VC Firm Y Combinator Launches an Experiment In Universal Basic Income (fastcoexist.com)

New submitter Gordon_Shure writes: Silicon Valley startup financer Y Combinator, remembered for successes like Airbnb and Dropbox, is launching an experiment to give people a Universal Basic Income. At present, the plan is for hundreds of participants to get repeated cash payments unconditionally. Then, assessors will record life consequences like changes in work patterns, self-employment, artistic endeavors, or idleness.

Recent focus on UBI in Finland, Switzerland and other countries see proponents claim a basic income will — in a world facing structural unemployment due to jobs taken by automated AI, robotics and machines — combat poverty and work insecurity. Others remain unconvinced. What do you think about the significance of what this kind of small-population study would show?

Comments

Interesting

[KermodeBear]

An interesting experiment, to be sure, and I'm glad that someone has the money to try it out.

It's hard to know until you're actually in the situation, of course, but I think that if I had a minimum income in addition to what I make now, I'd drop down to working part time and spend the balance volunteering and pursuing music again.

Re:Interesting

[ArmoredDragon]

As somebody who is very heavily opposed to communism and socialism, I'm interested in seeing the results of UBI (which is neither communism nor socialism, rather just a form of welfare) however I wouldn't want it anywhere I plan to live anytime soon, because it's one of those things where once you have it, it's practically impossible to take away, no matter what kinds of problems it creates or doesn't actually solve.

Re:Interesting

[Anonymous Coward]

It's a temporary study, so here's my prediction:

People currently living beyond their means will continue to live beyond their elevated means.
People capable of affording their current lifestyle will invest the additional income.
People who tend to make bad decisions will quit their jobs and pursue fame by some manner. Any success in this group will be seen as a strong argument for the UBI even if it proves to be statistically consistent with other people who drop their lives to pursue fame.

Re:Interesting

[pr0t0]

I'd drop down to working part time

While filling the remaining time with volunteering and strengthening the arts is noble, maybe even desirable in some sense; I'm guessing this modification to your work schedule is precisely why the UBI would fail on a larger scale...at least in the United States. It would seem to me the only way, or maybe just the best way, to judge it as a success is if not much else changed beyond lowering the costs of supporting those who cannot support themselves.

If a reduction in workforce productivity coincides with the UBI, a claim will be made that humans are lazy and will not work if they don't have to. Maybe they are correct. It was certainly the claim as to why Communism, or maybe Marxist Socialism, was or would be an inevitable failure. I'm not an economist, so my opinion on the matter is largely uninformed.

The UBI is interesting in principle, particularly if lowering the costs of supporting those who cannot support themselves can be achieved. If a measure of dignity and self-sufficiency can be returned to those people as well, all the better.

I personally wouldn't change my life at all.

Re:Interesting

[BarbaraHudson]

People dropping down to part-time work will increase demand for other people to fill in the gaps. It's better to have two people working part-time than one full-time and one idle, and the financial cost is the same either way.

With all the productivity gains in the last 45 years, we should be down to a 16-hour work week if the increases were divided equitably between employers and employees. So, since that didn't happen voluntarily, looks like the invisible hand is going to impose it on businesses whether they like it or not :-)

Re:Interesting

[Forgefather]

I'm not entirely convinced that the number of net work hours will even decrease. It is an interesting experiment, and I will hypothesize that the results will be determined by the financial state of the person that started receiving the UBI. I think that the largest change in behavior will come from people in the middle to lower income levels. People with very little income level will most likely have most of the money consumed simply escaping debt, which is usually what has them locked into lower income levels while the middle class will see the most change.

I predict that most of the middle of the road people who show up for a paycheck will cut back on hours worked during the day while most of the 'doers' will increase their average time worked. I feel that with more security on the financial side the people who are more naturally inclined to take risks and push the envelope will lose the largest disincentive to making a startup in their financial insecurity in the event of failure. Thus I predict certain groups will end up working even more hours than they were before because many people today work for reasons other than a paycheck.

Regardless of number of hours worked I feel that this move will have significant upward pressure on wages. With people cutting back hours due to disinterest there will be a decrease in the supply of labor and most of all UBI gives every single person bargaining power in terms of salary. For people of all income levels having an income that gives you the time and luxury to find a good job with a good salary gives you tremendous advantage in salary negotiations, which, properly leveraged, can translate to salary increases even in what were traditionally minimum wage jobs. Who wants to slave behind a cash register for 8 dollars an hour when they aren't desperate to feed their kids?

