to family care whereas we live in such insecure economic times in that more and more workers are dealing with jobs that are temporary, part-time, independent contracted. There’s much less of the stable long-term employment as I mentioned. What that means is that you’re really living paycheck to paycheck and really struggling, and you’re on the brink.
Anything could go wrong: a car accident, a stroke in the family, any number of things could go wrong and create a kind of crisis that makes it impossible for you to then restabilize. It can trigger a spiraling of economic insecurity and into poverty that’s incredibly difficult to get out of. What something like family care support or basic income can do is make what should just be a temporary moment of need, keep it a temporary moment of need as opposed to a long-term crisis.
Owen: You mentioned before that the population of people in need of domestic workers is rapidly increasing. Do you see other changes in the domestic worker space these last few years and going forward into the future?
Ai-jen: There are so many changes. Already the Bureau of Labor Statistics says that home care aides, home care workers are the fastest growing occupation in our entire economy and the estimates are that by the year 2030, if you take all of the workers who are providing child care in different settings and all the workers who are providing elder care and support for people with disabilities in different settings, that that combine will be the single largest occupation in our entire economy.
We’re talking about the care economy, far from being marginal and in the shadows. It’s actually going to be defining of our entire economy. We all have a stake, beyond the fact that we all have families and we all want to work, we all have a stake in this work becoming dignified life-sustaining work because it sets such a huge tone for the rest of our workforce.
I’m of the belief that, in the ‘20s and ‘30s manufacturing jobs were dangerous, low paid, precarious jobs. We collectively as a country transformed those jobs into good jobs with the pathway to real economic security and stability. Our task of the 21st century is to look at the low-wage service jobs like care jobs and actually do the same and make the same transformation happen. We’ve done it before, we can do it again.
Jim: Ai-jen, you mentioned that universal basic income would service one pillar in a larger new social contract that we could be moving towards. Can you tell us a little bit more about what else would be part of that contract, and also how you’re thinking strategically about moving towards it?
Ai-jen: Absolutely. I think that universal basic income, universal family care, this idea that every single working family would have some economic support to afford child care, elder care, and paid leave when they need it to care for their families, and portable benefits and three ideas that really deserve some oxygen and some real resources behind pilots and demonstration projects. They’re at the level of ambition that is appropriate. We’ve got some major challenges in this country with unprecedented levels of inequality, and I think we need bold solutions.
I also think of really important piece of this is going to be worker voice. We have a situation in our economy where 75% of the workforce earns less than $50,000 per year and meanwhile there’s so much wealth being generated. We have to figure out how workers have more of a voice and can share, where more workers can share in the prosperity that we’re collectively generating as a nation.
That has to do with voice, it has to do with having new forms of organization like ours, the National Domestic Workers Alliance. There’s lots of groups out there that are experimenting with different kinds of organizational forms to give voice to working people.
Owen: I’m wondering as the domestic worker population increases and as there’s more urgency around these issues if you’re finding that they get more attention or if that’s not happening yet?
Ai-jen: Great question. To some extent, it is happening partly because our movement is growing and partly because more and more families are really struggling with the need for care, whether it’s childcare or elder care. So more people are feeling the burn and the need in a way that feels right there at the surface.
I also think that the fact that more women are in positions of leadership in the private sector and in government can give voice to the challenges of doing work and having ambition and having responsibility in wanting to contribute in the workforce and then not having the support we need at home for our families. That’s becoming more and more a part of the conversation. We saw that during the election cycle in 2016. I think we’re going to continue to see that.
Jim: Those were all the questions that we had, but anything else you’d like to add?
Ai-jen: I will say that one of the things that is really important to me is in this period of a lot of political polarization and change that we preserve the space for big bold ideas like the universal basic income and universal family care and portable benefits. These are all ideas that need oxygen and resources to become real. We need to take them to their next level.
We don’t have everything figured out, but we need to start building from the ground up, which is why we’re really excited to be championing these campaigns in Maine and Michigan and folks are doing amazing work on the ground building constituencies behind these ideas and why I’m excited to be a part of the Economic Security Project.
Jim: Great. Well, thank you so much for chatting with us.
Ai-jen: Thank you.
Owen: That was Ai-jen Poo, executive director of the National Domestic Workers Alliance, recipient of the MacArthur Genius Grant, and co-director of Caring Across Generations on the Basic Income Podcast. Also, thank you to our producer, Erick Davidson. See you next week.
Momentum Toward Basic Income in Scotland, feat. Jamie Cooke
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Momentum is building in Scotland to explore basic income as a policy that can be a centerpiece of the modern social contract. While automation is often mentioned as a catalyzing force in the basic income discussion, Scotland is looking at the policy more from a social justice angle. In this episode, Owen interviews the Head of RSA Scotland and Board Member of Citizens Basic Income Network Scotland, Jamie Cooke.
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Episode Transcript
Owen: Hello, and welcome to the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh. One of the countries where there’s actually been quite a lot of progress around basic income is Scotland. There’s been a lot of political development, people are talking about new ideas, but it’s been a bit difficult to actually follow everything going on from the media reporting around what’s happening there.
Owen: To get an actual sense of what’s going on on the ground, I got a chance to interview Jamie Cook. He is the head of RSA Scotland and sits on the board of Citizens Basic Income Earth network in Scotland. Here is my conversation with Jamie Cook. Welcome, Jamie.
Jamie: Thank you for having me on.
Owen: To start, can you just tell us about the work of RSA Scotland?
Jamie: Sure. So we’re an international think and do tank. We’ve got a presence in about 90 countries around the world. Headquarters down in London, between 90,000 fellows in different parts of the world, and covering a broad range of different topics and ideas that we’re looking at. Particularly around civic impact, and how we can not just think about things but actually make a difference with it.
Which I suppose is partly where we’ve become particularly interested in ideas around the economy, the future of work, artificial intelligence and automation and obviously connecting all of those really, basic income.
Owen: Of course we’ll get into that in a moment, but first I’d just love it if you could ground us a little bit in the general political climate in Scotland. What’s that like these days?
Jamie: It’s really interesting time we have here. Obviously, 2014, we had a referendum on Scottish independence which the new vote, so the vote stay in the United Kingdom, won by 55% to 45%. Since then, we’ve had quite an interesting political context I suppose. The Scottish National Party are very much the dominant political force in Scotland controlling Scottish Government and most leaders of political representation. I think there was a feeling that perhaps after the referendum that was once in a generation votes and therefore we would go into a different context.
The referendum in European Union membership that we took, and obviously the fact that the United Kingdom has voted to leave the EU whatever that may end up looking like, at the same time as Scotland actually across every single local authority area voted to stay in the EU, I think created quite a different context. Again, showed a bit of a disconnect between the politics and the discussions in Scotland and the rest of the United Kingdom. That’s really kind of kick-started some of the debate again around Scotland’s constitutional future.
Just now, we’re at a position where we’ve just had the launch of a new growth commission by the Scottish National Party and Scottish government looking at what the economics of an independent Scotland could look like. I think very much signaling the beginning of at least a new discussion around Scotland’s constitutional future. At this stage I think it’s Brexit is so chaotic, and we’re not quite sure where it’s going.
I’m not entirely sure anyone knows what’s going to be the next steps or the next elements of discussion, but as it stands, I think there’s a very real chance we’ll have another referendum in our discussion around constitutional future of Scotland, whether that’s within the UK or actually as an independent nation.
Owen: Well, that’s really fascinating. We always have these conversations in a political context, but that one is very much in flux it sounds like. As you alluded to, the basic income discussion is alive and well in Scotland. Can you tell us what the status of that is right now?
Jamie: Sure. I think this reflects partly the fact that in Scotland, I suppose, wherever anyone stands on the constitutional debate, there is an understanding that as a small country, whether that’s independent or as part of the UK, Scotland is trying to find its place in the world, and how it can interact with other nations, how we can make decisions for some of the challenges we face here in Scotland. Really, what’s been quite exciting about that is opening up a space for considering more radical ideas and perhaps would be considered at other points.
For example, we’ve seen quite a push in Scotland around world-leading environmental change targets. There’s questions you can have around the implementation of those, but certainly the targets we’re aiming for are quite hard. We’re looking around new ideas for our Social Security and how some of these ideas can work in a different way in Scotland to the rest of the UK. I think that’s opened a really interesting space that basic income has been able to find a bit of traction.
I’ve been involved in it for a couple years now, and really the shift in momentum and interest during that period has been phenomenal. From something that was very much a fringe concept, as we’ve seen in other countries around the world, to one that actually in September last year the Scottish Government, so Nicola Sturgeon as First Minister, arranged within her program for governments, the outlining of her strategic or policy priorities for the coming year, basic income experimentation being one of those key priorities.
I think that’s been a massive step forward in terms of the engagement with political decision-makers but also the wider push within Scotland around whether we could explore some of the ideas attached to a concept like basic income really has pushed forward a lot of momentum. We’re at a position now where the Scottish Government has put money aside to support feasibility work by four of Scotland’s local authority, so council areas, to look at what basic income experiment might look like in those areas.
Glasgow and Edinburgh is our two biggest cities. Glasgow is the biggest, Edinburgh is our capital. Also North Lanarkshire and Fife, which are two areas that combine both commuter towns but also rural communities as well, it’s quite a diverse spread. We’re in a really interesting space of testing out these ideas and seeing where they might be able to go for Scotland.
Owen: And the conversation also in the US has really picked up in the last few years. What’s motivating that sudden surge over where you are?
Jamie: I think it’s been really fascinating having those conversations with our colleagues in the US, but I think there are slightly different pushes. I’m generalizing slightly here, but I think in the US there’s definitely been a huge push for you guys around the future of work, automation, artificial intelligence, how this is going to impact on jobs and how we see the next stage of, if you like, economic evolution. I think that’s partly why there’s been such a push and buy-in from some of the big tech leaders and so on.
I think here in Scotland, the pitch has been primarily from a social justice perspective; how can we create an economy and a society that is better balanced and better supportive to all of our citizens? I think there’s been a huge disconnect in many ways between political decision making in Scotland around social security and welfare in the United Kingdom. We’ve seen a system introduced under Universal Credit from the UK Government, it’s very much rooted in sanctions and presuming the worst of people. Really the idea you have to force people to behave in a positive manner or they will game the system.
Even though that isn’t written in any sort of evidence or, in fact, much to the contrary, it’s defined how our approach to social security has been in the UK over the last few years. I think within Scotland, there’s been a bit of a push back against that. I think as well within a Scottish context, there’s a recognition that in some of our communities, we have very long-standing challenges.
A city like Glasgow has been booming, has done a lot of really good renovation work over the last few years, is recognized on an international level for being a very attractive place to visit, to do business, and so on. Yet, there are also communities, particularly in east-end of Glasgow and the north of Glasgow, that have deeply entrenched issues around unemployment, around education, around health, well being, addiction, and so on.
I certainly have found with my conversations with a lot of community leaders and local authority representatives, that there’s a realization that we’ve tried to do the same things over and over again and they haven’t made those changes. In fact, we can’t just look to incremental change anymore to hope that the economy will pull everyone up with it. Actually, we need to try something quite radically different.
I think basic income has therefore offered space to challenge and to debate some of the norms or the expectations around the economy and around society that perhaps we’ve taken for granted for several decades.
Owen: That starts to get into what I wanted to ask you next, which was, if you have this goal of a more balanced society where people are a bit more equal, why is basic income the answer as opposed to say a jobs program or other social benefits?
Jamie: I think there’s several reasons that. One is there’s almost that kind of philosophical element to basic income and the recognition of us all having rights, connections, responsibilities, and opportunities as citizens. Actually, taking away from the idea that what we receive or give in to society is purely based on our economic activity. Actually, all of us, every single one us citizens, are entitled and deserve to have an element of security from that wider system that we’re in.
I think that recognizes those who’ve gone before us. The cliche about being an island, no man is, no woman is, we all are based on those who have come before us and those who come after. I think there is that recognition of having a better connectivity amongst society. Probably, and I think in a Scottish context, we shouldn’t over exaggerate these ideas of being more socially progressive as a nation than other places, I think we try to and that’s not always borne out.
But I think the political environment lends itself to the type of discussions around community involvement and connectivity and social responsibility that are sometimes harder elsewhere. I think though as well, there’s a recognition about the way that the job landscape is changing. Actually, the very nature of work is and should change. When we see the growth of insecurity, when we see the precarious lives that people are living, there are traditional ways we’ve approached that.
The social contract in the United Kingdom we created in the post war period, in response to Beveridge’s giants that he identified within the society, that we had to combat, we created the NHS and all our other fantastic and vitally important social security and welfare systems, but actually, they need to evolve and adapt to a different world were in now. There is a recognition that that’s an important space for us to start to get into.
How do we create a flexibility? As a small country, I mean Scotland is a very small country. It’s one of our strengths and one of our challenges where we have a smaller population than London does. That gives us a great flexibility, but it’s only a flexibility if we are able to give security and the ability to change and adapt to our citizens. There’s partly a recognition within that of this is a system that gives people the opportunity to grow into try new ideas and respond to the opportunities and challenges that arise for them.
Owen: Along those lines, there are a lot of different versions of basic income that you’ll hear proposed, from a straight universal basic income to a negative income tax, to a carbon dividend, or a sovereign wealth fund. What do you think might be the most feasible and best fit for Scotland?
Jamie: I think for Scotland, it’s funny, in some ways when we talk about the universality of basic income, you can sometimes get a bit of a instinctive negative response to that in Scotland. Because there is a feeling of, why would we be giving money to people who have more money than they need already? One of the important things we emphasize within all of our discussions in Scotland, is the basic income is not a policy that can operate in isolation.
For me, it’s a foundation stone to a new social contract. We wouldn’t introduce a basic income in Scotland with nothing else alongside it. It would go alongside reforming the tax system. It would go alongside, for example, looking at rent control, because if you don’t introduce some control of our own rent, our basic income would just vanish into the pockets of landlords. It would go around looking at the current measures we have in place for a minimum and living wage, for example.
That’s an important element whereby we look at that, and actually the universality therefore is very attractive. I find it very fascinate — I find it funny when I talk at quite a lot of events, sometimes people will stand up and shout at me at the end and say, “Basic income is a policy that Hayek and Friedman supported. You’re just trying to destroy the welfare state,” which I’m quite happy to defend the fact that I’m not.
The negative income tax as variation upon or way to approach it, hasn’t had the same resonance. It has a lot of negative connotations within the Scottish political context because of some of the proponents behind it previously. I would expect if we were to see success with this moving forward, and I think we have a very strong opportunity with the work we’re doing just now to really push towards basic income as a national policy in future years in Scotland, if we can demonstrate the evidence of success, I would expect to see that on a universal level.
I would expect to see it across society, because within the Scottish combination and political environment of basic income being both policy that supports individual decision making, but within a wider social context. It’s not one or the other. It doesn’t ignore the individuals, but also doesn’t ignore the fact that society does exist. That’s probably the most natural way that we would see that fit in Scotland moving forward.
Part of the interesting element of the experiments: one of the things I would give the most credit to the Scottish government, and to the First Minister, Nicola Sturgeon for, is the fact that, when you see a policy that suddenly picks up a lot of interest and momentum, and quite frankly fashion in some ways as basic income has, which is great and we’re really excited about. It’s very easy, I think, for a political decision makers, especially leaders of a country, to go one of two ways. Either they throw themselves into wholeheartedly and this is the answer to all their problems, which is not helpful or sustainable, or they reject it because it’s just a popular decision.
I think actually what’s been really positive to see from Scottish Government from the First Minister, is that what they see the popularity showing is that basic income is worthy of being explored further and being explored within a Scottish context, but with global conversations. They’re not throwing themselves into saying this will definitely be the policy in Scotland moving forward, but they’re also giving the space for us to experiment and explore and see what kind of implications this might be able to have for Scotland.
I think that gives us a really interesting space and opportunity and environment, that we can actually create quite a Scottish specific and targeted version of the policy in many ways that will work within a particular context that we have here, but also can learn from what’s happening in Finland and Stockton, California and Ontario and various other places just now as well.
Owen: You started to get into it there, I’m wondering what the public reaction has been to this whole basic income discussion. Do you think people are generally supportive?
Jamie: I think it’s getting there. I think one of the biggest things we need to do over the next year or so is really work on that public engagement. I think there’s probably still to big a proportion of the Scottish population haven’t engaged with the context yet. What I found in doing a lot of public speaking and public events and workshops and so on around the topic, is within a Scottish context you tend to get one of two reactions.
I think we’re lucky in Scotland in that we have a political context where we’ve had quite an open space to start from, maybe more so than in some other countries. For example, after the independence referendum debate, I think you had this huge growth in civic and citizen engagement in politics around the independence referendum. Registration for voting the referendum was not far shy of 100%; a huge turnout, people engaged in events.
I think when the referendum finished, people wondered where to go with that. Some people joined political parties, but I think for a lot, they were looking for that idea of a better Scotland. Whenever they sat on the constitution that was what was motivating them. I think therefore, we’ve had this great parts of the population we could tap into in a sense, who are looking for a progressive positive idea to really get behind, and I think basic income has lent itself to that.
Interestingly, the other reaction you find is quite a knee-jerk. I don’t mean this in a negative way, but it’s quite an instinctive reaction, which is when you talk about the concepts or giving people money and choice over what they spend it on, a reaction of, I know Jimmy in my street would spend that money on drink. He will spend it on alcohol, he will spend it in cigarettes, that’s not a good use of any sort of policy.
It’s a very quick and it’s very powerful and understandable reaction, but what I’ve also found with a lot of those reactions is it doesn’t take much of a space of discussing and allowing people to play with the idea and explore it. To also hear them saying, “I know he would spend it on alcohol, but I also know my cousin has been looking to set up a business and this would give her the spur to do it.” Or, “I know so and so who spent this time where they want to care for their husband who’s unwell, but they haven’t been able to do so because of financial reasons.”
