LETTER FROM WASHINGTON: Moving slowly towards a basic income grant
by Simon Barber2016-04-21 05:51:11.0
REMEMBER the basic income grant South African labour unions, churches and NGOs campaigned for back in the 1990s and early "noughties", but on which Trevor Manuel’s Treasury frowned on as a fiscal nonstarter? Silicon Valley A-lister Sam Altman thinks the US will have to adopt something like it within the next generation or two — and he’s not alone.
Altman is founder and president of Y Combinator, the seed-stage tech investor that helped launch Airbnb and Dropbox. As co-chairman of OpenAI, he is working with Elon Musk to see that artificial intelligence, as it approaches and perhaps surpasses the human variety, benefits mankind.
He believes that while technology will generate vast new wealth, it will in the process destroy much traditional employment without replacing it. As a result, he says, "I’m fairly confident … we’re going to see some version (of guaranteed basic income) at a national scale."
He wants to know how that might work, and in January advertised on his blog for someone to design and run a five-year pilot programme to see what would happen if you gave everyone enough to live on each month with no strings attached. Applications closed on February 15. His questions:
"Do people sit around and play video games or do they create new things? Are people happy and fulfilled? Do people, without the fear of not being able to eat, accomplish far more and benefit society far more? And do recipients, on the whole, create more value that they receive?"
Paul Faye and Paul Niehaus, co-founders of Segovia Technologies, a software company that creates what they call "tools to fight poverty", are already finding answers in an African context through their GiveDirectly initiative. Launched in 2011, GiveDirectly channels one-time grants of up to $1,000 to households identified as the poorest of the poor — living on US65c a day — in rural Kenya and Uganda.
GiveDirectly’s overheads, unlike those of the traditional aid bureaucracies and their contractors, are minimal. Free to spend the money as they choose, beneficiaries have chosen not booze, cigarettes or sloth, but tin roofs to replace thatch, livestock, schooling, food and clothing.
GiveDirectly is now looking to scale up from narrowly targeted one-off cash transfers. Faye and Niehaus are putting up $10m of their own money and hope to raise $20m more to give 6,000 or so Kenyans now living in extreme poverty a basic income guarantee for 10 to 15 years.
It’s an experiment they would undertake in the US if they could, but that, they say, would cost closer to $1bn. "Running the project in an emerging market, where meeting basic needs is far cheaper, will make it affordable to enrol enough people to generate statistically robust evidence," they wrote last week on Slate, the online magazine owned by Amazon’s Jeff Bezos.
Basic income grants in one form or another have been the subject of many studies in the US and elsewhere going back to the 1960s, and more are in the pipeline in Finland, Holland, Germany and Canada. None fully satisfy all of Faye’s and Niehaus’s requirements: the programmes under review must be long-term, must be generous enough to cover a minimum standard of living and must be universally available to all within the target community rather than means-tested.
"We already know quite a bit about the beneficial effects of giving people money for a few years; the key question is how the knowledge that your livelihood is secured for more than a decade affect your behaviour now. Do you take more risk? Get more schooling? Look for a better job?"
It is probably just as well that Altman, Faye and Niehaus are ready to take their time gathering data. A basic income grant is not on the US political horizon right now, nowthwithstanding advocates on both ends of the spectrum.
Among the most articulate is Charles Murray, a libertarian scholar at the American Enterprise Institute. Reviled by many for The Bell Curve, his work on IQ, he argues in a more recent book, In Our Hands, that the problem with the modern welfare state is not that it seeks to redistribute wealth to the less fortunate, but that it does the job badly.
He would scrap it and phase in an annual cash grant of $10,000 (in 2005 dollars) to every man, woman and child to spend as they, or in the case of children, their parents or guardians, saw fit. From a strictly fiscal perspective, this might work quite well.
• Barber is a freelance journalist based in Washington
Letter from Washington
REMEMBER the basic income grant South African labour unions, churches and NGOs campaigned for back in the 1990s and early "noughties", but on which Trevor Manuel’s Treasury frowned on as a fiscal nonstarter? Silicon Valley A-lister Sam Altman thinks the US will have to adopt something like it within the next generation or two — and he’s not alone.
Altman is founder and president of Y Combinator, the seed-stage tech investor that helped launch Airbnb and Dropbox. As co-chairman of OpenAI, he is working with Elon Musk to see that artificial intelligence, as it approaches and perhaps surpasses the human variety, benefits mankind.
He believes that while technology will generate vast new wealth, it will in the process destroy much traditional employment without replacing it. As a result, he says, "I’m fairly confident … we’re going to see some version (of guaranteed basic income) at a national scale."
He wants to know how that might work, and in January advertised on his blog for someone to design and run a five-year pilot programme to see what would happen if you gave everyone enough to live on each month with no strings attached. Applications closed on February 15. His questions:
"Do people sit around and play video games or do they create new things? Are people happy and fulfilled? Do people, without the fear of not being able to eat, accomplish far more and benefit society far more? And do recipients, on the whole, create more value that they receive?"
Paul Faye and Paul Niehaus, co-founders of Segovia Technologies, a software company that creates what they call "tools to fight poverty", are already finding answers in an African context through their GiveDirectly initiative. Launched in 2011, GiveDirectly channels one-time grants of up to $1,000 to households identified as the poorest of the poor — living on US65c a day — in rural Kenya and Uganda.
GiveDirectly’s overheads, unlike those of the traditional aid bureaucracies and their contractors, are minimal. Free to spend the money as they choose, beneficiaries have chosen not booze, cigarettes or sloth, but tin roofs to replace thatch, livestock, schooling, food and clothing.
GiveDirectly is now looking to scale up from narrowly targeted one-off cash transfers. Faye and Niehaus are putting up $10m of their own money and hope to raise $20m more to give 6,000 or so Kenyans now living in extreme poverty a basic income guarantee for 10 to 15 years.
It’s an experiment they would undertake in the US if they could, but that, they say, would cost closer to $1bn. "Running the project in an emerging market, where meeting basic needs is far cheaper, will make it affordable to enrol enough people to generate statistically robust evidence," they wrote last week on Slate, the online magazine owned by Amazon’s Jeff Bezos.
Basic income grants in one form or another have been the subject of many studies in the US and elsewhere going back to the 1960s, and more are in the pipeline in Finland, Holland, Germany and Canada. None fully satisfy all of Faye’s and Niehaus’s requirements: the programmes under review must be long-term, must be generous enough to cover a minimum standard of living and must be universally available to all within the target community rather than means-tested.
"We already know quite a bit about the beneficial effects of giving people money for a few years; the key question is how the knowledge that your livelihood is secured for more than a decade affect your behaviour now. Do you take more risk? Get more schooling? Look for a better job?"
It is probably just as well that Altman, Faye and Niehaus are ready to take their time gathering data. A basic income grant is not on the US political horizon right now, nowthwithstanding advocates on both ends of the spectrum.
Among the most articulate is Charles Murray, a libertarian scholar at the American Enterprise Institute. Reviled by many for The Bell Curve, his work on IQ, he argues in a more recent book, In Our Hands, that the problem with the modern welfare state is not that it seeks to redistribute wealth to the less fortunate, but that it does the job badly.
He would scrap it and phase in an annual cash grant of $10,000 (in 2005 dollars) to every man, woman and child to spend as they, or in the case of children, their parents or guardians, saw fit. From a strictly fiscal perspective, this might work quite well.
• Barber is a freelance journalist based in Washington
