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Silicon Valley’s basic income vision is wrong

LiveMint logoLiveMint 10-08-2017 Leonid Bershidsky

With figures ranging from 33-year old Facebook chief executive officer (CEO) Mark Zuckerberg to 90-year-old Nobel Prize-winning economist Vernon Smith endorsing a universal basic income, the idea may soon enter the US political mainstream. But Americans are being sold on a dangerous version of the UBI, designed as a resource rent rather than a product of social consensus.

Smith recently penned an op-ed for The Wall Street Journal, calling on President Donald Trump to privatize the interstate highway system in order to set up a fund that would pay every American a basic income, the way the Alaska Permanent Fund pays every Alaskan a share of the state’s oil revenues.

Zuckerberg, too, is a fan of the Alaska dividend scheme (which doesn’t pay enough to qualify as real basic income) and approves of the state’s native corporations paying a share of their profits to the indigenous population. He likes this kind of universal income scheme because “first, it’s funded by natural resources rather than raising taxes. Second, it comes from conservative principles of smaller government, rather than progressive principles of a larger safety net. This shows basic income is a bipartisan idea.”

There’s a further bridge between Smith’s idea and the Silicon Valley vision of a UBI. “Surface transportation rights of way would be opened to new mass-transit innovations at a time when driverless vehicles are making their entrance,” Smith wrote. The newly privatized roads, then, would generate income from fees paid by tech companies that operate self-driving fleets in a world where car ownership is obsolete.

That ties into the idea, put forward recently by John Thornhill in the Financial Times, that Facebook (and, presumably, Google and other companies that make money by selling their users’ personal data to advertisers) fund a basic income scheme to give back some of the money from these data sales.

The scale, boldness and ingenuity of tying together a revamp of physical infrastructure (for private owners would, according to Smith, maintain it better than the government does), the rents collected from a growing digital infrastructure, and an answer to tech-driven unemployment (Elon Musk, Zuckerberg and other Silicon Valley tycoons support the UBI for that reason) are impressive. But, to some, these ideas also create a vicious circle: “There are good reasons to be sceptical about a political compromise in which the citizens receive a basic income to pay for infrastructure whose profits then go back into the pot from which the basic income is financed,” Evgeny Morozov, a researcher of technology’s social impacts, wrote recently.

To proponents of the Silicon Valley school of thought on UBI, basic income is a tool to ensure public buy-in to the tech industry’s idea of an automated future in which people are mainly useful as consumers rather than as workers. Such a future is inevitable, they tell us, but don’t be scared because machine owners will take care of us as important stakeholders.

“As productivity grows with ongoing automation, so too should the basic income grow as a kind of prosperity dividend,” Scott Santens, one of that school’s foremost ideologues, wrote. “What is at first basic should eventually be the right of every citizen shareholder to the vast wealth of an automated nation.”

This is a vastly different approach to UBI schemes discussed in Europe, notably in Finland, where a pilot project is taking place now, and in the Netherlands. Of course, versions of the Silicon Valley approach have been aired in Europe, too: For example, failed French presidential candidate Benoit Hamon advocated a robot tax to fund a UBI. Those schemes are supposed to be tax-funded, the result of a public consensus that society should cover all its members’ most basic needs (in bygone days, that was called welfare). They are not constructed as a pacifying payoff to make people accept their labour is no longer needed. The Alaska oil fund is not the inspiration for these experiments because they involve active sharing rather than a passive rent from a resource, be it oil, infrastructure or people’s personal data.

To me, the sharing approach is less humiliating and dehumanizing than the rent-like payoff. It has more to do with erasing inequality than with getting people to accept the dominance (and associated benevolence) of a machine-owning elite. It makes sure citizens are asked about redistribution mechanisms (i.e. tax rates and the uses of income from them) rather than thrown a bone to keep the peace.

In truth, people and nations don’t have to accept a future in which a small group of companies—and, let’s face it, successful tech firms are a small, oligopolistic group—controls the fruits of what they call progress. It’s up to them to tax and regulate the monopolies and oligopolies. The opaque digital advertising business, for example, is under-regulated and possibly based on false claims about audience sizes. Killing US tech’s notorious tax avoidance schemes and making sure they pay like everybody else might make it much easier to fund UBI schemes.

At this point, regulators and legislators shouldn’t be scared of stifling technological innovation. Even if it slows down somewhat as a result of some monopoly-busting, tax loophole elimination, and applying traditional-industry regulation to tech businesses that pretend they are not part of traditional industries, that should be fine. There’s no point rushing headlong toward a dystopian future that an “Alaska-style” UBI won’t make much sweeter. Bloomberg View

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