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Universal Basic Income is 21st Century Policy

This presentation was put together to provide a detailed introduction to the idea of universal basic income and why it's superior to any means-tested program of today because of the fact it is unconditional. Feel free to use it as is or customize it.
by

Scott Santens

on 26 October 2016

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Transcript of Universal Basic Income is 21st Century Policy

An overview of means-testing
Old problems growing steadily worse
Future Problems
Extreme Inequality
Thank you!
Universal Basic Income is 21st Century Policy
Speaker: Scott Santens (@2noame)
Now vs. UBI
Finding a Better Way
The Case for Universal Basic Income
Universal Basic Income
Overview:
The idea itself of means-tested safety nets is deeply flawed
We need new ideas in the 21st century
The best idea is a fully universal basic income
Why do we means-test?
Assumption:
There are two kinds of people, the deserving and the undeserving. Those who do not deserve it, should not get it.

Result:
The creation of tests and test-givers, along with the removal of that which is deserved when it is no longer deserved, and thus the introduction of bureaucracy, high marginal tax rates, Type II errors, and stigmatization.
Bureaucracy
We have
over 200
separate programs in the US designed to help the poor.

These programs all have barriers to entry (and paid gatekeepers).

These programs all interact with each other to create "
welfare cliffs
."
If you are a single parent with even one child, it does not pay to work part-time, or temporarily, or for low wages. No one is taxed more for working than those receiving benefits.
Clawbacks
Because all means-tested benefits are clawed back as need is determined to be lessened, earning additional income is actively disincentivized. Additionally, the process itself, with all its tests, inhibits people from performing valuable self-motivated work.
Type II Errors
Any test will result in false positives and false negatives.
False positive
- Giving aid to those not in need -
Wasteful
at worst
False negative
- Not giving aid to those in need -
Fatal
at worst
Stigmatization
Programs designed for the needy will be avoided by those who don't wish to be seen as needy by themselves or others. This is the uptake problem, where people in need of assistance, refuse it. This can then lead to the perpetuation of poverty, lower lifetime tax revenue, worsened health outcomes, and crime that wouldn't otherwise happen.
Four decades of labor market transformation
Productivity decoupled from wages around 1973
Men are now earning less than in 1973
Incomes by race remain segregated and where they once all rose, they now fall
Those under 24 have seen 0% growth after 50 years
Something special is going on with those over 65
We are increasingly segregated by income with the top 20% winning and bottom 80% losing
Bargaining power has been falling since the late 1950s
Falling wages have intersected rising costs of basic needs
Since the late 1990s white Americans have begun suffering from an epidemic of suicides and afflictions stemming from substance abuse: alcoholic liver disease and overdoses of heroin and prescription opioids to a degree only comparable in contemporary times to AIDS according to 2015 Economics Nobel winner Angus Deaton and Anne Case.
With all of this happening for decades, where are we now and what's just around the corner?
The richest believe it would be ideal for them to have 40% of the wealth, but estimate they have 60% of the wealth.

They actually have about 85%, more than twice what they themselves believe is ideal.

They also believe the poorest should have almost 10%, but they have effectively 0%.
This is what extreme inequality looks like
Effect of this much inequality on economic growth
OECD: Had inequality remained as it was in 1990, US GDP would be $1 trillion higher today, and would be even higher if we'd reduced inequality.

"The impact of inequality on growth stems from the gap between the bottom 40% with the rest of society, not just the poorest 10%. Anti-poverty programs will not be enough."
The Federal Reserve surveyed 50,000 people in 2014 and found that 47% would not be able to handle an unexpected expense of just $400 without borrowing money or selling something.

