Strategy

Here's how the Silicon Valley dream of universal basic income slowly — then suddenly — became a solution for inequality in the US and abroad

trump mnuchin coronavirus
Treasury Secretary Steven Mnuchin first announced the idea of an interim universal basic income at a press briefing on Tuesday, March 17, 2020. AP Photo/Evan Vucci
Read in app

Andrew Yang will now be speaking at the Democratic National Convention after tweeting about being left out, in a political victory for the entrepreneur and for his favored policy of universal basic income, or UBI.

The former Democratic presidential candidate was not initially included on the list of speakers for the upcoming convention.

"I've got to be honest I kind of expected to speak," Yang tweeted Tuesday. 

Yang has garnered significant support over the past year for his progressive policies, including the long-simmering, but newly urgent, policy proposal of UBI, or the idea that every citizen deserves a minimum amount of income. The policy has gained popularity in the US and abroad.

Yang's plan was to implement what he called the Freedom Dividend, which consisted of guaranteed payments of $1,000 per month, or $12,000 per year, to all US citizens over the age of 18. 

Elon Musk shared his support for Yang and UBI. In a series of brief tweets, Musk said that he supported Yang, who previously founded Venture for America, and that UBI is "obviously needed."

Members of congress may also be getting more serious about the need for UBI. In April, House Democrats introduced the The Emergency Money for the People Act, which would give $2,000 a month to Americans over the age of 16 who make less than $130,000 a year. The payments, which are an interim UBI of sorts, would continue for at least six months and would last until unemployment falls to pre-coronavirus levels, Business Insider reported.  

The proposal followed the passage of the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, which guarantees a one-time cash payment of up to $1,200 to Americans who qualify based on earnings or Social Security status. The lawmakers behind the new Emergency Money for the People Act say a one-time payment of $1,200 is not enough.

The idea of an emergency, or interim, UBI was first announced by Treasury Secretary Steven Mnuchin in March, one day after Sen. Mitt Romney publicly called for the government to give US adults each $1,000 during this financially trying time. 

In Spain, Nadia Calviño, the country's minister for economic affairs, told the Spanish broadcaster La Sexta that the government is planning to introduce cash handouts to low-income Spaniards as a way to help people financially recover. She added that the government hoped it would become "a permanent instrument," Business Insider reported. 

Andrew Yang
Andrew Yang.  Hollis Johnson/Business Insider

UBI is gaining newfound interest, but the policy idea itself stretches back to the 16th century, when Spanish-born humanist Juan Luis Vives praised a system of unconditional welfare. "Even those who have dissipated their fortunes in dissolute living — through gaming, harlots, excessive luxury, gluttony and gambling — should be given food, for no one should die of hunger," Vives wrote in 1526.

Over the next few centuries, political scientists and sociologists honed the idea of a minimum income even further. In 1797, the American revolutionary Thomas Paine advocated for a "national fund" in the pamphlet "Agrarian Justice,"  for which every American would be awarded fifteen pounds sterling when they turned 21, with another ten pounds per year after age 50. 

Even Dr. Martin Luther King Jr. declared his support for basic income at a Stanford lecture in 1967.

"It seems to me the Civil Rights Movement must now begin to organize for the guaranteed annual income and mobilize forces," King said, "so we can bring to the attention of our nation this need ... which I believe will go a long, long way toward dealing with the Negroes' economic problem and the economic problem many other poor people confront in our nation."

In his final book, "Where Do We Go From Here: Chaos or Community?" King observed that "no matter how dynamically the economy develops and expands it does not eliminate all poverty." Hence the need for the nation to create full employment — or create incomes. 

martin luther king jr
Martin Luther King Jr. was a vocal proponent of minimum income.  Wikimedia Commons

The decade between 1969 and 1979 marked a crucial turning point in the basic income movement for two reasons.

The first was President Richard Nixon's 1969 proposal of the "Family Assistance Plan." The legislation promised to give an additional $10,400 (in 2016 dollars) each year to families who had kids, depending on income. While the FAP easily made it through the House of Representatives, it ultimately died in the Senate.

