With artificial intelligence looming, debate over ‘basic income’ heats up

Sue Dremann, Palo Alto Weekly

Updated: Wed, May 22, 2019

Originally posted: Fri, May 17, 2019

When Canadian researchers Evelyn Forget and Marni Brownell speak at Stanford University next Tuesday, May 21, they’ll be wading into a debate over one of the most radical socio-economic experiments to date — universal basic income.

Universal basic income is a program by which people are given cash, either monthly or annually and typically by the government, to spend as they wish. Embraced by Rev. Martin Luther King Jr., economist Milton Friedman, numerous tech titans including Facebook’s Mark Zuckerberg and Tesla’s Elon Musk, the idea of providing a guaranteed basic income to all is proposed as a way to help people rise out of poverty or keep from sliding into it.

Basic-income programs could help people pay off debts, obtain job-skills training, further their educational aspirations, afford housing, start a business or get through a health crisis, proponents say.

But others argue that a guaranteed basic income would be prohibitively expensive, de-incentivize people from working and actually cause more poverty by taking away funding for existing safety-net programs.

That tension surrounding universal-basic income can be felt at Stanford, where the topic is hotly debated, with lectures provocatively titled “Basic Income Illusions”; “Basic Income: A Radical Proposal for a Free Society and a Sane Economy”; and “Why Is Universal Basic Income So Controversial?”

For many proponents, the concept, which has been considered for more than 500 years, is an idea whose time has come. Millions of jobs in a multitude of industries are already being phased out by technology, robotics, radical new business models and artificial intelligence.

Approximately 25% of U.S. employment — 36 million jobs in 2016 — are at high risk of becoming automated in the coming decades, according to a January 2019 Brookings Metropolitan Policy Program report. Another 36% of U.S. jobs are at medium risk of becoming automated by 2030 — 52 million jobs in 2016 numbers. Most are lower-paying jobs in areas such as office administration, production, transportation and food preparation.

Closer to home, in Santa Clara and San Mateo counties, 40% and 43%, respectively, of tasks could be automated, the Brookings report notes.

Academics, business leaders and policymakers have been exploring how to prepare society for the expected job losses, which they fear could result in increased socioeconomic inequality and civil unrest.

Institutions such as the Stanford Basic Income Lab and Palo Alto-based Institute for the Future have been studying and taking positions on universal basic income.

Juliana Bidadanure, founder and faculty director of the Stanford Basic Income Lab, said public discourse about universal basic income has increased extensively in the last 20 years. Often, it has been raised as a potential remedy to job displacement and income inequality caused by artificial intelligence but is also related to gender inequality, since women often do jobs that are poorly paid or aren’t paid at all, such as caregiving.

“What is exciting about universal basic income is that it forces us to think hard about what we owe each other,” Bidadanure said.

The Basic Income Lab, founded in 2017, promotes research on the development and effects of universal basic income and brings together scholars, policymakers, business leaders and others to discuss and learn about the politics, economics and potential best practices of universal basic income.

Meanwhile, the Central Valley city of Stockton, one of the state’s 20 largest municipalities, is putting theory into practice, having kicked off a $3 million basic-income experiment in February. The Stockton Economic Empowerment Demonstration (SEED) project pays 130 individuals in households earning less than the city’s median income of $46,033. The selections were made randomly. Each recipient receives $500 a month for 18 months. The city also has a control group that won’t receive any cash, Stockton Mayor Michael Tubbs said.

The Stockton pilot program is funded by the nonprofit organization the Economic Security Project, co-chaired by former Facebook executive Chris Hughes, a proponent of universal basic income, who authored the book “Fair Shot: Rethinking Inequality and How We Earn.” (Bidadanure is also on the steering committee of the Economic Security Project.)

Researchers for the Stockton program are studying changes in the recipients’ financial security, sense of control, civic engagement and health and wellness. A public website will allow people to share their views with policy makers on basic income in Stockton and the country.

At its heart, proponents say, universal basic income calls for a shift in how society thinks — away from a tiered socioeconomic hierarchy of “rich versus poor” and “us versus them” to a “we” economy.

Natalie Foster, co-chair of the Economic Security Project, and former CEO and co-founder of Rebuild the Dream, a social-justice accelerator, said that wages have been stagnant for decades, leaving most people in America without the ability to rise economically.

“The size of the solution needs to match the size of the problem. The problem is dire, as we see in California every day. Solutions have been incremental,”

she said.

The Stockton experiment

The Economic Security Project, which was founded with the belief that universal basic income could alleviate poverty and increase the ranks of the middle class, was in search of cities to partner with when Foster met Stockton’s Tubbs.

Tubbs said he learned about universal basic income while studying Rev. Martin Luther King Jr. as a student at Stanford. In Tubbs, Foster said she knew she had the right person to implement a city-based universal basic income, the first city-run program in the country.

