Barbara Ridpath
Welcome to Chatham House. I’m Barbara Ridpath. I’m a member of the Council of Chatham House and I am absolutely delighted to be here in conversation with Chris Hughes, as you will know because you’re here, who is author of Fair Shot and who has used his own good fortune to think about how we can give everyone a fair shot. So, welcome to Chris, welcome to all of you. What we’re going to do is, we’re going to be in conversation, for the first bit, on a range of topics, but funnily enough, mostly around his book, and then we will open it up to a conversation with you. So, while we normally ask for questions, in this case, I’d actually like some ideas as well, so it’s not just about questions and answers.
I need to say that because we are being videoed or webcast, this is on the record and it’s not under the Chatham House Rule, which would be difficult with an event like this. You can send comments via Twitter using #CHevents, and I am reminded to ask you to put your phones on silent mode.
Alright, so that’s where we are for the start. Chris has been here since Monday morning on publicity tour for his book and I’m very curious, given what you’ve done and where you’re speaking, what you’ve had as a reaction. We’ll get to the basic premise in a moment but, having done some work on this myself, let’s be clear you’re pushing a guaranteed income and not a universal basic income, there’s a little bit of a difference between that. But, given that it’s a US concept or your concept is to apply it in the US, why a UK tour?
Chris Hughes
Well, first off, thank you, Barbara, for chairing today’s event. Thanks to the organisers at Chatham House. I’ve actually been here since Sunday evening and have yet to see the sun, but thanks so much for rolling out the London red carpet. But, it’s a real pleasure to be here today and to have the chance to talk about this issue, the book, I’m sure everything going on with Facebook, all of these different things that are happening in the world today, all of which are very important.
I’m here in the UK because, in many ways, this is the frontier of the conversation around economic inequality and specifically, the role of cash. Cash with no strings attached, whether it’s through a universal basic income, a guaranteed income, a sovereign wealth fund, all of which are very much alive and well in the political and civil discourse here and are increasingly so in the US. But if you zoom out and just, sort of, take stock of where the issue is, I think the fact that the – it’s really the UK and Canada that, I think, where the leaders of the countries are really grappling with this the most. Obviously, there are trials that are in development and to be run soon.
Up in Scotland there is a very large trial already underway in Ontario, and I think the reason for that is twofold. First, the inequality that we are experiencing in the United States is equally as problematic if not extreme here in the UK and in other places like in Canada. I think the US still takes the cake, unfortunately, but it’s a problem internationally. And I think secondly, the reason is because this idea goes back quite a long way in the political discourse of the UK and the United States, you know, the actual original – not only did Thomas Paine and others write about it centuries ago, but the interest in the past 100 years comes from a woman, a female Economist here in the UK writing in the 1930s and 1940s, Lady Juliet Lythcott – no, Rhys-Williams was her double last name, and then she – after she created the idea, Milton Friedman picked it up and it exploded in the United States. Richard Nixon became a fan and then, we can go through the history of it since. So, the opportunity to be able to be here to talk about the book and to really engage in dialogue, hopefully, we do get some good dialogue this afternoon, is why I’m here, and it’s an honour to have the opportunity.
Barbara Ridpath
So, do you think the fluency on the subject is better over here because…?
Chris Hughes
No question.
Barbara Ridpath
Okay.
Chris Hughes
Yeah, I mean, no question. We’re getting there, in the US, but there isn’t quite the same immediate – I think particularly on the part of political leaders, there are more questions about, well, how can we get this done? This is a big idea, but what’s policy really going to look like in the US? And that’s one of the reasons that I wrote the book and talk about a part of our tax code, which I think should be the framework to do it. But there’s a lot more questions about is this really feasible in the US and obviously, those questions are alive and well here too, but there are political leaders, who are very much out there and saying, “We can do this. It is possible. It is affordable. It’s complex,” but that lends a, kind of, urgency to the conversation that’s inspiring to people, I think.
Barbara Ridpath
So, I’m going to test the audience. I think it’s, kind of, useful, without making this a debate, where we’re voting before, after exactly. First of all, how many people in the audience, I presume it’s a high number, are fluent with the concept of universal basic income or guaranteed income? So, pretty good. Now, the next and obvious question is, how many of you think it’s a good idea? And I’ll tell you why I’m going to say that. Yeah, what do you think? Maybe a third? Quarter, a third?
Chris Hughes
I would say we got two-thirds for familiarity and half of those with support.
Barbara Ridpath
Yeah, so about two years ago I did an event on this subject at the LSE and we started talking about UBI and it was hysterical because the panellists who were all, sort of, my age were all dead against it. Dead against it. So, I said, “Well, let’s look at the audience,” and everybody under 30 put their hand up and everybody over 30 did not. Now, that was not true here today, but that’s why I ask, because there’s a demographic difference, I think also, in the UK of who thinks this is a good idea.
Chris Hughes
I think that’s true too in the US and I think it’s important – well, I think it’s true for two reasons. The first is the moral case. I think that there is something particularly that young people in the US, so people in their 20s, 30s, millennials if you will, feel that no-one should live in poverty in the richest countries, in the richest moment in history, full stop. We have a moral obligation to take care of one another and ensure that everybody can escape poverty, and what’s more, we can use cash to provide the economic opportunity for people to climb the economic ladder. So, I think that, kind of, intense moral commitment to the idea – it’s not to say that lots of people of different ages and backgrounds don’t share an affinity for it, but there is a sense of, I think, moral responsibility that is particularly felt by folks who are younger.
