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Basic income and other ways to fix capitalism | Federico Pistono | TEDxHaarlem


Translator: Michele Gianella
Reviewer: Robert Tucker Goedenavond Haarlem.
[Good evening, Haarlem] Feeling good, yeah? So, who here, today, of you, had lunch or breakfast
or any meal whatsoever? Great, we’re lucky. Because there is about
a billion people on the planet who live in absolute poverty, and they don’t have this privilege. Getting a meal
is maybe a fanciful thing. And even industrialized nations,
with very developed countries, there is about 15 percent
who live below the poverty line, like in the United States, or even Italy. Now, the story that we tell ourselves
to justify these kinds of things doesn’t really – it’s compelling to hear,
because it’s reassuring, but it’s not real. And it’s no surprise that we like stories,
we evolved by listening to stories, and that’s how our brains have developed
for hundreds of thousands of years. And some of these stories
became bestsellers, one of them was the great epic
of capitalism versus socialism. And of course we all know the story – well, depends whom you ask
or who told you the story. And it also works the other way around. (Laughter) And these stories, if you really
dig deep, they’re just fairytales, because the reality is very different: There is not a single truly
100% capitalist country in the world, as there is no truly
socialist country in the world. They’re all many variations
of the two and other ideological systems and other types of societies. But the wealthiest
and the healthiest of countries are those that have learned
to actually combine the best of them by looking at the evidence and the results instead of just sticking to an ideology
and telling themselves a reassuring story. We have some of the
prime examples of these in the Scandinavian and some of
the more continental European countries, and I could even include
the Netherlands to some respect. It’s important that we tell ourselves
credible stories, and not fairytales, because fairytales are very dangerous and can lead to unnecessary
suffering or deaths of hundreds of millions of people
as we’ve seen in the past. Now we have many challenges,
and one of them is unemployment. But instead of telling you
a story, or a fairytale, let’s have a look at the data. So here is a graph showing the employment to population
ratio in the US – and in the OECD countries
the statistics are very similar. And this is corporate profits
over the same amount of time. Now, if you put the two things together,
and you look at the recovery rate – the gray lines are recessions, and [from] the recovery rate
you see the degree of recovery – you see very, very astonishing results. We have corporate profits
at an all-time high, unemployment is at a multi-decade low, and if you take into account that women entered the workforce
only around that period, we’re actually at the lowest point ever, and we’re in the shallowest
period of recovery. We are in what, in economic terms –
it’s almost called the jobless recovery. Now, there is some studies coming out from the Oxford Martin School,
and MIT, from my colleagues, that suggest
that half of all jobs in the US are subject to automation – robots and other artificial intelligence
and smart programs. And research just coming out in Europe
also suggests the same results. Now I’ve actually performed
the same thought experiment, and I’ve done my own research two years before the Oxford
Martin School and MIT, and I had the exact same predictions. And one of the big criticisms
that I received was: Sure technology displaces jobs,
robots steal jobs, but in the end
you always create new jobs because you have
new opportunities, new sectors, and there is always time to recover
and find new ways of doing things. I said: “Okay, that might be true,
but let’s look at the data, let’s look at the historical perspective
and the timeframe.” So I took all the occupations,
and I listed them by number of workers, from the top to the bottom. And I asked myself
a very simple question: What kind of occupations
were invented within, let’s say, the next fifty or sixty years? Because if technology
only displaces temporarily jobs, then there should be
a bunch of new occupations that are invented in recent times. Actually I had to scroll down quite a lot:
number 33, computer programmers. It was invented actually 65 years ago. So the reality is
that new jobs are very few, highly skilled, very sophisticated,
very difficult to do, and very few people can do them. And certainly not
the 45-year-old truck drivers, maybe 70 or 80 million of them, who are going to be totally displaced
