Is a basic universal income for all the next logical step for humanity?

As automation reduces the need for human labour, some Silicon Valley executives think a universal income is the answer. Annie Lowrey looks at the beta test happening in Kenya.

The village is poor, even by the standards of rural Kenya. To get there, you follow a power line along a series of unmarked roads.

Eventually, that power line connects to the school at the centre of town, the sole building with electricity. Homesteads fan out into the hilly bramble. 

There is just one working water tap, requiring many local women to gather water from a pit in jerrycans.

In October, I visited Kennedy Aswan Abagi, the village chief, at his small red-earth home, decorated with posters celebrating the lives of African heroes, including JaKogelo, or “the man from Kogelo”, as locals refer to former US president Barack Obama.

Kogelo, where Obama’s father was born, is just 32km from the village, which lies close to the banks of Lake Victoria. Abagi told me about the day his town’s fate changed.

It happened during the summer, when field officers from a US non-profit called GiveDirectly paid a visit, making an unbelievable promise: They wanted to give everyone money, no strings attached.

 “I asked, ‘Why this village?’” Abagi recalled, but he never got a clear answer, or one that made much sense to him.

With little sense of who would get what and how and from whom and why, rumours blossomed. One villager heard that GiveDirectly would kidnap children. Some thought the organisation was aligned with the Illuminati.

But the confusion faded that unseasonably cool morning in October, when a GiveDirectly team returned to explain themselves. 

Nearly all of the village’s 220 people crowded into a tent, watching nervously as 13 strangers, a few of them white, sat on plastic chairs opposite them.

Lydia Tala, a Kenyan GiveDirectly staff member, got up to address the group in Dholuo. 

She spoke at a deliberate pace: These visitors are from GiveDirectly. GiveDirectly is a non-governmental organisation that is not affiliated with any political party. GiveDirectly is based in the US. GiveDirectly works with mobile phones. 

Nobody must involve themselves in criminal activity. This went on for nearly two hours.

Finally, Tala passed the microphone to her colleague, Brian Ouma, who laid out the particulars. “Every registered person will receive 2,280 shillings” — about $22 — “each and every month. You hear me?” The audience burst into wild applause.

“Every person we register here will receive the money, I said — 2,280 shillings! Every month. This money, you will get for the next 12 years. How many years?”

“Twelve years!” Just like that the whole village was lifted out of extreme poverty. (I have agreed to withhold its name out of concern for the villagers’ safety.) The non-profit is in the process of registering roughly 40 more villages with a total of 6,000 adult residents, giving those people a guaranteed, 12-year-long, poverty-ending income.

An additional 80 villages, with 11,500 residents all together, will receive a two-year basic income. 

With this initiative, GiveDirectly — with an office in New York and funded in no small part by Silicon Valley — is starting the world’s first true test of a universal basic income.

The idea is perhaps most in vogue in chilly, left-leaning places, among them Canada, Finland, and the Netherlands. But many economists think it might have the most promise in places with poorer populations, like India and sub-Saharan Africa.

GiveDirectly wants to show the world that a basic income is a cheap, scalable way to aid the poorest people on the planet. 

“We have the resources to eliminate extreme poverty this year,” Michael Faye, a founder of GiveDirectly, told me.

What happens in this village has the potential to transform foreign-aid institutions, but its effects might also be felt closer to home. A growing crowd, including many of GiveDirectly’s backers in Silicon Valley, are looking at this pilot project not just as a means of charity but also as the groundwork for an argument that a universal basic income might be right for you, me and everyone else around the world too.

Silicon Valley has recently become obsessed with basic income for reasons simultaneously generous and self-interested, as a palliative for the societal turbulence its inventions might unleash.

Many technologists believe we are living at the precipice of an artificial-intelligence revolution that could vault humanity into a post-work future. 

Our economy could turn into a funhouse-mirror version of itself: Extreme income and wealth inequality, rising poverty, mass unemployment.

A universal basic income has thus far lacked what tech folks might call a proof of concept. There have been a handful of experiments, including ones in Canada, India, and Namibia. 

But no experiment has been truly complete, studying what happens when you give a whole community money for an extended period of time.

