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Tech's favorite policy, universal basic income, is about to get its first big test

Tech's favorite policy, universal basic income, is about to get its first big test


6,000 Kenyans will get cash grants for at least a decade

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Over the last two years Silicon Valley has fallen in love with a striking economic theory. As former Facebook executive Sam Lessin wrote recently, "There’s been a dinner-time revival of the old conversation about the inevitable need for a guaranteed basic income in the United States." It’s ironic that in the heart of winner-take-all venture capital culture, there is a growing call for a massive redistribution of wealth, but if you believe that artificial intelligence and robots will improve dramatically over the next decade, it makes sense to start planning for a society that has little need for human labor.

The idea of universal basic income (UBI) has been around for a while, and numerous studies have found that giving cash directly to the poor can be more effective than traditional welfare. But so far no one has actually implemented a program that meets all the requirements of full-fledged UBI. They either didn’t cover everyone in a community, didn’t give enough to meet basic needs, or didn’t last very long. That changed last week, with the announcement of the first full-fledged test of universal basic income by an NGO called GiveDirectly.

The New York City-based charity will be giving 6,000 people in randomly selected Kenyan villages a steady flow of cash for the next 10 years. The amount will be similar to past GiveDirectly projects, between $255 and $400 per person, per year. That’s based on the average annual income and meant to cover basic needs like food, shelter, and healthcare. Unlike its earlier projects, these grants are universal, meaning every member of the local population will get the same amount, regardless of their employment status or financial health.

universal basic income

"When we started in 2009, people said what you might expect ‘they’ll waste it on alcohol, they’ll stop working’ and that just turns out not to be true. In reality, cash transfers are more effective than many things that we do," says co-founder Michael Faye. GiveDirectly has been growing rapidly, raising over $100 million since launching, and $52 million last year alone.

Faye acknowledges that the tech sector has been a key constituency behind basic income's recent surge in momentum, and that many donors are "tech people who think robots are going to put people out of jobs." And there are plenty of things about GiveDirectly that tie it to the world of tech. It’s backed by and Good Ventures. Albert Wenger of Union Square Ventures will be involved in the work on basic income. It’s focused its operations on Kenya and a few other African nations because of the combination of extreme poverty and availability of electronic payment systems like M-PESA. It has also incorporated technology across its operations, including the identification of poor households and fraud detection.

But Faye cautions against pigeonholing the concept as being a favorite only among the tech set. "Basic income may have supporters in the tech world, but its historic appeal is far broader. There aren’t many ideas that can claim support from both Martin Luther King Jr. and Milton Friedman."

Regardless, GiveDirectly’s project will provide the tech sector, and Silicon Valley dinner parties, with something that’s been missing from the recent discussion around universal basic income: hard data. "I’ve been intrigued by the idea for a while, and although there’s been a lot of discussion, there’s fairly little data about how it would work," wrote Sam Altman, president of the iconic startup incubator, Y Combinator. "I think it’s good to start studying this early. I’m fairly confident that at some point in the future, as technology continues to eliminate traditional jobs and massive new wealth gets created, we’re going to see some version of this at a national scale."

Do people sit around and play video games?

Y Combinator is planning to fund its own research into universal basic income, but is well behind GiveDirectly in terms of putting anything into action. Altman’s vision of basic income is also a bit more existential. "It would be good to answer some of the theoretical questions now. Do people sit around and play video games, or do they create new things? Are people happy and fulfilled?" he wrote. "Do people, without the fear of not being able to eat, accomplish far more and benefit society far more? And do recipients, on the whole, create more economic value than they receive?"

Faye hopes the impact of GiveDirectly’s program will be more immediate, both for the families receiving money and for the ongoing policy discussions. The conversations happening around universal basic income in the tech world are helping to drive awareness of the idea, but are distinct from the immediate need for more effective welfare programs around the world. As Faye says, "The Pakistani government does a billion dollars of cash transfers a year and i can tell you for a fact that its not motivated by the fear of AI."