In the end the question will be whether those that choose to make do with the basic income can be supported by the the ones that choose to work, but the idea can certainly generate benefit for everyone involved through increased wages and a decreased number of people who show up to fill a seat.

Re:Interesting

[tlhIngan]

As somebody who is very heavily opposed to communism and socialism, I'm interested in seeing the results of UBI (which is neither communism nor socialism, rather just a form of welfare) however I wouldn't want it anywhere I plan to live anytime soon, because it's one of those things where once you have it, it's practically impossible to take away, no matter what kinds of problems it creates or doesn't actually solve.

You do realize you're paying for other people's laziness/unemployability all the time, right?

Anytime any politician says "We will cut back benefits to the lazy and all that" it's really code for "We, the 1%, want to pay less taxes supporting your sorry asses". Because the homeless won't suddenly decide that because their government benefits are cut back, they will suddenly work. A lot of homeless ARE working - they don't make enough to pay for rent, food and other necessities. The ones that aren't, are generally unemployable - mental illness, drugs, alcohol or other problems keep them from holding even the most basic of jobs.

These people will not magically become productive members of society by cutting benefits. The working poor won't magically get better paying jobs (in fact, they'd likely lose their existing jobs), the mentally ill will not become employable (they need medical treatment, but they can't pay for that), etc.

Instead, those people will just become what the desperate do - steal/rob for the money and basic necessities they need. So instead of paying for their support through taxes, you're paying for them through increased crime, increased prices as stores have to cope with more shrinkage, increased security, etc. And yes, you can jail them - pay for more police officers, more courts, more jails. And medical bills - medical treatment inside the ER is the most expensive treatment option available - and the only one available, so you pay through increased insurance premiums helping people who can't pay at all for some of the most expensive medical treatment available.

Yes, it's all well and good to "be responsible" and "take care of yourself" and all that, but there will always be a segment of society that can't or won't. And it's either pay through taxes to take care of them, or abandon them and pay through other societal costs.

The only real question is - will basic income be done right? Because the basic income gets you basically very little - accomodations inside a large barracks-style room (you get a locker for your stuff, but that's it - you sleep with 8/16 other people at night), shared washroom facilities and entertainment, and 3 basic nutritionally complete meals a day.

That's what it really pays for - the absolute basics with very little discretionary money left over. Enough to live on, and for a few people, positively all they really need. If you want more spending money so you can live in more private accommodations, eat better food, have cash to pursue a hobby or anything else, then you need to do something to make extra money.

Sure, a few people will be happy to lounge around with the basics - that's fine. But a lot more people will want to improve their lot in life - I mean barracks style living only appeals so much.

Really, what happens is basic income transforms work from a necessity of survival (you can count having to steal or mug people as an occupation those without jobs have to do to survive), to a means to improve yourself. Eventually people want to have a private bathroom in their living arrangements, or private laundry, or watch more than just OTA TV, etc. So you work as much as you need to feel satisfied.

And it's sort of essential as robots and everything takes over - because those people whose jobs have been displaced aren't going to be able to find new replacement jobs no matter how much extra training they do.

Re: Interesting

[maple_shaft]

Despite the fact that the elephant in the room that macro economists are scared to death of is the drop in demand for goods and services in a mature economy. This causes natural deflation in a free market void of central bank interference. Japan for the first time is offering negative interest rates, a country that struggled with dropping consumer demand for decades. We are seeing the same things in the US and other countries where central banks are practically giving money for free with the hopes that it will trigger investment and demand. That and quantitative easing and creating new money out of thin air yet runaway inflation STILL does not occur! Most people work just hard enough to make just enough money to live a comfortable life with a few luxuries, but with productivity at record levels, not only do we have less and less need for productive workers for capitalists to make money, things that we have today that 40 years ago were toys of the rich are now common and cheap for the masses. Demand for more and more sophisticated luxuries is not continuous, it tapers off for most healthy functioning adults. This is clearly true or marketing services wouldn't be a billion dollar industry, using psychological tricks to convince people of needs that they don't have. This is only sustainable for only so long before we realize that demand cannot increase forever, constant growth cannot be sustained, and the value of human labor is approaching zero with productivity and automation gains. Universal income will not cause inflation as food and necessities on the supply side already surpass the possible demand from the population as a whole. With needs, we don't demand more food when our bellies are full, we don't demand additional homes and healthcare than what is necessary for us to stay alive. Everything else is a luxury and is a want not a need but in most people wants are limited too without psychological tricks. UBI will clearly not cause inflation, it is a necessary step towards a post consumer economy and society.