And so, the tech industry is getting behind GiveDirectly and other organisations testing the idea out. Chris Hughes, a Facebook founder, has started a $10m, two-year initiative to explore the viability of a basic income. (He has also been a major donor to GiveDirectly.)

The research wing of Sam Altman’s startup incubator, Y Combinator, is planning to pass out money to 1,000 families in California and another yet-to-be-determined state. 

Then there is GiveDirectly itself, which has attracted $24m in donations for its basic-income effort, including money from founders of Facebook, Instagram, and a number of other Silicon Valley companies.

The idea for GiveDirectly came to Faye and Paul Niehaus, who is now a professor of economics at the University of California, San Diego, when they were graduate students at Harvard.

Both were studying development and doing fieldwork overseas, an experience that underlined a lesson in economics 101: Cash was more valuable to its recipients than the in-kind gifts commonly distributed by aid groups, like food or bed nets. If you’re hungry, you cannot eat a bed net.

“Once you’ve been there, it’s hard to imagine doing anything but cash,” Faye told me. “It’s so deeply uncomfortable to ask someone if they want cash or something else. They look at you like it’s a trick question.”

At the time, distributing cash aid in a country with little to no banking infrastructure outside major cities would have required an extraordinary amount of manpower. 

But dirt-cheap mobile phones with pay-as-you-go minutes began flooding into sub-Saharan African markets in the 2000s.

In 2007, Vodafone and the British Department for International Development together built a system, called M-Pesa, for Kenyans to transfer actual shillings from mobile phone to mobile phone. 

An estimated 96% of Kenyan households use the system today.

Faye and Niehaus — along with their friends Rohit Wanchoo and Jeremy Shapiro, also graduate students — thought about setting up a website to raise cash in the US and send it directly to poor Kenyans. But they never found a non-profit that would distribute that cash abroad. They decided to do it themselves in 2008.

The following year, Faye travelled to Kenyan villages during the summer break, offering cash to whoever seemed poor and would take it. That, surprisingly, worked well enough to give them the confidence to start a threadbare randomised control trial the year they graduated.

It found that the recipients, who received an average of $500, saw excellent outcomes: Their children were 42% less likely to go a whole day without eating. Domestic-violence rates dropped, and mental health improved.

In time, the non-profit attracted the attention of Silicon Valley and its deep-pocketed young philanthropists. In the spring of 2012 Faye went to a friend’s brunch in Brooklyn and met someone working for Google.org, the tech giant’s giving arm.

She liked the sound of GiveDirectly and arranged for Faye and Niehaus to give a presentation at Google’s headquarters in Mountain View, California. The company ended up contributing $2.4m.

At first, GiveDirectly handed out large lump sums, generally $1,000 spread into three payments over the course of the year. The nonprofit’s field officers would locate low-income villages in Kenya, then find the poorest families in each village.

The field officers would introduce themselves to the town elders, explain their purpose, and return to provide mobile phones and training to recipient families. Then GiveDirectly would push a button and send the money out.

On a steaming October morning, I went with two GiveDirectly executives, Joanna Macrae and Ian Bassin, to visit one of the villages that had received GiveDirectly’s lump-sum payments.

We took off at dawn from Kisumu, an industrial city on the banks of Lake Victoria, and followed a two-lane highway to Bondo, a small trading city. 

From there, we turned inland from the lake and drove into a lush agricultural region. The residents of this village had received money in 2013, and it was visibly better off than the basic-income pilot village. Its clearings were filled with mango plantings, its cows sturdy.

“Could you imagine sitting in an office in London or New York trying to figure out what this village needs?” said Bassin. “It would just be impossible.”

Perhaps, but delivering money by M-Pesa has some downsides, too. We visited an older woman named Anjelina Akoth Ngalo, her joints swollen with advanced malaria. Sitting in her thatched-roof hut, she told us that she had received only one payment, not the three that she was promised.

She had given her phone to a woman in a nearby village who transferred the money out of it. She was now destitute, living on about $5 a week. (Bassin said that less than 1% of recipients experience theft, crime, or conflict.)

Still, nearly all the recipients described the money as transformative.

