Facebook founder and CEO Mark Zuckerberg made his first public comment on basic income during Harvard University’s graduation ceremony on Thursday, May 25, calling it an idea “we should explore” to “make sure everyone has a cushion to try new ideas.”
Mark Zuckerberg, a former Harvard undergraduate student who dropped out to focus on his Facebook business, returned to the university on May 25, 2017, to receive his own degree (an honorary doctorate) and to deliver the commencement address for the rest of this year’s graduating class.
A prevailing theme in his speech was “giving people freedom to pursue purpose.”
Zuckerberg’s mention of basic income followed a discussion of what is needed to cultivate a culture of entrepreneurship, during which he stressed that “the greatest successes come from having the freedom to fail” and lamented having known “too many people who gave up on pursuing their dreams because they didn’t have a cushion to fall back on if they failed.”
Speaking to an audience of millennials as a fellow millennial, the 33-year-old then declared, “Now it’s time for our generation to define a new social contract.”
Describing what this new social contract might look like, Zuckerberg proposed that “we should explore ideas like universal basic income to make sure everyone has a cushion to try new ideas.” He also called for other policy reforms such as affordable childcare and portable health insurance benefits (as opposed to the employer-linked health benefits that predominate in the United States), as well as continuous lifelong education.
Admitting that these reforms would not be free, Zuckerberg stated, “People like me should pay for it, and a lot of you are going to do really well, and you should, too.”
Zuckerberg then proceeded to other topics, such as the importance of charity and building communities at both local and global levels.
Although brief, Zuckerberg’s passing mention of universal basic income is noteworthy as the famed and influential entrepreneur’s first public comment on the topic. Moreover, while his singular remark was not an outright endorsement of the policy (as some headlines and social media posts quickly began to claim), it is clear that Zuckerberg sees it as at least worthy of serious investigation.
It is also notable that the Facebook CEO did not broach basic income as a solution to automation and technological unemployment, in contrast to some other tech entrepreneurs who have backed the idea (e.g., perhaps most famously, Elon Musk). Instead, Zuckerberg’s primary motivation seems to be the need to secure individuals against risk to facilitate, e.g., entrepreneurship, innovation, and cultural production.
Zuckerberg is not the first member of Facebook’s founding team to speak positively of basic income: cofounder Chris Hughes, a founding member and co-chair of the Economic Security Project, has become one of the policy’s foremost advocates in the United States.
I just completed some simple, “back-of-the-envelope” estimates the net cost of a UBI set at about the official poverty line: $12,000 per adult and $6,000 per child with a 50% “marginal tax rate.” They are in a paper entitled, “the Cost of Basic Income: Back-of-the-Envelope Calculations.” It’s currently under peer-review at an academic journal and available in un-reviewed form on my website.
Here are some of its most important findings:
The net cost—the real cost—of a roughly poverty-level UBI is $539 billion per year, less than 16% of its often-mentioned but not-very-meaningful gross cost ($4.15 trillion), less than 25% of the cost of current U.S. entitlement spending, less than 15% of overall federal spending, and about 2.95% of Gross Domestic Product (GDP)
This $539 billion UBI would drop the official poverty rate from 13.5% to 0%, lifting 43.1 million people (including about 14.5 million children) out of poverty.
This UBI will be a net financial benefit to most families with incomes up to $55,000, making it an effective wage subsidy (or tax cut) for tens of millions of working families.
The average net beneficiary of this UBI is a family of about two people making about $27,000 per year. The family’s net benefit from the UBI would be nearly $9,000 raising their income to almost $36,000.
Lowering the marginal tax rate to 35% would spread the benefits of the UBI program to more of the middle class while increasing the cost to $901 billion.
The cost of a UBI of $20,000 per adult and $10,000 per child is $1.816 trillion per year, less than 85% of total entitlement spending, less than 45% of total federal spending, and less than 10% of GDP.
-Karl Widerquist, Begun in New Orleans, completed at Cru Coffee House, Beaufort, North Carolina, May 21, 2017
The publisher of a paper I wrote in 2015 has now given me the right to share the published version of my own article without charge. (That is, without them charging me for sharing my own work with you.)
Thomas Piketty’s recent book, Capital in the Twenty-First Century, provides a great deal of empirical support for the observation that the rate of return on capital (r) is greater than the growth rate of the economy as a whole (g); i.e. “r > g”. From this observation, Piketty derives two important insights: entrepreneurs eventually become rentiers, and except during unusual circumstances, inequality tends to rise over time. This paper views Piketty’s observation against the institutional setting that has prevailed over the period of his study and makes two additional observations. First, whether Piketty’s two insights follow from his observation depends not simply on whether r is greater than g, but on whether the difference between the two is greater than the consumption of the capital-owning group. The relative size of capitalists’ consumption and capital income is not obvious, and therefore, more evidence is needed to confirm the connection between Piketty’s observation and his insights. Second, the statement r has been greater than g is more accurate than simply r is greater than g. Whether r continues to exceed g depends crucially on the political and institutional environment in question. Economists tend to view one specific institutional setting, a version of laissez faire, as natural. But there is no natural set of property institutions, and those that have prevailed over the two centuries of Piketty’s observations are extremely favorable to capital owners. Awareness of the flexibility of potential property institutions raises many ethical questions and makes many tools available to address inequality – one of the most obvious being the taxation of rent on capital distributed as a basic income
Three communities across Ontario have been selected for the Province’s guaranteed minimum income pilot. Ontario will be rolling out a three-year study in late spring and fall 2017. Premier Kathleen Wynne made the announcement with details of the project in Hamilton on April 24th.