Re:Interesting

[monkeyxpress]

It's a temporary study, so here's my prediction:

People currently living beyond their means will continue to live beyond their elevated means.

What does this even mean when you have a global economy with surplus capacity? Machines/People are sitting around not making stuff because those living within their means just want to save, and those living beyond their means are being told not to borrow the money those living within their means are desperate trying to shove into their bank accounts through the finance industry. An entire economy can't save for next year's harvest by hoarding piles of green paper.

People capable of affording their current lifestyle will invest the additional income.

By desperately trying to find someone to borrow the money off them, even though negative real interest rates would suggest you ain't going to find any takers.

People who tend to make bad decisions will quit their jobs and pursue fame by some manner. Any success in this group will be seen as a strong argument for the UBI even if it proves to be statistically consistent with other people who drop their lives to pursue fame.

As opposed to doing a job we could easily automate but won't because those of us who still have utility value ensure (through housing benefits, tax credits) that subsistence level humans can out compete robots for all the rubbish jobs.

I'm not a fan of lazy people. But I don't think it makes sense to have them do jobs that robots could do under the threat of starvation, simply so that I can feel better about some kind of puritan work ethic that was beaten into me as a child.

Re:Interesting

[SoftwareArtist]

The question is whether it actually would reduce productivity. The summary mentions "a world facing structural unemployment due to jobs taken by automated AI, robotics and machines." If you believe (as I do, and as the people behind this study clearly do) that we're heading toward a world where productivity isn't driven by human labor, we'd better start figuring out how to support all those people who won't be needed to maintain productivity.

Besides, there are many kinds of "productivity", and economists are much better at measuring some than others. A parent who stays home to raise their children may be contributing far more to society than if they were running a cash register at the grocery. But conventional economic measures only include the latter while ignoring the former.

Re:Interesting

[duckintheface]

The original definition of Marxist Socialism involves state ownership of the means of production. The nordic counties used to be socialist but that ended in the 1980s (I lived in Sweden at the time). France is the most socialist country in Western Europe. The social democracies of Europe (like Bernie's democratic socialism) do not involve the state owning production.

If you want to use the looser definition of socialism often employed in the US (transfer of wealth from top to bottom) then every government that has ever existed is socialist. So that's not a useful defintion.

Re:Interesting

[GameboyRMH]

Ah, the "rising tide causes inflation" idea, which is incompatible with any existing theory of how inflation works. I've even seen some people suggest that increased minimum wages would trigger the same effect. According to this idea, it seems that the only force keeping inflation in check is the desperation of underpaid workers.

So...

[psergiu]

Does the study include some "middle-class" test subjects so see how well they do after paying higher taxes ?

Re:So...

[vux984]

I am not intimately familiar with the tax regime where ever you live, but every where I've ever lived, as your income goes up your taxes go up incrementally only on the additional income.

e.g. if you make 10,000 you get taxed, 0$
if you make 30,000 you get taxed 0$ on the first 10, and then 10% of the next 20, for a total of 2k

if you make 50,000 you get taxed 0$ on the first 10, 10% on the next 20k, and then 30% on the next 30k. For a total of ~12k.

In super progressive taxation, it can get up to 60% and beyond. But that rate only starts on the dollars OVER X$.

So you don't "lose money" by reaching a higher tax bracket, you just make progressively less with each additional dollar.

Ie... your first thousand dollars you keep every penny of those dollars, but your 200,000th dollar you keep only 45 cents of that dollar.

So,even if I'm in the top tax bracket, and you give me another 10,000 in income I'll take it. I'll only keep 4,000. But that's still 4,000 more than I had. And if I'm smart, and invest it or shelter it I get to keep more than if I just use it as more walking-around-money.

Making more money and "Paying higher taxes" still means I took home more money than if I hadn't made more money in the first place.

So this all boils down to: "Does the study include some "middle-class" test subjects so see how well they do after paying higher taxes ?"

Why EXACTLY do you see this as a likely issue? Are you just unfamiliar with how taxes actually work? Or bad at math? Or is there some genuine issue that arises where you live if someone gave you a bunch of money that it would somehow ruin your life?

