Why you should care
Because everyone has a stake in the inequality debate.
Pooja Bhatia is an OZY editor and writer. She has written for The Wall Street Journal, The New York Times and the Economist, and was once the mango-eating champion of Port-au-Prince.
In recent weeks, a funny little concept has gotten some serious attention from some serious people: It’s called the universal basic income, and it amounts, basically, to a kind of souped-up welfare for all — rich and poor, hard workers and malingerers alike — in sums of a few thousand bucks a month. Never mind that our dads enjoy reminding us that there’s no such thing as a free lunch. Some are “making the case for free money” and even billing the basic income as the “bipartisan solution you’ve been waiting for.”
Here in Silicon Valley, the reception has been especially starry-eyed — one prestigious tech incubator is even rolling out a pilot program in Oakland. The incubator did not respond to a request for an interview, but the buzz makes sense: Silicon Valley, after all, teems with visionaries and would-be innovators eager to disrupt everything from the back office to your dinner. Why shouldn’t they turn to the economy writ large too? Besides that, the UBI has a kind of hands-off neatness that techno-libertarians out here love: With their basic needs met, the reasoning goes, people will be free to pursue whatever appeals to them.
But darker reasons lurk too. Among them is an inchoate anxiety about the disruptions to come, and how they’ll affect low-wage workers. For the tech entrepreneurs and hypercapitalists of this gilded region, the reminders are everywhere. On the sidewalks of Mountain View, which is home to that prestigious tech incubator and Google’s headquarters, you can’t pass five minutes without seeing a weird, tiny orb zooming by: It’s one of Google’s self-driving cars. It’s not hard to imagine the well-off worrying over what happens when Uber goes driverless, and all the people who’ve gotten by in the gig economy lose their jobs. Will there be backlash? Revolution? Painfully high prices for the women who clean your house?
There have been some skeptics of the universal basic income, for sure: The Swiss voted down a referendum by a margin of 3-1, and critics — from The Economist to The New York Times — have wondered whether governments can really afford it and whether it’ll turn all of us into lazy slobs. These are valid questions, but they miss the point: The basic income, at least in this incarnation, is at best a salve and really kind of a sop for the working classes. Income supplements will be forever precarious, subject to the political tides and winds. When it comes to disrupting capitalism and inequality, surely Silicon Valley could do better.
You need not have read Thomas Piketty to understand that capitalists do better in the long run, almost every time. Here in Silicon Valley, everyone from the custodian to the CEO knows that equity is where it’s at, which is why stock, stock options and vesting details are such a BFD around here. Labor economist Richard Freeman, a Harvard professor, points out that companies that give workers a stake, whether through profit-sharing or employee ownership, don’t just reduce inequality within the company, they also tend to perform better.
In an article this spring, Ross Baird, executive director of Washington, D.C.-based Village Capital, proposed that, for instance, Uber compensate its drivers not just in wages, but also with a share of the company’s value — after all, he argued, the drivers are the ones who are creating its value. “We assume that founders and investors should get a disproportionate share” of equity in a company, but “there’s a different way to think about it,” he says. Like me, Baird believes the talk around the basic income elides a more important point. “We’re innovating a lot in products and services, but innovating very little on how capitalism actually functions,” Baird says.
Response to this and other ideas was deeply divided, Baird says. Generally, though, equity-based solutions to inequality haven’t gotten much traction around here. In his book last year, Humans Need Not Apply, Jerry Kaplan proposed a pretty innovative idea to address growing inequality: We should reward corporations that have broadly distributed ownership, perhaps through tax incentives.
What kind of reception did that idea get? “The short answer is that I never heard anything about it,” Kaplan tells me.