I think it gives me the feeling that we won’t get 100% population behind this concept straight away, because you never do and that wouldn’t be sensible or indeed frankly [unintelligible] in many ways. I think there’s a real space there for us to be able to play with and challenge and experiment with the idea. That actually when we do that, and when we give particularly citizens the chance to do that instead of telling them this is a policy you’re going to accept whether you like it or not, there’s a real appetite in Scotland for doing that.
I think the more we can expand that and that’s — you mentioned me being a board member at CBINS, which is the Scottish affiliate of the Basic Income Earth Network, it’s one of the areas that we’re really looking at within CBINS is how do you train and empower and give the confidence to people to take these ideas out into the communities to discuss and challenge them. Frankly, maybe that will come back and push us in different directions, but that’s good. It’s a good way to engage the wider population.
Owen: What would you say are the next steps for basic income in Scotland?
Jamie: I think there’s a few elements. I think the biggest bet just now is the four local authorities who have been identified as the key test areas, if you like. They’re working. They’ve set up a steering group. They’re bringing in a kind of small staff team who will focus on developing a feasibility study into challenges and opportunities around experimenting with basic income in Scotland. I think it’s worth being honest about the fact that we do face challenges in Scotland.
As it stands, Scotland cannot introduce a basic income because we lack the devolution of fiscal powers and Social Security powers to be able to do that realistically. Currently out of the entire Social Security budget in United Kingdom, about 15% is controlled by the Scottish Government and Scottish Parliament. We have a realistic situation just now where we can’t do that forward.
If in the feasibility, for example, the financial costs of experimentation or the potential issues around the Department of Work and Pensions who run our Social Security Systems in the UK primarily, or Her Majesty’s Revenue and Customs who run our tax system, we are going to have work to really explore what are the ways that these could impact on any experiments.
Actually, therefore, what can we experiment with, what can we expect to be able to test and demonstrate, and frankly what do we have to be very honest about and say, “We can’t do that in this context.” That feasibility work is going to be to be vitally important and from an RSA perspective, we will be looking to engage with and support a lot of that and contribute to it. We’re looking at a number of complementary areas, but it will be a very important opportunity for Scotland.
I think the other thing that’s particularly important over the coming months and year really, is our engagement in Scotland with the rest of the world. One of the really exciting things with the basic income movement just now, so why we’re on this conversation just now is because it’s taking on a global dimension. Maybe taking on different characteristics in those areas, but we’re very much looking to learn from the rest of the world.
We’ve been working with our colleagues in Finland with a experiment underway just there. We’ve got events lined up in Scotland over coming months with leading basic income academics, Karl Widerquist from Georgetown University in Qatar, Evelyn Forget from Manitoba in Canada. We’re looking at how we can engage, I’m speaking at the Basic Income Earth Network Congress in Finland in the summer.
I think there is a really exciting space there for that global dimension; what can we learn and what can we share? I think that’s one of the things that’s been attractive in a Scottish context, but also shows us that we’re not just being individually radical here, we’re actually looking at something that’s taking on a lot of attraction and a lot of relevance in a number of different geographic and international contexts just now.
So I think the next year will be really exciting. I think it’s a space for us hopefully to identify the challenges to experimentation, but therefore ways around those. I think it’s definitely a space for us to start to design the process of what experimentation in Scotland would look like. I think with very much a strong focus and emphasis around the evaluation stage of that, the capacity building, the way to really build in wider society to the conversations where we’re having.
If we can take those forward, then I think a very exciting space for us to be able to put a package to the Scottish Government, to the Scottish Parliament, to our local authority partners and say, “This is our chance to really experiment and do something radical and exciting in Scotland.”
There are obviously political challenges to that, Brexit is a huge issue. If we are into a second referendum on Scottish independence that could have political connotations for this. I think by creating the model of what a basic income pilot or experiment in Scotland could look like, I think in the very least, we will create something very powerful that could be used in many different parts of world.
Realistically, I think with the discussions I’ve had and the feedback from various people, I think a very powerful opportunity, a real chance that we could do this forward and have a direct impact on Scottish policy moving forward.
Owen: Great. It’s a lot of exciting stuff. Those are the questions I had for you, is there anything else you’d like to add?
Jamie: No, I think that’s the crucial bits. I think it really is about that international dimension. I think we’re really keen to learn from what happens in Stockton, discussions you guys are having across California, I think potentially that impact around tech. For me, I feel we need a better synthesis between the element of tech AI focus, automation focus, there has been at points in the US with the social justice focus in Scotland because actually, I think what we need is both of those brought together better. Anything we can we can be learning and we can be contributing to in a global perspective, I think is definitely a hugely attractive particularly given the political context in Scotland just now.
Jim: That was Jamie Cook, head of RSA Scotland, on the Basic Income podcast.
Owen: I thought it was nice to hear that all these experiments, all the trials going on in different countries, it is a global conversation, especially within Europe, but also over here in California, these places are learning from each other and watching each other and it’s becoming a global movement.
Jim: That’s absolutely true. I think we often talk mostly about what’s happening here in the US, but we wouldn’t be having a lot of these conversations if it hadn’t been, well, a few years back for the Swiss referendum, but also the traction that this policy is really gaining in countries around the world. All of that adds onto itself and so I think altogether, that’s what’s led to more this snowball effect and you’re starting to see a lot more general conversation around the policy.
I also thought it was really interesting that his view is that automation is not the driver in Scotland, that it’s really about the social justice framework. I think that, certainly here in the US, the tech motivation is what you hear, at least in the news media for the most part. I think that’s why we feel like there’s more of a conversation today just recently. It’s really interesting to hear that in Scotland it is not about the tech it is about what could this do to really lift people up.
Owen: Yes, and that’s encouraging that the conversation is broadening to the social justice issue because automation provides a catalyst. Instead of us just coming out of nowhere and saying, “Hey, why don’t we just start giving people money”, it’s a motivating force, but there are so many more reasons to pursue basic income beyond that.
Getting back to how so many countries are doing this, it is hard to address every issue at once. Finland’s focusing on unemployment benefits. Stockton is more just about getting stories and lifting people up. Y Combinator, we’ll get a better sense of soon, but it is nice how because there’s so much going on, we are able to segment different parts of this conversation through different experiments.
Jim: Yes, absolutely. I think his view that this is really a foundation stone for a new social contract, and that he’s seeing other policies really going along with this to create that full picture of what it means to move into 21st-century social contract. That’s, I think, an exciting and smart approach to take.
Owen: I think that is where the conversation needs to go because that is an open question of what does the whole social safety net look like when you have a basic income and obviously there are a lot of opinions around that on both sides, but that is the next big question.
Jim: That will do it for this episode of the Basic Income podcast. We’re actually going to be taking a break over the next few weeks. We’ll still be releasing episodes, there’ll be some of our hits over the last year and a half. You’ll still keep hearing from us and we’ll pick up with new episodes in a month or so.
Thank you for listening. Thank you to our producer Erick Davidson. If you’re like what you hear, please do rate and review us on Apple Podcasts or the podcast service of your choice. Please do tell your friends about the podcast. We’re always looking to reach new people. We’ll talk to you soon.
Land, Housing, and Basic Income, feat. Laurie Macfarlane
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A universal basic income would have myriad interactions with existing markets, and one that is worth thorough consideration is the housing market. Laurie Macfarlane, Senior Economist at the New Economics Foundation, recent speaker at TEDxTotnes, and co-author of the book ‘Rethinking the Economics of Land and Housing’ joined the podcast to discuss the various factors within the housing market and what they could mean for basic income. Macfarlane proposes a method to share wealth from rising land values, based on the Alaska Permanent Fund.
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Episode Transcript
Owen: Hello, and welcome to the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh. We’ve talked about in the past that, while a universal basic income would really be a game changer on so many fronts, there are certain areas where it certainly wouldn’t solve the problem, and a big one of those is housing. Particularly here in the Bay Area with the astronomical prices of housing and rent, receiving something like $1000 a month really would not cut it for actually allowing people to be able to fully cover their basic needs.
So we thought it would be interesting to spend an episode delving more into understanding how we actually got to this place where housing has become so expensive and such a massive cost in certain parts of the country and around the world.
Owen: So here to help us think through those issues is someone who’s thought quite a lot about housing and land as a public resource. So today we’re joined by Laurie Macfarlane. He’s a Senior Economist at the New Economics Foundation, recent speaker at TEDxTotnes, and co-author of the book Rethinking the Economics of Land and Housing. Welcome, Laurie.
Laurie: Hey, thanks very much for having me.
Owen: So land and housing are major fields of study for you, and you trace much of the modern condition, both positive and negative, to private ownership of land. Could you explain why private land ownership, something most people take for granted, is so crucial to how the world works today?
Laurie: Yeah, sure. So, like you said, often people don’t realize that the idea that land can be owned as some kind of private property that can be traded, bought, and sold, and the right to exclude people from that land is actually quite a new idea in the history of humankind. It’s actually very, very recent. It only really came to the surface in the 16th century.
Before that, land couldn’t be owned. It was governed by rules of social custom and obligation and various other types of governance. But that transformation that took place, beginning in England, but then obviously spreading around the rest of the world, was really transformational on so many levels. And I think, for the purposes of this context of this discussion, I think the key thing is that it has a kind of a double-edged sword if you like.
So on the one hand, it really, as we know, gave birth the capitalism, transformed our whole economy, drove economic growth, technological advancement, living standards, and all the rest of it. But at the same time, it was inherently exclusionary. So by its very nature, as soon as you give some people exclusive rights over what was previously a commonly own resource, that inevitably involves taking away the rights of others.
And what happened in many countries is, whether it’s in the UK with the enclosures and the clearances or indeed in the US with the native population, millions of people were driven off the land violently, and those that were allowed to stay found themselves that they now had to pay rent to owners, to landowners to access what they previously could get for free.
And landowners effectively became the kind of gatekeepers, if you like, to this resource that we all need. You can’t live without land, you know, you need space to exist in. And therefore, it created this section of people who really were the gatekeeper to this essential natural resource.
And the way that we talk about this tension, this kind of what we call Paradox of Property is that private property is both on the one hand theft, which is the famous phrase that Proudhon, Pierre-Joseph Proudhon, used, the Socialist, that property is theft, but it’s also freedom, and that’s the kind of conception that you hear in the kind of classical liberal thinkers, that private property is key to liberal free society.
And we argue that actually both of these are true for different people, and the tension between them is really one of the dynamics that shapes modern societies. And that the way that this can manifest itself most obviously in modern advanced economies like the US, the UK, and Europe is actually through the housing market.
Jim: So, let’s delve into that a bit more because the history of housing in the UK, I think there’s a lot of parallels to the US as well, but over recent decades, the past century, how has the changes you talked about manifested in policy, and what has been the implication there?
Laurie: One of the things I think it’s really important to highlight when we’re talking about land is, although you can make comparisons between countries, certainly countries that have similar legal frameworks or whatever, what really determines the land economy most significantly is the rules, the politics, the customs, the laws, the history of each specific country.
It’s the rules of the game that really matter the most. And in the UK, we’ve had a significant transformation effectively over the past 100 years in how the land market in relation to housing operates. So if we first rewind back to the beginning of the 20th century, we had a situation where most of the population rented. They didn’t own any property at all, and they rented often in pretty horrible conditions in kind of slum landlord conditions in some of the growing new cities. And you had a class of people who owned lots of land and who basically rented out to renters.
Between the World Wars and after the World Wars, we had a change, quite dramatic shift where the government began to see it as a key role of government in response to some of the other conditions and the uprising that was happening with the people to really start providing low-cost affordable housing as a role of the state. And we had the extension, the building of what’s known here is council housing, which is public sector built housing rented out at affordable rates.
And this kind of continued after World War Two combined with taxes on property and, crucially, tight financial regulation. So in the post-war period, sometimes called the post-war consensus, there was really quite strict regulations on the financial sector. Many of them are legacy of the Great Depression when the dangers of a really laissez-faire financial sector were seen. And the effect of this was really to keep supply of housing and land up and the prices down more or less. They did a pretty good job of actually housing population, which is growing quite significantly at this point in time.
That all really began to change dramatically in 1960s, but particularly the 1970s and 80s. I’ll just very quickly paint some of the key changes that we can maybe then talk about because they were also mirrored in other countries as well.
Firstly, we had some of the taxes that were on property removed. We also had subsidies for home ownership introduced. And this was part of a political project sometimes referred to as the Property-Owning Democracy. That was the kind of brainchild of the Conservative Party in Britain. And the idea was really that they wanted to give more people a stake in private property and a road, this collective housing provision, that they saw as something that breeded kind of socialist mentality.
And there was also introduced a policy called Right To Buy, which was basically sold off a lot of the council housing. If you’re in public housing, you can actually buy it at a big discount, so you could own your own property for the first time. And that was something that was really popular because people liked getting, the idea of getting their own home, but also getting a discount to the market rate.
One of the most significant changes, though, as I touched on before was the liberalization of the financial sector, which really meant that whereas before if you wanted to buy a house and get a mortgage, you needed to save up for a really, really long time with what was known as building societies, which were mutual, almost like mutual associations that you had to be a member of. And you could only borrow quite a limited amount relative to your income.
But that all changed with the big bank and the deregulation of the financial sector, which liberalized mortgage credit markets and incentivized banks, big banks to come into the mortgage lending market. And that triggered a shift in the role that banks play in the economy, certainly in the UK and to some extent in the US as well, which was the tradition, away from the traditional view, which is they’re there to lend to productive business and finance investment. A shift away to effectively become real estate lenders. So effectively lending predominantly against land and property as collateral.
And this really unleashed a flood of new credit into housing, into the housing market, particularly in an environment where the supply side was pretty constrained as it was in this country. And when you have a really elastic supply of credit interacting with a fixed supply or near fixed supply of land and housing, the inevitable consequence was house price inflation and land price inflation was actually what was what was driving it.
And then, so what we’ve seen in the past few decades, is this feedback loop emerge. This interaction between housing prices and mortgage lending and levels of private household debt. And this feedback loop has been fairly prominent in driving the trajectory of house prices in many countries around the world.
Important to note: not all countries have gone through this. It’s important to highlight that. But certainly quite a few countries, particularly the Anglo Saxon countries that have all followed a similar trajectory in terms of financial sector, we’ve seen this take place.
Owen: So, some of that sounds like it’s firmly based in an ideology of homeownership and encouraging people into this system of private property, and some of that sounds like it’s unintended consequences or warped market forces at play.
I’m wondering, how should we think about land ownership? You mentioned that Paradox of Property, where it’s both theft and freedom, and that’s, you know, I think a lot of people get stuck there where they’re not sure which fork in the path to take. So, how should we think about land ownership?
Laurie: Yeah, so this is really the key issue because the way I think about it is, we can separate out ownership, which is basically a set of rights that you have to a bit of space, we can separate that out from the actual value that you can gain.
As a landowner, you’re in a very privileged position of being able to extract much of the value that’s being created in the economy around you, whether that’s through as a landowner charging out rents or whether it’s through just owning it and actually benefiting from the capital gains.
Because one of the differences, one of the things that makes land unique versus other types of asset is its value is essentially socially created. It’s not the product of the efforts of the individual landowners. So just to illustrate that, you can imagine if you own just an empty field somewhere in the middle of nowhere, it wouldn’t be worth very much because it’s not very useful. There’s nothing there.
But if you effectively fell asleep on that piece of land, and in the meantime, the government came in and built roads, railways stations, businesses popped up, and there was lots of activities, skills built all around you, you could can wake up in ten years time, and that land is suddenly worth quite a lot of money. And that’s not because of anything that you’ve done. That’s being socially created. It’s the result of the efforts of the surrounding community.
So the way I think about this is to separate out that value, in effect, that land owners can benefit from at the moment, and their actually ownership. And if we can capture that increase in the value of land that’s socially created, capture that and use that for public benefit while still allowing people to own land. We’re not talking about abolishing private property. We’re just talking about capturing the uplift in land that’s generated by the community at large, rather than land owners, and using that value, spreading that.
And what that then does is disappears, it kind of penetrates through this paradox, because the problem with, as I mentioned earlier, with land owners, with land value. It’s not that having valuable land’s a bad thing. It means that some people benefit at the expense of others. When land prices go up, that increases the wealth of one person, but then somebody else needs to pay higher rent. So it creates this wedge between two types of people. And if we can then capture that value of land and share it among the population, that then does away with this wedge, this kind of wedge that’s polarizing society, while still maintaining private property intact.
Jim: In your recent TEDx talk, you actually proposed a model that was in many ways akin to the Alaska Permanent Fund and their model of issuing universal dividends. Can you say more about what your idea is there?
Laurie: Yeah, sure. So funnily enough, the idea here really dates back to one of the earliest proposals of basic income, actually, which was Thomas Paine and a pamphlet he wrote called Agrarian Justice. And in that pamphlet, he identified what I just talked about, which is that it’s the value of, what he said the improvement only and not the Earth itself, that’s individual property.
And what he proposed is that the value accruing from land should be collected in a national fund and distributed via a one-off payment. And he was proposing it to young adults as a one-off annual payment and to pensioners as a way of capturing that value of land and then sharing it. And this was really one of the earliest formulations of what we now call a form of basic income.
And really, what I was proposing in my TED Talk is really a kind of updated version of that for the 21st century, and a similar way as the Alaska Permanent Fund today has recognized that oil is a natural resource, it’s a valuable natural resource that should be managed, the value of which should be managed in a way which benefits everyone. It’s really taking that idea but applying it to land and therefore, the basic idea being the anyone that owns land would be, would pay equivalent to a royalty just like oil firms have to pay royalties on the oil that they extract into a public fund.
