Automation, robotics, displaced workers, outsourcing, offshoring, near-shoring, smartsourcing…
These are all words that strike fear into the ordinary working man and woman, American, or otherwise…
Now comes a new set of words from the intelligentsia promising to fix it all for the common person, phrases like “guaranteed income” and “universal income” have emerged into the conversation.
But can schemes like these reverse the hollowing out of the middle class, the increase of homelessness, the growing pervasiveness of people living in tents on the edges of our cities, and the consolidation of monetary and political control in countries like the United States?
Recently I had the opportunity to interview Chris Hughes, Facebook co-Founder and author of the new book Fair Shot to investigate this important question with a series of questions of my own. Without further ado, here is the transcript of that interview:
1. In your book you propose giving an income supplement of $500 a month to people making below a certain threshold (say $50,000). Why is this better than the existing system of providing subsidized housing, food, higher education, and healthcare to people at lower income levels?
I am not suggesting we do away with the existing system – in fact, in Fair Shot I highlight the need for our current social safety net and advocate for a guaranteed income as a complement to it and not a replacement. $500 per month is enough to provide a financial cushion that can be used to cover bills, pay down debt save, cover some basic expenses while being re-trained for a new job, or any other manner of economic challenges millions of families face everyday. It’s not intended to replace a paycheck, but to supplement it. I also think we should expand the definition of work to include caregivers and students, which would recognize the work of an additional 30 million Americans in the workforce and offer them a financial lifeline that doesn’t exist today. I also think we could start with $500 and if the technical unemployment that some predict arrives, then the amount could increase.
2. Wouldn’t boosting existing subsidies like these be more efficient than introducing a new bureaucracy and have the same effect?
One of the biggest reasons direct cash benefits are so popular is that they are efficient: providing $500 a month as a tax refund would require little new bureaucracy to administer. I agree that we should invest in schools and hospitals, but sometimes we overlook the most powerful tools to combat income inequality. Unconditional cash gives autonomy to participants, and empowers them to make their own decisions about which expenses to prioritize, as opposed to the government dictating to them how and where they can use their benefits. And we know it works — our current cash programs lift more people out of poverty than food stamps, housing vouchers, and unemployment insurance combined.
3. Unfortunately, these days we have a lot of bad actors in business. What is to keep businesses from paying lower wages after a guaranteed income or universal basic income goes into effect?
This is a real concern that should be addressed by strong minimum wage laws and supporting the right of workers to organize for higher wages and more robust benefits. But a guaranteed income, paid for by taxing the people who benefit from the historic profits large companies now make, would provide stability to tens of millions of Americans, including those who work in the gig economy and don’t benefit from minimum wage laws and people working in the informal economy. A guaranteed income helps employees in difficult positions by giving them the financial stability they need to look for new employment and quit a job with an abusive boss or poor workplace conditions.
4. One of the biggest challenges our economy faces is providing workers with the right skills in the right numbers as the desired skills shift over a time. How does a guaranteed income fix that?
We have invested billions of dollars for decades in job training programs and with very mixed results. We need better schools and easier access to community colleges and higher education, but we’ve been investing in these institutions for decades and yet economic mobility is at an all-time low. It’s time we recognize that people need the basic cash to be able to pay for childcare to attend a community college class at night, or the cash to pay for gas or books. There are many barriers to education, and cash empowers people to take advantage of the educational opportunities we have already invested in to make possible.
5. You talk about automation as the driver for the need for a guaranteed income, and sure it is easy to imagine that self-driving cars and may put taxi drivers and truck drivers out of work, but a lot of highly skilled people in the middle and even upper middle class are about to be automated out of a job too (including a lot of computer programmers). How is $500 a month going to replace the loss of a six-figure income?
I’m actually less concerned about the future in which robots may take over jobs and more concerned with the problems of today: more than half of Americans don’t have enough cash on hand to cover a $400 emergency. We don’t need to speculate about the rise of robots to know that cash is the most powerful tool to combat income inequality in the here and now. A guaranteed income isn’t an alternative to work — it’s an investment in low and middle-class Americans who have been working hard while the financial system is rigged against them. Middle class people who find themselves unemployed will be given the same economic cushion — far from sufficient to enable people to drop out of the workforce, but an important support to help them adapt to the changing nature of work.