within the next five to seven years. And other hundreds of millions
of people in other professions. So think about a 45-year-old truck driver having to compete
with a 17-year-old Ukrainian whiz kid who writes four apps a day
on his computer. Not very credible. And if you look at another trend, the multi-billion dollar
companies of today employ fewer and fewer people, and they have
a bigger revenue per employee. If you take Apple, Google, Facebook
and Amazon, and you combine them, they are worth more
than a trillion dollars together, but they only create 150,000 jobs. And the newest companies
create even more revenue per employee because they’re worth
billions and billions in a very short amount of time, and they employ a few dozens
or at maximum a few hundreds of people. So this is the new economy,
this is the reality, and what it leads to is more inequality. Now, I’m not stating that this is
the only reason for inequality, but it certainly exacerbates whatever level of inequality
you might have. And if you look
at the global picture of inequality, the situation is quite dire. You divide the population
in 25 percentiles, and you see that the 75% on the bottom
owns less than 20% of all the wealth. And the richest 2% has
about 55% of all the wealth. And the richest 85 people, not 85%
or 85 million, 85 people, own as much as the bottom 3 billion. This is the reality, and it’s only
getting worse and worse. This is worse than the medieval time
during the feudal era. This leads to the disappearance
of the middle class, which is very bad because a thriving
society has a very strong middle class, for example in the Netherlands. And we know from Thomas Piketty’s
groundbreaking research that the return of capital – essentially, money that you’ve
just sitting there because you have it, or you have real estate
or other properties – makes a lot more money than labor. So those who have more capital will only
make more in this kind of system. And it’s a problem
that works at the structural level. This creates structural inequality, which is very different from temporary
inequality or cyclical inequality; it means that it’s in the system. So the story we tell ourselves,
or better yet the fairytale, is that this process
is not only inevitable, but it’s the nature of capitalism,
and there is nothing to do. Because things are just the way they are. Now, of course, we all know
that this is nonsense because there are countries that have
successfully redistribute wealth through policies and through
all sorts of innovations, such as Germany and South Korea, who have redistributed
quite successfully wealth, and have a very strong middle class, but they’re doing also quite well
financially and in the global market. So it’s not impossible,
but it’s very difficult. Even so, nobody has a long-term solution
for structural technological unemployment, which is just on the horizon, and actually we are already experiencing
some of it in some countries. One of the proposed solutions
is an unconditional basic income. So, first of all, what is it? Well, very simply,
it’s free money for everybody. That’s the simple version. The more elaborate is a lump sum of income that is distributed unconditionally,
without any strings attached, to every person in a country, every month. Now, I realize that we might be
plagued by selection bias – this is a TED crowd – but I’m going to ask
this question anyway. So if you think having a basic income,
giving free money to everybody, is a good idea, raise your hand. Okay, perfectly 50/50 almost. Great. Now, there is a lot of public debate,
luckily, on this subject, and it’s good because
this is a very old idea, and now it’s been
rekindled in the imagination and in the spirit of the people. The problem with the public debate
that I’ve noticed is that it’s very much based
on ideology and the moral argument. So whether you agree or not
– I’m not very much interested in that. I’m interested in the fact
that nobody is having a real discussion, very few are having
a real discussion about this topic. They either agree
because of some ideological reasons, some idea that they have
about what people might do, or whether its morally right; or you might disagree because you think
it’s atrocious, not going to work, or you can’t just give people money
for whatever reason. We are all forgetting
the most important thing, which is asking the right questions,
questions such as: How much will it cost?
and: How will you pay for it? How can you finance it? Would people stop working
if they just receive an income? and: Will it actually solve the problem? This is the main question. And, what is the problem
that we’re trying to solve? Because we should focus on the goal, not the story or the fairytale