And then that would then accumulate. It could be invested and other things, and the dividend of that would then be shared out equally among all of the population. And really what this is doing is meaning that the increase in the value of land that happens partly naturally just through progress is therefore captured and shared out, rather than just being concentrated in the hands of landowners. Meanwhile, everyone else faces higher rents in the rental market.
Owen: So, you’re not the only person who’s bringing up this sort of thing. The RSA recently garnered a lot of attention by calling for a serious look at bringing a universal basic income to the UK. How would you describe the current debate in the UK on basic income and shared wealth?
Laurie: Yeah, it’s interesting, actually. Basic income obviously is something that’s gained, I think, growing traction in recent years, and it’s started to be looked at more seriously in the sense that we’ve had a number of organizations here in the UK, policy organizations, actually crunch the numbers and look at this in a lot more detail. So there’s definitely a lot of interest.
The way that I see it, I think there’s two key issues. One of the key issues, I think, is this whole issue of, where is the money going to come from for it? And this is something that is always the question that comes up whenever you speak about basic income. And I think that really does matter, not only in a technical sense, but it matters also to the extent to which you can get public support for it.
Because if you, in the case where we’re talking about in the land stuff, if people can see that actually what we’re doing is collecting wealth that’s socially created and then distributing it, that carries with that a certain sense of justice, which makes it easier for people to support the idea of a basic income.
Whereas if we just say, oh, we’ll just get it from you know normal taxation or whatever, I think still there’s evidence that a lot of people still aren’t quite comfortable with the idea of giving people, of giving everyone money. So I think that whole debate around where does the money come from is an important one.
I think the other main challenge, though, and this is where the number-crunching has come into it, is the extent to which it is possible to implement a universal basic income in such a way that means that no one is worse off as a result of it. And obviously, this has quite a bit of complexity to it, in particular in a country like the UK where you have a welfare system that exists today with lots of different individual policies that affect everyone in different ways, and particularly when we’re talking about stuff like, you know, housing benefit and lots of these other welfare policies that exist today.
It’s challenging to have a universal basic income high enough to make sure that nobody is worse off, but I don’t think it’s impossible. But I think that’s where a lot of the work has been done. There’s been various modeling by different organizations that looks at how exactly this could work and how high it could be, and if so, where would that money come from?
Jim: We’ve been looking at here in the US, I mean, certainly we’re nowhere close to being able to pass a federal basic income or much of anything federally right now that would move us forward in that direction. But we’ve been looking at what we’ve called “stepping stone policies,” which take us some distance in that direction.
I’m curious, are there any current proposals or do you think that there is a decent chance of enacting new policy that does move us to some degree towards some of these bigger ideas in the relatively near future in the UK?
Laurie: Yeah, so I think there’s two things I would mention there which I think are relevant.
So firstly, you might be able to tell from my accent, I’m actually from Scotland. And Scotland has its own devolved Parliament and its own First Minister and various devolved powers. And the Scottish government has now launched trials of basic income in three different towns across Scotland that’s going to be happening over the next few years. And actually to try and trial some of the, tease out some of the practical issues around how it could work and how it could be implemented. So that’s a positive sign if their results from that are positive, then that will be a stepping stone, not just in Scotland, but actually across the rest of the UK.
The other way when we’re talking about the UK government as a whole, we obviously, firstly, we have a Labour Party who are in opposition to the government who are looking at this idea quite seriously and are doing some work in the background to look at how this could actually be implemented.
And actually, the current Conservative Government that’s in place just now has actually inadvertently made it slightly easier to implement a universal basic income because of the policies it’s undertaken in the past seven years. What the government has done since 2010 is introduce something called Universal Credit. And the idea was that, whereas in the past we’ve had lots of these individual welfare policies, they’ve basically tried to roll them all up into one single payment called Universal Credit.
Now the Conservatives have done this in such a way that basically reduces how much people get. It was done in a way to basically make cost savings, if you like, and cut back. But that could quite easily be, that process of consolidation could quite easily be taken, modified, expanded, and grown and turned into universal basic income. But a lot of that logistical IT systems work needed to amalgamate lots of payments into one single payment is actually being done by the government at the moment, which means that, which is in itself a helpful stepping stone. It’s just that it’s not currently being used that way at the moment.
Owen: Well, those are the questions we had for you. I’m wondering if there’s anything else you’d like to add?
Laurie: I mean, I suppose one of the things that’s probably worth getting your thoughts on is, there seems to me at the moment to be lots of different slight variations on universal basic income in terms of how it could be funded and how it could be applied. And I’m just wondering, do you think that there’s an idea, I don’t know if you’ve heard about it, called the Social Wealth Funds or Citizens Wealth Funds. And I actually did an interview with a team at City University in London who are looking at this as a potential way to fund a universal basic income.
And interestingly, what they’re looking at as a Social Wealth Fund is not only the kind of classic Social Wealth Fund of accumulating different financial assets and investments in a public fund that’s then used to pay for it, but they’re also looking at what they’re calling a Land Trust, which is also looking at how they can utilize land, all the public land that currently exist, but then also looking to build up land assets as well and use that to fund it.
So that was an interesting space where there’s this combination of ways of funding it. But I don’t know where at the moment, what the state of plays in the US. What’s the kind of state of debate in terms of where people think is the best route in there?
Jim: So, there’s a lot of different ideas floating around here. But both of the ones you laid out are being discussed. In particular, sovereign wealth funds that issue universal dividends. There’s starting to be more and more interest in that idea, not just from the universal payments perspective, but also motivated by the idea that this is a way to create commonly owned wealth, that we really don’t have to any significant degree in the way our economy is currently operating.
Owen: There’s also the idea of the Carbon Dividend, where you put a tax or a fee on carbon extraction, and that would add to the sovereign wealth fund or just be a dividend itself. So that, you know, there’s some crossover with the environmental movement there.
Jim: Yeah, there’s a lot of different ideas floating around as to what is the right / feasible way to actually fund this. Actually, just this morning, there was Chris Hughes, who runs the Economic Security Project, published an article in The Guardian advocating for a “data dividend” and applying a, really a fee or tax on companies that are profiting off data from a substantial number of people. I think there’s a lot of questions as to how do you, how does that actually work out policy-wise and implementation-wise. But there seems to be more and more, there seems to be growing interest in the idea that, let’s look at how, what is actually driving the concentration of wealth, and can we figure out mechanisms to actually allow that to be shared more broadly?
Laurie: Yeah, definitely. There was an article today, actually, and so I spent a bit of my time at an organization called Open Democracy. We’re running a project called New Thinking for the British Economy, and today an article by someone who is making the argument with UBI. The quote was, “Proponents of UBI need to go big or go home.”
I think what he meant is that by going big means that you need to take on this issue of ownership in the economy, kind of the root of the concentration of wealth. And that’s their agenda, and only by doing that will you really be able to get the UBI that is large enough, but also has acceptance that actually works.
And he was highlighting examples where he was quite worried that people are going straight in for the UBI or a halfway house UBI without touching the ownership stuff, and that, in his view, you could end up in not a very good place if you do that.
So you’re saying, yeah, go big and tackle the structural and make sure we go down that route. Otherwise, if it’s a kind of a halfway house UBI that doesn’t do that as well, then the outcomes you’re going to get aren’t going to be anywhere near as good. So it’s worth checking out, if you want to have a look at it.
Jim: That was Laurie McFarland, Senior Economist at the New Economics Foundation, recent speaker at TEDxTotnes, and co-author of the book Rethinking the Economics of Land and Housing.
Owen: So I always find it useful to zoom out and think about the power structures that we have inherent in our economy. And the one between land owners and renters and, you know, everyone else is so integral that we don’t even see it most of the time. But I found his perspective really helpful on that.
Jim: Yeah, it’s such an internalized idea that, oh, of course everyone should aim to buy their house, and we all get our private property, and that’s just the way it’s system works. And understanding that that’s not historically how the system has worked and that’s actually a relatively modern invention — I think it does, it forces you to then start to raise questions about, oh, if this isn’t an inherent model, is this the right model? Should we be thinking about differences there?
Owen: Yeah, and I also found his general proposal of, allow for land ownership because, I mean, the idea of going back on that, I know some people, that’s an ideal for them. It just seems so far-fetched to have a world where it’s all shared land, and I’m not even sure if that’s what we want exactly.
But anyway, to be able to capture the value of rising land prices, you know, of course, that’s something that has a history in the basic income movement, largely through Henry George. But you know, I like that he’s reviving that proposal.
Jim: Yeah, I think that there’s often a tendency to go to the extremes: either everyone fully owns what they have or we’re all sharing everything. I mean, it’s basically pure capitalism or pure communism.
But I think with the levers that we have through public policy, there often is an opportunity to find the sweet spot in the middle, saying we still want to encourage growth and progress. It’s great that we’re doing developments that make land so much more valuable. Let’s just make sure that everyone has a stake in that, and that is something that’s not incredibly exacerbating inequality in the process, but rather broadly growing our prosperity.
Owen: Yeah, and of course, we’re seeing that every day here in the Bay Area where there’s a ton of money flowing into the area, and it should be good for everyone, but it’s really exacerbating wealth inequality.
Jim: Yeah. I also think that this whole conversation is just a good reminder: universal basic income is a systemic policy. It’s aimed at everything, which means that even as simple as the policy itself is, how it touches everything, what funds it, what implications it has, what are the potential pitfalls that we are likely to face as we try to lift everyone in our society out of poverty, that connecting it back to these other big thorny issues like housing is important.
And helping us to understand what that relationship is and, as we talked about with Laurie, that it’s not just a separate thing. Not only does the cost of housing have major implications on how you design basic income, housing itself may actually be, the rising value of that may actually be a driver of the basic income.
Owen: Sure, and I think housing is the biggest thorniest issue, at least in terms of how it interacts with basic income. Almost everything else, I just think “basic income makes it better.” But with housing, you know, it is a lot trickier, and so to have a solution that incorporates both I think is a very sensible way to go.
Jim: Well, that’ll do it for this episode. Thank you for listening to the Basic Income Podcast. Thank you to our producer Erick Davidson, and if you like what you hear, please do make sure to rate and review us on Apple Podcast or to podcast service of your choice.
And please do tell your friends — we’re always looking for new listeners to help get the word out. We’ll talk to you next time.
A New Experiment on Cash Transfers & Childhood Development, feat. Greg Duncan
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An exciting new experiment, led by Greg Duncan of UC Irvine, is launching to explore how cash transfers affect early childhood on biological, cognitive, and social metrics. Duncan joined the podcast to discuss the motivation for the experiment, what it will study, and the research to date on poverty and children.
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Episode Transcript
Owen: Hello, and welcome to the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh.
Owen: So there is an exciting research experiment that just launched in the US called “Baby’s First Years” that will provide new mothers with unconditional cash, and the researchers are interested in everything from how the money is spent to how this affects neural development.
And so recently, Jim got to speak with one of the lead researchers. His name is Greg Duncan. He’s a Distinguished Professor at the University of California Irvine. So here’s Jim and Greg discussing Baby’s First Years.
Jim: Thanks so much for joining us. Now, to start with, can you just tell us what generally the work you’re doing focuses on?
Greg: I’m an academic economist, and I’m interested in social policy of various kinds, and I’ve long been interested in the effect of inequality and income inequality in general and poverty in particular on the development of children.
And I think one of the things we’ve learned over the last 20 years from neuroscience is how important the very early years of life are, infancy and toddlerhood, because that’s the time when a lot is happening with kids brains. And it’s a period when kids are particularly susceptible to enrichment in their environment as well as insults in their environment.
So, the idea that economic deprivation caused by poverty might be especially detrimental for early in life has been a focus of my research. And it’s also a very important policy issue because over the last 20 years since welfare reform, we’ve oriented our safety net more toward working parents — Earned Income Tax Credit, child tax credit, those are much larger now than they used to be, and they’re going to working families, generally families with somewhat older kids, and families who are further along in the life cycle then the families just starting out with newborns.
So there’s a substantial amount of poverty among low-income kids and especially young kids, and the question of whether income is an active ingredient in producing all the correlations that we see between poverty and child development.
One of the more noteworthy studies coming out of neuroscience recently shows that white matter in brains between kids who are in low-income families and higher income families is very similar to about six months of age. But by 36 months of age, there are these growing differentials, and we don’t really know whether it’s income poverty or whether it’s other conditions associated with poverty — things like single-parent family structure, low levels of parent education, neighborhood disadvantage.
What we’ve done with the project that we’re just starting is to try to isolate the impact of income itself on young childrens’ — infant and toddler — cognitive development and socioemotional development. Hence our experiment that’s just starting out now.
Jim: Now, I think when a lot of people think about the academic world, there is often an assumption that people are doing analysis but aren’t actually getting into really changing the way that our systems and policies operate. But this experiment you just referenced, Baby’s First Years, this is actually an instance where you are going to be providing unconditional cash payments to a number of low-income mothers and seeing what happens. So, can you just tell us more — what are the details of this experiment? What are you hoping to learn from it? What will that actually look like?
Greg: Sure. I mean, we think about clinical trials all the time in medicine, and we don’t trust drugs unless they’ve passed a muster with clinical trials. And with clinical trials, you have random assignment between some sort of treatment condition and some sort of control condition.
So we’re just taking that technology and applying it to income supplements. Specifically, we’re recruiting a thousand mothers in four different sites around the country. All the mothers have incomes below the poverty line. All have just given birth — we’re recruiting them in birth hospital shortly after they’ve given birth. Their participation is completely voluntary, but we ask if they’re interested in enrolling in a chance for a cash gift. And we’ve got two levels of that cash gift: either $333 a month for the first 40 months of the child’s life, or $20 a month for those 40 months. So 333 versus 20, it adds up to about four thousand dollars a year over these 40 months.
But the payment that’s monthly is trying to be aimed at the kind of instability, economic instability, that a lot of low-income families have. So the question is: to what extent are the babies going to be developing along more positive trajectories if they’re in this group of families where the mother is getting $4,000 a year versus $240 a year? And we’re interested not only in the comparison of how the child does. We’ve got, at age three, we’re planning on bringing the kids into neuroscience labs and doing all sorts of testing on their cognitive capacities and associate emotional behaviors, executive function, and things like that.
So we’re interested in the child, of course, but we’re also interested in the families. So what if the child does better with this higher income payment, what is it about the family that’s changing in a way that the produces that improvement? Is it the kinds of enrichment goods and services that parents buy, center-based childcare, for example? Is it the fact that this steady stream of income widens the bandwidth, cognitive bandwidth, of mothers and enables them to stay on top of things better? Can they avoid addictions? Can they avoid food insufficiency? The various things that can happen and often happen to low-income families that some sort of income floor might smooth out.
So the idea is to run this experiment, recruit the mothers over the course of 12 months and then visit them when their children are age 1, 2, and 3 and track what happens in these two groups, both in terms of how the kids are turning out as well as what sort of differences are showing up in family process.
Jim: Now, we often talk about motivations for programs like universal basic income and unconditional cash generally on the podcast, and a number of our past discussions have looked at it from different perspectives as to why that could be a particularly valuable approach to take. I’m curious for you, what were the main motivations to look at unconditional cash here as opposed to more traditional in-kind benefits like food or baby supplies?
Greg: Yeah. So we’ve got a safety net that consists of SNAP, which is the food stamp program, housing subsidies, various programs that subsidize different kinds of goods and services for parents.
But if you think about the way social benefits broadly conceived are structured, we already have a child allowance in the United States. We have in our income tax system, we’ve got an exemption for every child who’s a dependent. We have a child tax credit. We’ve got a additional child tax credit. We spend 100 billion dollars a year on what amounts to an annual child allowance, but it’s only reaching middle class families and richer families. Families that aren’t earning enough to be part of the income tax system don’t benefit from that.
So the idea really is to think of taking those benefits that are now concentrated not at the low end of the income distribution and thinking about a more general universal child allowance that would be received, you could imagine different forms that, you could imagine simply universal child allowance for families at all income levels are getting this in recognition of the fact that they’ve got extra expenses because they’ve got kids in their house.
So, you know, the more general universal basic income movement is really conceived with adults in mind, and we’re focusing on some kind of universal income that’s focused on kids. Although our test really isn’t of a universal kind of child allowance, but it’s more what might happen if you had that for low income families, for families with incomes below the poverty line.
Jim: So, can you tell us a bit more about what the research landscape in this area looks like to date? What previous findings were you drawing on or looking to when thinking about how to design and execute this study?
Greg: Sure. There have been hundreds and hundreds of studies linking poverty to child development in various ways. A lot of it is just correlational, where you observe whether the kids are poor or not as they are growing up and then you see whether they complete more education or they earn more or they’re healthier. And of course you get those correlations. You get particularly strong correlations with income in early childhood, which is kind of interesting.
There are what social scientists call quasi-experimental studies. There’s one that Hilary Hoynes did of the rollout of the food stamp program back in the 60s and 70s, and she tried to see to what extent for low socioeconomic status families kids who were conceived and born into counties that were already receiving food stamps were doing better in adulthood than kids who were conceived or born into counties where food stamps weren’t available — it was a county-by-county basis — and finds this remarkable relationship where adult health, cardiovascular health is substantially better for kids who are born in the counties where there’s already food stamps compared with kids not very far away across the county line where food stamps weren’t available.
So that’s very intriguing. And there are some genuine experiments in the 70s and 80s. There were called negative income tax experiments, where they actually randomly assign people to get different amounts of income. There were welfare reform experiments in the 90s.
But none of these studies really concentrated on very young kids. So if you’re particularly concerned with the effect of economic disadvantage on infants and toddlers — the food stamp study I mentioned is very much focused on early life, but all of the other kinds of experimental studies really are focused on older kids, so they often found differences, but you really can’t generalize down to very early life on the basis of studies that are conducted on kids who are already in elementary school or high school.
Jim: You mentioned a number of different areas that you’re planning to look at as far as what the impact of this treatment might be. Can you say a bit more about what specific data that you’ll be collecting in order to be able to assess that?
