Tech giants Elon Musk, Sam Altman push universal basic income concept

Congressional candidate Ro Khanna addresses supporters in Santa Clara in June 2016. (Patrick Tehan/Bay Area News Group file)

With an impending robot revolution expected to leave a trail of unemployment in its wake, some Silicon Valley tech leaders think they have a remedy to a future with fewer jobs — free money for all.

It’s called universal basic income, a radical concept that’s picking up steam as a way to provide all Americans with a minimum level of economic security. The idea is expensive and controversial — it guarantees cash for everyone, regardless of income level or employment status. But prominent tech leaders from Tesla CEO Elon Musk to Sam Altman, president of Mountain View-based startup accelerator Y Combinator, are proponents.

“We should make it so no one is worried about how they’re going to pay for a place to live, no one has to worry about how they’re going to have enough to eat,” Altman said in a recent speech at the Commonwealth Club in San Francisco. “Just give people enough money to have a reasonable quality of life.”

Altman is personally funding a basic income experiment in Oakland as the concept gains momentum in the Bay Area. Policy experts, economists, tech leaders and others convened in San Francisco last month for a workshop on the topic organized by the Economic Security Project, co-founded by Altman. The project is investing $10 million in basic income projects over the next two years. Stanford University also has created a Basic Income Lab to study the idea, and the San Francisco city treasurer’s office has said it’s designing pilot tests — though the department told this news organization it has no updates on the status of that project.

Proponents say the utopian approach could offer relief to workers in Silicon Valley and beyond who may soon find their jobs threatened by robots as artificial intelligence keeps getting smarter. Even before the robots take over, some economists say basic income should be used as a tool to combat poverty. In the Bay Area — where the rapid expansion of high-paying tech companies has made the region too pricey for many to afford — it could help lift up those that the boom has left behind.

Unlike traditional aid programs, recipients of a universal basic income wouldn’t need to prove anything — not their income level, employment status, disability or family obligations — before collecting their cash payment.

“It’s a right of citizenship,” said Karl Widerquist, a basic income expert and associate professor at Georgetown University’s School of Foreign Service in Qatar, “so we’re not judging people and we’re not putting them in this other category or (saying) ‘you’re the poor.’ And I think this is exciting people right now because the other model hasn’t worked.”

That means a mother living on the poverty line would get the same amount of free cash as Facebook founder Mark Zuckerberg, Widerquist said. But Zuckerberg’s taxes would go up, canceling out his basic income payment.

The problem is that giving all Americans a $10,000 annual income would cost upward of $3 trillion a year — more than three-fourths of the federal budget, said Bob Greenstein, president of Washington, D.C.-based Center for Budget and Policy Priorities. Some proponents advocate funding the move by cutting programs such as food stamps and Medicaid. But that approach would take money set aside for low-income families and redistribute it upward, exacerbating poverty and inequality, Greenstein said.

Still, some researchers are testing the idea with small basic income experiments targeting certain neighborhoods and socio-economic groups.

Y Combinator — the accelerator known for launching Airbnb and Instacart — is giving 100 randomly selected Oakland families unconditional cash payments of about $1,500 a month. Altman, who is footing most of the bill himself, says society needs to consider basic income to support Americans who lose their jobs to robots and artificial intelligence. The idea, he said at the Commonwealth Club, tackles the question not enough people are asking: “What do we as the tech industry do to solve the problem that we’re helping to create?”

Increased use of robots and AI will lead to a net loss of 9.8 million jobs by 2027 — or 7 percent of U.S. positions, according to a study the Forrester research firm released last month. Already, the signs are everywhere. Autonomous cars and trucks threaten driving jobs, automated factories require fewer human workers, and artificial intelligence is taking over aspects of legal work and other white-collar jobs.

Meanwhile, the cost of goods and services in the Bay Area soared 27 percent in the past 10 years, and the median price of a home last year hit $880,000 — which fewer than 40 percent of first-time homebuyers can afford, according to the 2017 Silicon Valley Index published by Joint Venture Silicon Valley. The price of renting a home has skyrocketed in recent years as well.

Proponents of universal basic income have varying ideas of how much money should be doled out to give people a decent quality of life. Clearly $1,500 a month isn’t enough in the Bay Area, but Altman says in a world of robots the cost of living would go down — some experts predict automation would lower production costs. In the meantime, an extra $1,500 still could have a big impact for Oakland residents such as 32-year-old Shoshanna Howard, who says the salary she makes working at a nonprofit barely covers her cost of living.

“I would pay off my student loans,” she said. “And I would put whatever I could toward savings, because I’m currently not able to save for my future.”

Interest in basic income first spiked in the 1960s and 1970s, when small pilot studies were conducted in states including New Jersey, Pennsylvania, North Carolina, Iowa and Indiana, as well as Canada. Some studies showed improvements in participants’ physical and mental health, and found children performed better in school or stayed in school longer. But some also showed that people receiving a basic income were inclined to spend fewer hours working. Other data suggested married participants were more likely to get divorced — some experts say the cash payments reduced women’s financial dependence on their husbands.

Y Combinator has plans to expand its experiment to 1,000 families. YC researchers are using the small Oakland pilot to answer logistical questions — such as how to select participants, and how to pay them. The researchers have said they’re focusing on residents ages 21 through 40 whose household income doesn’t exceed the area median — about $55,000 in Oakland, according to the latest census data. They expect to release plans for a larger study this summer.

Y Combinator announced its Oakland project last spring, but since then has kept many details under wraps. That tight-lipped approach concerns some community members who question whether the group did enough to involve Oakland residents and nonprofits.

Jennifer Lin, deputy director of the East Bay Alliance for a Sustainable Economy, said her organization reached out to YC about a year ago, but never heard back. “It makes me question what Y Combinator has to hide,” she said.

Lin is skeptical that basic income can do much lasting good in Oakland. What the city needs is more high-paying jobs and affordable housing, she said.

Elizabeth Rhodes, YC’s basic income research director, said the group is working with city, county and state officials, and has met with local nonprofits and social service providers.

“We want to be as transparent as we can, but protecting the privacy and well-being of study participants is our first priority,” she wrote in an email.

Meanwhile, Rep. Ro Khanna, Silicon Valley Democrat, is pushing for a plan that has been described as a first step toward universal basic income. Khanna this summer plans to introduce a long-shot $1 trillion expansion to the earned income tax credit that is already available to low-income families. But unlike a basic income, that money would go only to people who work.

“There’s a dignity to work,” Khanna said. “People, they don’t want a handout. They want to contribute to the economy.”