that we tell ourselves, and we are very attached to,
and we defend. We should think about what the goal is. So: What is the goal? Otherwise it’s going to be just like the discussion
with capitalism and socialism all the way round
for another hundred years. We don’t have that time. So what is the goal? It’s difficult
to reach a consensus, but I think a good starting
point is to start from Article 25 of the International
Declaration of Human Rights from the United Nations, which states that everyone has the right
to a standard of living adequate for the health and well-being
of himself [and] his family, including food, clothing,
housing, medical care, and necessary social services
and so on. So the question is: Does a basic income
fulfill this goal or not? Because if it does, I don’t think it really matters,
your ideology, because you’re actually
fulfilling the goal. And if it doesn’t, it doesn’t matter
how good the idea sounds: If it doesn’t work, it doesn’t work! So the only way to know
if it actually works is to look at the experiments, and nobody actually cites
the experiments or the results, they just pass it along and say, “Oh, we’ve done the experiments, and we know that it works,
and it’s settled.” No, it’s not settled – because these are the countries
where we’ve run the experiments, okay? It might sound promising,
but [it involved] 14 countries, [while] there is actually
200 countries on the planet, so that’s a reality check
for everybody. Only three of those were actually
an unconditional basic income, and only two had more than
1,000 people in the study. Okay, so this is the reality: We don’t have a lot of evidence
either for or against the basic income. We just don’t know, because we haven’t
done enough experiments. So let’s have a look
at these two experiments. In Canada, in the 1970s, for five years, about 10,000 people
received around $500 a month. They wanted to know
if people would stop working. And it turns out: Not really,
no, people worked just as much. Only two categories worked a little less: Women who took extended maternity leaves, which I think is good,
spend more time with your kids; and young boys worked less, but there was a higher completion rate
in high school for young boys, meaning they stayed more in school
instead of going to work right away, which also I think is good. And then an unexpected result:
a lower hospitalization rate. This is one of the things
that you discover when you actually – run the experiments and see
what happens in the real world, instead of just making
everything up in your head. The second experiment was in India,
much more recent, three years, 2011-13, about 6,000 people,
with a control group of another 6,000, received about $4 a month. May not sound like a lot, but in rural India this is actually
40% of your subsistence. Yeah, not everybody has 1,000 euros
just laying around like that. Results were very promising. There was improved food nutrition,
food sufficiency, improved livestock, there was no increase in public bads
like alcohol, prostitution and drugs, there was reduced illness, a lot more people were going to school, especially girls, who are usually
marginalized in society. So it’s great that a lot of girls
were going to schools. And people, very counterintuitive, were three times more likely
to be entrepreneurs and start their own business. So people were actually working more,
and they were taking more risk, and there was more innovation. So this is reality. Now, these results are promising,
but in no way conclusive. Because they are very small
and very few, these experiments. And to reach our goal we actually
have to ask some other questions, and answer them. For example: What happens with rent? So let’s suppose that starting tomorrow each one of us receives
1,000 euros every month. So 1,000 euros just magically pops in your
bank account, every month, the same day. Well, what happens to rent? If you’re not a homeowner,
you have a landlord or a landlady. What’s stopping them,
other than policy or other mechanisms, to raise the rent exactly 1,000 euros? Because that’s what the market dictates, you’re just going to [ask]
as much as possible [for] rent, as much as people can afford. If you [raise it] the same for everybody, well, that actually
only increases inequality because you’re moving more capital
to those who already have capital, because of Piketty’s research. So this basic income would actually
increase inequality and increase poverty, and destroy the middle class even faster. Then, if you are getting rid
of most social programs, and you just kind of say people are free to do
whatever they want with their income so we don’t need all this bureaucracy, there might be a drive
