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Andrew Yang: Alaska proves a universal basic income can work
Andrew Yang argues that the Alaska Permanent Fund shows the path to implementing a nationwide universal basic income.
- The Alaska Permanent Fund directs oil revenue into a fund that pays Alaskans a yearly dividend, usually between $1,000 and $2,000.
- Andrew Yang points to this and other experiments to support the efficacy of a universal basic income.
- However, Alaska's model leaves several important questions unanswered.
What does Andrew Yang have in common with Thomas Paine, Richard Nixon, Martin Luther King Jr., Charles Murray, Carole Pateman, and Elon Musk? They all have advocated for a universal basic income (UBI).
Yang calls his UBI proposal the Freedom Dividend. In his book The War on Normal People, he explains his reason for the moniker: "It's analogous to a company giving dividends or money to its shareholders. No one regards that as a waste of money, because the shareholders theoretically are the owners of the company. Are we not, as the citizens of the United States, the owners of this country?"
This Freedom Dividend would provide every American adult $1,000 a month, no strings attached. But an impediment Yang and other UBI defenders have always come against is a lack of data. No country has ever implemented a UBI policy to scale.
To meet this challenge, in interview after interview Yang points to Alaska to support UBI's efficacy. You read that right: A Democratic candidate for president is lauding the deep red state of Alaska as proof that a government spending program can work. Come again?
Looking toward Alaska
First, a bit of history. Alaska established the Alaska Permanent Fund in 1976, after a general election amended the state's constitution to allow for dedicated funds. The article commissioned the legislature to set aside a percent of oil and mineral revenues into a general fund. The Fund is managed like an investment fund and pays dividends to Alaskan citizens. Today, its value exceeds $60 billion.
Payouts began in 1982, and since the mid '90s, Alaskans — including children but excluding criminals — have regularly received dividends between $1,000 and $2,000 a year.
While the Alaska Permanent Fund isn't technically universal income, it is the largest, longest running distribution of such money to citizens. For this reason, economists, politicians, and researchers look to the state as a source of data for how a UBI could potentially affect economic wellbeing.
According to Mouhcine Guettabi, a researcher at the University of Alaska's Institute of Social and Economic Research, the data shows payouts are beneficial overall, but not miraculous godsends.
For every additional $1,000, women work an hour less and men's work increases by roughly 1.8 percent. Likely, this difference stems from mothers choosing to work less and spend time with families. As Guettabi clarifies, more men work in Alaska, so that uptick amounts to about 2,000 additional jobs in the three months after distribution. That's at a cost of about $600 million to the state.
Looking to children, every additional $1,000 reduces the likelihood of obesity by 4.5 percent. Statewide, that equals about 500 cases of obesity potentially alleviated.
Property crimes decrease by 8 percent; meanwhile, substance-related crimes increase by about 10 percent. However, these figures do not mean Alaska is a state filled with druggies sporting a strong sense of personal space. These divergences apply only to the first weeks after payout. Since distribution is annual, not monthly, this means the payouts have a marginal effect on crime.
Dipping our toes in the UBI pool
Other experiments have supported some of the data coming from Alaska.
From 1968 to 1971, the New Jersey Graduated Work Incentive Experiment offered cash payments to families. The experiment was designed to look at the impacts a negative income tax would have on people living below the poverty line. It showed no major withdraw from the work force and no effect on health or perceived life quality. However, families were more likely to upgrade their living conditions and enhance their economic well-being.
Moving to Europe, Finland recently concluded an experiment in universal basic income. Kela, the Finnish government's unemployment agency, gave 2,000 people a tax-exempt income of 560 euros a month for two years. The study found the income distributions didn't affect employment attainment or work hours. It did, however, elevate people's perception of their wellbeing and reduced their stress.
"Our results weren't that surprising as it kind of confirms what we know from other pilots," Minna Ylikännö, a lead Kela researcher, told Wired. "People's wellbeing is enhanced when they have some kind of financial security. They feel secure, so they feel better – that's something which we see in other countries too, not just a Finnish experience."
However, these experiments are limited in what they can tell us about UBI. Both were short-term, narrowly focused, and had small sample sizes. They only offered money to specific groups — those below the poverty line and the unemployed, respectively — not to a randomly selected group of citizens. As such, the Alaska Permanent Fund offers a much deeper history from which to draw preliminary inferences on UBI's efficacy.
The Big Yang theory
Data from Alaska and other small-term experiments suggests that many concerns over universal basic income are overblown. A UBI likely won't discourage citizens from working. It won't lead people to fund a lifestyle of decadence and depravity off the backs of hardworking taxpayers. And it's certainly not socialism.