The second reason I think is that I believe that we are living in a time when the neo-liberal economic and world order is coming apart. I think that we see this not just on conversations around the basic income or the guaranteed income, but I mean, look at what’s going on in the United States right now, we have a – you know, a Republican President who is going out of his way to impose tariffs on steel, and his own party is, sort of – you know, they’re saying some things. They’re saying, “Well, this isn’t a great idea,” but, you know, are still very much lining up in support. So, I think on the right and on the left there’s a sense that we have almost fetishized our obsession with individuals and market and that, you know, given that median incomes have not risen in the United States in 40 years.
Literally, we just keep cutting the tax rates on corporations and on rich people, and then you look around and median incomes are up by, I think, 3/4% over the course of 40 years. There’s a real reckoning with the fact that that just isn’t creating the, kind of, economy and the, kind of, society and I think the, kind of, democracy that we want to live in. And I think that’s very intuitively and viscerally felt by folks in their 20s and 30s, because many of them came of age in the midst of the great recession and are still struggling with how to find economic opportunity in the workforce, record mountains of student debt, a healthcare system that isn’t working for them, and we could go on at length. But that opens up the space for thinking about big new ‘crazy ideas’.
Barbara Ridpath
Alright, so that allows me to do the one poke I have in this whole thing, which is…
Chris Hughes
Only one?
Barbara Ridpath
…why not sort out the causes of this inequality, rather than paper it over with a guaranteed income for everybody?
Chris Hughes
Well, we should. I mean, there’s no – this is – the guaranteed income is not a silver bullet, and I think it’s really important. Sometimes, people who talk about – particularly some of the folks who talk about a UBI in the context of the rise of the robots, almost talk about it as a, kind of, religion. You know, that this – we can just implement this, and all of our problems are going to go away. So, I’m not part of that school. I’m not convinced that technological automation is going to destroy jobs wholesale. Massive dislocation, yes, wholesale destruction, I’m sceptical of. Nor am I here saying that a guaranteed income is going to solve healthcare, education, structural issues in the economy.
I am making the case that I think we often overlook the power of cash because it challenges core assumptions about trust that have developed over the past 40 plus 50 years, in our study, arguably even longer, you could go back centuries if you’re really trying to chart the genealogy and specifically, you know, the idea that we don’t like cash because if you give a poor person money, they’re just going to waste it, right? Like, that’s the idea. They’ll spend it on cigarettes or spend it on booze. They’re just going to hang out. They’re going to drop out of the workforce, I mean, it is – the levels of cynicism on this are very deep. And now, when you look at the data, when you go to Social Scientists or even Economists or people who’ve looked at this, sort of, stuff, you’ve got 100s of studies internationally, in the developing world, in the developed world and in highly developed contexts like here in the UK and in the United States, which show that that is just not true.
When you provide people with cash, they spend it on themselves, their families, their communities, they work just as much as they did before, if not, in some cases, more, and their health outcomes improve, their education outcomes improve, there is a lot on this in the book. So, you don’t have to take my word for it, but the data is there that exposes our trust deficit for what it is. And so, the – this is a little bit of a circuitous way to get to your question, but I guess what I’m getting is, not that we shouldn’t also think about the rise of monopoly powers and a more regulated, kind of, approach to our economy, that we shouldn’t also think about international trade, or the financialization of the entire – all of those, kind of, big structural questions…
Barbara Ridpath
Or the SEC issue you raise in your book, which I thought was really interesting.
Chris Hughes
Absolutely, all these kinds of big structural questions we need to have. Let’s just not overlook the fact that we could eradicate poverty today. And if we decide that – with cash, and if we decide that we’re not doing that then we are effectively making the decision that people should live in poverty and that economic opportunity is not – isn’t the most urgent thing, and we can use cash to provide that opportunity. Not as a silver bullet, but as a key and powerful tool in the toolbox.
Barbara Ridpath
There was – and I left my copy upstairs, but there are lots here, there was a wonderful quote in the book, from Martin Luther King Junior, and it’s the 50th anniversary of his funeral yesterday, so it’s a pretty important day around him anyway, but it talks about the importance of stability and security in people’s lives, and the difference that makes to be able to know where your next meal is coming from or where your next money’s coming from. And again, to use the UK example, a couple of years ago with the Bank of England thing, someone from Citizens UK said that “Over half the adult population does not have £500 for an emergency.” Wasn’t it? £500 if they lose their job or have a shortage or a relative who falls, you know, needs help, and so, could you talk a little bit about why that stability has been perceived as important, in the work you’ve been doing around this topic?
