Wednesday, July 18, 2018
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No Free Lunch

A minimum income for all?

There is something wrong with our system when I can leave here and make billions of dollars in 10 years while millions of students can’t afford to pay off their loans, let alone start a business,” observed Facebook creator Mark Zuckerberg in his commencement speech at Harvard University last May 25. Only 12 years ago, he dropped out of what is considered the top university in the world, which has now awarded him an honorary doctorate. He went on: “I know a lot of entrepreneurs, and I don’t know a single person who gave up on starting a business because they might not make enough money. But I know lots of people who haven’t pursued dreams because they didn’t have a cushion to fall back on if they failed…. We should explore ideas like universal basic income to give everyone a cushion to try new things.”

At this time when rapid technological, economic and social change is turning traditional ways of thinking on their head, it may indeed be time to consider an idea that would have otherwise been dismissed as radical and socialist. Zuckerberg called for a new economic order where everyone can have a sense of purpose in life, and indicated that inordinately wealthy individuals like himself should be the primary source of support for the universal basic income (UBI) scheme he suggests.

Radical as it may seem, the idea is not new—not even in the capitalist society of the United States. David Croen, in an online article on the subject, recounts how the idea traces all the way back to the Roman Empire, when Roman citizens were entitled to free grain. In 1776, Thomas Paine, one of America’s founding fathers, wrote of the need for a “national fund, out of which there shall be paid to every person, when arrived at the age of twenty-one years, the sum of fifteen pounds sterling.” Economists and civic leaders had subsequently called for a “floor” or minimum income for each citizen. During the Great Depression, Louisiana Sen. Huey Long gained support for his “Share Our Wealth” plan, which would guarantee every household at least one-third of the average family wealth.

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Noted economists Paul Samuelson, John Kenneth Galbraith and James Tobin were to later propose “a national system of income guarantees and supplements.” Martin Luther King Jr. wrote that “the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.” Under President Richard Nixon, a Family
Assistance Plan (FAP) made headway in Congress, providing $2,400 (including $800 in food stamps) for a family of four with no earned income (equivalent to more than $15,000 in current prices). Nixon continued to push for FAP in his 1972 reelection bid, while his opponent George McGovern similarly called for a guaranteed income of at least $6,500 for a family of four. But the idea faded from the public discourse thereafter, as the free market philosophy gained prominence, later to discredit such ideas as socialist, fostering dependency, and killing initiative.

Zuckerberg’s argument for UBI resonates at this time when entrepreneurship is widely seen as the key response to rising inequalities worldwide, stemming from a falling share of labor income in total incomes through time, while that of profit income rises. Worse, labor employment itself is under threat in the face of the onrushing Fourth Industrial Revolution, whereby computers, robots and artificial intelligence are taking over more and more tasks otherwise done by people. But fostering entrepreneurship entails, apart from providing equal
opportunity, ensuring a “cushion to fall back on” when business ideas fail. Entrepreneurs who succeeded at first try are extremely rare, and UBI, Zuckerberg argues, would induce more would-be entrepreneurs to take risks the way he did with Facebook, without fear of falling into poverty.

Croen cites initiatives on UBI already underway in various countries ranging from Africa’s Namibia and Kenya to wealthier countries like the Netherlands, Finland, Switzerland, Scotland (Glasgow), Canada (Ontario), and the United States (Alaska). Perhaps it’s time we in the Philippines seriously explored the idea as well.

cielito.habito@gmail.com

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