The stated goal of the pilot on the official website of the Ontario Government is to ”test whether a basic income can better support vulnerable workers, improve health and education outcomes for people on low incomes, and help ensure that everyone shares in Ontario’s economic growth.”
The mayors of each community – Lindsay, Thunder Bay, and Brantford/Hamilton/Brant County, expressed hopeful to positive reactions at the announcement that their cities had been chosen to pilot in the project.
Kawartha Lakes Mayor Andy Letham, which is home to the community of Lindsay, describes precarious work as a cause for concern in his community and admits that the status quo of society isn’t functioning well. “The cost of poverty on people’s mental health is real,” said Letham. “So how to we break these cycles?” Lindsay will host 2,000 of the total 4,000 participants.
Thunder Bay Mayor Keith Hobbs, a 34-year veteran of the local police force, described his experience with some members of the community: “I saw the same people all the time, like a revolving door.” Hobbs expressed excitement at the possibility of this project positively impacting the lives of those he had consistently interacted with. Workers and citizens of Thunder Bay have had to reinvent themselves as the region transitioned from industries like pulp and paper to health research institutes, law, and genomics.
Pulp and Paper Mills in Thunder Bay, Ontario
Brantford Mayor Chris Friel expressed excitement to take part in a project that will reduce poverty and improve health and educational outcomes. Ron Eddy, the Mayor of Brant Country, stated that he looks forward to observing the results of the project. “The only way you’ll know the outcome is to try it out. So, let’s see what happens,” Mayor Eddy said.
Details on the Pilot
The basic income pilot will randomly select 4,000 individuals between ages 18 to 64 that meet certain criteria, and provide them with a minimum income despite their employment status. The plan will target populations who are in precarious work positions, those already on social assistance, and the homeless. The program will, however, target mostly the “working poor” according to Ontario’s Minister of Community and Social Services Helena Jaczek. Those receiving a minimum income will be compared to a control group, which will not receive payments. The project will look for outcomes using metrics like food security, health and health care usage, education and training, and labor market participation among others.
Recipients of the guaranteed minimum income will receive:
$16,989 per year for a single person (75 percent of the Canadian poverty line), less 50 percent of the recipient’s earnings from work;
$24,027 for a couple, less 50 percent of their earnings from work;
An additional $6,000 for those with disabilities.
In addition to this, recipients will continue to receive other provincial and child benefit payments.
With this version of a guaranteed minimum income, a person earning $12,000 a year would still receive a basic income of $10,989 (subtract $6,000, or half their earnings, from the base amount of $16,989) and therefore receive a total of $22,989. A recipient’s net income will still increase, with the minimum income still active, as earnings from work increase up until around a wage of $34,000, where the payments would disappear. The total cost of the project is expected at $50 million per year.
Hugh Segal, a former senator who was consulted for the project, noted in Manitoba’s “Mincome” experiment in the 1970’s that the community saw improvements in health with no drop in employment, and that the potential exists for the government to save money if it replaced the traditional social assistance programs like Ontario Works with a basic income. The Provincial government is also in the early stages of planning a fourth basic income pilot for the First Nations community.
The largest trade union in The Netherlands with over one million members, FNV (Federatie Nederlandse Vakbeweging / Federation of Dutch Trade Unions), held a conference on May 10-11 at Sport Business Centre Papendal to discuss its policy plan for the years 2017-2021.
The policy is based on the experiences, opinions and observations of the members, non-members and experts of the organization. During a comprehensive consultation phase, each member had the opportunity to identify the most important topics which should be included in FNV’s conceptual policy plan for 2017-2021. A preliminary summary of the most important subjects was published in a separate draft resolution that was discussed by the Congress of the FNV on May 10. Despite several attempts to amend the draft resolution, the board of the FNV turned down all the proposals that went beyond the statement that “The FNV will investigate a basic income in the coming period and will start a discussion about it.”
However, on the 11th of May, during debates with members of FNV’s parliament and especially with the sector beneficiaries therein, this announcement was replaced by a more powerful and far-reaching text stating that
The basic income is an interesting option, especially in the way it is formulated by FNV Sector Beneficiaries. The FNV therefore proposes to start investigations and experiments in a practice-oriented manner based on the recommendations of FNV Sector Beneficiaries. As a result of this, FNV will decide whether a basic income can become one of the instruments that can equally share work, income and capital.
A ‘basic income’ as formulated by FNV Sector Beneficiaries is
an amount that is comparable to the Dutch state retirement pension (AOW) in which a couple receives less than a single person;
for anyone who has legally lived in The Netherlands during 18 years;
income from paid employment will not be set off with the basic income;
current allowances such as rent and care benefits continue to exist;
unemployment and disability insurance also remains for that part of the income that comes from paid work.
“Due to the hard work and non-stop pressure of the section of welfare recipients among FNV’s members, they now have negotiated a much better outlook for the introduction of a real basic income in the long run,” says Johan Horeman, “A huge step is set in the right direction.”
The adoption of the amendment was made possible by the driving forces Willem Banning and Harrie Ortmans, board members of FNV Sector Beneficiaries and Johan Horeman, advisor of the board.
Thanks to Ad Planken and Dave Clegg for reviewing this article.
The 2020 BIEN Congress was to be held in Brisbane in Australia from the 28th to the 30th September 2020. Due to the coronavirus outbreak, the event has been cancelled. BIEN’s Executive Committee and the Scottish and Australian congress Local Organising Committees have agreed the following statement: ‘The Scottish and Australian Congress Local Organisation Committees have agreed that the current plan is to hold the 2021 BIEN congress in Scotland and the 2022 BIEN congress in Australia.’
A Basic Income is a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement. Read more
A series of conversations from around the world that explore the relationship between the Covid-19 pandemic and Basic Income. Read more