Its true there are some edge cases in tax law, where as your income goes up you no longer qualify for certain deductions or subsidies, but even then its nearly always a zero sum game. And worst case you end up with the same amount you started with despite receiving more money. But these usually only affect the lower/barely middle class.

The only "trap" to suddenly making more money is not being aware what you can keep, and spending more than you actually were entitled to keep, creating a tax bill you don't have money to pay. (e.g. if you make 50,000 a year set aside money to pay a tax bill for someone who makes 50k a year, and someone gives you a new 10k in income, going on a 10k vacation with it is pretty stupid.)

Modified life plan for this goal..

[Anonymous Coward]

I'm an electrical engineer. I've worked in lots of neat jobs.

A few years ago I realized none of those technical jobs would get me off the hamster wheel; having enough investments so I could eat, pay for basic living expenses, and then make nifty things and services instead. Financial independence. This is not the same thing as being filthy rich; for an accurate number, it involves having about $500k in liquid assets under investment generating income. Assuming you're willing to live someplace cheap. (I am)

I'm not from money, quite the opposite, and am unwilling to risk it all on ability to raise capital. I didn't understand how the rich stayed rich. I know what not having money to buy food feels like. Not going there. Ever again.

I looked at where the money is, and there's lots of it in financial-related industries, particularly if you're good with numbers - and even "advanced" financial math isn't that difficult relative to engineering.

My goal - through a career change and making other investment a life priority - was to get off the hamster wheel. I've devoted 10 years, or a measurable percentage of my life to this so I can enjoy the rest. I'm 6 years into my plan, and on track to make my goals, along with my wife, who shares my ambition to be free. ...but look at this!

Guaranteed income offers everyone that chance. Go do what you want to the net benefit of society. Remove that worry and fear. Remove the stigma. Hell, call it a citizenship dividend.

People will work; it's in our natures. What will change is what and how they work; most (many) jobs are pointless and should be automated. They WILL be automated in short order. Once this happens you can become a prison state, ripe for chaos; or you can adopt a scheme like this one.

We live in the future. This will be interesting.

Re:Modified life plan for this goal..

[liquid_schwartz]

People will work; it's in our natures.

I'm not sure I agree with your premise. I know that some people will always work. Myself and my mom for example. My two sisters probably wouldn't. My ex wife, a childhood friend, and a few others I know all avoid work as much as possible. Fun experiment, ask a lazy person do help you and see how fast they are busy that day. I am not against the citizen dividend as long as the citizens have to something other than breathe to get it. Work and pay taxes, great you qualify. If you're retired or not working a paying job then you have to do something else. I like what Maine has done with regards to people who want free stuff, where you have to volunteer a certain number of hours to qualify. Everyone I know on disability is doing a big fat nothing to help the world that helps them. This is wrong. I'm not against helping people, however money for nothing is a bad idea.

Re:Modified life plan for this goal..

[Compholio]

... Fun experiment, ask a lazy person do help you and see how fast they are busy that day. ...

I am most interested in this because I find that lazy people get in the way of real work since you make them look bad if you get anything done. It would be very interesting to have the workplace composed solely of the people that actually wanted to be there.

Re:Modified life plan for this goal..

[Daemonik]

People always point to someone else and say "they don't work" or "they're wasting their money".. it's usually never that simple. Our system of employment is very hit or miss, and isn't really capable of even determining what jobs a person would be good at or find interesting.

Fun experiment, ask a person if they are busy that day and offer them some money to help you instead of assuming they should for free, see how fast they come over. Your "lazy person" may have just figured out that busting their ass for nothing isn't the best thing they can do with their time.

Time limit too short

[phantomfive]

They will only be paying people for five years. If someone paid me for five years, I would be constantly worried about what would happen at the end of five years. I wouldn't want to re-enter the workforce with degraded skills, etc.

But if I knew I would be getting that money for the rest of my life, it very likely would affect my habits.

The UBI ignores human nature

[timholman]

The problem with a UBI is that it is (in theory) supposed to replace the multitude of payments through various government social programs with a single check or debit card given to every recipient every month, at which point the various government agencies that administer housing, food stamps, etc., can be shut down. Government bureaucracies never shutter themselves voluntarily, and it won't happen with a UBI, either.

The UBI operates under the assumption that everyone manages money in a rational manner, which is completely at odds with actual experience. Many people will take their UBI and immediately spend it on drugs, alcohol, gambling, or bling, while ignoring the monthly rent, the electric bill, buying groceries for the children, etc. Others will be cheated out of their money by criminals or even other family members. So do we let those families starve or get evicted because the heads of household are incapable of managing money for themselves or their dependents?

