In a world of wealth and growing prosperity, where do we go from here?
“Utopia for Realists: How We Can Build the Ideal World” by Rutger Bregman is an enjoyable a quick read about the opportunity to shape our ideal world and future. He also did a related TED Talk that I highly recommend watching. Although I had previously seen the viral clip, I didn’t realize the author was the same individual who gave a searing speech at Davos a few years ago till I came across Trevor Noah’s Daily Show segment with Bregman after reading the book.
Bregman, a historian, uses history and a series of studies to support his thesis that we have the resources, knowledge, and tools to work towards a modern utopia and shape society and civilization as we’d like. He shares three big ideas that he thinks are necessary to get us there and that already have substantial roots and evidence in history and are well understood, natural evolutions of our current capitalist society:
- The End of Poverty and Universal Basic Income (UBI)
- End of B.S. Jobs
- Open Borders
I’m mainly going to share thoughts on UBI, but first a bit of background:
The World is Rich (On Average) and Has Different Problems Now
Per Capita Income is 10x what it was in 1850.
The Global Economy is 250x what it was before the Industrial Revolution.
Today, more people worldwide suffer from obesity than from hunger.
Yet, depression has become the biggest health problem amongst teens and the number one cause of “illness” worldwide by 2030.
The author asserts that worldwide we have the wealth and resources we need for our entire basic human needs, yet people are working harder, there is more inequality than ever, and there is much unrest and lack of satisfaction.
“Man needs, for his happiness, not only the enjoyment of this or that, but hope and enterprise and change…It is not a finished Utopia that we ought to desire, but a world where imagination and hope are alive and active.”
- British Philosopher Bertrand Russel
While capitalism has helped us achieve our current level of wealth, he pushes us on, what kind of world do we want going forward? And certainly, undirected capitalism will not be sufficient to solve those problems and achieve those goals.
Poverty and Scarcity
In his TED Talk and book, Bregman talks about the scarcity phenomena: namely that when a resource is scarce it pre-occupies the mind and causes individuals to make poorer decisions. The poor are particularly in this mode — where food, money are scarce — and they are constantly context-switching and juggling mentally how they are going to make their daily lives work. I wrote about similar brain science behind poverty in an earlier blog.
The Brain Science Behind Behavior
Poverty, inequality, and the long lasting impact of adverse environments.
I also saw this in my own work at Jobbot.ai where we were helping employers recruit and hire blue-collar workers. Unfortunately many times a job applicant would schedule a job interview but not show up. Many recruiters took that as evidence that the candidate is not reliable. If they can’t show up for an interview, how can they show up for work? Makes sense, right? Well actually in many cases, those candidates had some unusual extenuating circumstances that many of the white collar recruiters couldn’t identify with — e.g. no gas money, didn’t have a working car and their ride fell through, or child/family care situation. Human recruiters discarded those applicants and would not reschedule an interview for them, but ironically the automated Jobbot rescheduled those interviews and found that those applicants were similarly likely to be hired, to perform fine as workers, and have similar levels of tenure/retention.
The related studies show, that if we can address the concern if we can REMOVE the scarcity mindset, individuals will make better decisions and get themselves back on track or even to a better track.
Universal Basic Income
Enter UBI. This is the big assertion of the book and Bregman’s thesis and admittedly the one I was HIGHLY skeptical of. The highlights are:
- historically UBI always seemed like a logical conclusion for the evolution of capitalism — even supported by Richard Nixon and almost came to law!
- we can eradicate the nanny and paternalistic “surveillance” state — everyone knows the government is not the most efficient execution body, let’s get them out of the business of welfare and monitoring individuals.
- direct payments work. there is ample evidence to support that direct giving to poverty is the most EFFECTIVE way to remove people from poverty. If you want the short version his TED talk is great.
Basically, incentivize the world we want to live in, do it more cost effectively, and based on scientific evidence of what works, RATHER than taking a paternalistic notion that a) poor people are lazy and b) we, society, the government know how to help them.
We need to reframe how we think about poverty, the meaning of work, and what world we want to live in.
UBI is and could be an important progression of how we think about human society and more civil than the alternative. Many things that seemed impossible or inconceivable in the past have come to be — e.g. we don’t grow our own food, we give all our money to someone else to manage (and expect them to give us more/interest), we don’t police our own homes and neighborhoods, we expect someone else to pickup the trash on the streets, women can work and vote, etc.
