Why a bunch of Silicon Valley investors are suddenly interested in universal basic income

 

Updated by Dylan Matthews on January 28, 2016, 1:10 p.m. ET @dylanmatt dylan@vox.com

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Sam Altman at TechCrunch Disrupt NY in 2014. Brian Ach/Getty Images for TechCrunch

Basic income is having a moment. First Finland announced it would launch an ambitious experiment to see if it would work to give everyone in a given area is given a set amount of cash every year from the government, no strings attached. Now the Silicon Valley seed investment firm Y Combinator has announced it wants to fund a basic income experiment in the US.1

Full disclosure: My godfather, Robert Morris, is one of Y Combinator's co-founders and principals. I haven't talked to him about any of the company's activities, and we definitely haven't talked about basic income.

YC's president, Sam Altman, announced on the YC blog that the company wants to hire a researcher to "work full-time on this project for 5 years," and supervise an experiment wherein Y Combinator will "give a basic income to a group of people in the US for a 5 year period, though we’re flexible on that and all aspects of the project."

Basic income as an insurance policy for the robot takeover

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Two robots, wary of the future they will rule.

Y Combinator — a startup incubator that counts Dropbox, Airbnb, and Reddit among its alumni — seems mostly interested in basic income as a response to technological unemployment. In the future, the reasoning goes, enough work will be automated that demand for all but the highest skilled labor will collapse, leaving a small group of programmers and capitalists with all the coconuts and most people with nothing.
I'm skeptical this is ever going to happen (Matt Yglesias makes a good case against the hypothesis here), but basic income is one way to make sure everyone survives structural employment changes in the future.
"I’m fairly confident that at some point in the future, as technology continues to eliminate traditional jobs and massive new wealth gets created, we’re going to see some version of [a basic income] at a national scale," Altman writes.
This, interestingly enough, is also the rationale used by many radical leftist thinkers to justify a universal basic income. Under one view, delightfully named "fully automated luxury communism," humanity will overcome capitalism by having machines do most of the labor and then distributing the proceeds fairly across a public that will be able to work far less.
Radical theorists Nick Srnicek and Alex Williams wrote in their recently published book Inventing the Future, "The technological infrastructure of the twenty-first century is producing the resources by which a very different political and economic system could be achieved."

Basic income has always brought together ideologically divergent supporters; in the early 1970s, libertarian economist Milton Friedman and 1972 Democratic nominee George McGovern both advocated versions of the plan. But a coalition combining avowed anticapitalists with literal venture capitalists for the project of basic income is still pretty startling.

What Y Combinator's study could add

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Life under a basic income?

Y Combinator's interests here are nonetheless pretty unique. Most past basic income studies — ably reviewed by my colleague Noah Kulwin at Re/code here — have focused on the question of whether the policy reduces work — which was thought of as a bad thing.
The best past experiment, in the Canadian town of Dauphin in the 1970s, was considered promising because it suggested the policy didn't discourage people from working much; only teenagers and new moms (two groups who might be better off not working anyway) reported working less. By contrast, more poorly conducted US studies suggesting that a negative income tax (a variant of basic income that phases out as people earn more from their jobs) discouraged work were taken as a mark against basic income.
However, if Altman's concern is caring for people after technology has wiped out all their work, then "does basic income keep you from working" isn't a very interesting question.
Altman writes that he wants to know, "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 economic value than they receive? "
These are harder questions to answer. If someone relies on their basic income to create a gorgeous sculpture, how do we measure if that "benefits society far more" than what they were doing before? What if the sculpture is super ugly but it brings the person who made it incredible amounts of joy? Figuring out reliable, non-bullshit metrics for the criteria Altman's proposing is really tough.
But Altman's questions are in any case different from those posed by most basic income studies to date.

This is a golden age of basic income experiments

Rob Hurson

The Three Smiths Statue, Helsinki's most awesome public sculpture.

The Y Combinator study promises to be the fourth notable basic income trial of the late 2010s.
Right now there are two notable experiments in rich countries in the works. The first, in the Dutch city of Utrecht, suffers from the same key flaw as the US study by only targeting existing beneficiaries. The second, much more promising experiment is Finland's, which is testing a whole bunch of approaches. The researchers are trying a pure basic income, a partial basic income paired with some existing welfare benefits, a negative income tax, and some other ideas.
They're also aiming to test the idea not just by randomly selecting a group of people across the country to get benefits, but also by having some areas where a big chunk of residents or even all of them receive the benefit. That lets you see what happens to an entire community when a basic income policy is introduced.
Having a whole town get benefits could have cascading effects as households escape poverty, as some people use the income guarantee as insurance so they can take risks and form companies, as universities see increased enrollment, etc. Dauphin is really the only place we've had a study on that scale so far, so Finland's experiment is adding a lot.
Finally, there are rumors swirling that GiveDirectly, a charity that gives cash directly to desperately poor people in Kenya and Uganda, is planning to launch a large-scale experiment of basic income in a developing country. Such a study would be much cheaper than rich country equivalents; even a guarantee as small as $1,000 a year could double or triple many residents' incomes.
These three trials are similar in many ways to what Y Combinator is proposing, especially the Finland one. But they're addressing different questions.
Finland and Utrecht want to know if a basic income is a more efficient way of delivering assistance to poor people than their existing policies; they're not particularly interested in ushering in a post-work future.
The GiveDirectly program is trying to figure out if basic income is a viable way to lift people in developing countries out of extreme poverty. That's probably the most promising use of a basic income from a humanitarian perspective. Giving $1,000 to someone living on $2 or less in Rwanda effects a much bigger standard of living increase than giving $1,000 to a poor person in the US.
But none of the three experiments is interested in the kinds of questions — "Does basic income make for a more creative society liberated from the constraints of cash?" "Does basic income increase happiness through greater leisure?" — that Y Combinator wants to answer. If done rigorously, the firm's study could wind up making a useful, original contribution to the basic income movement. Hope for a post-work future is a big part of why basic income has become popular. It makes sense to test whether basic income can make the best parts of that vision real.