Fredrick Omondi Auma had been impoverished, abandoned by his wife and living in a mud hut when GiveDirectly knocked on his door.

He used his money to buy a motorbike to give taxi rides. He also started a small business, selling soap, salt, and paraffin; he bought two cows; and he opened a barbershop in the coastal city Mombasa.

His income had gone from 600 shillings a week to 2,500 shillings — roughly $25, a princely sum for the area. His wife had returned.

“I didn’t imagine I would be living in an iron-sheet house,” he said, referring to his roof.

“I didn’t imagine I’d be wearing nice shoes. I didn’t imagine I would have a business, and earnings from it. I didn’t imagine I would be a man who owns cattle.”

Many popular forms of aid have been shown to work abysmally. Skills training and microfinance, one 2015 World Bank study found, “have shown little impact on poverty or stability, especially relative to programme cost.”

A vast majority of aid — 94% — is non-cash. Donor resistance is one reason for this; it is not easy to persuade US oligarchs and Japanese industrialists to fork over their money to the extremely poor.

“There’s the usual worries about welfare dependency, the whole ‘Give a man a fish’ thing,” said Amanda Glassman, a public health and development expert at the Centre for Global Development.

Institutional inertia is another factor. “There are a lot of good people working in the system,” said Niehaus. “And there are a lot of organisations pushing to do cash transfers. But the way they are structured and incentivised from the top down — they aren’t structured to do it. They have a specific mandate, like health. Cash transfers give choice of what goal to pursue to the recipients.”

Moreover, cash might force aid workers and non-governmental organisations to confront the fact that they could be doing better by doing things differently — often by doing less.

“It’s easy to muster evidence that you should be giving cash instead of fertiliser,” said Justin Sandefur of the Centre for Global Development.

“The harder argument is: You should shut down your USAID programme, which is bigger than the education budget of Liberia, and give the money to Liberians. That’s the radical critique.”

Faye put it more bluntly, if half-jokingly: If cash transfers flourished, “the whole aid industry would have to fire itself”. There is something to that. One estimate, generated by Laurence Chandy and Brina Seidel of the Brookings Institution, recently calculated that the global poverty gap — meaning how much it would take to get everyone above the poverty line — was just $66bn. That is roughly what Americans spend on lottery tickets every year, and it is about half of what the world spends on foreign aid.

In the pilot project village, the residents had just started to work through how transformative the programme would be. Detractors often say nobody would work in a world with a basic income. 

Ultimately, what a universal income would do to workers in the rich world will remain a mystery until someone tries it out.

But here, many villagers were concerned primarily with procuring the sustenance that their penury had denied them. Pamela Aooko Odero ran a household that had been suffering from hunger. She took her money as soon as she got it and went to buy food.

Many more made plans that were entrepreneurial. When he got his money, Erick Odhiambo Madoho walked to the local highway nearest the village and took a “matatu”, a shared minibus, down to Lake Victoria. 

There he found an M-Pesa stand and converted his mobile money into shillings. He used the cash to buy the first of three rounds of fishing line that he would need to hand-knot into nets to catch tilapia in the lake.

When the nets were done, he told me, he would rent a boat and hire a day labourer to work with him. He anticipated that his income, after costs, might reach as much as 2,000 shillings on a good day. I asked him why he hadn’t saved money for nets beforehand.

He shrugged, smiled and said, “I could not.”

Annie Lowrey is a contributing writer at The Atlantic and a former economic-policy reporter for The New York Times. She is writing a book about universal basic income for Crown.

Adapted from an article that originally appeared in The New York Times Magazine.


© Irish Examiner Ltd. All rights reserved

Email Updates

Receive our lunchtime briefing straight to your inbox

More in this Section

The greatest journey: Voyager's mission is coming to an end

Social Ability Kilkenny: Focusing on abilities rather than disabilities

Ask Audrey: Why can’t they afford subtitles for Daithi O’Se?

Me and my mentor: Celebs on the importance of role models


Lifestyle

Classical Review: Ensemble Marsyas

Album Review: Grizzly Bear - Painted Ruins

In Vogue: Changing of the guard at iconic fashion magazine

Lidl and Heidi Klum - has the High Street reached peak collaboration?

More From The Irish Examiner