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100 People in Oakland Will Get Free Money as Part of a Basic Income Experiment

Y Combinator says it’ll give 100 people in Oakland between $1,000 and $2,000 a month to see if basic income can lessen the burden of automation.

Starting sometime this summer, a small group of people in Oakland will get free money in what may be the nation's first basic income experiment.

The money won't be coming from the government, though. Instead, Silicon Valley's Y Combinator, a business incubator for tech startups backed by venture capital, will be trying to solve a problem that the tech industry is at least partially responsible for.

As more and more blue collar industries become automated, and artificial intelligence, self-driving cars, and drones threaten to eliminate the need for a human workforce in a wide array of sectors (taxi and truck drivers, news curators, fast food workers, etc), those who think about the future are starting to wonder how those who are out of work are going to survive.

One of the leading solutions? Give people a bunch of free money, a "universal basic income" that will allow everyone to at least live above the poverty line.

"We work with technology companies who are building the types of tools to let people do more with less, so automation is something we're very aware of and it drives the interest"

"We're on a trajectory where a lot of jobs are degrading over time in terms of job security, how much jobs are paying, some things along those lines," Matt Krisiloff, who is heading up Y Combinator's basic income project, told me. "If you extrapolate that going forward, it's going to be a problem most likely. Basic income is a possible solution for those problems."

Krisiloff and Elizabeth Rhodes, a recent University of Michigan Ph.D. grad who will serve as Y Combinator's research director for the project, told me that the tentative plan is to give about 100 people in Oakland between $1,000 and $2,000 per month for between six months and a year.

The participants will be selected randomly from across the city but will include people across all economic tiers and will not discriminate between employed and unemployed people.

"We're going to pull a diverse group," Rhodes told me. "We'll be stratifying by certain characteristics to make sure we have different income levels and ethnicities, but figuring out how we collect that sample is one of the things we're going to be working on in the pilot."

Proponents of basic income say that with our basic needs fulfilled, people can focus on being creative and adding something to society rather than on maintaining jobs that robots can do better than us. The theory has been developed from the Alaska Permanent Fund, which gives everyone in the state a small stipend pulled from oil reserves and "negative income tax" experiments during the 1970s.

"A universal basic income has many undesirable features, starting with its nonnegligible disincentive to work"

"I wouldn't say it's our responsibility [to find out if basic income works], and there's no way we could figure it out alone," Krisiloff said. "But our type of work drives interest in it. We work with technology companies who are building the types of tools to let people do more with less, so [automation] is something we're very aware of and it drives the interest."

It's not just Silicon Valley, though, basic income is an idea that's gaining steam all around the world: Next month, Switzerland will vote on whether the company should give every Swiss person roughly $30,000 every year, simply for living in the country. Ontario is considering a similar, smaller measure, as is Finland.

Detractors, meanwhile, say basic income is much too expensive to be taken seriously, would contribute to inflation, and would make people lose their purpose.

"A universal basic income has many undesirable features, starting with its nonnegligible disincentive to work," economist Eduardo Porter wrote Tuesday in The New York Times. "In this world, though, where work remains an important social, psychological and economic anchor, there are better tools to help than giving every American a monthly check."

Krisiloff says that Y Combinator's experiment is being designed to answer many of the questions people like Porter have with basic income. If you give people free money, what will they do with their time? Are there better ways to strengthen the social safety net?

Interestingly, a basic universal income is an idea that has supporters among both conservatives and liberals. By giving it to everyone, it's inherently "fair," and you also manage to remove lots of the bureaucracy associated with welfare and other programs that conservatives argue are abused.

In a blog post, Y Combinator says that it plans to work with the Oakland city government on its pilot program, and, if it goes well, the company wants to do a larger, five year research program perhaps in several different cities. Oakland's city government did not respond to a Motherboard request for comment, and Y Combinator wasn't ready to say how involved the city would be. Rhodes said that the company will share as much information about how the study is going as it's being done while still "protecting our participants and the integrity of the study."

"We're not sure this is the best solution, but we want to study this because it hasn't been studied," Rhodes said. "We aren't going to be able to answer all the questions, but the point of the study is to see how it might work and then move forward from there."