Of course not. Those people will need to be helped (sarcasm intended). So the various government agencies will continue to expand and spend even more money on housing, food, medical care, etc. The UBI won't even make a dent in entitlement budgets. Instead, it will become "free money" to be squandered on a thousand other things besides basic human needs.

Anyone who doesn't think it won't happen need only look at inner city schools in the U.S. In theory, every child should be getting meals at home thanks to government SNAP benefits to their parents or guardians. In practice, schools give many kids a free breakfast and lunch every school day, and even give them food bags to take home for the weekend, because Mom or Dad can't be bothered to buy food for the kids with the SNAP money. Where does the money go? No one knows or even attempts to find out. They just give the kids free food and cross their fingers.

The UBI will not change human nature. It will instead become one of the biggest entitlement boondoggles in the history of civilization.

Re:The UBI ignores human nature

[amiga3D]

Yes. We have problems now with welfare recipients using money for everything but it's intended purpose. I've donated coats to children that live in homes with cable tv and a donk with 30" rims sitting in the driveway. I feel sorry for the kids, they didn't choose their fucked up parents. I think any kind of basic living stipend should be in the form of food, clothing and housing. If they want money they should work for it.

No choice

[duckintheface]

Automation and AI are for real. I've heard about job replacement by automation my whole life. But now it is seriously happening and not just for menial labor. Professional services and complex tasks are being replaced as fast as the software can be written.

So it is useless to talk about UBI as if it is optional. The only alternative is some form of luddite resistance to automation. UBI is a much better solution. It can be funded by taxing the massive profits coming from the automation. So the only real obstacle is the mindset that resists the idea of not requiring work for survival. Get over it.

Re:No choice

[ShanghaiBill]

Automation and AI are for real. I've heard about job replacement by automation my whole life. But now it is seriously happening and not just for menial labor.

There is actually very little evidence for that. America is at full employment. Labor force participation is not back to where it was in 2007, but that is mostly due to an aging population, not lack of jobs. If you look around the world, countries with the most automation (Japan, Germany, America) have the lowest unemployment, while countries with the least automation (India, Africa, Latin America) have the highest. This is exactly the opposite of what your theory would predict.

Automation is nothing new. Automated looms destroyed the jobs of weavers two centuries ago. In the late 1800s, automation of agriculture destroyed the majority of the jobs. Plenty of people predicted gloom and decline. Yet the opposite happened: The economy prospered and living standards soared. Technology makes workers more productive, and makes good and services cheaper in terms of human labor. There is little evidence that "this time things are different".

Liquor & drug industry would profit massively

[mileshigh]

Most people need externally-imposed structure, even though they hate it. Otherwise, it's too easy to put things off until "later." Case in point: statistics inform me, dear reader, that you're probably 10+ pounds over your ideal weight. As a /. reader, you probably consider yourself to be above-average motivated, etc, but I'll bet you're (still) planning to get rid of the weight, and how's that working out? Now, if you suddenly couldn't get any kind of sex whenever you're 3+ lbs. over your ideal weight, how long would it take you to get and stay skinny?

For many people, financial need is what gives them that sense of urgency. Some may view having a "crappy" job like working as a waiter as human bondage that should be automated, but they're ignoring the fact that said job is what gets that person up in the morning and gives their life structure. Otherwise, it's just too easy to smoke a joint and think about what you'd like to do today... but probably won't get around to doing.

I grew up with a lot of kids with rich-kid allowances. Not huge amounts of money, but typically in that annual $30 - 60K range that's being proposed for a UBI. In about half the cases they've wasted their potential. In other words, they're middle-aged fuck-ups still sucking on the parental teat, and their well-meaning parents can't bring themselves to cut them off.

And guess what? They mostly spend their days pleasantly high or buzzed. Based on this (not conjecture), my experience is that giving many people an allowance gives them one less reason to stay off drink and drugs.

Re:TANSTAAFL

[pr0nbot]

I have some savings that earn approx 7% interest per year. You can argue the interest payments are the premium I'm paid for the risk of default, or perhaps that they represent the opportunity cost of spending the money, but it's pretty hard for me to understand how I'm "earning" them in any sense that relates to actual work. I could go into cryogenic suspension and the money would still roll in.

I'd wager that most rich people aren't really rich from earnings; they're rich from renting out their capital.