6. The cost of living in a place like San Francisco, New York, LA or Seattle is much different than that in Mobile, Alabama, how will your scheme address that?
I think it makes sense to adjust the income floor based on the cost of living in different states or cities, but I do believe that the goal should be for it to remain as simple as possible so that people benefiting from it recognize its power.
7. You propose taxing workers that make over $250,000 to pay for your plan. Why did you choose to tax workers instead of the businesses choosing to fire workers to increase their profits?
The winners in our winner-take-all economy claim an outsized reward for their victory. When one percent of society owns the same amount of wealth as the bottom 90 percent, it’s clear there’s a problem. My proposal brings the tax rates on the wealthiest to their historical 20th century average of 50 percent. To be clear, that’s only on earnings above $250,000; so if you make $300,000 the tax increase only applies to $50,000. I think this is an important distinction that many people miss, and I also think it’s important to point out that this applies to an extremely small number of Americans. By the one percent paying their fair share in taxes, millions of Americans will have a chance at economic security.
There are many other ways to pay for this — taxes on carbon, corporations, financial transactions — but I think the simplest and most powerful way is to ask those who have prospered in the new economy to give others a fair shot as well.
8. Wouldn’t redesigning our tax and fee system to incent people to exhibit behaviors that benefits society and discourages behaviors that harm society be more impactful than a guaranteed income?
I’m not a fan of government paternalistically telling people how to live their lives — and I think much of the history of the safety net is that it is often focused on regulating the poor rather than empowering them. (For a fantastic recent read on the topic, you may want to check out Automating Inequality.) I believe we have a collective responsibility to make sure everyone has a shot at economic success, and the simplicity of cash guarantees that by recognizing the freedom of each person to decide how to live their lives.
9. What is your reaction to the notion that the disappearance of the middle class has coincided with the disappearance of humanity from both business and politics? “Nothing personal, it’s just business.”
I think that money is inherently linked with dignity, and that we have falsely equated the wealthy as good, hard workers and deemed the poor as deserving their circumstance or lazy. This is certainly a contributing factor to the erosion of humanity from both business and politics. I believe that unless we make significant changes today, the income inequality in our country will continue to grow and call into question the very nature of our social contract. It is such a fundamental idea behind America that if you work hard, you can get ahead — and you certainly don’t live in poverty.
But that isn’t true today, and it hasn’t been true in the country for decades. Many experts have looked at how democracies slide into authoritarian rule, and growing class resentment and the emergence of nativist or populist leaders, such as the man who currently sits in the White House, is a recurring theme.
10. As real wages and life expectancies in the United States continue to fall, will $500 a month be enough to quell growing worker and citizen discontent in America?
A guaranteed income of $500 a month isn’t a silver bullet: it won’t be enough to solve all of our future economic and societal challenges, and it isn’t meant to. A guaranteed income alone isn’t going to guarantee everyone a fair shot, but it is by far the single most powerful tool to help. At the core of America is that the idea that people have the opportunity to live their own dreams, that they can be the person they want to be. If you want to be a teacher, nurse, artist, or businessperson, you should have every chance to work toward that goal. That requires a good education and the ability to work your way up over time. But every step along that journey requires cash of some sort – to pay for a security deposit on an apartment, the gas money to interview for a job, or for childcare while you’re in classes at the local community college. Right now, people have little cushion, and poor and even middle-class people have no savings to pay for basic expenses. A guaranteed income is not a cure-all, but it does make it just a little bit easier for people to fulfill their dreams.
Thanks for all that Chris! I hope everyone has enjoyed this peek into the mind of one of the man behind the new book Fair Shot!
Image credit for Chris Hughes image: Lisa Berg
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Braden Kelley is a popular innovation speaker, builds sustainable innovation cultures, and tools for creating successful change. He is the author of the five-star book Stoking Your Innovation Bonfire and the creator of a revolutionary new Change Planning Toolkit™. Follow him on Twitter (@innovate) and Linkedin.