Chris Hughes
Well, I think it’s – we talk a lot about jobs in our politics, specifically because a job used to be synonymous with stability. If you had a job, you had probably a full-time – in the US, where our social safety net is so much more tattered and is so much more piecemeal, it’s even worse because, you know, historically, we’ve relied on a job for benefits, for retirement, for all kinds of things. It is different here, but I think many of the same principles apply. A job used to mean stability. It used to mean 40 hours a week, healthcare, vacation days, sick leave, a retirement savings account, that is the, kind of, job that my parents had. My mom was a public-school Teacher, dad was a Paper Salesman, you know, we lived in a small town in North Carolina, they were able to save for their retirement, provide for us, I mean, we didn’t – we weren’t living the high-life, but we were able to make ends meet. Now, all of the job – 94% of the jobs that we’ve created in the US, in the past ten years, have been part-time, contract, temporary or seasonal. Effectively – so, we talk a lot about the gig economy, yes, that is the Uber driver who brought you – who might have brought you here today or you’ll interact with. It’s also the Starbucks worker who one week gets 20 hours, the next week might get five…
Barbara Ridpath
But even the Starbucks worker gets healthcare.
Chris Hughes
…the next week might get 40. The Starbucks worker gets healthcare, this is true, but the point is, is that jobs are fundamentally unstable now. They don’t provide that security and so, as a result, workers not only are we seeing, you know, very much the depletion of savings, while the cost of living is going up, there’s the psychological impact of constantly living on the brink. And when you don’t know how much income you have, how are you supposed to do basic budget – how much rent can you afford? If you don’t have job security, if you don’t know how much your income might be next month – there are months when you do well and there are likely, months when you don’t, and many of these people don’t show up in poling statistics at all because of the lumpiness, so they might show up one year, but the next year they’ll be technically out.
So, the problem that I think we need to solve is not only the income inequality, which is at record levels, but the income instability that the gig economy and globalisation and our current markets have created with a foundation. So, specifically, something on the order of magnitude of $500, £350, every month for everybody who makes the median wage arm down, as really a heartbeat of stability in the background. That’s not enough money – I mean, whether it’s – you know, six grand, $6,000 or £4,000, it’s clear that it’s not enough money to live on. It’s meant to be a, kind of, supplement, a foundation, an income, that when combined with other benefits and wages, provides some semblance of stability and economic opportunity. And – then, in the long-term, if it is true that jobs go away wholesale, as the Onmask and others sometimes claim, then we have a down payment for, kind of, more – for the, kind of, universal basic income idea that is usually talked about as more money and going to everybody, if that turns out to be as urgently needed as some – I think it might be.
Barbara Ridpath
It’s probably worth mentioning, and I don’t know how many people who did economics are in the room, but there are a lot of rather famous Economists that are in favour of this idea. I mean, they include Tobin, they include Milton Friedman and I think Keynes was even a fan. And yet, one of the things that I’ve been struggling with, as I’ve been working my way through this is, if you have a guaranteed income, the nice bit is maybe people won’t do mick jobs anymore. You know, maybe they won’t be willing to do the, kind of, menial work that they’re paid here hopefully, in London, a living wage for, but a lot of them aren’t even paid that, or does it mean it’ll be worse because all of those, sort of, unpaid internships in Parliament, they can now say, “Well, you don’t need to be paid ‘cause you’re getting your basic income, so I can – I don’t have to pay you at all for cool jobs. If you want to be a Vogue intern, there’s not a chance I’m even paying your lunch anymore,” you know? Or, is it just inflationary because suddenly, you’ve just bumped everything up by $12,000 a year? And I don’t know – I honestly don’t know the answer to that. Have you done any…?
Chris Hughes
We have.
Barbara Ridpath
Has anybody been talking about that?
Chris Hughes
Yes. Studies have been – so, I think the first question is more complex in some ways than the second. The consensus, in the economics community is that unless this is done through issuing debt, the concerns around inflation are pretty muted. There have been some studies…
Barbara Ridpath
‘Cause you’re taking it away from somewhere else.
Chris Hughes
Exactly. It keeps the money supply constant and there have been some studies that have looked at this and have shown very little inflationary impact. There are people who want to do quantitative easing for the people and I think in that context, particularly in Europe, there are groups here who are very – who are organising for that idea, and there I think the inflationary concern is a little more urgently – it requires a more urgent attention to address it. But the other thing too, when you talk to a lot of Economists about inflation concerns of a guaranteed income and most of them say, a) we could use some more inflation or challenge over the past decade, it’s not been that, and b) the overall economic growth that most of the models suggest, from the spurring of consumer spending, is likely to outweigh any of the inflationary concerns.
On the first question around, you know, whether some of the potential externalities of some of the issues with wage. I think we need higher wages in general, living wage, and higher minimum wages in the United States. However, I also think that those are not sufficient to creating this stability, a) because there are a lot of people who aren’t covered by at least – I’m more familiar with the US context on this point, but in the US, there are a lot of people who are not covered by minimum wage laws. An Uber Driver as a perfect example, an Etsy seller, many of these people in the gig economy that’s exploding, they’re not covered.
And then secondly, you – for many of the jobs that are covered they are increasingly still unstable, particularly in retail, which is one of the – and counterintuitively perhaps, which is one of the biggest sectors of job growth. And so, yes, those folks should be paid more, but if they still don’t know how many hours they’re going to get necessarily next week, or it doesn’t come with any other benefits, then you don’t achieve the goal of having a job really mean that, kind of, stability. So, I think there – these are really important questions that need to be ironed out.