Greg: Sure. You’re always trying to be copycats when it comes to growing measures for our study. It’s very nice to be able to use measures that were used in national studies so we can compare our study to results from larger and more representative samples.
But there are standard cognitive tests, IQ type tests that we’ll be using for the kids. There are standard assessments of executive function, which is kind of working memory and impulse control.
At age 36 months, you can’t put kids into fMRI scanners because they don’t nap reliably, and they get frightened. But you can put caps on their head to measure electrical activity, and that’s what we plan to do. EEG and ERP are the initials for the kinds of electrical signal data that we’ll be collecting.
So the idea is, around 36 months, kids are starting to develop an ability to regulate themselves. So when there’s an impulse — the three-year-old is hit by a playmate in preschool — is that child going to hit back? Now the instinct in the amygdala is to strike back right away, but then the prefrontal cortex might say, well, maybe let’s wait on that. But that’s going to require a connection between the amygdala and the prefrontal cortex and that wiring starts to take place around this time. So the question is whether we’ll observe stronger connections in the kids who are in the higher income families relative to the kids who weren’t.
So that’s on the child side. And on the family side, there are just many, many different kinds of measures we’re going to be drawing. We want to know about expenditures, to what extent are family spending their money differently between the two different groups on things like childcare? Are they moving to a better neighborhood? Are mothers working less? Are they using the opportunity for this higher income to take more months out of the labor force before re-entering in order to be with their children for the first three or four months of their kids lives?
We’re also interested in stress. We’re measuring that both with questionnaires as well as biologically with the stress hormone cortisol, which you can get in saliva as well as hair.
We want to know about the sensitivity of parenting. And for that, there’s kind of a standard play task that you can give to mothers with their kids. This is going to be at 24 months, when the kids are 24 months of age. You videotape it, and then you code it up for language. You code it up for the sensitivity of parent interactions.
So, we have a lot of, we have ambitious plans to gather a lot of information, both about the kids as well as the family.
Jim: So, I think most people think of providing unconditional cash as a super simple process: you literally are just giving people money. But when you actually get down to the details, there are some obstacles and complications that can arise. Can you tell us about what challenges you faced in getting this experiment going and how you dealt with them?
Greg: Yeah. That’s… we’ve taken about six years almost to get this project off the ground. And some of it was fundraising, but it turns out, as you say, to be rather difficult to give people mone. And one reason is because of the safety net that’s in place. So if you give families an extra $100, and they report that to the food stamp, the SNAP program officials, food stamps are reduced by about $33 as result of the additional hundred dollars of income. And for housing subsidies, that’s the same kind of thing. You get this chunk of the benefits reduced as you get additional income.
So in order to make sure that the net amount of income increase for the families was the full $333, we had to work with the states with all of our sites as well as a lot of localities to get either legislation or administrative rules changed so that income from our payments did not count as countable income for the determination of any of these benefits, So these are cash gifts, and we’ve worked out details, sometimes painfully, to make sure that caseworkers know that it’s not proper to count our income as countable income for the termination of benefits.
So we enrolled our first mom yesterday, which is very exciting, and in the next couple of months, we’re going to be doing a lot of work on the ground to make sure that all of these exemptions that are being secured are working for the moms, so they’re getting the full amount of money that we’re providing to them on their debit cards.
Jim: Well, that’s great to hear that things are actually really off the ground. Those are all the questions that I had — is there anything else that you’d like to add here?
Greg: I might say, you know, the connection between our findings and public policy are tenuous. In public policy debates these days, one side has one set of evidence, the other side has another set of evidence. At least in the welfare reform debate in the 90s, evidence from social experiments, where there was the kind of random assignment that we’ve got, was widely respected by a substantial swath of legislators on both sides of the aisle.
Whether that’s still the case, we don’t know. But I think one needs a random assignment experiment in order to have a possibility for influencing policy. And once we get our results in hand, we’re very much committed to try to inject these findings into debates that are taking place every year in federal government as well as state legislators all around the country.
Owen: That was Jim Pugh and Greg Duncan on the Basic Income Podcast.
Jim: So, it’s great to see another experiment on unconditional cash being moved forward in the US. I think that the more pilots, the more experiments we can have, the more data we collect, and the more stories we can tell, the easier it’s going to be to make the case for more policy. That as this becomes more of just a thing people do, it’s going to, it keeps moving the ball forward.
Owen: Yeah, and I think this delves into territory that we touch on a little bit just through our work in the basic income space, but doesn’t get a ton of mainstream media exposure, that how you grow up, the conditions in which you grow up, and the effects of poverty can affect your actual brain, and you can see those effects very early on within the first few years.
Jim: Yeah, and I think the fact that there is such rapid development then means that the effects of just a couple years of additional support could really be massive here. And so often we talk about, well, if you’re an adult, if you get support for two or four years, how much difference does that make in the longer term? That even if it’s helpful, that if you look at where you are 10, 20 years down the road, I think there’s still some questions as to whether that impact is going to be terribly large.
But if we’re talking about children and we are thinking about the development aspect, then two years of a different environment — yeah, that can be a game-changer.
Owen: Yeah, and it completely gets around the whole idea of, well, did this person make some mistakes? Were they responsible with their money? All the things that you hear that are attempting to kind of skirt around the impacts of poverty and the effects of that cash could have. No one’s going to say that about a one-year-old, and we’re talking about one-year-olds here.
Jim: Hopefully not. Hopefully we’re not in that place.
I also thought — and we’ve talked about this before — but another great example of how complicated it can be to actually administer paying people money. And that to actually be able to move ahead with this experiment, they had to get, they have to work with state legislatures and get approvals so that they didn’t kick people off their are other benefits plans.
And so I think that’s just another good example of how, as we’re thinking about moving forward here, we need to be ready for it to be more complicated than we first assume it might be.
Owen: Sure, and also, huge credit to them. They got legislation passed in multiple states to make this happen. And obviously, that’s no small feat. Even if it’s good legislation, it’s hard to get legislators’ attention to get something through. And so, yeah, big credit to them, and also, yeah, a sign that this is going to be a long complicated fight.
Jim: Yeah, certainly. I also, and we’ll see what happens, but going back to your point about the different perceptions there are around children, I think that we’ve seen in the past that it tends to be much more politically viable to push for more supportive policy towards children.
And so, if there are some compelling findings here after this experiment is over in a few years, that gives a strong reason for enacting this sort of policy widely. Maybe that sets us up to actually move pretty quickly on some more ambitious legislation on this front.
Owen: Yeah, some people propose a child allowance as the first step toward a basic income. And I go back and forth on that because I think there’s so many reasons to give an adult a basic income. But, you know, I think that it might be the most politically viable path.
Jim: Right. There is the question of, how well does that set up for everyone else getting in money? But it is, maybe, a more easy policy to start giving money out to some folks at least.
Owen: Yeah, and would be hugely impactful.
Jim: Yeah.
Owen: Well, that’ll do it for this episode of the Basic Income Podcast. Thank you so much for listening. Thank you to our producer, Erick Davidson. If you like what you hear, please rate us and review us on Apple Podcast or the service of your choice. And do tell your friends — we’re always looking to bring more people into the conversation.
An Update on Finland's Basic Income Trial, feat. Aleksi Neuvonen of Demos Helsinki
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Recently, there have been a lot of media reports on Finland’s basic income trial, some stating that it is ending, that it failed, or something along those lines. The reality is much different. To get an understanding of what’s actually going on, and what caused all those news stories, Owen spoke with Aleksi Neuvonen, cofounder of Demos Helsinki.
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Episode Transcript
Owen: Hello, and welcome to the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh. Many of you may have read headlines in recent weeks claiming that Finland’s basic income experiment had been canceled. Now, for those of you who took time to dig in a bit, you probably discovered that was not correct.
The Finish experiment, in fact, is continuing as originally planned and the quote unquote cancellation actually referred to a proposed expansion of the experiment.
Owen: So we thought it would be good to get into the details about what’s actually going on there. And find out, you know, if the experiment is not cancelled, what is happening.
So, I got to speak with Aleksi Neuvonen. He’s the founder of Demos Helsinki and someone very close to the situation. And he gave a really good take on what’s going on there.
Owen: Welcome, Aleksi.
Aleksi: Thank you.
Owen: So, to start, could you just remind our listeners what the original basic income program in Finland was and what its goals were.
Aleksi: The basic income experiment in Finland is one of the twenty-seven policy experiments that the current coalition, government coalition in Finland is running. And they started their program in 2015. And basic income experiment is the biggest of all these politics experiments.
I would say the reason why they decided to experiment basic income is that there has been, for 15 years practically, an intention to renew the Finnish welfare system, which different types of committees during each election term trying to come up with certain suggestions on how to modernize the welfare system, which is a rather big system, takes quite a big chunk of the budget in the Finnish government with no results for the past 15 years.
And now, when Finland elected new government, or new Parliament, three years ago, there was an idea of changing the way they do policymaking. Then they introduced the idea of going towards experimentation culture. And as welfare reform was one of the key areas, they decided to try it with a new policy tool, which is an experiment which would last two years from the beginning of 2017 till the end of 2018.
Owen: Okay. Yeah. So, in the last couple of weeks, as I said, there have been a lot of reports about some changes to the experiment, that it’s ending, that something’s different. Has anything about the experiment changed?
Aleksi: No, actually, there has been no changes whatsoever. The current experiment comprises of two thousand people being selected to the experiment. Those people still get the basic income of 560 Euros per month. And that will run till end of this year. No analysis on the impact of the basic income or changes in the benefits that they receive have been done. And that was the intention from the beginning.
They will start analyzing the results at the beginning of 2019. So nothing has changed in the experiment itself. And from the beginning, there was a plan to make it a two-year experiment with some speculation on whether they could extend it to last longer.
Actually, the group that did the pre-study and design of the experiments suggested that, based on previous experiments, usually it takes from three and a half to four and a half years before you start getting positive well-being impact on the people participating in such an experiment, hence it should be longer, but no one promised it to be a longer.
However, there were plenty of discussions on whether they could extend it but apparently now politicians especially have come into a conclusion that there are no means of extending the experiment from the current length.
Owen: And so that’s what caused all the reports, is the decision to not extend it?
Aleksi: Sure. So it has been done somewhat official, actually that happened already last fall around November when they put out a press release saying that now they are approaching the midpoint of the of the experiment, and it looks like it won’t be extended, which was not stated very clearly, but anyhow, rather implicitly stating that it won’t be extended.
Owen: I see. And so, the basic income pilot was focused on the unemployment system. And, am I correct in thinking that there were some changes to Finland’s unemployment benefits system?
Aleksi: Yes. I mean, the system of of unemployment benefits comprises of number of different types of benefits regarding on for how long have you been unemployed or what has been your previous work history like. So people currently receive some unemployment benefits that are proportional their previous wages for almost almost two years. And now there has been some changes for this, these benefits.
So the idea is to incentivize people to be more active in taking job, while they still enjoy this much, much larger benefit than the basic income is. So they are conditionalizing those benefits by requiring people to send a certain amount of job applications or participating in different types of trainings during that period of time, which is, I would say ideologically somewhat quite opposite to what we’ve been thinking of basic income to be.
So it’s more about motivating people to seek for jobs, especially that they would get immediately quite soon, instead of, with the basic income, to pursue some other paths in their career.
Owen: I’m wondering what your reactions and maybe the public reactions as well have been to to these reforms?
Aleksi: The public reaction to these these reforms has been somewhat infuriated, I mean, there’s been big, big demonstration against the initiatives, for good reasons, I would say. It was prepared in a really fast pace. There are several contradictions, which would make it very difficult to be implemented point-by-point.
So there are… and it’s somewhat contradictory also to some other parts of legislation. And, of course, there are quite different types of situations where it doesn’t necessarily work that nicely. And probably, one of the underlining questions there is whether that should make people to move from from one town to another if they wish to get employed, which in Finland is a rather new thing.
We’ve had an idea of providing employment in all part of the country. And now with this new piece of legislation it would require people to commute longer distances or go from their hometown to seek job.
Owen: I see. And are there other problematic aspects of the new reforms that are causing a lot of uproar?
Aleksi: Yeah, I would say it’s over, of course, quite opposite to what people think of their what contemporary world should look like in how detailed some type of supervision there is on what you do when you are unemployed. And, I mean, really encouraging people to get jobs really fast instead of, I mean, look for some other some other opportunities in life.
And I mean, there are different types of people, I mean, reacting to this in a really, really negative manner. There are plenty of very highly educated people who think that once they’ve received good high quality education, they should be allowed to search for a job that somehow would meet their skills.
And then there are less educated people who feel that they are now already having quite difficult situation in their life. And now their benefits are getting even narrower becasue they always are at threat of meeting the sanctions.
And overall, I think this type of a sentiment that people feel that they are continuously being supervised or that they are in a constant threat of losing their benefits, it’s not necessarily the way of making people more motivated and to improve their skills. We know very well that threat is not necessarily the best motivator in very many things. It doesn’t make them necessarily very productive,
Owen: Right. One thing we talk about sometimes in the US is that, you know, we have people who are on many different benefit systems, and it almost becomes a part-time job just to stay on those benefits.
Aleksi: Yeah, there is pretty good scientific evidence on that happening, that people who really fall on benefits, they, I mean, first of course realize that they have to spend quite a lot of time sorting out these different forms and so on. And also, then feel that they are being disempowered because they are in a constant threat of losing those benefits.
And actually, that was one of the founding ideas of the basic income experiment that, would it help those people to become employed if they wouldn’t be stressed out because those burdens of constantly feeling the problems or being kind of, having these conditional benefits that require quite a lot of time applying them and waiting the benefits to be paid.
Owen: And getting back to the basic income experiment. While, I know it’s not completed and the official analysis is not been conducted yet, do we have any data or any stories even from the experiment so far?
Aleksi: There is no official data. It is actually based on the Finnish law that the officials cannot cannot give out any data on people because it’s all based on the official unemployment benefits system, and you cannot give out any kind of details on that.
And also that the one of the founding principles of the experiment was that it should be kept as a closed laboratory for the period of an experiment. In some of the previous experiments in the 70s, some of them were failing because there was so much things intervening. People were interviewed quite constantly and getting other people contacting them constantly, so that somewhat hampered the experiment itself.
There has been some stories on a couple of people who are participating in the experiment. So some journalists have searched for people. And at least these stories have been rather promising. So people who’ve been, I would say, rather prototypical people who have certain level of education, not necessarily in a field which would provide very secure or a long-lasting job opportunities, but is somewhere between freelancing and entrepreneurship and occasionally some opportunities of getting employed for long periods of time.
For instance, a person works having a training in as a professional dancer. And it has implied that the experiment seems to be offering her better opportunities for getting certain level of income where she is not in a threat of falling between different types of benefits, or she can do some freelancing and even have a private company while receiving the basic income as a benefit.
Owen: Yeah, for freelancers, I think the benefits are pretty obvious. From your estimation, do you think basic income is more popular in Finland now than than it was when the experiment started?
Aleksi: Probably. I assume that at least the overall understanding and knowledge on basic income is much, much better.
There has been so many articles on that in the newspapers, of course. Overall, things seem to be rather positive on basic income, of course, depending on how lucrative the basic income would be. So what level of benefit it would be finally when introduced. Quite a few people are, would allow people to have, let’s say, 800 or 900 euros basic income are rather okay for having that 600-700 still per month.
But there hasn’t been any kind of a survey on that over the past half a year, which would have been the probably a good time of polling that. And I’m really interested in hearing what the levels that they will be at the end of 2019 when people are being exposed to so much information on basic income for the past couple of years.
At the same time, political debate around basic income as a possible solution after the next elections hasn’t been that, the level of that discussion hasn’t been that high, which is somewhat surprising I would say.
Owen: Yeah, that is surprising. Well, those are the questions that I had for you. I’m wondering if there’s anything else you would like to add?
Aleksi: I would say that… Two things: the first is that the basic income experiment in Finland wasn’t initiated because any of the political groups in coalition had any ideological stance for basic income.
It was more merely thought to be one way of advancing some type of social security reform in the coming years. So, I’m quite sure there will be some reforms, some discussion on some type of reform, which, in a way or another, will resemble basic income over the next few years in Finland. It will be discussed after the next parlimentary elections which take place April next year.
It might resemble more, for instance, negative income tax or universal credit, which is now being tested in the UK. But there will be something which will continue the idea of reforming social security system to meet the needs of our age better.
Owen: So the idea is far from dead in your country. It sounds like it’s alive and well.
Aleksi: It is alive and well. And at the same time, there are no technical reasons why the experiment wouldn’t be relaunched after the elections and after the new coallition has been formed next year.
So there’s, according to my understanding, a full technical capacity to restart it, let’s say, at the beginning of 2012 with a bigger and more diverse amount of people. And then in Finland, we would have also a dynamic online income register in place, which would make it easier to combine those benefits with taxation.
So then they could also test different taxation levels combined with the basic income. Some experts say that with the current experiment, one of challenges is that we cannot be assured which thing are we actually testing? Whether the freedom from all the types of bureaucracy, of applying for welfare, really incentivize people to seek job better or whether it’s just the mere free benefit that they receive, which is tax-free, that incentivizes system.
So they’re actually two things which both have some type of effect on these people. And we don’t know, which are we testing right now? And when we could combine it with taxation, it doesn’t have to be then a tax-free benefit, which would then be, lets say, a more realistic way of implementing it as a permanent solution.
Owen: I see. So, you can start to move towards something where it could be, you know, something that’s a stable part of the government going forward.
Aleksi: So it would be much, much more a realistic real-life experiment than what it is now as a rather robust robust solution.
Jim: That was Aleksi Neuvonen, founder of Demos Helsinki, on the Basic Income Podcast.
