For this instalment of our “Next Gen Reads” series, Marcus reviews Fair Shot: Rethinking Inequality and How We Earn written this year by Facebook co-founder, Chris Hughes.
In our age of a much-heralded looming job crisis, and rising inequality between the wealthiest 1% and the rest of society, the term Universal Basic Income has become a familiar one. The notion of a state-issued income for all is either seen as the panacea for impending societal disaster, or a dosser’s delight, usually depending on political outlook. Regardless of your personal view, it is a policy which would usher in unprecedented state-support – at an enormous cost.
In his new book, Chris Hughes advocates an equally effective but – in his eyes – more justifiable and achievable alternative: the guaranteed income. In America, he suggests a $500/month state handout to every adult who lives in a household making less than $50,000/year. By this method he forecasts lifting 20 million Americans out of poverty at the cost of $290bn/year – half of America’s annual defence budget, and less than the amount spent on Social Security, Medicare, and Medicaid.
Through a combination of an astute understanding of global trends, deft political sensitivity, logical clarity and illuminating personal experience, Hughes succeeds in making the case compellingly. He therefore provides provoking reading for both policy-makers and those keen to consider what course of action our post-4th industrial revolution Brave New World should take.
Hughes does not launch straight into proposals, but offers his personal background in order to explain why he feels strongly about this cause. He paints his upbringing in Hickory, North Carolina, as comfortable but very much confined to the traditional American working class. Even as he was topping classes throughout high school on the wings of an academic scholarship, he had an acute sense of his social shackles, shunned by the “white, wealth kids” and “suspicious of their privilege”. Even at Harvard, he felt a mere exhibition of the “’up by the bootstraps’ success our country supposedly makes possible”. By revealing this candid backstory, Hughes portrays how instrumental his upbringing was in instilling a faith in the power of work, but also an awareness of America’s deeply ingrained social rigidity.
The second chapter seamlessly transitions from the micro to a macro-analysis of the recent global trends which facilitated the Facebook story. Yes, he, Mark Zuckerberg and the others earned their success by ingenuity and hard work, but the landscape which offered this potential was not of their making; globalisation, technological advances, and a boom in venture capital arose just at the right time for them to profit as they did.
Without the Internet boom, Facebook would have failed. Without globalisation’s impact on the affordability and accessibility of mobile phones, Facebook would have failed. Without the infinite number of willing investors, Facebook would have failed. “Facebook would not exist, at least in the form it is today, without major advances in technology, globalised markets…or venture capital”, Hughes states categorically.
More is achieved by this confession than earning reader admiration. By acknowledging the part Fortune plays in modern day fortunes, Hughes argues that we implicitly accept the need to provide for those who are not so lucky. “We have created an economy dominated by forces that reward luck in an outsized way”.
This trio of trends – so fortuitous for the likes of Facebook and Amazon – has also had a detrimental effect on America’s middle class, by giving rise and precedence to the controversial gig economy: “as contract work has expanded, wages for traditional, full-time jobs have stagnated”. Hughes is at his most convincing when covering the nuances of the contemporary work scene, convincing the reader of the need to do something to redress the resultant widening societal gulf.
Having established the need for change, Hughes turns his attention to advocating his proposed course of action. Once again he begins with a personal experience, this time his philanthropic trip to impoverished Kenyan villages several years ago. His watershed moment was the first time he came across direct cash handouts, when he met the charity GiveDirectly. The stellar results of this efficient and empowering approach to philanthropy convinced him that it is the best form of giving, and one that is transferable from the world of charity.
He would take these lessons back with him, and so we move on to the kernel of his proposition: a state handout aimed at alleviating the growing economic burden on America’s working/middle class.
At this point, he interrupts the narrative flow with a passage dispelling the worst fears about AI’s likely impact on jobs. He does not foresee the mega job loss that some do, but says we have far more pressing, concrete issues, such as job insecurity and the rising cost of living. “Regardless of how AI evolves, a guaranteed income is the best tool to provide financial stability and opportunity to people who already need it”. Although somewhat jarring to the book’s rhythm, this is an important inclusion, as he re-phrases a concern which has become fashionable to exaggerate.
As seen, Hughes has already established the moral argument that governments should support the unfortunate many who do not benefit in the same outsized way as the fortunate few. He pre-empts the political objections of those on the right who are resistant to a “free salary”. They cite the “dignity of work” as a counter-argument – the notion that humans receive dignity from working, and that any policy which discourages that is a dehumanising one. To this, Hughes provides devastating evidence that a guaranteed income in fact exhorts work: for example, 25% of Americans in poverty state that the primary reason for not seeking work is that the ensuing childcare/elder care would cost more than their salary. Simply put, “working no longer necessarily pays”.
He bolsters the foundations of his fledgling idea by suggesting funding methods. Carbon emission taxes and micro-taxes on financial transactions receive page-space, but his personal view is that “the solution should be more directly tied to the problem”. This means a higher rate of tax for those “like me who have benefited massively from the new economic forces”, such as capping tax deductions at 28% for the wealthiest. These methods would inevitably end up targeting the same select group of society, but if you have bought into Hughes’ reasoning about re-balancing out-of-proportion fortunes, this is no bad thing.
Hughes’ idea of a guaranteed income is not a revolutionary concept. It is, however, perhaps the most realistic and well-reasoned version of a social policy which is becoming increasingly difficult to ignore and reject. Hughes’ book is a timely addition to this mounting force, and one upheld powerfully by compelling argumentative and personal credibility.
Fair Shot is available on the book’s website for $15.00.
Marcus Solarz Hendriks