Another thing I would put in this category is housing policy, you know, how do you make sure that landowners and capital owners just don’t take advantage of all the cash that people get? And I think when the time comes, when we’re putting a guaranteed income into public policy, we need to think through specifically, all of these questions at the exact same moment and in the same piece of legislation. And I’m sure there will be yet more externalities that we’re not even aware of, but I don’t think that while those are very much causes of legitimate concern, I don’t think any of those on its own is a reason not to push forward with the idea.
Barbara Ridpath
Okay, this one might be a stretch, but when I was doing a little bit of prep for this, one of the earliest forms or proponents of basic income was actually to recognise that no-one had a right to own the land and if we were going to give ownership of the land to somebody, then everyone should get a dividend for the benefits that that land produced, whether they owned it or not, and that’s where it came from. So, in light of what’s been going on, on the other side of the Atlantic and here with Cambridge Analytica and what’s going on today in Congress, when your old friend is testifying, is there something to be done around a digital dividend or a digital payment that says, as a result of these companies profiting from the use of me as a customer, that you would think about as a way of conceiving either the funding of this or the solution to some of the problems that have been raised in the last couple of weeks?
Chris Hughes
There may be. So, let me take a half step back and just give some context on how this particular idea might work, and I’ll use a real-world example. Up in Alaska, 50th state in the United States, they have what’s called a Permanent Fund dividend. So, about 40 years ago, what they did is, in the middle of an enormous boom in oil production and natural gas production, the state was awash in cash and they said, “We’re going to take and put a small royalty on all the profits from these companies that are taking advantage of this natural resource and we’re going to put it into a savings account. And what we’re going to do is, we’re going to say that 2.5% of the earnings from that account every” – excuse me, “2.5% of the corpus of the account will go to every citizen of Alaska as a dividend.” So, it was very much a sovereign wealth fund paying a dividend to each person. So, now, 40 years later, every single Alaskan in the United States gets a cheque, no strings attached, every October it’s about $1,500 every year, on average.
For a family of four, that’s $6,000 median income to the US, so around 60,000, so just as a benchmark, imagine your own income getting a cheque for an extra 10% in October. You would plan for that, you would think about that, you would – and Alaskans say, “It’s very welcome and very helpful,” and we know a lot about what happens to the economy up there. People – it has a – it brings down the poverty rate massively. People work just as much in Alaska as they do in the lower 48. We know a lot about the positive benefits. It also happens that if you rank states in the United States for inequality, guess which state is 50 out of 50. Alaska, and the Permanent Fund is not the only part, but is a key driver of combating inequality and making it the most equal state.
So, the reason I describe that is because there is a conversation brewing about whether data is the oil of the 21st century. If the – you know, all of the data that we’re creating when we use our phones and all the social networks, but also Amazon, you know, all of the hardware, it’s massive and it creates trillions of dollars of economic value and right now, we don’t benefit from it in any, kind of, economic way. We get to use Facebook for free, however, you know, the profits go to Facebook. So, the question today is, is it possible to think about a sovereign data fund or a sovereign wealth fund that is capitalised by some, kind of, surtax on companies that do use our data and whose economic force, and could we do that in a way that would combat income inequality and produce a divided for everyone?
It’s really very much at the question stage, because there are all kinds of difficult questions around, well, how would you structure that? What counts as a data company and what doesn’t? And to be honest, I, and I think a lot of other people, have more questions than answers on how to do it. But it’s the, kind of, thing that I think we should be pushing on and pushing the frontiers on because there is a case to be made that without that, kind of, economic structure, then inequality is going to get worse and worse and the profits of not just tech companies, but of the markets and the 1% who owns so much of the capital, are only going to compound increasingly fast over time.
Barbara Ridpath
And before we go to the audience for comments and questions, is there anything specific you want to add on the news items of the day around Cambridge Analytica? I suspect that a couple of people out there might want to know something.
Chris Hughes
We should talk about it. I mean, so much – it’s – I think the Cambridge Analytica scandal is really, just the tip of the iceberg. The big question of what responsibility does Facebook – do Facebook, Google, Amazon, Apple and other major tech companies have as companies and to us as a society? What regulation of them is important to have and what should the companies then do to respond? So, on data and security, I think there’s no question that Facebook made egregious mistakes here. Mark will spend the next couple of days talking about why that happened and taking responsibility for it in Congress, but the problems are not just going to be solved by a couple of days of Congressional testimony or a little notification at the top of your newsfeed saying, “Oh, you were part of the group that had their data accessed.” And the reason is because I don’t think that Facebook users or users of any of these platforms really have an understanding of how much data we all are producing. Where does it reside? Do I own it or does Facebook own it? Who gets to see it? Who – do companies – what access do companies have? Can I take that back? Can I leave Facebook? Can I take my data with me? And then, all these other kinds of questions, if I was captured in a photo that you put on Facebook, is that my own data? I mean, there are some informational questions that I think users just need to understand that…
Barbara Ridpath
In the UK you now have the right to be forgotten.