With a population of 320,000, Stockton has seen its share of ups and downs. In the 2000s, the city experienced rapid growth when rising Bay Area housing prices prompted people to move to the more-affordable city, boosting the population by 17%. As a result, the city’s median housing value more than tripled, from $110,000 to $400,000 between 2000 and 2006, according to United States Common Sense, a nonpartisan nonprofit policy group started at Stanford University.

In February 2012, the city filed for bankruptcy, due in large part to years of alleged mismanagement and rising government-employee-benefits impacts, according to the Common Sense paper.

By 2018, however, Stockton’s fortunes had changed. It soared to the second most fiscally sound municipality in the nation among the country’s most populous cities, based on debt or surplus per capita, according to Truth in Accounting, a nonprofit group that tracks state and local financial practices.

But Stockton’s poorest are still experiencing a crisis, Tubbs said.

“We had the fastest rising rent in the country last year. It’s put a huge pressure on housing and cost-of-living increases,” he said, noting the per capita income is $22,000.

“Many people are working two to three jobs; 23% live in poverty. They’re failing to afford basic necessities like housing, utilities, transportation and child care,” he said.

Two months into the program, Tubbs said he is hearing anecdotally that people are using the $500 a month to pay down their credit card debt, pay for transportation or pay overdue electric bills.

Currently, the city has no plans for how it would pay for a guaranteed income in the future if the program is found to be beneficial. That’s a major concern of those who question universal basic income, who say expanding such programs — and having the government pay for it — would be prohibitively expensive.

Debra Satz, Stanford’s Vernon R. and Lysbeth Warren Anderson dean of the School of Humanities and Sciences and a professor of philosophy as well as ethics, told the Weekly she is skeptical about the amount of basic income that would be required to reduce poverty substantively.

People would need to be given large-enough sums of money that would be meaningful. The U.S. poverty line for a single individual is just over $12,000 per year. It’s about $26,000 for a family of four, she noted, so a cash payment of a few hundred or a few thousand dollars wouldn’t change people’s lives.

“Numbers really matter. Paying for (basic income) is going to have to be at a very high level,” she said. “So how would that work?” (Learn more in The $3.8 trillion question.)

Magical thinking or potential solution?

Rather than a guaranteed basic income, Satz favors a conditional subsidy that requires some sort of participation in society.

“Granting basic income that isn’t conditioned at all on the willingness to contribute (to society) potentially undermines the ideal of reciprocity that lies behind the welfare state,” she said during a panel discussion in January titled “Basic Income Illusions,” which was hosted by the Stanford Basic Income Lab and the McCoy Family Center for Ethics in Society.

For Satz, the definition of participation would be broad and go beyond the current concept of work. It would include volunteer work, job training, elder and child care and other contributions to society that do not show up in a market economy.

Beyond that, Satz thinks that cash transfers are only one part of a broader toolbox to create a more egalitarian society, which requires tools other than empowering the individual.

“Cash is a means to satisfy the strongest individual preferences people have, no matter what they are. Achieving public goods takes coordination. Take the good of disability accommodation. If we give each person needing a wheelchair a check for $1,000, that doesn’t ensure that accessible public spaces will be built.

“We should grant higher priority to support certain goods like education and health care over other kinds of goods like surfing opportunities, to use a famous example, even if some individual would prefer surfing to schooling and health care,” she said.

“A well-funded universal basic income, at a high level, runs the risk of diverting desperately needed resources to improve the quality of public goods by spreading them like peanut butter over millions of different uses. And that, to me, is not as efficient and as powerful a way of attacking problems like bad housing, segregation, bad schools,” she said during the January discussion.

Satz is also skeptical of the ability of universal basic income to transform communities.

“You walk around Stockton and you think: ‘Look, the solution of giving everyone $5,000 (per year)? That’s not what Stockton needs. Stockton needs major investment in infrastructure, schools and job training programs,'” she said.

Tubbs, however, disagrees that Stockton is facing an either/or choice.

“This shouldn’t just be about addressing infrastructure needs. We need both — and people are at the heart of it all,” he said.

In an email, he cited the city’s recent efforts to boost infrastructure investment: mounting Measure M, a special tax dedicated to recreation and library programs, services and facilities; creating Opportunity Zones as a means for future investment in housing and industrial development, business and workforce; and talking with the California State University, Stanislaus’ Stockton campus to spur more development.

“But, while we’re making all these long-term infrastructure investments as we speak, we shouldn’t wait to invest in our people. It isn’t about giving handouts, especially in a society where one out of two Americans can’t afford a $400 emergency. It’s about finding solutions to some of our most pressing economic issues,” Tubbs said.

“A guaranteed income isn’t an answer to the issue of public investment in infrastructure nor is it a solution to all of society’s ills.”

Bidadanure agreed. A single policy cannot tackle all of the social and economic challenges that workers face, but universal basic income might address some of them, she said.

There is a growing body of evidence that a guaranteed income makes a positive difference in people’s lives, she said. Several studies found that people don’t squander their cash payments and people didn’t work appreciably fewer hours. Some women who did work less, researchers found, used the time off to care for their families, she said.