Owen: So what struck me other than just that, how wrong the media has been about this, because you know you… I’ve had so many people come up to me and say. “I heard the Finland thing didn’t work out”, and it’s just not true. But moving beyond that, what struck me is just how this is an incremental fight on so many different levels both in term in current benefits like the unemployment system in Finland, the fight they’re having their now, and also the SNAP system here.
But also over the experiments that were doing because, you know, that is going to be an ongoing battle
Jim: Yeah. Policy is complicated. To actually set up anything, not just logistically in applying the policy, but actually to make sure that you’re aligned with all the different organizations and key stakeholders, that just takes a lot of work, and that’s pretty much always true.
And so it doesn’t really matter even if you have a super simple policy of handing out cash, that’s still gonna have a lot of complicated steps in the process to make it happen.
Owen: Right. And it is encouraging, you know, even if it does make the whole thing take longer, that there is a real desire to do it right, and to have these sorts of experiments.
And also, I was encouraged by the fact that there was a big public outcry to the, you know, the changes in the unemployment system and to the fact that they’re maybe not continuing the basic income pilot. Usually changes to the social benefits system, they can kind of pass mostly unnoticed.
Jim: Yeah. It’ll be really interesting to see how things progress there, particularly when we get to 2019 and can actually see the results. Will that actually change the conversation? Will the government there suddenly become more amenable to the idea of expanding and continuing on with that trial in order to to see how it might apply to different groups and over the longer term?
So I’ll be curious to see what ends up happening with that. I also think that this really points to how important it is and will be to frame conversation around experiments, because as we said, a lot of these details, there’s so much complexity there. And that’s going to be true of results as well.
When we actually start seeing that quantitative data coming out, depending on how you look at it, it can it can say many different things. There’s the old quote “Lies, damn lies, and statistics,” and I think that can certainly apply here. And so I think that not only thinking about how do we talk about the experiments leading into it? And then how does that translate into our interpretations of the results coming out of it?
Owen: Yeah. It’s going to be fascinating, and I think this episode really shows that, how just the initial round of journalism was, a lot of it was just inaccurate. And so yeah, there’s gonna be a lot of, you know, diligent work to be done to find out what actually is going on in these experiments.
Jim: Well, that’ll do it for this episode. Thank you for listening. Thank you to our producer, Erick Davidson. If you like what you hear, please do rate and review us on Apple Podcast or the podcast service of your choice.
And please do share with your friends. We’re always looking for more listeners. We’ll talk to you next time.
Exploring the Potential of Basic Income in India, feat. Saksham Khosla
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The basic income conversation is alive and well in India, particularly in the wake of an analysis conducted by the The Indian Ministry of Finance’s 2016–17 Economic Survey. Saksham Khosla, a Research Analyst at Carnegie India in New Delhi, discusses the Ministry of Finance’s proposal, and the various issues to be tackled in considering a basic income program for India. Khosla describes the unique challenges of creating a social safety net for a country of over 1.3 billion people.
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Episode Transcript
Owen: Hello, and welcome to the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh. We’ve talked briefly in the past about some of the past research around cash transfers, and there’s been a fair amount of studies on that and, in particular, some basic income pilots that have taken place in India in the past. And there’s recently actually been quite a growing debate in the country on the policy, but we really haven’t had a chance to delve in on that topic until now
Owen: So here to help us do that is someone who spent a lot of time with these issues in India. So joining us is Saksham Khosla. He’s a Research Analyst at Carnegie India. Welcome to the podcast.
Saksham: Thanks so much, guys. Thanks for having me.
Owen: So, to start with, can you just tell us generally about your work on universal basic income?
Saksham: Yeah, absolutely. So my research on UBI has really started in the aftermath of the Indian Ministry of Finance’s proposal for an Indian universal basic income that came out in 2016. That particular report seemed to have set a firestorm of debate in India about how does some radical transformation of the welfare net can be implemented in India.
So after that report, I really became interested in figuring out how apt really is such an intervention for the Indian context and what might one think about when something like this have to be implemented at the scale and size and scope that is India. That really was the rationale for getting into a, discussing a UBI for me.
Jim: Now, you’ve written that there is an active debate around basic income in India. Can you tell us a bit about, what is the driving interest there behind the idea? Is it, in the US, oftentimes automation is brought up as a reason for people to become interested, and there are people who explore it for other reasons here as well, looking at the anti-poverty and equity value that the policy might bring. But I’m curious if you can give us some insights as to what’s actually causing people to pursue this policy there.
Saksham: Absolutely. Like in the US, the universal basic income is the not really a new idea for India. In the late 60s, there were debates happening within the Indian cabinet about whether a minimum income standard would be a useful policy intervention.
That debate seems to have subsided since then, but it seems to have picked back up starting around 2011 and 2012 when a couple of Indian Economist started thinking about whether there is an argument to be made for administrative efficiency. And that really is the big driving rationale for an Indian UBI. Can it outperformed our existing social safety net, which is one that is incredibly expensive? It’s sort of a patchwork of programs that takes place across the country in for a variety of different populations. And the thinking is, well, can one cash transfer, something that suffices for a household and is enough to cover their basic need and that’s delivered directly into people’s bank account, can that really outperform some of the more complicated welfare arrangements that we have in this country?
And since then, that debate is really been picked up by lots of economists, scholars, researchers, activists, and that has finally culminated in the economic service report that came out a few years ago.
Owen: So we’ve spoken in recent episodes about the importance of understanding the context of a country’s social benefit system before we, you know, throw in a UBI. So if you could just help us understand India’s current anti-poverty programs and other social programs, that would be really helpful.
Saksham: Yeah. So the poverty alleviation strategy has really comprised three basic prongs. First off, obviously, economic growth. Second is public services like healthcare, education, sanitation and so forth. And the third, in which particularly the Indian state has invested heavily since the 2000s is social protection. And this involves transfers of varying kinds, subsidies. And these can broadly be broken down into two basic tents.
The first is obviously services that are rendered for individuals who are in the formula sector. So whether you’re a government employee, whether you’re employed by an organization, pays taxes, and has its employees on a formal payroll. But these, the formal sector really comprises a minority of India’s labor force. A little less than 10 percent of the entire working population falls within the formal sector. India welfare architecture really kicks in and comes to life for the remaining 90 percent of the workforce, those who are in informal organizations. They’re off the books, they’re self employed, they’re primarily involved in agriculture.
And here, the Indian state has a variety of programs. The first broadly are programs that are more or less transfers. These involve India’s flagship fuel, fertilizer, and food subsidies. There are India’s public works program called the Mahatma Gandhi National Rural Employment Guarantee Program, which is the world’s largest public works program. And then you have a series of insurance programs as well as the national social assistance program, which is basically a combination of pensions, which is given to the elderly, those who are disabled, widows, and so on and so forth.
So that is the broad generalization about India’s social safety net. Some of these, mostly, they are in-kind, but there are a few cash transfers in there as well.
Jim: Now, India currently has over 1.3 billion people living in the country. Can you talk about how does the massive size of the population affect how to country administers social benefit programs?
Saksham: That’s a really good question. I think the way the country has figured out how to administer the variety of programs is to essentially leave the central government in charge of the biggest and most expensive of these programs and then work alongside state government as well as local governments to decentralized some of those work and have them do a little bit of the heavy lifting. So while the funds may actually be coming from the central government, a lot of the day to day implementation is actually done by state governments with district administrations.
Now, of course, a lot of individuals fall through these cracks, just given the size and complexity of India, but that is the general thinking behind well, how does one go about addressing such a population?
Owen: So now getting into your analysis of the UBI proposal by the Indian Ministry of Finance’s economic survey: could you describe the proposal and also share your views on its, what you see as its shortcomings?
Saksham: The proposal, the big headline findings from the proposal are basically along the following lines. I definitely do recommend checking out the entire chapter in its entirety. But the big takeaways from the Ministry of Finance’s chapter was that a transfer of Rupees 7,000, which comes out to about 110 dollars annually, would bring down poverty from the existing poverty rate, about 22%, to a poverty rate of about 0.5%, if that transfer was given to 75 percent of India’s population.
So it’s important to know that this is not a fully universal transfer. The economic comes out and says that completely ensuring coverage of the entire population would be something that would be too fiscally costly, and possibly even politically costly as well. So it advocates for a 75% coverage rate, and it suggests various ways of excluding the remaining 25%, whether by targeting certain populations, rolling it out sequentially, possibly even targeting different geographies of the country and then taking it up to a larger scale.
The cost that the economic survey puts for such a transfer to a population of that size is about 5% of GDP. This is a fairly high, fairly costly estimate, and the survey comes out and says that this isn’t something that can be an add-on to existing programs. So all the programs that I talked about earlier like the public works program, the public distribution system, which is to ensure food security in the country, and a variety of other large welfare schemes would essentially have to be rolled back or dismantled to make place for a UBI, for a quasi-UBI as the survey calls it, of this magnitude.
So after looking at how the survey goes about putting together this estimate, and the implementation of a UBI, I had the following thought to evaluate this proposal. First of all, it is not really a universal basic income, obviously it’s for 75% of India, not the full population. So there is going to be targeting still retained as a big part of the program.
Now the service says that it wants to exclude the rich rather than target out, target the poor. But that still seems to me at least leaving the door open to a series of inefficient means-testing mechanism, or even other targeting techniques that may not work as easily in practice as they would in theory.
Looking into the various ways of calculating the transfer, the annual transfer of about $100 per year, it’s a fairly low payout because it’s based on a lower poverty line than alternative poverty lines that are available in India. And it’s not a true poverty line transfer as well. It’s essentially a cash transfer that is supposed to push people over the party line.
If you were to actually calculates the cost of giving folks in India a poverty line transfer, that would come to about 10 to 12 percent of GDP, rather than the 5% the survey puts forth. And that’s actually more than the entire central government’s revenue in the path. So we can see already that the the size and population of India is a big constraint on pulling off an ineffective UBI.
So the final part of the puzzle is, well, how do you actually send folks the transfer? The survey puts a lot of stock in India’s national biometric identification system, called Aadhaar. And the government’s push for universal financial inclusion. The survey actually comes and says that these two pieces are essential to have in place before one can think about having a universal transfer deposited directly into people’s bank account.
I completely agree with that estimate. I think it’s fairly early in our financial inclusion system to think about transmitting such a transfer effectively. There have been a series of evaluations by scholars, activists, and journalist of cash transfer experiment that are currently being undertaken in relatively urban parts of India where the food security program, the food that one would ordinary get down to the program, people are being given cash instead of that. A series of evaluations have found that for a variety of reasons, whether last mile delivery, the actual amount of the cash, the cost that people have to bear in receiving the transfer then going and spending it in the open market, actually have created significant concern for these populations. So in parts of the country where things like the PDF and other welfare schemes are function fairly effectively, the preference for cash transfers actually fairly low.
And we can see that the series of implementation problems the current government is facing with implementing cash transfer as indicative of just how far we have left to go before we can think about universal or even quasi- universal cash transfer across the country. So a UBI, for all it’s worth in theory, actually radically changes when one thinks about translating it into policy and action.
Jim: You mentioned challenges with “last mile” on this new cash transfer approach. Can you elaborate what those issues are?
Saksham: Yeah, absolutely. So the pilot evaluations of what are called “direct benefit transfers” have essentially found that, and these have been a series of evaluations that have been going on by organizations like JFL in coordination with the Food Ministry. And they’ve essentially found that the size of the subsidy, in particular, has not been enough for individuals getting the transfer to compensate for their typical consumption expenditure.
In addition, the combination of cash transfer with the biometric identification program has complicated things significantly. What that means is that when an individual goes to get this cash transfer, they must authenticate their fingerprints to receive that transfer, and their fingerprints are essentially recorded within the nation’s biometric identification program.
And across rural India, authentication failure are an incredibly big reason why people have been unable to receive their payments. That has resulted in massive exclusion errors where people who would have otherwise been able to receive their food rations, simply by demonstrating their ID card to the person actually giving out this grain, have been systematically denied their cash transfer. So authentication failures and exclusion errors that have resulted as a part of the Aadhaar program, just the biometric program, have been a significant obstacle in receiving this transfer.
Over and above that, actually going and spending this money in the open market has been something that incurs high private cost because one has to take out the time to actually go and receive the transfer, go and spend it out on the open market, because of all these reasons, there’s a lot of progress that needs to be made before large-scale Aadhaar-linked cash transfers can be actually trusted to fully reached recipients.
Owen: That’s very interesting. So universal basic income has a lot of principles embedded in it, such as universality and unconditionally. Even if a full UBI may or may not be right for India, what principles from the overall concept do you think would be useful in implementing and changing India’s social benefit programs?
Saksham: So I think something that has benefited several state governments, and even the central government in their implementation of existing welfare programs, and I’m thinking particularly of the public distribution system and security, has been to universalized coverage and reduce the number of eligibility criteria or bureaucratic hoops a beneficiary has to jump through to receive that transfer.
So several Southern and Central, even Eastern Indian states have found that when they implemented reforms that make it eash for a vast proportion of the beneficiary population to receive the transfer with relatively little bureaucratic middlemen, that actually has helped reduce leakage, reduce corruption, reduce the chance of transfers of being diverted from beneficiaries.
So a big reason why the administrative efficiency argument is made in favor of a UBI, that argument loses a certain part of its salience when one considers the progress that India’s existing welfare schemes have made to reform themselves just by implementing the principles of universality, and to a certain extent, unconditional as well. One thing that I actually think, and this is something several scholars in India has put forth, could be a stepping stone potentially to a UBI, is to universalize existing social pensions among folks that are elderly, the widows, and people who are disabled, because these are vulnerable populations. They’re easily identifiable, and a series of evaluations and studies over the past decade have found that this is a program that works particularly well relative to other schemes.
So if one were to universalize payments, and social pensions in particular, I think that would be a very useful way to combine the central tenet of UBI, which involves cash given to a universal population with as little bureaucratic intervention as possible.
Jim: So delving more into the politics around this: can you give us a sense for what is the current conversation around basic income and similar policies in India right now? Where does there seem to be momentum for actually pushing forward real change?
Saksham: I think the conversation for UBI, at least politically, seems to have hit a pretty significant roadblock immediately after the proposal was submitted by the Indian Chief Economic Advisor’s office. The chief, the country’s Finance Minister pretty much came out and said that the country’s finances cannot handle a UBI at this point in time and that it would be easy to implement, but very hard to roll back. So I think there is a fair amount of political doubt, I think, about the feasibility and the need for such a program at this point in time.
But I think that there is certain cause for optimism, if not from the central government, but from the state government. So several Indian states are actually contemplating whether it would be easier and more feasible to convert several of that existing benefits Into cash transfers, combine that cash transfer, and transmit that to their beneficiiaries.
Now, obviously, there are a couple of dangers here. One has to be careful that this isn’t a program that Happens only in India’s most effective states administratively, and states that, rather than states that actually need this sort of intervention. And that under the guise of a UBI, this isn’t an excuse to sort of step back from the state’s obligations to its citizens and convert programs that would be relatively high functioning into relatively meager cash transfers. I think that’s a big risk.
So I think the conversation right now, at least politically, on a UBI seems to be at a bit of a standstill. But I don’t think that that should be cause for pessimism. Several folks have recommended that coalition of workers unions, whether they are informal workers or workers in formal sector, could come together to agitate for a UBI. In fact, several of the UBI experiments in India have been conducted with the help of the Self Employed Women’s Association, which is a group of women running small businesses for whom this policy seems to have great potential. So I think that is where the political discussion is at.
It’s also hindered because we really don’t know what the final form of a UBI will be in India. The economic survey proposal is just that, it’s one proposal. But we don’t know whether a central state government would go about actually implementing it. Would it involve a higher amount of taxes? Would it involve actually dismantling existing schemes, in which a brave government would have to contend with the beneficiaries of that scheme, and therefore the political ire, as it were. So I think that’s where political discussion is at.
Owen: So, given the uncertainty both around the politics and also about what is the right way forward, what do you see as the next steps for basic income in India?
Saksham: Well, I think for both a UBI, folks that support UBI, and those that criticize the the applicability of such a program, the only way this discussion can move productively forward is, I think, through a state-administered basic income experiment. And I want to emphasize the part that this should be, something should be administered by a state government or a collection of state government, potentially even by the central government. Because rather than the discussion that’s happening in the US or in certain parts of Europe, the key constraint to implementing a basic income in India is state capacity, and whether the Indian state implements it in such a fashion that is more effective or can outperform existing schemes. The relative benefit or merits of the idea quickly lose any of their relevance if what we get in its place is a program that leaks, that has a high chance of encouraging corruption, and that may even come at the cost of schemes that do actually deliver their benefit to these citizens.
So I think a basic income trial, ideally something that is longer than five years to resist electoral pressure and to give us long-term cash transfer effect, is incredibly important for this debate. And if we can get this done with the participation of an external agency that has high amounts of experience evaluating large randomized control trials or other forms of welfare evaluations, that would be an ideal way to figure out, well, is this really something that fits neatly within the welfare contact and if it’s something that is worth investing resources, time, and even political will behind.
Jim: That was Saksham Khosla, a Research Analyst with Carnegie India.
Owen: So, I found it very interesting when he described the problems of implementation of cash transfers. It felt like the reverse, at least in the US and a lot of other countries, where usually if you’re delivering stuff or some kind of non-cash benefits, that’s much harder than delivering cash. There’s a lot of transfer issues, whereas cash is just instant and easy. Whereas, you know, as he described, that’s not really the case in India.
Jim: Yeah. I think this was a great example of understanding the key differences that will ultimately lead to different right solutions in different countries. And that recognizing that it seems like there, I mean he talked about leaks and corruption in the process. And so they have systems they’ve developed over time that are, at least it seems currently, somewhat resistant to that, and if you’re talking about something new, that “last mile” piece may actually be a huge challenge. And so whether you use cash instead of specific in-kind goods, any sort of new approach, and also the amount of security you need to include with it in order to try to prevent that, those all create additional barriers that you don’t necessarily think about at first blush.
