UBI, or Something Better?

What’s odd about this discussion on Universal Basic Income below is that nobody successful in Silicon Valley participates in a UBI scheme, nor would they. They rely on risk-taking, equity, and reward. Not sure why they don’t advocate this for everybody – after all, because of the way risk is assigned to asset ownership, labor ends up taking all kinds of risk, yet almost never participates in the rewards to that risk. Instead they get a one-time bonus or profit-sharing.

But Zuckerberg would never accept those terms, either now or before he made his first dollar. It looks to me that Silicon valley tech supports redistribution in order to make their outsized gains from network effects more politically palatable.

Unfortunately, this critic of Zuckerberg and Silicon Valley in general wants to double down on failed tax and redistribution schemes instead of empowering people to participate in the risks and rewards of capitalist entrepreneurial success.

“He (or She) who is without capital in a capitalist society is little more than a wage slave and a captive consumer.” 

Another truism about the future: In a world run by robots, he who owns and controls the robots is king. Make sure you own your robot!

Original article here.

What Mark Zuckerberg Gets Wrong About UBI

New Republic, July 7, 2017

By Clio Chang

It’s no secret that tech bros love universal basic income. Sam Altman of Y Combinator is funding a UBI pilot program in Oakland, California, in part because he was inspired by Star Trek. Tesla’s Elon Musk supports the policy because he realizes that the aggressive automation caused by the tech industry will make UBI “necessary.” This week, as part of his “I’m-not-running-for-president” tour around the country, Mark Zuckerberg visited Homer, Alaska, which resulted in him writing a Facebook post lauding the merits of the state’s Permanent Fund as a model for a national form of basic income.

UBI, a concept that dates back centuries, is the idea that every person should receive some amount of money so that no one dips beneath a basic standard of living. For those on the left, it’s seen as an alternative to our country’s woefully limited cash welfare system. For libertarians, a basic income is lauded as a slimmer, less intrusive way to deliver government benefits. It is the rare utopian idea that people of different political stripes can agree on—Zuckerberg himself made sure to note the “bipartisan” appeal of the policy in his post.

But Zuckerberg reveals exactly why the left should be alarmed that Silicon Valley is taking the lead on this issue.

First, the idea that UBI has bipartisan appeal is disingenuous. The left would have a policy that redistributes wealth by funding UBI through a more progressive tax scheme or the diverting of capital income. But libertarians like Charles Murray argue for a UBI that completely scraps our existing welfare state, including programs like Medicare, Medicaid, and housing subsidies. This would be extremely regressive, since money currently directed towards the poor would instead be spread out for a basic income for all. And certain benefits like health insurance can’t effectively be replaced with cash.

Second, Zuckerberg asserts that Alaska’s Permanent Fund—which uses the state’s oil resources to pay a dividend to each Alaskan and is seen as one of the few examples of an actual UBI-like policy—is advantageous because it “comes from conservative principles of smaller government, rather than progressive principles of a larger safety net.” But a UBI policy can only reflect small government principles if one envisions it eating into the country’s existing welfare state, rather than coming on top of it. In this respect, Zuckerberg’s advocacy of UBI “bipartisanship” starts to look more like a veiled libertarian agenda.

This attitude echoes other pro-UBI tech lords like Altman, who sees basic income as providing a “floor” but not a ceiling. In his ideal scheme, no one will be very poor, but people like Altman will still be free to get “as rich as they fucking want.” The tech vision of the world is one where it can wash its hands of the rising joblessness it will generate through automation, but where those at the top can still wallow in extreme wealth. As Altman told Business Insider, “We need to be ready for a world with trillionaires in it, and that’s always going to feel deeply unfair. It feels unfair to me. But to drive society forward, you’ve got to let that happen.”

This is deeply telling of the tech UBI mentality: driving society forward doesn’t mean reducing inequality, but rather fostering more entrepreneurship. The former is viewed as unnecessary and the latter as an inherent good.

Zuckerberg also compares Alaska’s Permanent Fund to running a business—a very specific one:

Seeing how Alaska put this dividend in place reminded me of a lesson I learned early at Facebook: organizations think profoundly differently when they’re profitable than when they’re in debt. When you’re losing money, your mentality is largely about survival. But when you’re profitable, you’re confident about your future and you look for opportunities to invest and grow further. Alaska’s economy has historically created this winning mentality, which has led to this basic income. That may be a lesson for the rest of the country as well.