to privatize a bunch of things, because you don’t need
so much social programs and government involvement. Well, we know what happens
when you privatize healthcare. It’s a very bad idea,
quality goes down, prices go up, and everything goes to the bin. So whatever solution we come up with, we have to remember
that it’s not going to be a panacea, because things need to be contextualized, and if they’re implemented,
they must be comprehensive, in a comprehensive package
of larger reforms, to look at the whole ecosystem and the larger implications
of what you’re doing. And they must be different
in every country, because different countries
have different social contexts, social adaptations, and social norms, and not everybody
[has] the same cultural level. So it’s never going to be
a one-size-fits-all solution. And the problem is
that we don’t have enough experiments. We need more data, but most of all
we need better data. In particular, we need experiments, and I make out a call for everyone who’s a policymaker, or is working at university who has
any power whatsoever to influence things, to start trials, talk to me, talk to other people
in the basic income community. And let’s do them,
with at least 10,000 people, with a control group so you know
what you’re accounting for. It must be truly unconditional: Everybody receives it,
no strings attached whatsoever, otherwise it’s not going to work. It needs to be for more than two years, because what people do if they know it’ll be
in the long term is very different – they make plans about the future. If they know it’s just going
to last 6 months, you’re not going to see
the social dynamics that actually unfold in a complex society. And it must be a true basic income, not a fraction of a percent,
of like 10% or 40% of the poverty line; it must be, many economists suggest,
about half the median income, or somewhere around that number. And finally, we need
detailed feasibility studies, because there are now
some preliminary studies that suggest that it might
work financially, but we don’t really know because no one
has actually done a thorough research looking [at] all the implications,
all the way down, in the economic activity
in the larger sense, looking at the broader picture. So we need to get
in touch with universities, with professors, with economists,
with policymakers, with experts, and with entrepreneurs,
yes, with entrepreneurs, because there are
new technologies and new innovations that can help us simplify bureaucracy, because now it’s easier than ever
to run a basic income experiment thanks to technology such as
the block chain and cryptocurrencies. And in developing countries
mobile payments are very successful, like in Kenya. There are now lots of groups that are trying to implement
basic income through cryptocurrencies and the Swiss in Switzerland
are going to vote this year on a basic income in a public referendum. Now, I have a feeling
that it’s not going to pass, because they haven’t done
a feasibility study, and the discussion
is at the ideological level. So a lot of people
are rightly not convinced because no one has actually taken the time
to run an experiment or do a proper study. So there are some worrying trends
that we need to think about. We have aging population,
with fewer people being able to pay taxes and more people
requiring a pension; rising inequality; we have the prospect
of technological structural unemployment; and the disappearing middle class. All of this is very worrying. And if we just tell ourselves
stories and fairytales, that this is the way things are, and nothing’s going to change,
and we can’t do anything about it, it’ll just be like
the climate change debate, where we just run around in circles, and there’s not really a debate, the facts are out the window,
and it’s just ideology. It’s going to be a disaster
if we treat it in the same way. So we need a serious, real public debate, looking at the data,
looking at the evidence, getting in touch with experts,
civil society, policymakers, everybody, to have a real public debate,
so we can find together solutions, so we can reach our goal to give
a high standard of living to everybody, all 7.2 billion of us, who are sharing this amazing experience
for a very brief moment, in this pale blue dot,
floating above the sky. And there is, in the words
of the great Carl Sagan, there is perhaps no better demonstration
of the folly of human conceits than the distant image of our tiny world. To me, it underscores our responsibility
to deal more kindly with one another, and to preserve and cherish
the pale blue dot, the only home we’ve ever known. Thank you. (Applause)