With that said, Alaska's example can't help us answer many of the lingering questions surrounding a nationwide UBI. Foremost, whether we can afford it.
The Alaska Permanent Fund pays out once a year, and the amount fluctuates based on, for example, stock market performance and whether the legislature diverts funds to other projects or investments. Conversely, the annual $12,000 advocated by Yang and other UBI proponents is significantly higher and will not be allowed to fluctuate to match market pressures (whether it adjusts to offset inflation depends on how it is established).
Cost estimates of a nationwide UBI vary, but hedge-fund manager Ray Dalio calculated the cost to be more than $3 trillion annually. The Center on Budget and Policy Priorities calculated a similar amount. For reference, the Congressional Budget Office estimates federal revenues for 2019 to be $3.5 trillion.
Yang's solution is to consolidate current welfare programs and then implement a 10 percent value-added tax (VAT). This new tax would specifically target business titans such as Amazon, which in 2018 paid effectively no taxes on $11 billion of profits. As Yang told George Stephanopoulos on This Week:
What we have to do is, we have to join every other advanced economy and have a value-added tax that would fall on the Amazons of the world, and because our economy is now so vast at $20 trillion, up $5 trillion in the last 12 years, a value-added tax at even half the European level would generate over $800 billion in new revenue.
The second major concern: offering money to every citizen helps the rich as much as the poor. Effectively, wealth inequality persists. Yang's response, we need to give everyone the UBI to make it stick and then use the VAT to ensure the poor become better off.
As described on Yang's campaign website: "By giving everyone UBI, the stigma for accepting cash transfers from the government disappears. Additionally, it removes the incentive for anyone to remain within certain income brackets to receive benefits. If it's paid for by a value-added tax as in my plan, a wealthy person will likely pay more into the system than he or she gets out of it."
Others disagree. An analysis from the Tax Policy Center argues that a VAT has the potential to reduce household income by either raising the prices of goods at market or reducing the business revenue available to workers. Additionally, a VAT won't tax the returns on capital investments, which make up a large portion of income for upper-class households but little-to-none for low-income ones. The Center concludes that a VAT would ultimately be regressive unless introduced alongside a sweep of policy changes.
The final concern we'll consider is that a UBI diverts funds from programs with a proven track record of success. This is why Yang's proposes an opt-in program. Under his plan, those who prefer existing welfare programs can stick with them. Furthermore, people who draw more than $1,000 of assistance these programs will still receive the difference should they opt in.
Ultimately, any dollar that goes into a UBI program is a dollar that can't be spent elsewhere. Would providing everybody a $1,000 a month help uplift children in impoverished families more than, say, universal preschool and lunch programs? Is it better to offer people $1,000 per month to assist paying for healthcare or to enshrine health as a universal right?
Yang correctly points to Alaska to support his Freedom Dividend, as data from the state can help us begin the conversation. However, it can't help us answer the fundamental questions mentioned above. For those, we'll need to debate the topic with honesty, good data, and solid arithmetic. This conversation may take a while yet.
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What is human dignity? Here's a primer, told through 200 years of great essays, lectures, and novels.
- Human dignity means that each of our lives have an unimpeachable value simply because we are human, and therefore we are deserving of a baseline level of respect.
- That baseline requires more than the absence of violence, discrimination, and authoritarianism. It means giving individuals the freedom to pursue their own happiness and purpose.
- We look at incredible writings from the last 200 years that illustrate the push for human dignity in regards to slavery, equality, communism, free speech and education.