Chris Hughes
No, indeed, I mean, Europe has been at the forefront of this debate for years, and a lot of the legal work that has been done is coming to fruition now, but – so, my point is, is I don’t think that this is just a scandal for the headlines in March and April of 2018. My hope is that this is a much broader cultural conversation that is well overdue, and I will say, that I think actually, this is really only one bucket of the problems that we need to wrestle with. The second bucket is the impact of social media on democracies, civil discourse and our elections, which we were talking about more last year, given Brexit and Donald Trump and the Russian hacking. And then, the third bucket is the psychological and sociological effects of being constantly either on our phones, or having our phones be one step away. By some account, millennials check their phones 150 times a day, which is just remark – I mean, you start doing the math and you’re like, how is that possible, if you’re awake for 16 hours or, you know, then ten times an hour means once every six minutes, and then – you know, since I’ve been internalising this, even I have been much more aware of how often I’m using my phone. So, my point is that we haven’t wrestled with the effects on our psychologies and our sociologies, the rise in social isolation of many of our children and adolescents, all of these big picture questions, we’ve really just had almost like a, kind of, passive response to. Like, the phones have just – we’ve gone to the beautiful, colourful, attractive thing and it’s been very useful to us, but now, I think, I hope, we’re having a different conversation about how do we make sure these things are working for us? Rather than just constantly creating – or creating kinds of paradigms that we have to work within, without actively choosing to do so.
Barbara Ridpath
So, there may not be jobs for Truck Drivers in futures, but there may be plenty of jobs of problems that need to be solved in society and policy problems still to wrestle with. Alright, I’m going to now ask for questions and comments. I’m presuming someone with a microphone is going to show up? There we go. And there are a lot of them. I’m going to start here in the front row with the first one, I’m going to take them one-by-one until, if we get tight, we’ll bunch them up. Please give your name and your affiliation if you will.
John Warren
Thank you very much for your talk. John Warren, Physician and member. One of the greatest inequalities is between those who are healthy and those who are seriously ill. Looking at international rankings, the United States could probably cut their health expenditure between 40 and 50% and also, rise up the rankings. Do you think free nationalised healthcare should be a greater priority than basic income?
Chris Hughes
Well, I think we get into trouble when we say ‘greater’. I think we should have a public option in the United States that enables everybody to have cheap, affordable, quality healthcare. I mean, in the United States, we talk about Medicare for all. I think it was a mistake not to push for that more aggressively, in the last debate in 2009 and 2010, and there are a lot of candidates, who are already beginning to whisper for the 2020 raise, on the left in the US, who are talking about how to do that. And we had some traction in the States, in California in particular, there’s exploration and that’s an idea.
The problem, I think, is with the ‘greater’. I think this is part of what I talk about when I say the neo-liberal order is coming undone. We get – particularly on the left in the US, we get very – we get into this mode well, we can’t do everything, so we have to fight amongst ourselves about what is most important. Is healthcare more important than education? Is education more important than economic security? Well, what about infrastructure? Our housing situation is just – and so, what ends up happening is that it’s a, kind of, conversation of scarcity that doesn’t, I think, in the long-term, promote a broader sense of the common good and an understanding that a basic income, alongside Medicare for all, is the, kind of, country that I want to live in, in the United States and elsewhere.
Now, the questions are always, well, how are you going to afford all of that? and those are important questions to answer. We just can’t like, at the very beginning of the debate about the, kind of, society that we want to live in, all of a sudden be cost-constrained, because I will say in the right, in the United States, they are not. They just passed a tax bill that adds – for folks who – on the right, the Republicans in the United States have talked for a very long time about how high the deficits are, and you could argue that one of the key talking points of Donald Trump was about, you know, ballooning deficits. They just passed a tax bill that will increase the deficit by well over a trillion dollars, over the next ten years. They’re not talking about well, what should be the priority. They’re just expanding the debt, and in a way that is very much in contrast to what they say.
So, my view is that we can and should be talking about many of these solutions, in tandem with one another, and I will say just one thing that I do think is important, you know, there is quite a lot of data about improved health outcomes, as a result of a guaranteed income. If you provide a guaranteed income to people, you see hospitalisation rates, in the experiments in the 70s and in some later on, hospitalisation rates do go down just ‘cause people are healthier. There’s speculations because people can buy healthier food, people can have more time to get to the gym, to take a walk, etc., and you also see importantly, psychological – a decrease in psychological issues and mental health issues.
The biggest pilot that has shown that is actually amongst Native Americans in North Carolina, the Cherokee have a basic income, kind of, programme and the kids from the families, who have received that money, have ten even 20 years later, double digit reductions in mental health issues and addiction rates, etc. So, my point there is to say we should think about all of these in tandem with one another and we should recognise that providing cash stability, does have important secondary health effects that would be something I think that we all want.
Barbara Ridpath
But if you’re interested in that, UCL’s just come out. Their Institute on Global Prosperity has just come out on a big study on universal basic services, which is saying take the NHS model and apply it to transport infrastructure, housing, social housing, for just that reason. So, it’s the obverse.
Member
It’s cheaper.
Barbara Ridpath
It may well be. Next? Oh, and on the aisle here? Can I send somebody with a mic this way? Just there, and there we go.
Sharmila Whelan
Thank you, and you raised some interesting points.
Barbara Ridpath
Can you give your name and – sorry.