Owen: Yeah, and like you said, I think it shows the importance of experiments and trials just because there’s always going to be something that you’re not thinking of when you actually lay it out. I feel like a lot of us advocates can kind of get frustrated because we feel like we know this works, that we should just do it, but you learn so much through all the trials that we’ve done and especially in a context that at least we’re not particularly familiar with.
Jim: And we talked about this in the episode earlier this year with Elizabeth Rhodes, but for the Y Combinator experiment, the first thing they did wasn’t to run the experiment. The first thing was to do a very small pilot just to understand logistics.
So even here in the US, people recognize that once you actually, once the rubber hits the road, and you’re actually talking about real programs, it’s so important that you really dig in and understand, what are the logistical challenges? How, are there ways that this may have unintended consequences or break down at points that we might not think about in a top-level economic analysis?
Owen: Yeah, and speaking of economic analyses, I always find it interesting what conditions people choose to set when they’re creating these analyses. You know, he described one where it’s 75% of the population, which it’s kind of daunting to think about how that remaining 25% is like the population of the United States. But, you know, that’s one way to do it.
We spoke to the team in Washington DC who looked at a basic income at the poverty level and 4 and 1/2 times the poverty level. And I just find it interesting the sorts of choices that people make when they’re modeling this out, and I feel like, you know, that’s something where it’s a lot cheaper to do an economic analysis, but we could still use a lot more of those to just get a feel for what different programs might look like.
Jim: Getting more movement on all fronts. The more, the better we understand this, the more informed and deep debates we can have, the better for moving things forward.
Owen: Yeah, absolutely. Thank you for listening to the Basic Income Podcast. Thank you to our producer Erick Davidson. Please subscribe on the podcast service of your choice and leave us a rating or review. And please tell your friends to bring more people into this conversation. See you next week.
Expanding the Earned Income Tax Credit, feat. the California Budget & Policy Center
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While basic income is often described as a revolutionary proposal, we do have programs in the federal government and some U.S. states that contain elements of a basic income, namely the Earned Income Tax Credit (EITC). The California Budget & Policy Center (CBPC) has studied the effects of the EITC, and what it might look like to expand the program to something resembling a basic income. Jim and Owen are joined by Senior Policy Analysts at the CBPC, Alissa Anderson and Sara Kimberlin.
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Episode Transcript
Owen: Hello, and welcome to the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh. In past episodes, we’ve talked a bit about the Earned Income Tax Credit, or EITC, as a policy that in some ways resembles the universal basic income and could potentially be expanded to more closely model the policy and to the live up to the aspects of it that so many of us find so interesting. One of our past guests, Chris Hughes, talked about his proposal for a guaranteed income, which is heavily inspired by the Earned Income Tax Credit.
But we haven’t delved too deeply into the policy to understand exactly how it works and what current proposals actually are moving and have been discussed as far as taking it more in the direction of basic income.
Owen: So, in this episode, we have some people who’ve done some deep analysis on this, in the context of the State of California. So joining us from the California Budget & Policy Center are Alissa Anderson and Sara Kimberlin. They are senior policy analysts. Welcome to both of you.
Alissa: Thanks very much for having us.
Sara: Yeah, thanks.
Owen: To start with, can you just tell us generally about the work that the California Budget & Policy Center does?
Alissa: Sure. So we are a non-partisan public policy research organization. And we basically seek to inform state budget and policy debates, primarily by analyzing the impact of policy proposals on low and moderate income Californians.
And so we cover a wide range of policy areas, everything from early care and education, K-12 education, higher education, health and human services, tax policy, housing, and many others.
Jim: Now, as I said earlier, one policy we’ve talked about in the past in relation to basic income is the Earned Income Tax Credit. Since we haven’t really gone into too much depth, do you mind just giving a brief description of what that policy is and what impact it has for low-income Americans?
Sara: Sure. So the the Earned Income Tax Credit is, originally it’s a refundable federal income tax credit that’s designed to allow low and moderate income working families to keep more of their earnings. And basically, it reduces the amount of federal income tax that families. They’ll get more money if they have more children, and it’s based on how much they earn.
But importantly, because it’s refundable, if the Earned Income Tax Credit is more than what a family owes in taxes, then they get the difference back as a refund. So they’ll actually get a check back from the federal government that you can help them increase their income and pay for their basic needs. So what that means is even families that don’t owe any federal income tax can get the full amount of EITC that they qualify for.
Some important things to know about it: for one thing, it actually has a very broad reach. About one in five tax filers in the US claims it. And it can be a very sizable cash benefit, so the federal EITC can boost families earnings by over a third to almost a half depending on the number of children with a maximum credit about $6,300.
And there’s also some other important things to know about it. For one thing, it’s been around for a very long time. It’s very well researched. So there’s a lot of evidence behind it showing that, for one thing, it lifts more children out of poverty than any other federal policy, that it helps increase families incomes. For another thing, it’s been shown to increase employment among single mothers, and single mothers with kids are the largest group that benefits from it.
And finally, it appears to provide benefits that really help the next generation. So for one thing, it’s linked to improved health for babies like higher birth weights. It’s a key predictor of future health and economic well being. And it’s also been linked to higher test scores for kids and higher high school graduation rates and college attendance rates.
So it just appears to be linked to a lot of really important positive long-term outcomes for kids.
Owen: Those are really fascinating findings. So, Alissa, EITC is a federal program, but a number of states provide a supplement to the federal funds, including California, where the supplement is called CalEITC. Can you tell us about the program and its specific impact?
Alissa: Yeah. So currently, 29 states have state EITC, and the District of Columbia does as well. And generally the purpose of state EITCs is to enhance the benefits of the federal EITC. Tt basically provides an additional state credit on top of the federal credit.
So California’s credit, which is called the CalEITC, was created in 2015, but it’s structured really differently from the way other state EITCs are structured. So California basically decided to target the state EITC only to workers who are facing the greatest economic needs, in order to be able to provide those workers with a much more generous credit.
So California’s EITC is actually far more robust than other state EITCs in terms of the size of the credit. Generally speaking, it provides the credit that’s about 85% of the federal EITC, whereas most other states provide credits that are 30% or less of the federal EITC. So our credit is actually the most generous refundable state credit in the nation. And so families with kids in California can get a maximum CalEITC of about $1,500 to $2,700 dollars, depending on how many kids they’re supporting. And workers who aren’t supporting children can get just over $200.
But the credit is only available to families with extremely low incomes, mostly families that are living well below the poverty line. And that’s different from the way other state EITCs work. In most other states, the state EITC is provided to all workers who qualify for the federal EITC, but because the states are providing the credit to so many people, they provide a much smaller credit. So there’s a trade-off there.
In terms of the impact, in each of the last two years, about 370,000 tax filers have benefited from the CalEITC. It actually means that many more people have benefited from the credit because a tax filer can be a married couple, it can be a parent with kids. It’s basically all the people listed on a tax form.
And this year, the credit has reached over 900,000 tax filers as of the end of March, so a few weeks before the end of this year’s tax filing season. And that’s because the credit was significantly expanded last year.
Sara: In terms of thinking about who the people are who benefit from the CalEITC, I think one important thing to note is it really overwhelmingly benefits children. Tax filers are eligible if they have low incomes and they aren’t supporting any children, but in fact, more than 90% of the CalEITC dollars have gone to families with kids. So it’s a really important tool especially for helping working mothers. If you look at the tax filers with kids who are eligible for the CalEITC, about 70% of them are women. So it’s especially beneficial for children and and working moms.
And the CalEITC is really targeted to reducing the depth of poverty. So in terms of how it affects poverty of among families who are eligible, it really brings families closer to the poverty line because it’s really focused on, the largest credits go to the families with the with the lowest earnings. It’s not really designed to lift families above the poverty line as much as reduce the depth of poverty because a lot of these are families where a single parent is working part-time or part of the year.
But another thing that’s important to note is, it’s important to think about the CalEITC in combination with the federal tax credits that the same families are eligible for. So if you look at the CalEITC in combination with the federal EITC and the federal child tax credit, which is another tax credit that low-earning families are eligible for, those three credits combined can really significantly boost the earnings of families that are really earning a small amount.
So for example, a family with three kids could see their earnings rise by as much as 92% And again, we’re talking about families who have very low earnings, well under $20,000 a year. So, again, if you look at the CalEITC plus the federal EITC combined, those lift over 800,000 Californians out of poverty each year. And many of those are children. So those credits combined also have lifted over a quarter million Californians out of deep poverty.
Jim: Wow. That’s great to hear that such a recent program that’s providing direct cash has already had such an impact. One thing I’m curious about: in past episodes, we’ve talked about some of the different barriers to access that exists for means-tested programs that we have today. And a really big one is simply awareness of the existence of the program. People don’t even realize that there’s more support available to them.
And I know, at least in the past, EITC has faced challenges around that. Can you tell us a bit about, what has the update bin for the program? And what has actually been effective at getting more people to be able to take advantage of it?
Alissa: Sure. So, it does appear that many people who are eligible for the CalEITC have missed out on it. And one of the ways we know that is, we conducted a survey at the end of 2016, so after the first tax filing season when the credit became available. And we found that fewer than one in five people who were likely eligible for the credit, based on their income and family size, had even heard of it.
And we also found that fewer than half of the people who appeared eligible for the CalEITC had even filed their taxes that year. So we have some evidence that people are missing out on the credit.
Unfortunately, we don’t know the exact uptake or the participation rate. We know how many people are receiving the credit, but we don’t have a really good handle on how many people are eligible for it. And really the key challenge is, the credit targets people who have such low incomes that many of them aren’t required to file state income taxes. And so if they’re not filing, of course, we don’t have tax data on them.
So I think you know the bottom line here is that, I think one of the keys to making the CalEITC success is for the state to invest more in promoting the credit because it could be that a lot of people just don’t realize they can get cash back if they file their taxes, even if they’re not required to file.
And I also think that it’s really important to connect low-income families to free tax services. I was really surprised to learn when I started studying the EITC that the majority of people who claim the EITC paid to file their taxes, even though all of them are eligible for free tax prep services. So it basically means the majority of people claiming the EITC don’t get the full benefit of their credit. And tax paid tax preparers are not very forthcoming about how much they charge people, but some research has suggested that EITC filers can be charged several hundred dollars, which for low-income family is a lot of money and they really need to get the full benefit of their credit.
And for the CalEITC population, because they have extremely low incomes, well below the poverty line, I would imagine that if they think they’re only filing option is to pay somebody that they really might not think it makes sense to file their taxes and claim this credit if they’re not going to get the full benefit anyway.
So I think one of the best things that California could do to boost participation in the CalEITC and also make sure that families are getting the full benefit of the credit is to expand and promote free tax prep services. Things like VITA, Volunteer Income Tax Assistance. VITA sites provide free tax prep services by volunteers who are trained and certified by the IRS, but only 2% of EITC filers in California actually use VITA.
Part of the problem is a lot of people don’t know about it, but I think an even bigger problem is that VITA sites just really don’t have the capacity to meet the great demand for free tax prep or the funds to compete with the advertising of paid tax preparers.
Jim: And beyond that, if we could get more people to be taking advantage of CalEITC, I imagine they would also be taking advantage of federal EITC, which would mean more money coming into California.
Alissa: No, absolutely, and that’s a great point. So I think there’s evidence that also suggests that the federal EITC is underutilized, and the research suggests that the people who aren’t claiming the federal EITC who are eligible for it tend to have very low incomes, the very population that the CalEITC targets.
So there’s a huge opportunity, now that we have a state EITC, to not only promote that credit but to also make sure that people are claiming the federal credit as well, which draws federal dollars into the state and can help provide a boost, not only to low-income families, but to the businesses where they spend their money.
Owen: Just a technical question: if someone is eligible for the federal or the CalEITC and they file their taxes, do they get it automatically, or do they have to take additional steps?
Sara: They’ll need to fill out the form that demonstrates that they’re eligible for it, but it’s like in standard tax preparation software with any paid preparer or volunteer VITA preparer, they would presumably go ahead and fill out that form and qualify for it. There aren’t any, it’s like filling out any other tax form when you’re filing your income taxes.
Alissa: And my understanding is that VITA actually trains their volunteers specifically on EITC because the population they’re targeting is eligible for that credit. They get special training on that credit in particular.
Owen: So the EITC naturally has a work requirement. What can you tell us, you mentioned single moms before, we can you tell us about the effect this has on incentivizing employment?
Sara: There’s strong evidence that the EITC does encourage people to work. And in fact, it was originally designed to encourage work, and that’s part of the reason why it had such strong bipartisan support over the decades that it’s been in place.
And the way it encourages work is by providing a more generous credit as families earn more income up to a point, so that generally the more people work, as they work and earn more, they get a larger credit until their incomes reach a point where it starts phasing out because their incomes are high enough to not need as much support.
So, there’s a large body of research on the federal EITC showing that it boosts employment, especially among single mothers who, again, are the largest group of beneficiaries. In fact, there’s some new research that’s come out in the past couple years that shows that when you account for the fact that EITC encourages people who aren’t working to start working because they get not just the wages that they earn from their job, but they also then qualify for the EITC, which increases their income for the year. When you account for that extra effect of people entering the workforce, EITC actually reduces poverty twice as much as previously had been thought to do.
So, there’s a large body of evidence showing that it really helps give people a reason to enter the workforce and and helps make the earnings that they get sufficient so it really can allow them to support their families much better.
Jim: Now, last year, you release a report that drew a connection, a direct connection, between EITC and universal basic income, and looking at specific steps that could be taken in California to expand CalEITC in that direction. Can you tell us what that expansion looked like and what really motivated your approach here?
Alissa: Sure. So, part of what motivated us was the fact that most discussion around UBI looks at how this could be implemented at a national level, but it might actually be more realistic politically to implement at the state level. And so we wanted to look at, how could we Implement a UBI here in California?
And so what we ultimately argued is that the CalEITC could really lay the groundwork for a much bigger, bolder basic income policy. And what led to that conclusion is that, we thought that providing a truly meaningful basic income, one that significantly cuts poverty, also ideally helps people above the poverty line who we know also struggle to get by in California, if it’s provided universally, it would be really expensive, and we’re not sure that the state could generate a revenue source large enough to do that.
So we thought through, okay, how could we how can we make the cost a little more realistic? And there’s two ways to do that: you either reduce the benefit, or you target it to fewer people. And so we would argue that targeting it to fewer people makes more sense because that way you can provide a more meaningful income Support to the people who need it the most.
Once we go down the road of targeting the benefit we thought, well, we also need to gradually phase it out, because otherwise it can create some sort of weird behavioral responses. So, for example, if the income benefit is only available to people with $50,000 or less in income, if it ends at $50,001, somebody would have a really strong incentive to not take a pay raise if it would push them over that income limit because they would actually be worse off without the basic income.
So once we go down the road of targeting the basic income policy and phasing it out gradually as income rises, what we find is that we’ve essentially recreated the EITC. And so we thought, well, why not build on our existing EITC as a way of moving toward a basic income policy in California?
And then there are a number of other advantages to building on our existing EITC. For one thing, the administrative cost would be low because you’d basically be piggybacking on an existing mechanism for distributing cash to people, the tax system. Plus, all the information you’d need to find out about who’s eligible for the benefit is already collected on tax forms, so it would be efficient.
And then also, when you provide a refundable state tax credit, it’s not subject to federal income tax. But if you provide a payment outside of the tax system, it likely would be. So for example, the Alaska Permanent Fund, which, as you know, is the closest thing that we have two basic income policy in the US, is taxed. It is considered income for federal tax purposes. So it means essentially the state, if we were to provide income outside of the tax system, essentially the state would be handing some money directly to the Feds. It wouldn’t be going into the pockets of the families that it’s intended to go to.
And then on top of that, if we provide a benefit through the tax system, and in the EITC specifically, it wouldn’t reduce eligibility or benefits from other public supports like food assistance or health coverage because EITC payment specifically say that they don’t count as income in benefit levels or eligibility for those other benefits. And a lot of families who are working and getting the EITC also do need other public supports to make ends meet, particularly here in California where we have a very high cost of living.
So we looked at a number of ways that we could make our CalEITC more like a UBI. And so one thing that we looked at is expanding it to people who don’t work for pay but who are engaged in productive activities. So, for example, students pursuing higher education: you could provide the credit based on how much time they spend in school, for example. You could provide it to caregivers, people taking care of young kids or elderly adults or people with disabilities who are doing legitimate work, but they’re just not getting a paycheck for it.
And eventually, maybe, open up the credit to all people without earnings from work, which is somewhat radical idea here in the US, but there certainly is precedents for this because many advanced industrialized nations do provide child benefits that are not tied to work.
And then the other thing we looked at is exploring providing workers who qualify for the CalEITC to opt-in to receiving it as a monthly payment, as opposed to just a lump sum. And the advantage there is that it would allow workers to kind of smooth out their incomes over the course of a year. And it could also serve as sort of a forced savings account.
Owen: Yeah, it’s always interesting to think about the concerns we’d have if we were introducing a program like that right now, as opposed to something where we’d, maybe in 20 years, where we’d have a chance to work out the kinks of whether this income counts toward federal taxes and that kind of thing.
So you started to get into this in the last answer, but both the federal EITC and the CalEITC, in addition to including a phase-out, include a phase-in. So someone who doesn’t earn any income doesn’t receive any benefits, but they will gradually receive more money as their annual income increases up to a certain point. This means anyone who doesn’t have a job or is engaged in unpaid labor, Like you mentioned, doesn’t receive any support through the program.
So you mentioned addressing this through including other types of labor, such as family caretaking or being a student. Another way to do it would just be to eliminate the phase-in, so that people with zero income would receive maximum benefits, which would effectively convert the EITC into a negative income tax, which is the form of basic income we were testing in the 60s and 70s.
What do you feel like the pros and cons are of these two approaches?