The inherent worth of all human beings<p>Human dignity is the inherent worth of each individual human being. Recognizing human dignity means respecting human beings' special value—value that sets us apart from other animals; value that is intrinsic and cannot be lost.</p> <p>Liberalism—the broad political philosophy that organizes society around liberty, justice, and equality—is rooted in the idea of human dignity. Liberalism assumes each of our lives, plans, and preferences have some unimpeachable value, not because of any objective evaluation or contribution to a greater good, but simply because they belong to a human being. We are human, and therefore deserving of a baseline level of respect. </p> <p>Because so many of us take human dignity for granted—just a fact of our humanness—it's usually only when someone's dignity is ignored or violated that we feel compelled to talk about it. </p> <p>But human dignity means more than the absence of violence, discrimination, and authoritarianism. It means giving individuals the freedom to pursue their own happiness and purpose—a freedom that can be hampered by restrictive social institutions or the tyranny of the majority. The liberal ideal of the good society is not just peaceful but also pluralistic: It is a society in which we respect others' right to think and live differently than we do.</p>
From the 19th century to today<p>With <a href="https://books.google.com/ngrams/graph?year_start=1800&year_end=2019&content=human+dignity&corpus=26&smoothing=3&direct_url=t1%3B%2Chuman%20dignity%3B%2Cc0" target="_blank" rel="noopener noreferrer">Google Books Ngram Viewer</a>, we can chart mentions of human dignity from 1800-2019.</p><img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNDg0ODU0My9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTY1MTUwMzE4MX0.bu0D_0uQuyNLyJjfRESNhu7twkJ5nxu8pQtfa1w3hZs/img.png?width=980" id="7ef38" class="rm-shortcode" data-rm-shortcode-id="9974c7bef3812fcb36858f325889e3c6" data-rm-shortcode-name="rebelmouse-image" />
American novelist, writer, playwright, poet, essayist and civil rights activist James Baldwin at his home in Saint-Paul-de-Vence, southern France, on November 6, 1979.
Credit: Ralph Gatti/AFP via Getty Images
The future of dignity<p>Around the world, people are still working toward the full and equal recognition of human dignity. Every year, new speeches and writings help us understand what dignity is—not only what it looks like when dignity is violated but also what it looks like when dignity is honored. In his posthumous essay, Congressman Lewis wrote, "When historians pick up their pens to write the story of the 21st century, let them say that it was your generation who laid down the heavy burdens of hate at last and that peace finally triumphed over violence, aggression and war."</p> <p>The more we talk about human dignity, the better we understand it. And the sooner we can make progress toward a shared vision of peace, freedom, and mutual respect for all. </p>
Scientists find that bursts of gamma rays may exceed the speed of light and cause time-reversibility.
- Astrophysicists propose that gamma-ray bursts may exceed the speed of light.
- The superluminal jets may also be responsible for time-reversibility.
- The finding doesn't go against Einstein's theory because this effect happens in the jet medium not a vacuum.
Jet bursting out of a blazar. Black-hole-powered galaxies called blazars are the most common sources detected by NASA's Fermi Gamma-ray Space Telescope.
Cosmic death beams: Understanding gamma ray bursts<div class="rm-shortcode" data-media_id="cu2knVEk" data-player_id="FvQKszTI" data-rm-shortcode-id="c6cfd20fdf31c82cb206ade8ce21ba3f"> <div id="botr_cu2knVEk_FvQKszTI_div" class="jwplayer-media" data-jwplayer-video-src="https://content.jwplatform.com/players/cu2knVEk-FvQKszTI.js"> <img src="https://cdn.jwplayer.com/thumbs/cu2knVEk-1920.jpg" class="jwplayer-media-preview" /> </div> <script src="https://content.jwplatform.com/players/cu2knVEk-FvQKszTI.js"></script> </div>
Is Bitcoin akin to 'digital gold'?
- In October, PayPal announced that it would begin allowing users to buy, sell, and hold cryptocurrencies.
- Other major fintech companies—Square, Fidelity, SoFi—have also recently begun investing heavily in cryptocurrencies.
- While prices are volatile, many investors believe cryptocurrencies are a relatively safe bet because blockchain technology will prove itself over the long term.