Bernard Jenkins

41 Comments

  1. Another dude with an accent that had no clue about basic economics, and thinks socialism is the answer.

    Pure insanity.

  2. The industrial revolution has ended, and so has the time when a job supplies our basic needs. We presently live in a market economy, where everyone has to trade work, knowledge and skills for what we really need- a roof, meals and friends. This system has, judging by many criteria, is not benefitting many people. One criterion, homelessness. Just look at our city streets. And our financial systems are just trading in IOUs.

  3. We should add to these studies, the GCC countries where there is a kind of UBI and a lot of foreigners working instead of the local population!!!!
    The question is what will a person do with this additional money that is given; will he create more value to society? or the other way around?

  4. Its funny, how nobody pointed this out…. But well, this video is quite old.
    Most recent study found out, that only 10% of jobs are in immediate danger of automation, 40% in severe danger. But its estimated, that for ~86M lost jobs, another ~114M jobs will be opened. Thus automation is even statistically proven to not cause issues.

    Also, skeptics were always with every revolution. People were afraid they'll lose jobs in Industrial revolution. But did they ? No.

    Today version of capitalism, even with few flaws, works really well. Poor are getting richer while rich are getting richer.

    Also…. Norway is Market Economy, there is nothing social or socialistic.

  5. Our ancestors could breath unpolluted air and drink unspoiled water, hunt or gather their own food and create their own housing. Civilised humans can do none of those things, that's human progress! Of course density of occupation precludes an autarkic life-style but somehow we have come to accept that there are no inalienable property rights for humanity just alienable rights for those who can afford them, everything including a right to life is for sale for if no one has an inalienable property right in the Earth they have no right to a life that is not subject to the arbitrary power of better placed humans. There is no right to say no for the disinherited, disenfranchised and domesticated who should be in receipt of consideration for the contribution of their jus soli (interest in the Earth) to those who wish to create a surplus from it. Since humanity in general is denied the ability to provide for their own subsistence because of the appropriation of the land by exceptional individuals, corporates and States, the surpluses they create should provide that subsistence as a consideration for denying them the freedom that their ancestors enjoyed. UBI is that consideration for everyone, not something that is graciously given but the right of a person whose property (jus soli) has been occupied and who requires payment under the law of property from the person or entity who occupies it (ground rent £25 and subsistance).

  6. We need a solution for automation, but I learned nothing from this lecture. The 2 points of data presented were horrible and simplistic. Less hospitalizations? How does that relate to UBI and how can we trust the data? In the future studies, will random people fr the population be selected for the UBI, including millionaires, rich, or middle class, or like all the other studies conducted, will UBI be given to poor and marginalized? Because if it is a redistribution income, then it is not universal and the experiment won't work, bc poor and rich spend it it differently. And 10 k people would not be enough, we need 1/3 of a city, and we need a second treatment for comparison, such as a really good minimum wage, and a combined minimum wage/supplement to draw a conclusion.

  7. I suggest we run a U.S. wide 250+ million sample size UBI experiment at the level of 1000$ per month for the next 50+ years.

  8. I swear it feels like yang watched this video and brought it into politics

  9. Scandinavian? You mean depression, suicides, control, no happiness, no social life, expensive yes thats scandinavian………..Resource based economy is the future not combining Isms.

  10. Would Jeff Bezos get Ubi or Rothschild or Wallenbergs here in Sweden? ^^ As long as monetary system is alive we will never solve anything. RBE

  11. I am here because of Andrew Yang. It’s refreshing to see this was a serious discussion only 4 years ago and the things he is saying are so much more true and impactful now. It’s scary. We need to act now.

  12. this is foolishness – the extra people will be killed one way or another. You think they are just going to be supported when they have nothing to offer but yet claim a place at the table to make demands? you have a mighty high opinion of yourself if you think you matter to anyone who has power. Beyond the basic fact of life and nature that vacuums are not tolerated, the USA is already totally bankrupt having nearly 200 trillion in unfunded liabilities and there is not enough money in the whole world to pay it. Most are going to starve to death

  13. While I agree that a control is important, it's worth noting that this study by definition won't be blind, let alone double blind. I know part of the goal would be to see what biases show up, but…experiments in a social setting are difficult because the nature of a societies' biases changes faster than you can build a model of it…

  14. Total BS. Flush ALL failed socialism down the sewerpipe of history, including the hair-brained idea of universal basic income. Eliminate ALL government interference in healthcare. Eliminate government to the extent practicable. Frederico is spouting fairytails. Better that all life on earth should perish than the tyranny of communism should succeed. Global warming is a lie. The global economy is sinking because of the drip drip drip of free stuff used to buy votes for the socialist-communists. Opening the valve with UBI will only sink the whole world quicker.

  15. Sorry for being the one pulling a stinker on the top of this argument but despite my total agreement for an ideal system which is a marriage between capitalism and socialism , a universal free basic income for EVERYONE would eventually lead to a debate about ''Who has the right to procreate'' , like age limits and all the social stigma that follows or rather unravels thereafter :-/ … And if this free universal income would be limited to those of 18 years of age and above , the question would become ''How do we adjust the education system to provide a fair chance for everyone while providing sufficient able and qualified workforce to the industries and society as a whole ?''