Sharmila Whelan
Sorry, Sharmila Whelan from Asianomics. You suggested that the guaranteed income would have no impact on money supply and it wouldn’t lead to a rise in public debt. That implicitly suggests that it’s going to be funded by taxing entrepreneurs and businesses, right, to fund it. My concern is that you start fund – taxing entrepreneurs and companies at punitive rates, what you’re going to do, it’s going to kill the entrepreneurial incentive to invest in new businesses and create new jobs and so, that’s one. And you’re going to slow down the rate of innovation and specialisation and economic growth overall, right? Again, it’s not going to be – lead to zero inflation, even if the money supply is constant because, as we know, the lower your income is, higher is your marginal propensity to consume, i.e. the more you spend – the lower your income, the more you spend out of each dollar that you earn. So, what you’re going to see, I suspect, is that actually, the poor are going to suffer, exact – precisely the people you’re trying to help with the guaranteed income. That the price of goods and basic consumer goods will go up and essentials and actually, in real terms, they’re going to be no better off, and an example…
Barbara Ridpath
Chris, and I think that’s pretty clear, so, Chris?
Chris Hughes
Well – so, here’s where – so, I think we disagree, ideologically, on a couple key points. Entrepreneurship is at historic lows in the United States. I’m less familiar with UK data, but perhaps some people could volunteer. I mean, the idea that job starts – excuse me, the rate of companies that are being started has not been this low in decades in the United States, so if we’re going to talk about entrepreneurship, and the problem is that we already don’t have enough entrepreneurship. Yes, we have the Facebooks of the world, which, in some ways, can be – which I do think can be culturally misleading because we see the mythology of the rags to riches story here when, in reality, companies are starting at a much lower rate than they ever have before. And I think that a lot of that is because people don’t have the basic liquidity, certainly not the savings, to weather – they don’t have the savings to weather a negative event like an emergency, let alone the ability to invest or pool capital to start a business. So, my view is that that, kind of, liquidity is what is most urgently needed to spur entrepreneurship and to invest in people who have the ideas in the first place, not to create more and more of the kinds of gargantuan, consolidated companies, which are the story of the economy today.
I also think that, you know, the idea that tax rates are going to be so egregiously – such egregious penalties in the US, I mean, we just lowered our corporate tax rates to near historic lows. I mean, let’s be clear, I – my tax rate is less today than it was for my parents, growing up in a middleclass household. So, the idea that we can, you know, say to the wealthy and to the corporations that are profiting, you should pay your fair share. We’re going to bring your taxes back into line with where they were for much of the 20th century when, by the way, economic growth was much more robust, and that growth was much more broadly shared, that prosperity was much more broadly shared. We’re going to do this in a way that’s different, that invests in people to be able to invest in themselves. I just think in the long-term that is the recipe not just for the moral case of this, but also, for the pragmatic case. For the case that that is in the long-term what is going to grow the economy and lead to more robust growth in the long-term.
Barbara Ridpath
Good. Oh, there’s lots of hands. How about this first row here, right in the front row.
Rose Bethar
I’m Rose Bethar, I’m a student at Cambridge doing my MPhil in policy. I had a quick question around guaranteeing UBI around the gender lens that can be applied. There’s been a lot of talk about social integration and it supporting gender neutrality, but there’s also a bit of discourse at the moment around actually, you could exacerbate some tensions and women could be the first to leave the market and be in a, kind of – it could normalise women staying at home and doing domestic duties. What are your thoughts on that? Will it be good for gender relations or could it actually push women back into the household?
Chris Hughes
Well, I think a couple things. I think the issue – the concern, to me, is that a lot of the work that has been happening domestically, for a very long time, childcare and elder care has not been recognised by the state as work. You ask a young parent, who has a kid who’s staying at – who has a young child staying at home whether it’s work, I think at least, in the United States, we’ve gone through a cultural sea change where people recognise that as work. And so, I think that we should expand – specifically, I talk in the book about the earned income tax credit as the framework to build a guaranteed income in the US and as part of the contingent, I want to expand the definition of work to include a lot more untraditional, kinds of activities. But I think that a guaranteed income, to speak directly to your question, would enable people to make the choices that they want to make about what, kind of, work that they want to do, and it may be that some women or men want to stay at home with their families. The idea that we should only categorise a certain, kind of, work in the formal economy as genuine work and push those people in, I think is not fundamentally, aligned with the freedom or the agency that I want to see.
I also think that it’s important that a guaranteed income be on a per capita basis, and this is one of the places where I diverge with some scholars at places like Brookings or some folks, who prefer to household it. And the reason I think it should be on a per capita basis is because I think it should recognise the individual liberty and autonomy of each individual to figure out what she or he wants to do with their own life. And what – one of the things that we saw in some of the guaranteed income experiments back in the 70s, was that there was an initial report that came out after several years of looking at the data, which showed that divorce rates increased. And at the time, in the 80s, it was a big reason why people said, “Okay, we can’t do a guaranteed income because it’s effectively dissolving the nuclear family,” and now, 20 years or 30 years later, we look back on that and the – most of the scholars say, “Well, that enabled a lot of women to have the autonomy to leave relationships that weren’t working for them.” Because in that period, labour force participation amongst women was significantly lower. And so, ironically, that’s been turned from seeming like a negative thing to a more positive thing, because it means that people can make the choices that they want to make.
So, my view on this is that the guaranteed income can and should enable women and men to exit – to enter or exit the relationships as they like, to enter or exit the labour force as they like, and those decisions should be with those individuals, not with the state, to tell them exactly what counts as work and what kinds of social institutions they should stay in.
Barbara Ridpath
Next question. There is one, sort of, towards the back there, either one of those two would be great.