The idea that a “winning mentality” is what is going to lead to a basic income in the United States reveals how little Zuckerberg understands about politics. This is a pervasive ideology among tech leaders, who believe the lessons that they have gleaned from their own industry are applicable to all of the country’s problems. But remember the last time a disrupter said he was going to step into the political arena and run our country like a business?

For moguls like Zuckerberg, there is never any deep consideration of, say, the fact that racism, sexism, and classism are deeply intertwined with our country’s policies and are some of the biggest obstacles to implementing a highly redistributive policy like a UBI. Nor is there any attempt to consult with lifelong organizers and activists on the issue.

At the end of his post, Zuckerberg states that the “most effective safety net programs create an incentive or need to work rather than just giving a handout.” This echoes the “personal responsibility” rhetoric that drove workfare policies in the 1990s, which ended up kicking millions of people off of welfare rolls, leaving them in extreme poverty. The line also directly undermines the push for a UBI, which is quite literally a handout that can help liberate people from the “need to work.”

It would appear that Silicon Valley’s support for a basic income comes from self-interest. As Jathan Sadowski writes in the Guardian, “the trouble comes when UBI is used as a way of merely making techno-capitalism more tolerable for people, when it is administered like a painkiller that numbs the pain and masks the symptoms of economic injustice without addressing the root causes of exploitation and inequality.”

Tech moguls may seem like tempting allies for UBI advocates, but their vision of an ideal social safety net does not look anything like the left’s. If it did, they wouldn’t be pushing just for a basic income, but also for things like universal health care, free public education (not just for engineers!), and strong labor unions. For Silicon Valley, UBI is a sleek technological means to a very different end.

How to Get the Rich to Share the Marbles

This is a NYT article that presents some interesting findings from behavioral studies of cooperation and conflict. We can see from the results that our concepts of fairness are related to our perception of effort and chance. If we expend effort to receive an award, fairness dictates that we keep that reward. Also, if fate happens to smile upon us, there is no obligation to share the luck – sharing is purely by choice. This has many implications for the current political discussion over “fairness” in a free society. It is doubly significant given the technologically-driven trend towards “winner-take-all” in the economy. The policy implications are that we eschew envy and seek to create a balanced playing field. Our rules and regulations should be targeted to prevent cheating of the “heads we win, tails you lose” variety, and that especially applies in politics. The Tea Party and OWS movements have been incited by the perception of widespread cheating among elites in control of our institutions. But if we don’t get the policy adjustments correct, these same elites are clever enough to use envy to divide and conquer. We can observe much of this today in the presidential campaigns.

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By JONATHAN HAIDT

Suppose scientists discovered a clump of neurons in the brain that, when stimulated, turned people into egalitarians. This would be good news for Democratic strategists and speechwriters, who could now get to work framing arguments about wealth and taxation in ways that might activate the relevant section of cerebral cortex.

This “share-the-spoils” button has been discovered, in a sense, but it may turn out to be harder to press than Democrats might think.

Pretend you’re a three-year-old, exploring an exciting new room full of toys. You and another child come up to a large machine that has some marbles inside, which you can see.  There’s a rope running through the machine and the two ends of the rope hang out of the front, five feet apart. If you or your partner pulls on the rope alone, you just get more rope. But if you both pull at the same time, the rope dislodges some marbles, which you each get to keep. The marbles roll down a chute, and then they divide: one rolls into the cup in front of you, three roll into the cup in front of your partner.

This is the scenario created by developmental psychologists Michael Tomasello and Katharina Hamann at the Max Planck Institute in Leipzig, Germany. In this situation, where both kids have to pull for anyone to get marbles, the children equalize the wealth about 75% of the time, with hardly any conflict. Either the “rich” kid hands over one marble spontaneously or else the “poor” kid asks for one and his request is immediately granted.

But an experiment must have more than one condition, and the experimenters ran two other versions of the study to isolate the active ingredient. What had led to such high rates of sharing, given that three-year-olds are often quite reluctant to share new treasures? Children who took part in the second condition found that the marbles were already waiting for them in the cups when they first walked up to the machine. No work required.

In this condition, it’s finders-keepers. If you have the bad luck to place yourself  in front of the cup with one marble, then your partner is very unlikely to offer you one, you’re unlikely to ask, and if you do ask, you’re likely to be rebuffed. Only about 5% of the time did any marbles change hands.

But here’s the most amazing condition — a slight variation that reveals a deep truth. Things start off just as in the first condition: you and your partner see two ropes hanging out of the machine. But as you start tugging it becomes clear that they are two separate ropes. You pull yours, and one marble rolls out into your cup. Your partner pulls the other rope, and is rewarded with three marbles. What happens next?