  16. I’m sorry, you destroyed your point right at the moment when you said private medicine is terrible and prices go up, which is exactly the opposite- look up Lasic surgery. The problem with medical care in the US is due to insurance. There is no insurance for lasic eye surgery and the prices went down and quality went up.
    The speaker is a dreamer

  17. Y don' THE TOP 1 $ OWNING 90 % WEALTH PAY 20% TAX equalling 20 times the tax YOUNG WORKERS CAN PAY.

  18. He makes the same mistake many do when they talk about "redistributing" wealth. Those who have a lot of wealth did not get it from a "distribution". They CREATED it! So, in fact, we're talking about stealing some of their created wealth and distributing it to others — to those that did not put out the hard work, the blood, sweat, and tears to create it.

    I live in Germany, and it is true that his country and others have found an unholy balance between how much wealth they steal and still maintaining the economy. But I wonder just how much more those economies would grow without all the theft.

    Also, I think his estimates of jobs being displaced by automation is overstated. This talk was done on 2015. Trump has clearly demonstrated that this is not the case, with unemployment rates the lowest they've ever been!

    We do not need to "fix" capitalism. We do not need a "UBI". We need to take the reigns off of capitalism and let it seek its own optimizations.

    Also, by now, UBI has been tried as a "test pilot program" in a few places. How did it go? Not hearing much about UBI anymore. Hello. They are not only unsustainable, but does more damage.

    Anyone can create wealth. Even the 40-year-old truck driver that may have lost his job to autonomous trucks — which itself have not taken off to any great degree. He can open up a small shop, for instance, where he sells a good or service to his local community.

    Never underestimate the power of human ingenuity. And necessity is the mother of invention. And no, it is not easy to put human ingenuity in your statistical models. Just doesn't work that way!

  19. Robots can not steal my job because the Democrats are going to get rid of the oil that it takes to keep them moving.

  20. This guy and all UBI people all ignore that UBI comes from taxes. I would rather work 10 hours a week to earn $1000, rather than 3 hours per week so the government can give me $1000. Because when the government runs anything, it costs twice as much.

  21. UBI Pushers — they always say " we need more data" because they know its not a good idea.

  22. Hardcore Absolute Fact: 1.) Private building ownership ( rent control ) must be calculated based on the poorest sovereign human beings ( homeless ) who are excluded from society from livable wage, respectable jobs and make a living panhandling to survive! Property owners are too greedy and never moral = always raising rents on the hardwork of those on fixed incomes!

  23. Hardcore Absolute Fact: UBI in Ohio must be $2,000/Month minimum now because of high cost of living! It shouldn't take anyone more than 4 days to pay rent! 32 Hours of work! There are lots of other bills to pay as well!!!!!

  24. hum socialism to fix capitalism? we tried that with obama and more of the middle class went into become even poorer and more broke just like this speaker wants you to become.

  25. Basic income principle is essentially what caused the Roman Empire to collapse. Every Roman citizen that lived in a city received a minimum income. So everyone moved into the cities, and eventually the Empire became a welfare state. Innovation decreased while complacency and laziness increased. The Empire was invaded, and around 476 A.D., the rest is history.

    While this may seem like a good idea in theory, history shows us it's terrible because it encourages laziness. A better idea is one proposed by Warren Buffett, which is to use tax credits in some way to the benefit of those with less income. People that work and endeavor to support themselves, but for whatever reason are still lacking, would be good to help. People that are lazy and refuse to work when they are perfectly capable of doing so should starve.

  26. IF PEOPLE HAD BASIC INCOME, HOUSING, HEALTH CARE AND EDUCATION IT WOULD GIVE PEOPLE A CHANCE AND TIME TO CREATE ADDITIONAL JOBS AND OR PRODUCTS OR WOULD WE HAVE A LAZY SOCIETY?

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