In September of last year, I published an issue of The Family Papers dedicated to universal basic income (UBI): Enough With This Basic Income Bullshit. Thanks to this paper being touted by Tim O’Reilly and discussed on Hacker News, I was dragged into heated arguments around the future of social policy. And while the paper itself was initially written rather hastily in reaction to something I had read, the subsequent discussions helped me clarify why exactly I doubt UBI so much.
One of my criticisms concerns the idea that UBI would be simpler. While simplicity exerts a welcome fascination on tech entrepreneurs (after all, entrepreneurship is the art of making things simple), we shouldn’t forget that social policy is complex for a reason: it’s about providing coverage against many risks at the scale of an entire nation. And I still don’t get how distributing a fixed amount of money to everyone can cover people against complex and critical risks such as illness or unaffordable housing.
Another criticism derives from political history. The strength of a social institution can be measured in its capacity to withstand the inevitable conservative backlash. And a retrospective of redistributive government programs suggests that UBI wouldn’t pass that test: if a liberal government put it in place, soon enough the conservative opposition would succeed at discrediting it (along the lines of “it makes the poor lazy and the rich don’t need that money anyway”) and would dismantle it as soon as they were back in power.
A third argument in my piece was recently echoed by Vox’s Matthew Yglesias: “Silicon Valley’s basic income fans should spare a minute to defend the actual safety net”. All the heated (and abstract) discussions around UBI distract thought leaders from the tech industry from considering the more pressing social challenges of the moment. And as Republicans in Congress and the White House look like they’re close to repealing the Affordable Care Act, it seems that one such challenge is defending the very principle of a social health insurance that covers every American.
Because indeed where are tech entrepreneurs and venture capitalists when it comes to weighing in on health care coverage? They’re nowhere to be found, heard, or read. For one, they’re not personally concerned: well-educated white men from privileged backgrounds have no reason to express an interest in the complicated and unattractive world of social insurance. Also, many entrepreneurs and VCs, especially in Silicon Valley, mistrust the state as a matter of principle and prefer to stay away from an industry as regulated as health care. Finally, there’s the reluctance to join a public conversation that is so polarized on both sides of the political spectrum.
Well, let me lay out at least three reasons why US entrepreneurs and VCs should very much care about the future of the Affordable Care Act and health insurance in general:
It’s your consumers and their purchasing power. As US Senator Elizabeth Warren recently explained at the 2017 Wall Street Journal CFO Network conference, once individuals lose health care coverage, it will drive costs up and create problems for the entire economy. If people spend all they have in health care, how can they subscribe to your latest product, however cheap and convenient? Less government health care coverage eventually means redistributions from every business, including tech companies, to the insurance and health care industries.
It’s switching jobs and founding startups more easily. As former Obama economic advisor Jason Furman explained in a 2014 blog post, “Access to health insurance outside the workplace allows people... to take risks that further their careers and benefit the economy as a whole, like going part-time in order to go back to school, leaving a job in order to start a business, or moving to a better job, perhaps at an employer that does not offer coverage.”
It’s caring about what matters for people and society. As of today, Silicon Valley has a major image problem with ordinary people who fear that they’ll lose their jobs. I’m not sure that a bunch of billionaires discussing singularity and immortality when millions of ordinary people are losing their health care coverage provides the best impression in that regard.
Above all, it’s about shaping the future of the economy. Whatever the outcome of the current showdown in Congress, I expect the Democratic Party to ultimately embrace the cause of single-payer insurance, thus polarizing the health care debate even more. And instead of expanding the cathedral of the traditional welfare state, the opportunity that we must all seize together is to imagine a new health care system that is more in line with the Entrepreneurial Age. How can that happen if entrepreneurs and VCs don’t participate in the discussion?
Apart from that, here’s my latest Scaling Strategy note: Long Term in the Failure Age.