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To mitigate poverty, Y Combinator set to launch minimum income plan
OAKLAND, Calif.—Earlier this month, Y Combinator, the famed Silicon Valley incubator dropped a bombshell: it had selected this city to be the home of its new "Basic Income" pilot project, to start later this year.
The idea is pretty simple. Give some people a small amount of money per month, no strings attached, for a year, and see what happens. With any luck, people will use it to lift themselves out of poverty.
In this case, as Matt Krisiloff of Y Combinator Research (YCR) told Ars, that means spending about $1.5 million over the course of a year to study the distribution of "$1,500 or $2,000" per month to "30 to 50" people. There will also be a similar-sized control group that gets nothing. The project is set to start before the end of 2016.
The notion of guaranteed minimum income has been kicking around globally for centuries, especially among 20th century thinkers (Martin Luther King, Jr. famously advocated for it). But it’s only recently that extensive trials have begun in various places, including Canada, the Netherlands, Finland, and now in Oakland. (Another organization, called Give Directly, operates a similar program in Kenya.)
Tapped to run the project is Elizabeth Rhodes, an academic who recently arrived in Oakland. She says the project’s goal is "to empower people and give people the freedom to be able to meet their basic needs."
But the details have yet to be fully worked out, and a lot of questions remain. How exactly will people be chosen? Will they come from a truly random sample of Oakland’s population? Will high-income people be automatically excluded? By what mechanism will people be notified? How will the money actually be transferred? Most of all, will it actually work?
If Y Combinator's Basic Income project is successful, it would expand over the next five years to hundreds of citizens and perhaps include people beyond Oakland. And it would make the Bay Area’s venture capitalist class feel good about helping the poor.
"Overall the idea is to take money we make from YC [and], rather than all of the partners cashing out... putting it into research," Krisiloff told Ars. "I think that there’s a culture at YC that just making money isn’t that interesting. [YC president Sam Altman] really likes to talk about how the overarching mission of YC is to create the most innovative thing. Money is a vector for change, but money in and of itself isn’t that interesting."
It’s obviously difficult to lift people out of poverty. According to the White House, as of 2012 (decades after President Lyndon Johnson's "War on Poverty"), approximately 15 percent of Americans (or 49.7 million people, including 13.4 million children) live below the poverty line. Worse still, "only about half of low-income Americans make it out of the lowest income distribution quintile over a 20-year period." (As the old saying goes: "It’s expensive to be poor.")
Here in Oakland, for all of its gentrification and new shiny downtown restaurants and cocktail bars, just under 20 percent of the population (specifically, 18.7 percent, or 71,599 people, as of 2010) live in poverty. And yet, it has also become the fourth-most expensive rental market in the country, thanks to spillover from nearby San Francisco.
Like many American cities, Oakland is divided along economic and racial lines, which also manifest themselves as large differences in access to quality education, public health, fresh produce, and more. As Mayor Libby Schaaf herself put it in her October 2015 State of the City address: "It’s hard for us to celebrate the overall health of Oakland knowing that two people can live just one mile apart and be nearly twice as likely to be unemployed—and live 15 years less."
As soon as YC announced its Basic Income plan, it got lots of support from the municipal government. Mayor Libby Schaaf instantly said on Twitter that she was "excited" that Oakland had been chosen. Public records show that Rep. Barbara Lee (D-Oakland), loves it, too.
However, some groups, including Causa Justa :: Just Cause, are skeptical that Y Combinator—an institution worlds away from the needs of working-class Oaklanders—is capable of managing such a project.
Still, YC's Oakland project is in its very early and experimental stages.
"Because the main goal of this pilot is to gather data, it’s a useful to run it in a socio-economically diverse city like Oakland," Matt Zwolinksi, a philosophy professor at the University of San Diego, told Ars.
"That way we can see what differences there are in the responses of the wealthy and the poor, the educated and the uneducated, skilled and unskilled laborers, and so on. And we can tweak future studies or the final public policy in light of that information."
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To mitigate poverty, Y Combinator set to launch minimum income plan
Socialism or philanthropy?