Sara: It’s relatively easy to imagine support for the idea of eliminating the phase-in for people who are doing things like caregiving or going to school, doing different kinds of productive activities that are not paid employment, but they’re productive activities that benefit the community broadly.
So, for example, the pros of allowing caregivers to to claim the credit, regardless of income: for one thing, it rewards the work that is necessary, but typically unpaid, and would also do things like help address the lack of affordable child care and affordable options for caring for elderly relatives or people with disabilities and their families.
But it’s also important to note that, not just those families and individuals, but also the community at large really benefits when children are raised in families that are not facing economic insecurity, because children who are raised with enough income and their families have better long-term health and education outcomes. So, over the long term, they become more productive worker and are likely to need less public support as adults. So I think is a very clear argument, very clear sort of bipartisan argument for why there’s a good state interest or public interest in supporting individuals who are doing caregiving work.
And similarly with students who are the same way, we know that a lot of low-income students face a lot of struggles to meet their basic needs and really be able to afford to stay in college long enough to graduate, which is a really key problem in the community again. Not just the students, but the community benefits from having a better educated and more productive future workforce. So I think there are clear pros on both, of course, the individual level and at the state level or community level for eliminating the phase-in and allowing those kinds of individuals doing those kinds of activities to to claim a credit without any kind of phase-in.
Extending it down to anyone without paid work would definitely be a much more radical idea. Again, though, if you eliminated the phase-in for anyone who has children in their family or anyone who is caring for dependents regardless of what age they are or anyone who’s raising children or dependents, I think there’s a lot of research that shows that children growing up in poverty face a lot of serious disadvantages over the long term. And so helping ensure that their families have enough resources when they’re young can really pay off over the long term, both those children and also for society at large.
And again, many other countries, and in fact, even the United States, we provide a child tax credit and child benefits for tax filers with children that are not specifically linked to how much income you make, kind of recognizing the fact that there are costs associated with raising kids, and it’s in everyone’s best interest to make sure kids’ families have the resources they need when the kids are growing up.
I think a lot of the cons in terms of eliminating the phase-in are largely political. The key argument against it is that it would discourage paid work because if you can just claim the credit whether or not you have any earned income and the amount of credit you get doesn’t depend on your earnings, then you might be less inclined to go take a low-wage job or a part-time job or anything that would give you an earned income that was less than the amount of credit you could get, less than the amount of basic income you could get.
Although again, in the context of thinking about this as a state policy, I think it’s important to note that the federal EITC is structured with a phase-in, so there could be opportunities to eliminate the phase-in at the state level, and there would still be an incentive to work based on the federal credit that people would be eligible for.
And, of course, the other major con would be just that it would significantly add to the cost the more you expand the the population of people who are eligible. So that again gets into the question of trying to figure out how to prioritize how much credit and who gets the credit in order to make it financially feasible.
Jim: You just touched on the politics around this issue, and I’d be interested to delve a bit more into that. Is there currently political movement towards significantly expanding EITC in California? If so, where is that at? If not, what might that process look like?
Alissa: Yeah, absolutely, there’s a lot of support for continuing to build on our state EITC. So, first of all, we have a lot of champions in the legislature that have been strong proponents of the credit since it was first created. So, for example, Senator Toni Atkins played a really critical role in getting the credit established when she was Speaker of the Assembly and now she’s Senate President Pro Tem. Assembly Budget Chair Phil Ting, who represents parts of San Francisco, has also been a champion of the credit, and he signaled his strong support for a robust expansion of the CalEITC this year through the state budget. And there are many other legislators who have carried bills over the years to strengthen and expand the credit as well.
Also in California, there’s a large coalition of over 30 organizations that’s been advocating for continuing to build on the CalEITC ever since it was created. It’s called the CalEITC Coalition, and they advocated for the expansion of the credit last year, and they’re continuing to advocate for further improvements in the credit this year and beyond.
And so specifically this year, the Coalition is proposing to make the credit more inclusive because there are a number of low-income workers who have the incomes to qualify, but who are actually ineligible for the credit, and many immigrant families who work and pay taxes also don’t qualify for the credit because their primary earner doesn’t have a social security number that’s valid for work. And so that means many children don’t have access to the credit, and that even includes US citizen children.
So the Coalition also is supporting the proposal that Assemblymember Ting put forward late last year that would significantly expand the CalEITC over the next few years and really provide much greater financial security to working families in our state. Basically, the proposal is to raise the income limit to qualify for the credit from about $22,000, where it is currently, to about $31,000. And what that means is a full-time minimum wage worker would be able to access the credit even as the minimum wage rises to $15 per hour over the next few years.
And then his proposal would also increase the size of the credit across the board for everyone who’s currently eligible for the credit. So, there are numerous other ways that the credit could be strengthened or expanded, and the Coalition has some ideas for other options to pursue in future years, but that’s really sort of currently what’s moving. And there’s certainly people in the legislature who are strongly supportive of the credit and really want to make it a success and make sure that it reaches as many people in the state who are working and struggling to get by as possible.
Jim: That was Alissa Anderson and Sara Kimberlin, both senior policy analysts with the California Budget & Policy Center.
Owen: So I thought first and foremost, it’s just a good reminder of how powerful the EITC is, both federally and and statewide. You can have certain objections to who it leaves out and how it phases in — I think we might desire some modifications around that. But just in terms of its effects, it’s keeping millions of people out of poverty.
Jim: Yeah, and not only is it effective in making a huge difference, it is actually an area where movement is happening, that this is a pretty new policy in California, and there are ongoing, well-backed efforts that have very strong shots at success to make significant improvements. And so, if we’re thinking about what sort of policies can move right now, this is definitely one of them.
Owen: Yeah, it’s nice to hear that we have people who are pretty powerful in the legislature, especially Toni Atkins who, like they mentioned, just became our Senate Pro Tem, who are big backers of this program and sound open to expanding in.
Jim: Yeah, I’d be curious to try to understand more what those barriers are, political barriers are, to actually taking this to be a negative income tax. I thought the point about how a state could do that, because the federal EITC has the phase-in, as far as incentivizing work, to the degree that happens, that that would still exist. But it’d be interesting if we started having more conversations about making that change in California and perhaps other states who have those states supplements to the federal EITC.
Owen: Yeah, and it sounds like people are open to the idea of at least eliminating the phase-in for parents or other caretakers, you know, people taking care of elderly grandparents, perhaps, students. And maybe if you start shaving away some of those exceptions, you can start to get close to it just being a universal program.
Jim: True. I do think that there’s an interesting question about, is it more effective to chip away at it that way, and that eventually gets you to a full negative income tax, or should it be something where in one go you say, everyone ought to have this, as opposed to starting to really enumerate and list out those particular categories that you deem are worthwhile.
Owen: Yeah, I think it would be cleaner if you could just do it all at once, and it would be more of the program you would design if you are starting from scratch. But I also don’t really see them as mutually exclusive projects. I think the closer you can make it so that a true negative income tax is a smaller leap, that I think is going to be good progress either way.
Jim: Well, it’ll be exciting to see how this develops in the months ahead.
Owen: Yeah, absolutely. Thank you for listening to the Basic Income Podcast. Thank you to our producer, Erick Davidson. Please subscribe on Apple Podcasts or the podcast service of your choice. And please tell your friends — we’re always looking to expand our audience, and word of mouth is always the best way to do that. See you next week.
The Basic Income Debate in Australia, feat. Emma Dawson
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With a recent proposal for universal basic income by Australia’s Green Party, the debate over the policy is alive and well down under. Owen and Jim spoke with Emma Dawson, Executive Director of Per Capita, a progressive think tank in Australia. Dawson is a strong supporter of Australia’s social programs but is skeptical that universal basic income is right for her country.
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Episode Transcript
Owen: Hello, and welcome the Basic Income Podcast. I’m Owen Poindexter.
Jim: And I’m Jim Pugh. Those of you who have been following recent basic income news may have heard about a proposal that came out just in the last few weeks in Australia. Now most of our conversations on this podcast tend to focus on US policy, but the conversation around this really is an international one and what happens in places around the world can shape perspectives, and certainly there can be similarities and also differences on policy solutions in different places.
Owen: So for this episode we’ll be speaking with Emma Dawson. She’s the executive director of Per Capita, which is a progressive think tank in Australia. And we’ll be discussing a recent proposal there around basic income which she has some concerns about. So welcome Emma.
Emma: Hey, nice to be with you.
Owen: So we’ve had some guests from countries around the world in the past. And like Jim said, we tend to focus on the US and the challenges we have here and what basic income might look like in this context. However, as we discussed in a recent episode with Professor Alma Zelleke, the assumptions and values inherent to the social safety net in a particular country have a major impact on what new policies solutions will prove effective.
So to start with can you just tell us generally about the current state of the economy and social programs in Australia and what challenges you currently face?
Emma: Sure. So Australia is a growing economy, a reasonably large economy. We’re a wealthy nation, second only to Switzerland in terms of wealth per capita, and we actually hold the world record now for the longest period of uninterrupted economic growth. So we’re going to 26th year without a recession. And unlike a lot of countries, we didn’t go into recession during the GFC. We had a a government that implemented a fairly Keynesian style fiscal stimulus package at the time and kept a lot of people in work that otherwise almost certainly would have been thrown out of work.
We also have a fairly strong social safety net. We have the most tightly targeted tax and transfer system in the OECD. So our welfare spend is very carefully targeted to those who need it. There is a degree of so-called middle class welfare, but certainly not as much as you might find in other comparable jurisdictions.
We have a reasonably strong minimum wage. It’s I think $18 39 Australian, which is which is a little under $15 US an hour, is the absolute minimum wage. We also have, of course, universal healthcare. So we have some some measures in place in our safety net that certainly aren’t there in the US.
At the same time, all those headline figures look really good, but we do have a higher unemployment rate than the US. It’s currently sitting around 5.5, 5.6 percent and that hasn’t budged for a long time. We have a very high rate of under utilization in the labor force, so we have about 1.1 million out of our population of 25 million. We have that 1.1 million people that are looking for more work than they’ve currently got, and you only need to be employed for one hour a week here to count as employed in the statistic.
And our wage growth is pretty stagnant. It’s sitting at around 1.9 percent per annum at the moment, which is barely keeping up with inflation. And our inflation measures, of course, take into account a whole range of costs and prices, but the most significant prices, things that are not that are essential spending like electricity, housing, healthcare, and education, those costs are rising at a rate rapidly outstripping wage growth.
So people in Australia are feeling squeezed. Our economy looks to be in good shape from the headline figures. But the reality on the ground is that I would argue, and certainly most people on my side of the political debate here are arguing, that prosperity is not being fairly shared at the moment with working people and particularly with people that aren’t working that are out of the workforce for whatever reason.
Our New Start payment, which is our unemployment benefit, is I would say criminally low. It’s as low as 250 Australian dollars a week, which is well below the poverty line. It hasn’t risen in real terms for a quarter of a century. Our pension age pension rate was lifted under the last Labour government, that’s our, you know, you would call them liberals, although the Liberal Party is our conservative party here.
The age pension rate was given a boost then, but it’s still barely adequate particularly for people that don’t only home. And single renters find it very difficult on their pension. And similar payments like the disability support payment another income support measures, I would argue, need lifting considerably in a country that I said is per capita the second wealthiest in the world.
Jim: Now there’s been quite a bit of media attention directed to a recent proposal from Australian Senator Richard Di Natale, leader of the Australian Green Party, to establish a universal basic income in Australia. I know you have some concerns around that proposal, and we’ll get to that in just a moment. But can you start by describing what exactly has been proposed here?
Emma: Yeah. Well, it’s difficult to do so because there wasn’t a lot of meat on the bones of Di Natale’s proposal. He made it at an address to the National Press Club, which is our, you know, primary forum in Canberra, the capital, for politicians to speak to the press over here.
And really the headline of that address, there are a few, it was a bit of a grab bag of policies as I said in my article critiquing his announcement, but the UBI was kind of thrown in there. And all he said literally and I can quote him, he said: “That’s why we need a universal basic income. We need to UBI that ensures everyone has access to an adequate level of income as well as access to universal social services, health, education, and housing. A UBI is a bold move towards equality. It epitomizes a government which looks after its citizens. It’s about an increased role for government in our rapidly changing world.”
And that was about it. And the Greens haven’t announced any other detail on that policy proposal on their website or in any of their policy documents. So it was really a kind of, we think this is a good thing, but we haven’t we haven’t thought about it much further. We haven’t costed it. it’s not a detailed or costed policy proposal from the Greens at this point in time. That’s pretty much all that I’ve been able to find. Although their research institute, each of the political parties here has an affiliated think tank or research institute, and the Green’s think tank certainly has been advocating for a UBI for some time, but it hasn’t made it any further into formal policy adoption by the party as yet as far as I can see.
Owen: So even at that high level description of the policy, you’ve got some concerns around it. I believe a number of aspects don’t make sense. So can you just talk us through some of those concerns and also share what new or expanded policies you feel would best address current social challenges?
Emma: Sure. So, the UBI debate here’s a live one as it is in the States on what I call my side of the political divide. I’m a progressive. I’m very concerned about social justice. Our think tank Per Capita is focused on fighting inequality in Australia. So UBI has been a live issue for us for a while, and I’m certainly a bit of an outlier compared to some of the other thinkers in our space on the UBI, and many of my colleagues, some of them within Per Capita, some with affiliated organizations that we work with are proponents.
My concerns are, they’re multiple and they come primarily from a practical point of view, but also some philosophical concerns, and it’s important to be clear that when I talk about a UBI in Australia, the U, almost with everybody, stands for Universal rather than Unconditional. I have no problem with the basic income card, it’s the universal part that gives me cause for concern.
And particularly in the way that Di Natale talked about it. Literally, he said we need a UBI that ensures everyone has access to an adequate level of income as well as access to universal social services, health, education, and housing. Now, I don’t want to see any of those Services disappear. I think they’re critical and they are fundamental part of what makes Australia a pretty good place to live.
But if you are going to fund a UBI at an adequate income leve,l and in Australia that poverty level would require every adult to get about 23,000 Australian dollars a year to be above the poverty line, then some pretty reputable costings done by Peter Whiteford at the Australian National University here has found that that could be around between 250 and 350 billion dollars a year in additional tax revenue.
So even if you take the roughly 160 billion a year that Australia currently spends on income support on its social safety — our social services programs, unemployment benefit, age pension, disability support, etc — even if you got rid of all of those payments and replace them with the UBI, you couldn’t save all that 160, you’d need to retain some of it because it’s spent on administration and and bureaucratic systems and so on. You’d still need to raise at least another three hundred billion dollars a year in tax revenue.
And that’s a pretty big ask at the moment our government. Our government parliament system isn’t quite as riven as bipartisanship conflict between the parties as yours, but it’s getting there, and we have a conservative government at the moment that is all about cutting taxes for businesses and cutting spending on social services. And the idea that we’re going to raise another 300 billion dollars anytime in the near future I think is fanciful.
If it were to be done, some early costings by Ben Davison and Miranda Steward at the Australian National University, which are underway at the moment, but their early findings have been that there’d be need to be a minimum income tax rate on working people of around 40%. It’s currently sitting at the average is about 27. So the average so the average working income tax rate would lift by 13% on high-income earners and be as high as 78%. It would require a wealth tax which would mean placing a tax on the value of the family home, which in Australian political history has proved to be political suicide for anyone who suggests that.
Now I do support wealth tax actually. I think it’s where we need to be as a country. I think taxing income rather than wealth is inherently regressive, but to shift from what we have now to attack some transfer system that would require such a massive change to the tax base I think is going to be virtually impossible to achieve.
So that’s my first very practical concern about the suggestion. I’m interested in what we can do now to help people that are living on $250 a week while they look for work or living on $400 a week as on the age pension and they don’t own their own home or people who are being forced into disability support payments that are barely adequate to live on.
We have a system at the moment that’s incredibly punitive towards people that need our help. Our current unemployment benefits cost us about 1 billion dollars a year. So if we were to increase that payment that 250 dollar a week payment by just the $50 that the Australian Council of Social Services and union movement is suggesting, that’s around two billion dollars, which is 1% of the cost, less than 1% of the cost of the UBI, and I’d like to see that happen tomorrow.
So that’s my first concern, really, but then the thing that attracted the most criticism and I think the most misunderstanding from the article I published a couple of weeks ago was when I said that a UBI robs people of agency. And that’s probably something I should explain a little bit further.
Owen: Yeah, please, go ahead.
Emma: So my concern there is, not that giving people who are in need of income support for whatever reason a cash payment of their fair share of government of tax revenue and of national revenue and prosperity robs them of agency. I don’t believe that at all.,I think we should give people a decent basic income without a whole heap of conditions that makes it impossible to get and that just provides them with dignity.
And there is a lot of evidence from around the world that if you do that, they’re much more likely to be productive, find purpose, and have agency over their lives. So that wasn’t what I was saying. What I’m addressing is specifically when people hold out the UBI as a solution to the disappearance of work, that this argument that the robots are coming, and they’re going to take all our jobs, and there’s not going to be any work for anyone anymore. And so the answer is just to replace income.
My argument is that, that’s very nice and very good and it will keep people out of the poverty line, but it negates the other values of work, the values of work that go beyond providing income, which are that it does give people a sense of purpose, it allows people to feel that they’re in control of their lives, that they’re managing adequately to provide for themselves and their families, that they can do that themselves without relying on support from an external party. And I think a lot of advocates of the UBI too easily dismiss the value of work beyond income.
And I know that a lot of arguments about the UBI are saying, well, it allows people to do other things, and more meaningful things, and it supports entrepreneurship, etc. etc. It has to be set at a really high level for that to be the case, even more than the 300 billion dollar cost that I was talking about earlier, for people to be able to genuinely thrive and be creative and perhaps start a new business or pursue some artistic pursuit. You need to provide them with a pretty serious level of income.