Presentation slide from Sanja Kon's presentation on the evolution of money at 2020 Web Summit
Credit: Sanja Kon<p>The move came shortly after the payments company Square invested $50 million into Bitcoin, and after Fidelity announced that it was opening a Bitcoin fund into which qualified purchasers could invest <a href="https://www.bloomberg.com/news/articles/2020-08-26/fidelity-launches-inaugural-bitcoin-fund-for-wealthy-investors" target="_blank">(minimum investment: $100,000)</a>. Together, this institutional backing might have something to do with Bitcoin's recent surge back to near its 2017 price peak of $19,783. (Bitcoin is listed at 19,384.30 as of Dec. 3.)<br></p>
Presentation slide from Sanja Kon's presentation on the evolution of money at 2020 Web Summit
Credit: Sanja Kon<p>But more importantly, it suggests cryptocurrencies might soon have the opportunity to prove themselves in real-world use cases. After all, skeptics have long doubted the ability of cryptocurrencies to go mainstream as a form of everyday payment. But people seem increasingly comfortable with digital payment systems.</p><p style="margin-left: 20px;">"The entire world is going to come into digital first," Schulman said at Web Summit, adding that PayPal's services already go hand-in-hand with cryptocurrencies. "As we thought about it, digital wallets are a natural complement to digital currencies. We've got over 360 million digital wallets and we need to embrace cryptocurrencies."</p><p>Sanja Kon, vice president of global partnerships at the cryptocurrency payments processor company UTRUST, also spoke at Web Summit about the increasing adoption of digital payments:</p><p style="margin-left: 20px;">"Physical cash is becoming more and more obsolete. And the next step in the evolution is digital currency."</p><p>Kon noted some of the inherent advantages of cryptocurrencies, namely ownership. </p><p style="margin-left: 20px;">"For many people, this is really the main benefit of cryptocurrency: Users owning cryptocurrencies are able to control how they spend their money without dealing with any intermediary authority like a bank or a government, for example," Kon said, adding that there are no bank fees associated with cryptocurrencies, and that international transaction fees are significantly lower than wire transfers of fiat currency.</p><p>Kon said cryptocurrencies have unique growth opportunities in areas where people aren't integrated into modern banking systems:</p><p style="margin-left: 20px;">"With cryptocurrencies and blockchain, with the use of just a smartphone and access to internet, Bitcoin and cryptocurrencies can be available to populations of people and users without access to the traditional banking system."</p>
Bitcoin as 'digital gold'<p>Still, it could take years for people to start using cryptocurrencies for everyday purchases on a large scale. Despite this, many cryptocurrency advocates see digital currencies, particularly Bitcoin, as a way to store value—digital gold, essentially.</p><p style="margin-left: 20px;">"I don't think Bitcoin is going to be used as a transactional currency anytime in the next five years," billionaire investor Mike Novogratz recently told <a href="https://www.bloomberg.com/news/articles/2020-10-23/novogratz-says-bitcoin-is-digital-gold-not-a-currency-for-now?srnd=markets-vp" target="_blank">Bloomberg</a>. "Bitcoin is being used as a store of value. [...] "Bitcoin as a gold, as digital gold, is just going to keep going higher. More and more people are going to want it as some portion of their portfolio."</p><p>There are obvious parallels between gold and Bitcoin: Both are mined, do not degrade over time, are finite in supply, and aren't directly tied to the value of fiat currency, making them <a href="https://www.reuters.com/article/us-gold-inflation/gold-as-an-inflation-hedge-well-sort-of-idUSKCN1GD516" target="_blank" rel="noopener noreferrer">relatively invulnerable to inflation</a>. The obvious objection is that the price of Bitcoin, and cryptocurrencies in general, is far more volatile than gold.</p><p>But for investors who believe the inherent value of cryptocurrency technology will prove itself over the long term, these price fluctuations are just bumps on the long road to the future of currency. </p><p style="margin-left: 20px;">"It's no longer a debate if crypto is a thing, if Bitcoin is an asset, if the blockchain is going to be part of the financial infrastructure," Novogratz said. "It's not if, it's when, and so every single company has to have a plan now."</p>
Singapore has approved the sale of a lab-grown meat product in an effort to secure its food supplies against disease and climate change.
Approve for your dining pleasure<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="dd3f57f8baf14e654812d30a309d1f17"><iframe type="lazy-iframe" data-runner-src="https://www.youtube.com/embed/307gysA18_E?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span><p><a href="https://www.ju.st/en-us" target="_blank" rel="noopener noreferrer">Eat Just</a>, a company that produces animal-alternative food products, announced the news earlier this week. In what the company is calling a world first, Singapore has given it permission for a small-scale commercial launch of their GOOD Meat brand product line. For the initial run, the cultured chicken meat will be sold as an ingredient in "chicken bites."</p><p>"Singapore has long been a leader in innovation of all kinds, from information technology to biologics to now leading the world in building a healthier, safer food system. I'm sure that our regulatory approval for cultured meat will be the first of many in Singapore and in countries around the globe," Josh Tetrick, co-founder and CEO of Eat Just, <a href="https://www.businesswire.com/news/home/20201201006251/en/Eat-Just-Granted-World%E2%80%99s-First-Regulatory-Approval-for-Cultured-Meat" target="_blank" rel="noopener noreferrer">said in a release</a>.</p><p>According to the release, Eat Just underwent an extensive safety review by the Singapore Food Agency. It provided officials "details on the purity, identity and stability of chicken cells during the manufacturing process, as well as a detailed description of the manufacturing process which demonstrated that harvested cultured chicken met quality controls and a rigorous food safety monitoring system." It also demonstrated the consistency of its production by running more than 20 cycles in its 1,200-liter bioreactors.</p><p>While Eat Just did not offer details on its propriety process, it likely follows <a href="https://www.newscientist.com/article/mg24032080-400-accelerating-the-cultured-meat-revolution/" target="_blank" rel="noopener noreferrer">one similar to other lab-grown meats</a>. It starts with muscle cell samples drawn from a living animal. Technicians then isolate stem cells from the sample and culture them <em>in vitro</em>. These cultured stem cells are then placed in a bioreactor, essentially a fermenter for fleshy cells. The bioreactor contains scaffolding materials to keep the growing tissue from falling apart as well as a growth material—the sugars, salts, and other nutrients the tissue needs to grow. As the cells grow, they begin to differentiate into the muscle, fat, and other cells of meat tissue. Once grown, the tissues are formed into a meat product to be shipped to restaurants and supermarkets.</p>
An abattoir abatement?<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNDg2Mjg5OS9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYyODg1NDI3N30.AYmFJfWQbPjK-o1IatyFHL-OLjcfXBMmQKYyvz4oT3s/img.jpg?width=980" id="8a82d" class="rm-shortcode" data-rm-shortcode-id="93f824fe4c6f397ab2b65e4665847e71" data-rm-shortcode-name="rebelmouse-image" />
A graph showing the number of animals slaughtered in the United States per year from 1961–2018.
