Billionaire Discovers UBI

Craig Dalzell

Techbro Billionaire and founder of OpenAI, Sam Altman, has just concluded one of the longest running Universal Basic Income experiments to date. He launched the project after becoming intrigued albeit unconvinced by the idea (and as accusations grew that tools like his AI could become an increasing threat to jobs) and he made a show of personally funding the scheme that saw 1,000 low income people being paid $1,000 a month plus 2,000 people receiving $50 as a control group. All participants had a household income below 300% of the federal poverty line (the limit below which people start to qualify for federal low income support – the various thresholds can be found here) and the average household income of participants was $29,000 (approx £22,500 as of current exchange rates).

The results of the study have been overwhelmingly positive and entirely in line with other studies of UBI. Participants were more able to buy essentials that they had been cutting back on and – contrary to detractor claims – were likely to reduce spending on alcohol, drugs, unprescribed painkillers and other substances that are too often used to numb the stress of chronic poverty (drug use studies consistently show that that poverty is not caused by drug use so much as the opposite being the case). The study also found that people worked more (not less) as a result of receiving the basic income and took measures to improve their education or the education of their children, however it was noted that the increase in work was slightly more muted in the full income group compared to the control group as those who could now afford it chose to spend more time with their children rather than working every single hour just to feed them. Single parents in particular were noted to be more likely to take on more flexible working hours to do this. I can’t see how that can be considered a “bad thing” but in this world where some only value people for their productivity and ability to contribute to making the GDP line go up, I’m sure some might.

Of course, the limit to many UBI studies have been their relatively short running time so the fact that this one ran for three years has been useful to show what happens not when someone can suddenly afford essentials that they couldn’t yesterday but to give people time to settle into the situation of having a guaranteed income. This is where other issues started to reveal themselves. Having enough money to live on might allow you to secure housing where before you were homeless, but it might not be enough to compensate for the poor quality of housing generally and for the crap, overpriced housing that you can now just barely afford. It might allow you to buy food, but not compensate for only having the "choice" between one set of crap, over-processed, barely nutritional, mostly edible substance or another almost the identical product probably owned buy the same monopolising conglomerate. Being able to afford to ride the bus to work now doesn’t help if public services are degraded to the point of there not being a bus to ride.

I’ve seen some comments around this study essentially saying “well, if UBI can’t fix housing, then there’s no point to a UBI” and this is precisely the opposite of the correct conclusion. The lack of a UBI hasn’t fixed housing either. The fix for housing comes via a massive and intentionally disruptive programme of public-owned, socially rented housing leveraging cheap government borrowing to build houses a level of quality that embarrasses the private owned and rented sector into improving. The current policy that “poor people deserve poor houses” is one that only serves the already wealthy who were able to jump onto the “housing ladder” before pulling it up behind themselves and the already even wealthier who were able to rent those assets out to those left behind.

The final thing to note in this is that while the cost of a UBI is high, this study being personally funded by a billionaire shows how actually affordable it is in practice. The total cost of the distributed income to the 3,000 people involved was $13.2 million per year. This is substantially more than his reported earned salary (around $65,000) but, like almost all other billionaires, he earns most of his wealth via increases to his wealth rather than through earned income. If his reported $2 billion worth of assets accrued annual gains of 5%, then that’s an equivalent income of $100 million – enough to fund a UBI of $1,000 per month for over 8,000 people.

In fact, lets play a game we’ve played before. Rather than hoping that a few more billionaires will come to their semi-philanthropic senses, let’s imagine that we take a look at the wealth held by all of the wealthiest 400 Americans (ironically, Altman is too poor to be on this list, the poorest Forbes 400 billionaire has a total wealth of £2.9 billion). Their total wealth is estimated at $4.5 trillion. As before, we’ll assume that the title of “billionaire” is precious to these people so we’ll not take that away from them. But any assets above $1 billion are collectivised and placed in a US National Wealth Fund. That’s $4.1 trillion. With an average return of 5%, that’s enough to give a $1,000/month Basic Income for over 17 million Americans and to instantly half the number of people living below the federal poverty line. Not one of these billionaires would notice a material change to their lives but the lives of 17 million people would be transformed for the better (and anyway…if detractors of UBI are correct, shouldn’t the billionaires not being as wealthy be an encouragement for them to work?). As I’ve said before, faced with results like this and with the affordability of extending the UBI to everyone using other means, it is now a moral imperative to implement one.

Poverty is not the result of personal choice on behalf of the poor or even because of lack of money, but because of lack of money in the right places and the hoarding of it in others where it can do far less good. My “solution” here is optimistic to the point of utopian but that isn’t the same as being unrealistic. All it will take is politicians listening to people other than the billionaire-dragons who stand to fund the eradication of poverty at the cost of a fraction of their horde. But if a democracy means anything then it means placing no more value on the voice of a single person than on any other. So perhaps we could put it to a referendum and see if the votes of 17 million people in poverty agree with the votes of 400 people who’ll never want for anything even if they have to invest most of what they have in the Common Good of All of Us.