For the most part, it’s pullers-keepers. Even though you and your partner each did the same work (rope pulling) at more or less the same time, you both know that you didn’t really collaborate to produce the wealth. Only about 30% of the time did the kids work out an equal split. In other words, the “share-the-spoils” button is not pressed by the mere existence of inequality. It is pressed when two or more people collaborated to produce a gain. Once the button is pressed in both brains, both parties willingly and effortlessly share.

Tomasello has found that chimpanzees doing tasks similar to this one do not share the spoils, in any of the conditions. They just grab what they can, regardless of who did what. They don’t seem to keep track of who was on the team. Tomasello believes that the “share-the-spoils” response emerged at some point in the last half-million years, as humans began to forage and hunt cooperatively. Those who had the response could develop stable, ongoing partnerships. They worked together in small teams, which accomplished far more than individuals could on their own.

So now let’s look at a key line in President Obama’s State of the Union address: “we can restore an economy where everyone gets a fair shot, and everyone does their fair share, and everyone plays by the same set of rules.” The president is making three arguments about fairness in this one sentence, but do any of them press the “share-the-spoils” button? If you think that the economy is like a giant marble dispenser with a single rope, then you’d probably agree that if everyone does their “fair share” and pulls on the rope as hard as they can, then everyone is entitled to a “fair share” in the nation’s wealth. But do Americans perceive the economy as a giant collaborative project?

My parents were teenagers in New York City during the Second World War. The home front really was a vast and sustained communal pull. My mother remembers saving up nickels and dimes to buy a war bond. She lingered by her aunts and uncles, waiting for them to finish packs of cigarettes, so that she could grab the foil wrappers for the aluminum recycling campaign.

My parents were part of the generation that went through the depression, a world war, and then the cold war together. This generation accepted federal controls on wages during the war as being necessary for the common good. In the years after the war, the combination of high taxes on top earners, social norms against exorbitant pay, and an increasingly sturdy safety net brought income inequality down from a peak in 1929 to a long valley from the 1950s through the 1970s. It’s a period known as “the great compression.”

The compression went into reverse in the 1980s, and since then, inequality has risen to levels approaching those of 1929. Democrats have long sounded the alarm about rising inequality, but for decades they got little traction among the electorate. It’s only in the last few months, since Occupy Wall Street popularized the concept of the 1 percent, and since we all learned that Mitt Romney pays less than 14% in federal taxes, that the nation’s attention has been focused on the earnings of the super-rich. Will the Democrats’ new emphasis on fairness be enough to rally the nation to raise the top tax rates? Will Obama’s new progressivism press the right moral buttons?

America is in deep fiscal trouble, and things are going to get far worse when the baby boomers retire. Normally, when a nation faces a threat to its very survival, a leader can press the shared-sacrifice button. Churchill offered Britons nothing but “blood, toil, tears and sweat.” John F. Kennedy asked us all to “bear the burden of a long twilight struggle” against communism. These were grand national projects, and everyone was asked to pitch in.

Unfortunately, President Obama promised he would not raise taxes on anyone but the rich. He and other Democrats have also vowed to “protect seniors” from cuts, even though seniors receive the vast majority of entitlement dollars. The president is therefore in the unenviable position of arguing that we’re in big trouble and so a small percentage of people will have to give more, but most people will be protected from sacrifice. This appeal misses the shared-sacrifice button completely. It also fails to push the share-the-spoils button. When people feel that they’re all pulling on different ropes, they don’t feel entitled to a share of other people’s wealth, even when that wealth was acquired by luck.

If the Democrats really want to get moral psychology working for them, I suggest that they focus less on distributive fairness — which is about whether everyone got what they deserved — and more on procedural fairness—which is about whether honest, open and impartial procedures were used to decide who got what. If there’s a problem with the ultra-rich, it’s not that they have too much wealth, it’s that they bought laws that made it easy for them to gain and keep so much more wealth in recent decades.

Sarah Palin gave a speech last September lambasting “crony capitalism,” which she defined as “the collusion of big government and big business and big finance to the detriment of all the rest – to the little guys.” I think that she was on to something and that she was right to include big government along with big business and big finance. The problem isn’t that some kids have many more marbles than others. The problem is that some kids are in cahoots with the experimenters. They get to rig the marble machine before the rest of us have a chance to play with it.

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