Credit: Our World in Data<p>Singapore's approval is an important step in support for clean meats—so-called because they don't require animal slaughter and would likely leave a reduced carbon footprint—but hurdles remain before widespread adoption is possible.</p><p>The most glaring is the price. The first lab-grown hamburger was eaten in London in 2013. <a href="https://www.bbc.com/news/science-environment-23576143" target="_blank" rel="noopener noreferrer">It cost roughly $330,000</a>. As with any new technology, investment, iteration, and improved manufacturing will see the price drop substantially and quickly. For comparison, Eat Just's chicken will be priced equivalent to premium chicken.</p><p>Other hurdles include up-scaling production, <a href="https://www.nature.com/articles/d41586-019-00373-w" target="_blank" rel="noopener noreferrer">the need for further research</a>, and developing techniques to reliably produce in-demand meats such as fish and beef. Finally, not all countries may be as receptive as Singapore. Countries with large, entrenched meat industries may protect this legacy industry through a protracted and difficult regulatory process. Though, the meat industry itself is investing in lab-grown meat. Tyson Foods, for example, has <a href="https://euromeatnews.com/Article-Tyson-Foods-announces-investment-in-clean-meat/697" target="_blank" rel="noopener noreferrer">invested in the food-tech startup Memphis Meats</a>, the company that debuted the world's first beef meatball.</p><p>"I would imagine what will happen is the U.S., Western Europe and others will see what Singapore has been able to do, the rigours of the framework that they put together. And I would imagine that they will try to use it as a template to put their own framework together," <a href="https://www.reuters.com/article/us-eat-just-singapore/singapore-approves-sale-of-lab-grown-meat-in-world-first-idUSKBN28C06Z" target="_blank" rel="noopener noreferrer">Tetrick told Reuter's during an interview</a>.</p><p>Regardless of the challenges, the demand for meat substitutes is present and growing. In 2020, plant-based substitutes like Beyond Meat and Impossible foods <a href="https://bigthink.com/coronavirus/plant-based-meat" target="_self">gained a significant foothold in supermarkets</a> as meat-packing factories became coronavirus hotspots. The looming threat of climate change has also turned people away from meat as animal products. Livestock production is environmentally taxing and leaves <a href="http://css.umich.edu/factsheets/carbon-footprint-factsheet" target="_blank" rel="noopener noreferrer">a much larger carbon footprint</a> than grain and vegetable production. </p><p>Then there's the moral concern of animal cruelty. In 2018 alone, 302 million cows, 656 million turkeys, 1.48 billion pigs, and a gob-smacking 68 billion chickens were <a href="https://ourworldindata.org/grapher/animals-slaughtered-for-meat" target="_blank" rel="noopener noreferrer">slaughtered for meat worldwide</a>. And those figures do not include chickens killed in dairy or egg production.</p><p>If brought to scale and widely available, clean meats could become serious competitors to traditional meat. <a href="https://bigthink.com/technology-innovation/meat-alternatives" target="_self">One report has even predicted</a> that 60 percent of the meat people eat by 2040 won't come from slaughtered animals. It could be just the thing for people looking for a meat substitute but who find tofurkey as distasteful as, well tofurkey.</p>