Vincent Neate
Thank you, hello. Chris, my name’s Vincent Neate, I’m a member of Chatham House. I wanted to put to you – I love everything you’re saying, except that I’ve been thinking about this for some time and would put my emphasis on consumption. So, I would put the emphasis on the idea that there is a level of ability to consume within a society that nobody should be allowed to fall below, and I think – I would just like to get your view on that compared to a level of income that they would achieve.
Barbara Ridpath
I know I said I’d take them one-by-one, but why don’t you, Vincent, pass that one ahead and we’ll do two at once?
Richard Nield
Thank you. You’ve talked about the benefits that can come, and for exam – sorry, Richard Nield, Chatham House member. You’ve talked about the benefits that can arise from basic income tools, improved health outcomes and so on. I’d be interested, in your views, as using basic income tools as an incentive and actually tying basic incomes to certain socially desirable behaviours or outcomes. Is that something you would think there is some scope for, or is it unhelpful and dangerous?
Chris Hughes
I think it goes against all my values. I’m very suspicious of paternalism in all Government programmes and I think it’s because I talk – I grew up with and continue to talk to and spend a lot of time with people who spend much of their days running from one Government office to another to prove that they qualify for a certain, kind of, benefit. I mean, I was last – about four or five weeks ago I was in Jackson, Mississippi, and meeting for a couple of days with a lot of young mothers, who – all of whom were living in public housing and just listening to their experience of what it’s like. Again, this is in the US context, but I have a feeling it’s not that dissimilar of elsewhere, just going from the food stamp office, to the housing voucher office, to the – all the kinds of regulations that happen around what kinds of relationships they can be in, to even trying to understand TANF, which is our, kind of, welfare programme. I mean, it was mind boggling and it meant that for some of these women, the Economists estimate that their effective, like marginal – it’s not tax rate, but for every dollar that they go out there and make, they lose as much as 60% of it in benefits. So, I’m just very sceptical of the idea of elite, people in rooms like this one, telling poor people what to do, and it’s very much a values-based belief that I think that more often than not poor – not just poor people, but working-class people, middleclass people make the better decisions. So, that’s why – just to give context on why that goes in the other direction.
I’d love to hear more on the first question. I’m not sure – a basic level of consumption ability, that seems interesting to me. The first thing I think about is, well, what are all the things that people pay for that they don’t – that don’t count as consumption, you know, public transit or childcare or maybe those – all of those things, we’re using more economics example, and those count as consumption as well. But I’m not – like, what do you get by reframing it and say, instead of it’s a guaranteed income, it’s a guaranteed consumption stipend or – and just, I’m curious to hear more.
Vincent Neate
So, my starting point for this was actually, thinking about the taxation system and thinking that the way in which we tax companies and people on the basis of income, it is – it just doesn’t really make a lot of sense to me, because the better I get at something that I’m doing.
Chris Hughes
Ah, right.
Vincent Neate
So, I wanted to start thinking about how we might be able to tax people on the basis of consumption.
Chris Hughes
I understand.
Vincent Neate
And then, therefore, actually, how would you create a system whereby there was a minimum level of tax – minimum level of consumption that would not be taxed? In the same way today, we have a minimum level of income that would not be taxed.
Chris Hughes
Well, this is – I mean, I think it’s a really interesting talk about a provocative idea in the US context where we don’t have, you know, a VAT. So, people in my community are in favour of funding this instead of taxes on the 1% through a, kind of, VAT and specifically in so doing, using the refund of those – of the VAT as the guaranteed income, if you will. So, if everybody’s paying it, including folks at the – in the bottom, you know, quintile or two quintiles, it’s the refund from that which funds the benefit. So, it ends up being those who consume more end up paying more. So, I think that’s a really interesting route to go. The politics of it are more difficult but, you know, I would put it in a category of ideas worth – I’d love to read a great paper on that. I’d love – worth further exploration.
Barbara Ridpath
It also has interesting environmental implications, if you’re actually trying to reduce certain kinds of consumption.
Vincent Neate
It’s very green, yeah.
Barbara Ridpath
Yeah, that’s my point.
Vincent Neate
I’ll write you that paper.
Barbara Ridpath
I think we have time for one or two more questions. How about first row here and then back in the middle ‘cause I keep taking aisles instead of middle, sorry about that.
Richard Opla
Richard Opla from Chatham House as well or as a member. I must admit, one is I’m way away from being a millennial, so take that with my comments. The trust factor is one that worries me, because I’ve seen – I’ve been fortunate enough to do well in my own lifetime. My children have benefitted from that. I saw a lot of their friends who essentially, had a lot of money and have wasted their life and I really worry about giving money for nothing.
The other thing is your premise is that inequality is growing. Now, that – I don’t know the statistics for the US. I suspect it is, but in the UK, actually, income inequality has been narrowing and is now at one of the lowest levels for a couple of decades. Doesn’t mean that we don’t have problem with under-employed or unemployed, the unemployment rate’s very low. We definitely have a problem with people whose expectations of work, when they’re in work, it’s not a guarantee for 30 years of work. So, I wonder – I see the moral reason for doing this, but I think you have to look at each country – in the US perhaps each state. I mean, look at Alaska and then model some of the things from there, rather than blanketly across the developed world say this. Because the most inequality frankly, in the world, is not in the developed world.