More than 45 million needing food assistance since 2011.
Extreme insecurity
Citizens with an annual household income greater than $100,000 are 80% likely to vote, while those with an income of $15,000 or less are only 30% likely to vote. (Nonprofit Vote, 2013)

“When the preferences of economic elites and the stands of organized interest groups are controlled for, the preferences of the average American appear to have only
a minuscule, near-zero, statistically non-significant impact
upon public policy.” (Gilens and Page, 2014)
Unequal Democracy
IMF: If we were to reduce the incomes of the top 20% and increase the incomes of the bottom 60%, GDP would grow. Why?
Multiplier effect:
$1 to the top adds 39 cents to GDP

$1 to the bottom adds $1.21
Extreme inequality is only one urgent problem. There are more right around the corner...
3.5 million drivers
($40,000/yr avg)

5.2 million related

? million dependent
Self-driving vehicles are on the way, including trucks
All routine jobs have seen no growth since 1990
What happens if routine jobs also stop growing?
Deep learning algorithms trained by Big Data
Defeated 18-time world champion Go player
International master level chess self-taught in 72 hours
Learned to play Atari 2600 seeing only pixels and points
Can now caption photographs
Can outperform humans in IQ tests ( < Master degree)
Even passed a visual Turing test!
Artificial Intelligence (AI) has arrived
From the 2016 Economic Report of the President to Congress: If you make under $20/hr there's an 83% chance your job will be automated away
The rise of alternative employment
From 2005 to 2015, all jobs increased by 9 million

From 2005 to 2015, alternative work arrangements increased by 9 million

In other words, ALL employment growth since 2005 has been in alternative employment like temp jobs, contract work, and gig work - the "Gig Economy"
Employers Past
Employers Now
Challenges Ahead
Is it even possible to create jobs faster than technology destroys them?
What happens to the unemployable? Education? Is it even possible to retrain everyone to be engineers?
If full time careers are a thing of the past, replaced by job after job year by year and even gig after gig day by day, how do we design bureaucratic policies around that?
How do we increase incomes for humans if demand for the labor of most humans continues to drop?
Is there possibly one thing we can change that would actually have an effect on all of this?

YES
No matter what, every individual gets the same amount as everyone else as an equal income floor set above the poverty level.

In the U.S. this would be at least $1,000 per month, and by definition it could eliminate poverty, but that is only one effect.

It's enough for anyone to refuse work which is both its greatest strength and the cause of most concern.
Basic Income
What happens if everyone gets $1,000/mo?
Welfare programs like TANF and SNAP no longer need to exist
Welfare cliffs are eliminated because nothing is lost with work (all earned income after taxes is kept as additional income)
All type II errors eliminated (false negatives) aka everyone we define as needing help gets it
All forms of unpaid unrecognized work become paid and recognized (parenting, open source coding, Wikipedia)
Minimum wages laws become entirely optional as everyone can refuse to work for insufficient wages
Increased worker bargaining power
Wages and salaries must adjust to attract workers
Where the required wage becomes too high, technology is welcomed to take the job
Less fear causing people to work more than 40 hours
Jobs requiring less than 8 hours of work can adjust
New ability to outright refuse jobs that need not exist
Productivity goes up with all of the above
What happens when work is no longer required to live
The Uber economy of on-demand work becomes a tool of empowerment offering greater control of hours
Increased ability for people to pursue their own work
Education becomes more voluntarily self-pursued, meaning less pressure on tuition costs, and greater uptake of alternatives like MOOCs
Psychologically, commitment to tasks is increased
What else happens when work is no longer required?
Citizenship effects
More time to engage in political activism
Greater ability to vote on election days
More time to volunteer locally
More time for parenting and other care work
Less need for patents and copyrights
Emergent Effects cont.
Emergent Effects Cont.
Reduced crime
Increased health outcomes
Reduced demand to live in high cost of living areas
Startup incubator
Countless more...
Is there evidence for any of this?
The American Income Maintenance Experiments
Canada's Mincome in Dauphin, Manitoba
Universal Basic Income pilots in Namibia and India
Studies of cash transfer programs all over the world
GiveDirectly's work in Uganda and Kenya
Studies of basic income size monthly lottery winners
Alaska's annual Permanent Fund Dividend
The Great Smoky Mountains Study of Youth
Puzzle Pieces
Primary earners spend more time job searching
New mothers extend their maternity leaves
Birth weights increase due to maternal nutrition
Fewer emotional and behavioral disorders
Boosted key personality traits (conscientiousness, agreeableness)
Students focus on school, grades improve
Hospitalization rates decline (8.5%)
Crime goes down (42%)
Home ownership rates increase (4-6%)
More fresh fruits and vegetables consumed
No increase in alcohol and tobacco (19 studies)
Savings go up, debts go down
Entrepreneurs are born and so are customers
Effects observed so far
In Namibia, when given basic incomes, self-employment jumped 301%.