Even if you did that not all people are going to do that. Not all people are waiting to write the next novel or start the next Uber or whatever. A lot of people find value in work just from going to work, being with other people. It’s the social aspects of work. The value of just getting up every day with something to do with a purpose that allows you to provide for yourself. That work itself doesn’t always have to be for a lot of people incredibly creatively fulfilling. There is value in what in Australia, and I know in the US as well, we’ve traditionally called Blue Collar jobs.
I think there is a worrying tendency amongst a lot of highly educated progressive caring advocates of the UBI to dismiss Blue Collar work and say those jobs are crap anyway, and if they go, people will be able to do better things. A lot of people engaged in those jobs don’t think they’re crap, you know, they they actually get a lot of value out of going and working in a manufacturing job or a retail job and engaging with people.
And so I’m a lot more concerned that we don’t just lie down and say the robots are coming and there’s nothing we can do about it and let’s implement a UBI. I think there are things we can do about it, we can protect work and the value of work and the inherent dignity that comes with having a job.
Sure, if some jobs are disrupted, and there’s a lot of evidence that a lot of Industries will be disrupted. They have been throughout history right since the first Industrial Revolution. There are going to be people that are thrown out of jobs that they’ve held for a long time and they are going to need a lot of help out to find something else and some of them will not, some of them will be at a stage in their life where retraining or reselling or adapting to a new job is going to be, if not impossible, then too difficult to manage in the time available. And we absolutely need a decent level of support for them, a basic income for them.
But I’m not happy to say that should be our primary focus. Our primary focus should be to help as many people make the transition as possible and find something meaningful and rewarding to do with there.
Jim: The concerns you just let out very much echo concerns that we often hear in the United States. And I think, we’ve spoken on the podcast a few times about this in the past, but I do think that there is a challenge that arises when you mix and match basic income as a means of addressing current challenges versus basic income as a way of dealing with coming rampant job loss from automation.
And where I think our perspective has landed is that from the automation perspective, basic income would be necessary. but not sufficient. That if you actually end up in a world where there really is not enough work to go around, as someone who wants to support people, you should make sure everyone has money, but that you would absolutely need to have programs or changes in culture beyond that in order to ensure that the structure that jobs provide today, that the lack of that would not cause much larger issues.
Emma: Yeah, look, I’m on board with that. I’m still questioning why we’re all still working 40 hours a week when you know, it’s 75 years since Keynes told us would be working 15 hours a week. I’m a big advocate for the shorter working week. I think we need to divide up the hours of work a lot more evenly than we do.
We know in Australia that around one in five people want to work less than they’re working. And another one in five people can’t get enough hours, and there’s a crazy mismatch there. If we could reduce our working week to 30 hours a week, and in Australia the basic rate is 37.5, but we have some of the world’s worst overtime workers, people that work long hours without being paid particularly in the professional classes.
If we produce the working week to 30 hours a week for a start, we’d see a lot fairer distribution of hours. It would be incredibly helpful particularly for women who continue to take a disproportionate burden of unpaid work, and we haven’t talked too much about unpaid work yet, but it’s a critical part of this debate, as you know, as you often talk about on your podcast. I’ve listened to a few episodes.
I think that a fairer division of working hours with a shorter working week and a cultural shift that could see men and women equally say, well, I’m leaving to do school pickup today. I’m going to take the Friday, to do the to do the laundry and the grocery shopping and share that that unpaid burden a lot more evenly, we’ll see a massive shift in society. And the way the old ways of working where we structure all of our social security payment, our working week hours, even our transport and commute times around the idea that the man goes out to work at 8:30 in the morning and comes home at 6:30 at night and the woman picks up the slack at home. That’s a nonsense and it’s always been a nonsense frankly. It’s a particularly middle-class, mid-twentieth century phenomenon. I come from an originally working class Northern English background, and the women in my ancestry pretty much went out to work at the age of 12 just like the men did in cotton mills and so on. So working-class women have always worked.
And the structures that we have in place in society just need to shift massively. And I completely agree with you that those things are absolutely necessary. At the same time as we do look at what’s in place to support people when they can’t work for whatever reason.
And there are there are good reasons to not be able to work. For a start, in Australia, there aren’t enough jobs. A colleague of mine said the other day, if every job candidate in Australia was the absolutely perfect candidate that was immaculately presented in a suit and tie with a polished CV and exemplary experience, the unemployment rate would be exactly what it is today. Because there aren’t enough jobs for the people looking for work.
Quite apart from that, there are people that can’t work because of disability or illness or because they’re caring for family member, children, elderly parents, another family member with disability or illness. They may have a mental illness. There are legitimate reasons that people can’t work, and we need to support them better when they can’t. But if we could divvy up the work that is there for the people that want to do it in a more rational and reasonable factor and all get a little bit more time to look at the other aspects of our lives as well as paid labor, I think the world would be a much better place.
Owen: Yeah, I certainly share a lot of those goals. I see basic income as something that could help us get there too, perhaps a shorter work week and more equitable, better distributed, labor all around. In terms of cost, just in terms of how much you’d have to give to each person and what the total figure would be, it is a very large number. One way that people have talked about addressing that is through a negative income tax. So, the sort of two basic ways you could do it, it could be either through just distributing variable payments with the amount determined by an individual’s current income level, or it can be implemented through the tax code with full basic income payments going to everyone and increasing the tax level to retrieve the funds from higher income earners.
You started to touch on that in a previous answer, and I’m curious, first, if you support any implementation of a negative income tax, and second, does your support differ between those two designs?
Emma: Look, again, just up front, I want to make clear that the basic income part I support, it’s the universality that’s the problem. And that’s what we’re talking about here, whether it’s the basic income model or the negative income tax model. And no I don’t, for practical purposes and partly philosophical purposes too.
For practical reasons, even if it was implemented through the tax code, which tends to be the model that’s talked about in Australia because we have a strong tax and transfer system here and progressive taxation. It just essentially leads to what people call tax churn. And the cost of administering that, I don’t see how they’re defensible when you’re essentially handing out money only to get it back through the tax system. So, people don’t receive that. It just basically would lift their tax free tax free threshold, and not by much. I mean, their tax free threshold here, the amount of money you can earn before you start paying taxes, currently about 18.5 thousand dollars a year. A UBI set at the poverty level would be about 4.5 thousand more than that.
But the income tax on wealthy people would still, in order to make that payment a livable payment, and in order for the UBI to work the way advocates say it will work, which is allows people to refuse badly paid or work with poor conditions, it needs to be a significant payment. And so I don’t think that that we’re going to get agreement from the Australian populace to lift tax rates on the wealthy by that amount that drastically that quickly. I just don’t believe it’ll happen, and I think there are there are other priorities.
But more than that, a lot of the arguments that I hear is well, if you give it to everybody then it de-stigmatizes welfare. If everybody’s receiving the payment, then those punitive approaches that we see towards people receiving income support go away because everyone gets it, so then rich people won’t complain about paying for poor people. That argument just doesn’t hold water with me, firstly because if rich people aren’t actually seeing the cash payment because it’s being done through their tax system, they won’t perceive it that way anyway.
But even if they did, I think we’re better than that. I think it’s up to those of us on the progressive side to persuade people that paying their fair share of tax to support citizens, their fellow citizens that are in need, is the right thing to do. It’s the price we pay for civilization, and we can do it by persuading people rather than bribing them, which is essentially what a universal income is. It’s saying, well, if we give it to everybody then people won’t complain about those that need it, and they’ll just take it because they think they’re getting it too.
I maybe maybe have a little bit more faith in him and nature than that. And I think the left for too long has capitulated to neoliberal arguments around tax and spend and reducing the size of government and the fact that those on welfare are a drain on the rest of us. And it’s time we fought back directly against those attacks rather than capitulated to them and say okay, then we’ll just bribe everybody to be good people and pay their fair share.
I find that, I can’t make that capitulation. We recently released in Australia a report that we did at our think tank for Anglicare, which is one of our social service providers, that found that the tax of, the cost of foregone revenue to our federal budget, the money that we’re not collecting from people in the highest 20% of income in the country because of tax concessions, things that we allow them to do to reduce their taxable income like, salary sacrifice into their superannuation savings, their retirement savings, and get a tax discount and things like that, that’s costing our budget 68 billion dollars a year.
And if you average that out, that’s 37 dollars a week for every taxpayer that’s going to make the wealthy people here more wealthy. The government came out in January here with an attack on people on welfare saying every person on welfare is costing the Australian taxpayer 83 dollars a week. And if you broke that down, the cost of someone living on an unemployment benefit to the average taxpayer, as they like to say, per week was six bucks. Six dollars a week was coming out of my pocket to support someone on income support, but 37 dollars a week is coming out of my pocket to support people so they can have a holiday house and and a luxury car.
I think we can win that debate without handing out cash payments to the wealthy.
Jim: I think that’s a great point, and it brings up some almost philosophical questions about, and I’d be curious to know more about what what the specific perspectives are there, but certainly in the US, the sort of Welfare Queen myth. This idea that yes, you have this class of people that is a drain on the system, has been so indoctrinated that the amount of effort to tackle that head-on seems, honestly, it seems like a much larger task in many ways than to pass something like basic income and to increase our tax base here by massive massive amounts.
So I think it seems like we have big challenges ahead of us no matter which direction we take here, and perhaps there’s different interpretations as to…
Emma: And look, I’ve said to people on social media over the last few weeks when I’ve been engaging with people in the States about my views: if I was in America, I might have a different approach. You guys don’t have universal healthcare. Your minimum wage is pretty woeful. You don’t have nearly as well targeted a welfare state as we do. So I might say, look, fixing that really is too hard, and it’s easier to do UBI. I don’t know, maybe that’s how I feel if I was living in that environment, but here I don’t think that’s true.
And I do think it’s an indictment on the Left, if you want to use the universal term for your Democrats, are our Labour and Greens Parties here. It’s an indictment on us that for 30 years, we’ve let neoliberalism win the debate to the point where, as you say, that Welfare Queen narrative is so entrenched that we feel it’s impossible to overturn that and we have to go and look at new things that that are pretty radical.
And there have been some pretty convincing arguments as well that a UBI is in a way a capitulation to capitalism. It’s saying that the only way of valuing any kind of work or any kind of existence is through cash. This comes back to the argument about, well, it supports unpaid work. Well, yeah, that’s great, and I think that we need particularly for women who take a lot of time out of the workforce and are not rewarded for that and end up in Australia with half the retirement savings of men. Women over 55 here our fastest growing group of homeless people. That’s directly because they they take the burden of unpaid work.
And so I do think, we saw our last progressive government in here finally introduce paid parental leave. I think that leaves you guys as the only English-speaking advanced nation on Earth that doesn’t pay for parental leave, so at least we’re getting there. But those things need to be recognized, and we do need to reward unpaid work, particularly if we’re going to close the the equity pay gap and gender equity across the board.
But I also take some issue ideologically with the idea that the only way of recognizing volunteering and caring is by giving people cash. It’s really a pretty big ideological capitulation to capitalism.
Owen: Yeah, I can understand that. I feel like one thing that appeals to me about basic income is that you don’t have to anticipate every situation, every person who’s in need or who is doing work that should be compensated in some way and isn’t. And while cash is, it’s impersonal and it is, as you said, a capitulation to our capitalist system, it is just kind of universally valued and effective. And so that’s what appeals to me..
Emma: I was more being ideological rather than practical. I fully accept that.
Jim: So one thing I would say beyond the specific practicality or even the ideology of the policy itself is something that I would say has come up amongst the many supporters of basic income that I’ve talked to. Pretty much everyone, regardless of whether you support or oppose the policy, would agree that universal basic income would be a radical shift over what exists today. And many supporters see that as a positive and actually feel that we need to have some really out there ideas as a way of pushing people outside the traditional political box and encouraging bigger thinking. So I’m curious what your perspective is around around that interpretation.
Emma: Radical ideas are essential and I wouldn’t be engaged in the debate if I thought it wasn’t worth talking about. I think it’s great to have the debate because it focuses on what the issues are and what needs to be done and that there really are incredible imbalances in prosperity in the way that we treat citizens according to some pretty arbitrary decisions about what’s of value. And that growing inequality in the developed world is a huge problem.
So I really value the debate because of that, and I love radical ideas. I’m arguing against it because it’s worth arguing this issue. It does make us think about, you know, we might not all agree on ultimately what the solution is, but the thing I found over the last few weeks since I came out against the UBI, as people have put it, is that myself and most of the people on my side of the debate, we all agree on what the problems are. And if we can shine more light on those problems and get more debate around those problems and the different things we can do to fix them, that’s only a good thing. And often that’s only achieved by debating the radical ideas.
So no, I love the debate, which is why I do engage with everyone that contacts me on Twitter or however, even the ones that get pretty nasty at times. I always try and answer the questions because the contest of ideas is I mean, I work in a think tank, so yeah, that’s something I think is pretty important.
So no, I think radical ideas have to be out there. Keynes was a radical economist. He’s probably my go-to economist when it comes to these issues. I like radicalism. It’s what shifts the debate, it’s what moves the needle, shifts the needle. But yeah, I’m still focused at the end of the day of what can we do now to lift people out of poverty? What can we do now to give kids a better start in life, to get a better equality of outcome as well as of opportunity for people in society? And that’s going to paint me as a Communist in some parts of America, but I’m really not one, I’m considered quite Center Left here in here in Australia.
But you know, what can we do now and what’s practical, and if that means engaging with debate and saying look, UBI, nice idea in a utopian world. Maybe one day we’ll get there. But at the moment let’s focus on the BI part for those that need it and not give up on creating jobs and responding to automation the way that we have through every other industrial revolution of the last 250 years.
But yeah, let’s all agree on what we do agree on, which is we need to address the balance for working people and for people that can’t, for whatever reason, work and that needs support from the rest of us. Because we’re a society. We’re not an economy. We’re a society. We’re not a collection of individuals. We are actually, you know, we function best when we look out for one another.
Jim: That was Emma Dawson, executive director of Per Capita, a progressive think tank in Australia.
Owen: So I thought she laid out a lot of the main objections to basic income in a really well thought out way. And I’m glad we got some time to focus on the idea that a basic income, you know as she put it in the article, robs people of agency, and I think she got a better chance to kind of explain what she meant by that in the podcast. And I think that’s going to be really key to advancing basic income is to show people that this is not about giving up on work and that that’s still going to be pretty core to what we do, but the basic income is still a necessary part of that.
Jim: Yeah, and as we talked about recently in the episode with Andrew Yang, either we talk about universal basic income as a solution for what we face today, or if we’re talking about it for farther in the future, then yes, we need to have more. We need to talk about what is the answer beyond that. That expecting just giving people a base amount of cash every month, that is not a sufficient replacement for the structure that our labor force currently provides. And even if you believe that we may eventually get to a point where everyone in our society is fully self motivated and can figure out for themselves what they’re gonna do and have new community structures. That world looks so different than what we have today. If you’re talking about basic income to address automation, I think there is a degree of responsibility to go that one step farther and talk about what that other transition looks like as well.
Owen: Yeah, I also thought it was insightful to hear from someone who lives and works in a country that does have a more robust social safety net than the US, where it’s easier to see just patching up the holes in that social safety net as opposed to a brand new program. I do, you know, I’ll stand by the point I made in the interview that I think a blanket approach is always going to catch people who you’re just going to inevitably miss, but it is I think helpful to have that perspective.
Jim: Yeah, I found it very interesting, her perspective that it was going to be easier or at very least the right way to try to change people’s perspective on deserving and undeserving members of society and that moving to a place where there wasn’t stigma attached to people receiving some sort of welfare or social benefit program that was delivered in targeted way, that that was the more appropriate path to go down than to say everyone gets this. This is just something that we receive for being alive. I think that it’s very hard for me to imagine that being a more viable way to proceed here in the States, and it’s interesting that her view is that that is the case in Australia.
Owen: Yeah, I mean I do agree with her that it’s a little bit shameful that the Left has not really made a serious effort to counteract the Welfare Queen idea. But yeah, at the same time, I feel like it’s always just going to be there if you have the sort of safety net that we have, especially a weaker one. I wonder if having a stronger social safety net gives more people pride and makes it less of a stigma around receiving benefits from it, but I do feel like conservatives in whatever country will tend to target those benefits to reduce to reduce government spending.
Jim: And I think, finally, I really appreciated her perspective on debate around big ideas. I think that there are people out there who have different interpretations of what the right way to proceed is, but when you dig in you see we’re actually trying to do the same thing, and if we can actually come to that alignment and agree that we need to be talking about some more radical change, that seems like a really productive conversation to have probably.
Owen: Yeah, I was struck by how many of her bigger long-term goals line up with mine.
Jim: One more thing I’ll add: when Emma posted her article opposing basic income on Twitter, it drew a lot of critique, not shockingly. And some of that was productive, but there was also quite a few pretty disrespectful responses, questioning her knowledge and understanding of the economics here. Obviously as we just heard, and what you could have figured out with, I think, literally ten seconds of googling, she has thought a lot about these issues and is clearly an expert space.
And I think it’s important to stress, if we’re going to win over folks to this idea, we need to do so respectfully. For people who disagree with us, challenge them, but do it in a way that’s not the meaning or patronizing and actually prompt a real conversation.
Owen: Yeah, and just to add on to that: it’s impossible to know how much of that response was fueled by the fact that she’s a woman, but just based on what we know about the world, I think we can assume at least a little bit of it. So I would just ask basic income advocates and anyone else to just be sensitive around those issues and to give people their due respect.
Jim: Absolutely. Well, thank you for listening to this episode of the Basic Income Podcast. Thank you to our producer Erick Davidson. If you like what you hear, please do make sure to rate and review us on Apple Podcast or the podcast service of your choice, and please do tell your friends. We’re always looking for new listeners. We’ll talk to you next time.