Barbara Ridpath
I’m going to bunch these, if I can? Can I take the question in the front row here and then the woman on the aisle here, and then we’ll ask you to try and handle all three at once?
Alex Pytlarz
Oh, hi. Alexander Pytlarz and I’m just a guest here. What would your views be on cutting more on the benefits system here and replacing more hypothecated benefits with UBI and instead of giving out benefits for specific things, just giving most people a UBI to live with?
Barbara Ridpath
Okay, and last of all? There we go.
Courtney Havel
Thank you. Courtney Havel, member of Chatham House. There’s been a system going in Finland, different experiments been going on there and I’d like to know what your views are on that, because it’s had its ups and downs and whether you can draw any parallels for the book that you’ve written?
Barbara Ridpath
There you go.
Chris Hughes
Fantastic, okay, so, to the first question, and the first part, I think it’s important to be – to make a differentiation between folks – trust fund kids and people who are living in poverty. I think the psychologically of living in poverty is a constant stress of trying to understand how you’re going to be able to budget every single moment. I hear the same anecdotally, from people all the time, but there’s also a lot of psychological evidence to show this. If you’re interested in this question, there’s a fantastic book called Scarcity, written by Sendhil Mullainathan and Eldar Shafir and it goes into the specific cognitive and psychological effects of scarcity, of not having enough. And one learning about it that I cite in my book is that folks who are in that group, who don’t have any savings whatsoever and couldn’t afford if their car broke down and it cost them several thousand dollars, if you look at their IQs, in comparison to everyone else, they’re just as high, but when you ask them questions about what would you do if your car breaks this afternoon? Their IQ point – on the same test, they drop by 14 points, compared to the control, which doesn’t drop at all, which is the equivalent of like pulling an all-nighter. So, it’s – there’s an intense cognitive effect of scarcity, and I’m not saying that necessarily means that everybody who’s always in these scarce positions budgets well, but I do think that it isn’t necessarily always an apt comparison, to compare that situation to other folks, who might be more fortunate, who don’t spend a lot of money well.
On the two – I’ll take the second part of that first question and the second question a little bit together. I do – I am much more familiar with the United – with the American context than the UK one, so I will be anxious to learn, and we could probably have a whole hour debate over the question of inequality and whether it’s rising or not rising in the UK, because I imagine…
Barbara Ridpath
My data doesn’t agree with that.
Chris Hughes
Yeah, it depends on how you sliced it. I was like, well, there are a lot of things that don’t seem to agree with that, but again, this is not my exact area of expertise. But my contention is that the inequality is problematic on its own and it’s particularly problematic when we have the capacity to eradicate poverty and create more economic opportunity for the middleclass, and that is definitely not true, and the inequality point, in the United States. I mean, the top 0.1% in the US owns as much wealth as the bottom 90% combined. Not top 1%, the top .1%. The Walton’s own as much wealth as the bottom 40; just the one family, own as much wealth as the bottom 40% combined, so the inequality in the US context is egregious.
I think that also, the question on cashing in existing benefits is very much specific to the different countries. In the book, in the US, and our [inaudible – 55:43] is in tatters. It’s got full of holes. It needs to be reinforced, if not expanded, so I do not favour any cash in, in the US. In other countries, and IMF put out a great report last year that said, “In countries that do have stronger social safety nets, like much of continental Europe, a basic income, on its own, probably doesn’t make as much sense, as in places where the safety nets are much foggier,” and there the IMF said in a place like the US, it could very well make some sense. So, I think in the UK, I would leave it to other, you know, scholars here to speak to specifically, which parts might be opportunities for a cash-in to partially finance, but in the US, it doesn’t make a lot of sense.
And then lastly, on the Finland – there are pilots going, as I was saying at the top of the conversation, in Ontario, in Scotland, in – soon in Scotland, in Finland and in Kenya. The Finnish one is the one that, to be honest, is the most problematic. It’s really – because it’s targeted just to people who are unemployed. It’s, kind of, like a cash supplement. It’s not a guaranteed income. It’s not a universal basic income, by any means, nor is it really, a guaranteed income. It’s really just a, kind of, rethink of the benefits structure, so I always bristle a little bit when I see it being referred to as a real basic income, kind of, experiment because I think it is – of all of the ones happening, I think it’s the one that is the most problematic and will have less – we’ll learn less from that than we will from the others. And I should say the organisation, I’m co-running the Economic Security project, we’re doing a demonstration in a city in California in Stockton, there’s another group called Y Combinator, which is doing an even bigger pilot in another state in the US, so there’s a lot happening on this front. The question to me is not can we get enough evidence around these questions, ‘cause I think we already have a lot and we can get more. The long-term question is, can we build the political will to get this done and that’s – those are the sets of questions that keep me up at night and I think that’s the most work that needs to be done.
Barbara Ridpath
So, I think what we’ll need to do is, bring Chris back and talk about the political issues and how we actually make it happen…
Chris Hughes
Easy.
Barbara Ridpath
…in another session when he’s next in town. But for the moment, could I ask you all to thank Chris for his time, and very interesting [applause]. And there are books for sale over here, which I forgot to mention, so if you’d like a book signed or sold to you, just here. Thanks very much.