UBI and Redistribution
As a proud American Capitalist, I had to ask myself why is it that I have a problem with UBI — with the concept of “redistribution”? Even writing the word strikes fear in the capitalist in me. The reasons I told myself are that a) we want a world where people are incentivized for work b) good things don’t happen when people get things for free and c) socialism doesn’t work — we don’t want a lazy uninspired society.
Several issues here:
First — we already live in a subsidized world….its just the government that is deciding how to dole out those subsidies. Ironic, and unfortunate, that we generally want less government, except for when it comes to how poor people should lead their lives. Is it really that we trust the government more than poor people?
The top 20% of Americans already pay 87% of income tax. So those of us in the bottom 80% are being subsidized substantially. Some quick numbers: The US budget is a staggering $4.8T. If we remove deficit spending we can say Tax Revenue is $3.7T…that bottom 80% is contributing approximately $250B in individual taxes. So if we enjoy the “freedoms” provided by our US military to the tune of $700B per year, most of us are not paying our fair share …. many of us would need to fork over another $500…per month! That’s just for the military. If we look overall at the federal budget, on average, we in the bottom 80% would need to pay many thousands of dollars more per year.
Are we ok with this form of subsidy because it's indirect? It does come in the form of farm subsidies, oil prices, etc. Those seem kind-of direct. And actually, the list goes on beyond those. I think the reality is that most of us are ok with some sort of progressive tax code where the wealthier pay more in taxes than the rest. The wealthier get outsized benefits from the taxes in safety, laws, infrastructure, education for workers, etc.
Second — about that concern for laziness, the evidence shows that UBI does not make people lazy — it actually helps get their head clear (not having to worry about whether to get gas or food) and they can focus on education and getting a good job and taking care of their kids.
Last — if we can get past the perceived moral issue of “redistribution” — perhaps we can just accept the results that it’s just more effective. If the science and cold hard facts tell us that providing UBI will make our society safer, cleaner, and SAVE us money in crime, poor reform policies, education, etc. — why would we not do it?
And the fact that we could enable people to live dignified lives, well that seems like a pretty decent by-product. Rand institute conducted some economic models that show that with a more even distribution, the lower 90% portion of the economy would receive $2.5T of earnings more each year — and the median income more than double of today.
Broadly speaking, the concepts raised by Bregman all point to the need for a more active public policy arena: namely to shape a society we want to see, we need to set out those societal goals and smart policies will be necessary to help achieve those. And here, I agree, the free market is not sufficient to solve all problems and it is absolutely worth exploring improvements and evolution from that system. I wrote more about this in “Winners Take All”.
Now, this does NOT mean that the government should DO more, but rather that we should have smart policies and ensure incentives are aligned properly to our broadest aims and goals. There’s a nice documentary “Sweden: Lessons for America” that makes the claim that a strong social safety net THROUGH privatization, for example, can lead to a high quality of life without the government actually having to RUN and solve those problems.
As for UBI, I’m intrigued and hopeful, but I do have my concerns. I acknowledge Bregman’s review of the history and studies, but one glaring omission appears to be that we have no idea how UBI will shape society in the long-run. Yes, maybe an infusion of UBI investment now and for the near-term future may help. Maybe. BUT how will this impact subsequent generations? If you are the great-grandson of a family who has been solely supported by UBI — what will your sense of worth be? Will it really be that your needs are taken care of BUT you are still ambitious enough to explore science or philosophy as presumed? Or will this breed a sense of “classes” where a working class is highly productive and pays taxes to support a non-working UBI class? Will income equality actually grow as one group cannot get reasonable jobs — and we won’t try to fix that because they have and can rely on UBI — and the affluent class will only continue to grow its wealth and drive further class divides?
Other questions arise — will a whole cottage industry of capitalists find ways to take advantage of people’s UBI income? With more automation force an increasing number of people rely on UBI? Will there be a growing need to keep increasing the UBI amount and the fight becomes more about how much to redistribute — e.g. how to fairly split the pie — rather than trying to grow the pie at all?
Bottom line I think the questions raised are important and deserve to be studied and explored. I think it's inadequate to rely on the systems that got us here (unbridled capitalism) to get us there (a better, happier world). However, I do believe in the broadest incentives of the free market, the sense of pride that comes from purposeful work and accomplishing something and I think the long-term implications of any large such social programs need to be approached carefully.