In Liberia, when given basic incomes, 1/3 of recipients started their own businesses.

In India, when given basic incomes, recipients were 3x as likely to start a business, 2x as likely to increase their working hours as those in control villages, and 1/3 of women started their own businesses.

In Kenya, when poor people were given cash unconditionally, 90% of them used it to start their own businesses or purchase livestock.
The Entrepreneur Effect
Moneylenders worse off due to reduced need (recipients twice as likely to reduce debts)
Shift from wage labor to self-employment made it harder for employers to find employees
Reduced dependency of women on men for their survival
Shift from paid work to unpaid work, e.g. care work
Is it all positive? Any negative effects observed?
Eye of the beholder...
We're already funding about half of it...
Can we fund a universal basic income?
Additional revenue options include:
Elimination of subsidies, deductions, and credits
Consumption taxes (VAT, sales)
Financial transaction taxes
Carbon taxes
Treating citizens as shareholders like in Alaska (LVT, natural resources, patents)
Citizen seigniorage
Savings through reduced costs (crime, health, etc.)
Funding options for basic income
Economic Nobel Laureates (Stiglitz, Pissarides, Mirrlees)
Willem Buiter, chief economist of Citigroup
Canadian Medical Association
Robert Skidelsky, economic historian
Barbara Ehrenreich, author of Nickel and Dimed
Albert Wenger, venture capitalist
Erik Olin Wright, analytical Marxist
Dustin Moskovitz, co-founder of Facebook
Sex Workers Open University
Ryan Holmes, CEO of Hootsuite
Sam Altman, President of Y Combinator
Tim Draper, billionaire VC investor
What kind of support is there for UBI?
Where might the world see UBI first?
Switzerland voting on it on June 5, 2016
Finland is planning to start a 2-year experiment in 2017 using a pop. of ~10,000 given ~550 euros/mo
Experiments are beginning in the Netherlands
Canada is looking to start their own experiment
Namibia's Ministry for Poverty Alleviation headed by Bishop Kameeta of the BIG pilot
Brazil passed it into law in 2004
An independent Scotland via SNP
Iceland via Pirate Party
Support from the Right:




Support from the Left:
No more need for 100s of programs
Simplify the tax code
Can eliminate federal minimum wage
Fewer government employees
Elimination of poverty
Reduced inequality
No more holes in safety net
Universal strike fund
Rare cross-partisan support
In a time when we can agree on nothing, basic income holds the potential to be an idea that can gather support from across the entire political spectrum and bring people together at the same table.

It is not the only change we need to make, but it's the change that will have the widest range of emergent effects.
A NEW New Deal Coalition
TANF: 1 in 5 who qualify get it
SSDI: 1 in 9 with disability get it
Housing: 1 in 4 who qualify get it
SNAP: Lasts 3 weeks and 3 months every 3 years
EITC: 25% miscalculated
NOW
UBI
5 in 5 get it

9 in 9 get it

4 of 4 get it

Lasts full month every month

0% miscalculated
Means-tested targeted assistance no longer makes any sense in the 21st century, if it ever did at all. UBI is unconditional.

The benefits of technology have been concentrating wealth at the top to the point inequality is so extreme it's now pulling down GDP. This must be corrected by lifting the incomes of the bottom 40-60%. UBI would accomplish this.

The decline of bargaining power is a key factor and can be corrected by providing everyone the power to decline work entirely. UBI is the only way to accomplish this.

UBI simply works. It is inevitable to adopt, and the sooner it is adopted as the next step forward, the sooner we'll finally take another giant leap for mankind.
read more at scottsantens.com
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