Canadian researchers Brownell, associate director of research and a senior research scientist at the Manitoba Centre for Health Policy, and Forget, an economics professor at the University of Manitoba, have studied the health impacts of giving people unconditional cash payments.

Forget’s 2011 analysis of Canada’s 1975-1978 “Mincome” experiment (short for “minimum income”) found that those who took the time off did so in beneficial ways, such as returning to school. Twelfth-grade high school enrollment increased in Dauphin, one of the three sites included in the study, from about 83% to 100% but dropped back to 83%-85% after the income payments ended.

Mothers also reportedly took more time off around childbirth by using their stipends for longer parental leave.

Forget also found that hospitalizations decreased 8.5% during the basic-income pay period, with hospitalizations for mental health issues and for accidents and injuries — which are often related to poverty in population health analyses — being the most significant drops, she noted.

Researchers have also studied the outcomes of a United States income program: Alaska’s Permanent Fund. Since 1982, Alaska has paid dividends to its residents from the state’s oil revenues. The amount of the annual cash payment, contingent on revenues, varies from year to year. At its peak, residents received $2,072 per person or $8,228 for a family of four annually. In October 2018, each resident received $1,600.

The fund has grown to $52.8 billion in the last 35 years.

The payments have helped keep 2% to 3% of the state population out of poverty each year since 1990, according to a 2016 report from the Institute of Social and Economic Research in Alaska. A 2018 study by Damon Jones of the University of Chicago and Ioana Marinescu of the University of Pennsylvania found the dividend has had no significant effect on overall employment rates, but the share of people who were employed part-time increased by 1.8%.

A 2017 phone survey of 1,004 Alaskan voters commissioned by the Economic Security Project found that 40% of respondents said the annual dividends made a “great deal” or “quite a bit” of difference in their lives during the prior five years. Another 39% said the dividends made a “fair amount” or only “some” difference. About 20% said the funds made “just a little” or “no difference” to them.

The survey found that 30% of respondents said they used the money to pay off debts; 27% said they saved all or most of the money; 24% spent all of the money and 15% spent half and saved half.

Seventy-eight percent of those surveyed had positive feelings toward the Alaska Permanent Fund. Respondents who viewed the program negatively — about 7%, which doesn’t include the 15% who were “neutral or unsure” — said they thought the money could be put to better use, believed it should not be treated as an entitlement, had doubts about the fund’s longevity or believed the fund to be susceptible to political manipulation.

The political question

Tubbs said he believes the biggest hurdle to widespread universal basic income wouldn’t be financial so much as political.

In his own city, not everyone in the community liked the concept, but most didn’t object because the proposal didn’t use taxpayer dollars, he said.

“It sparked a good conversation about our values as a community. We started with the premise that as a country our economy isn’t working for half the people. We have to be bold. We believe that people should be given the necessities to live.”

Data indicates it might not be an easy sell. During a March 13 lecture at Stanford, Alan Krueger, the late Princeton University economist and former chairman of former President Barack Obama’s Council of Economic Advisers, said his research shows that 33% of respondents to a survey supported the idea of universal basic income for all Americans and 42.1% were opposed.

But Foster noted that the country has instituted radical ideas related to income before that are now popular and ingrained.

“Social Security is a great example of a radical idea,” she said. It started as a small payroll tax, and as it became clear that people used it and wanted it, it was increased.

Zuckerberg, a Palo Alto resident, advocated for a new socio-economic ethic during a 2017 commencement speech he gave at Harvard University.

“Every generation expands its definition of equality. Previous generations fought for the vote, civil rights. We have the New Deal and Great Society. Now it’s time for our generation to define a new social contract. We should have a society that measures progress, not just by economic metrics like GDP, but by how many of us have a role we find meaningful.

“Giving everyone the freedom to pursue purpose isn’t going to be free. People like me should pay for it, and a lot of you are going to do really well and you should too,”

he said.

The Institute for the Future in Palo Alto issued a manifesto a few years ago for an even more expanded concept — what it terms “universal basic assets” — to create a more equitable world. Rather than simply giving people cash, the universal basic assets model calls for equal access to things such as housing, personal wealth, education and other assets that enable people to grow and thrive. Already public assets, such as health care, transportation infrastructure and other resources, would need to become more equally accessible.

In a 2017 opinion piece for the business news publication Quartz, Institute Executive Director Marina Gorbis wrote that while universal basic income in the form of money can be invested in assets such as education, health and training, the proposals don’t address the root causes of inequality.

As more jobs become obsolete because of advancing technology and artificial intelligence, economic returns will increasingly go to the investors and owners of these technologies instead of workers. So policies and new ownership models, such as employee stock-owned companies and cooperatives, are needed so that capital flows to all segments of the society and not just to a few.

But she also noted that the point of universal basic assets wouldn’t be to engage in collectivism or to seize and redistribute wealth and assets. Instead, creating these vehicles for wealth distribution would help people survive in a rapidly shifting economy.

Correction: A previous version of this story stated the median income in Stockton as $45,000 and the cost of the SEED program as $1 million.

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