The second was the "Mincome Program" that took place in Manitoba, Canada. Between 1974 and 1979, residents in the city of Winnipeg and smaller nearby town of Dauphin received additional monthly income, again based on their income levels.

It wasn't until University of Manitoba economist Evelyn Forget discovered the Mincome files 20 years later that anyone realized what a success the program had been.

Forget's research showed hospitalization rates fell by 8.5%, high school completion rates went up, and new mothers could afford to work less. And in general, few people stopped working — one of the key fears that's often cited about basic income.

By nearly all measures, the conclusion was clear: Basic income held serious potential as a way to lift people out of poverty.

Forget's research was critical because it helped revive the basic income movement after two decades of dormancy. Advocates had been praising the concept all the while, but only within the last decade have mainstream economists considered putting it back into action.

Some of the biggest names in business, particularly the tech world, have endorsed UBI, including Musk, Mark Zuckerberg, and Richard Branson.

In over a dozen countries and many more cities around the world, academics and policymakers have launched basic income experiments of their own — some completed, some ongoing. Many of the projects have already replicated the effects Forget found in the late 1970s. Much of the contemporary research on UBI and related programs has been carried out in the developing world; the World Bank largely found that the global poor spend the money on household goods, health care, and that various costs that come with schooling. 

As has been observed elsewhere, the biggest issue with basic income is that it still needs more large-scale, years-long empirical study in developed countries to figure out where or not it "works." Given that UBI remains something of a political Rorschach test — the term "government handout" remains a lightning rod in 2020 — it needs more to be more tested than debated. (Though the financial havoc the novel coronavirus is causing Americans may change that). As UBI becomes more mainstream, it stands a stronger chance of being better researched — and ending up as viable policy.

Chris Weller contributed to an earlier version of this post. 

Read next

Drake Baer was Business Insider's editor-at-large, working across the newsroom to help produce ambitious journalism. For two and a half years before that, Baer served as deputy editor, overseeing a team of 20+ reporters and editors who cover the future of work, real estate, and small business. The fast-paced team was behind some of Insider's major packages in the last few years, including a state-by-state look into unemployment during the first year of the pandemic and in-depth profiles of "niche famous" characters such as real estate media tycoon Brandon Turner and HR icon Johnny C Taylor. They shed new light on big names, like Joe Biden, America's imperfect leader. He also cultivated thesis-oriented ideas journalism, whether it be on why "'diversity' and 'inclusion' are the emptiest words in corporate America" or why it's actually a horrible time to buy a house. (No, really, it is.) Before editing, his byline as a reporter was on the masthead for Fast Company and New York Magazine, covering the many intersections of social science, business, and economics. Baer has interviewed some our time's leading minds, including philanthropist Bill Gates, FiveThirtyEight founder Nate Silver, NBA champion and investor Steph Curry, "growth mindset" psychologist Carol Dweck, the rapper Q-Tip, Nobel laureate Daniel Kahneman, and the man who gave a name to "disruptive innovation," the late Clay Christensen.Baer has published two books, the most recent being Perception: How Our Bodies Shape Our Minds, with Dennis Proffitt. In 2014, New York Times bestselling author and Wharton professor Adam Grant highlighted his first book, Everything Connects, as one of the 12 business books to read that year. He has been featured as a speaker at the Aspen Ideas Festival, presented at TedX Princeton, and moderated many panels.  
Marguerite was formerly a correspondent at Insider, covering business leadership, CEOs, and diversity and inclusion in corporate America. She also helps oversee Insider's The Equity Talk series and Better Capitalism section.  Before joining Insider in 2020, Marguerite was an online editor for NBC's Today.com and a reporter for CNBC and CNBC Make It. Marguerite studied sociology at SUNY Binghamton and earned her master's degree in journalism at the Craig Newmark School of Journalism (CUNY).  If you've got a relevant story to share, email is the best way to get in touch: mward@bjinnox.com