The other week, I was gifted a book on utopias. I haven’t read it all yet, but the first 4 chapters were all about universal basic income and ending poverty. The idea sounds great, and the research done on initiatives like this show that it does work and can save governments money. So why is it not done?
It is because the world is complex and interconnected. Take for example one of the initiatives to make sure no one is homeless in the state of Utah, USA. It was considered a success, until the financial market crash in 2008 which put so many more people homeless, that it made it seem like the plan wasn’t working.
The truth was, the plan itself was working if you looked at Utah as a closed off, contained system. And this is the same for most research done on the topic. When people are given money so that they don’t have to worry about putting food on the plate or having a safe place to sleep, they tend to start fixing their life around. Crime, healthcare, policing required, and other negative factors go down, while employment, happiness, education, children’s mental health all goes up when poverty is not a risk. The problem is that unless you apply initiatives like this worldwide, no system is ever self-contained. Let me give you an example.
The problem with Utah’s homelessness initiatives:
Let’s say that there are 10,000 homeless people in the state of Utah. A government funded initiative starts to purchase housing to house them and provide them the basic needs to get back on their feet. Soon enough, most homeless people have been taken off the streets. However, there is a problem. Homeless people from nearby states have started hearing about this initiative and are moving to Utah to take advantage. The landowners and house owners in Utah start raising their prices because they know the government will need to keep buying more houses and the project becomes more expensive. The government has no power to limit this initiative – either they do it for everyone, or they are back to square one – having homeless people on the streets from other states.
Lets take the story a step further. Utah shares the success of its initiative and the whole of the USA applies it, homelessness is nearly eradicated in the whole country. Can you guess what happens next? Immigrants, legal or not, start to take advantage of the situation. The advantages of such a good safety net attracts more and more immigrants, and putting controls in place to stop it is too difficult. Soon, either the initiative must stop, or the population will get out of control with not enough space in cities to build affordable houses. Now the initiative needs to become global, but there is a problem. A massive country X says they don’t care if there are homeless people, it’s not seen as a problem for them. Country X starts to benefit from eradicating homelessness without having to spend a penny. The homeless from that country just migrate.
A global world can rarely agree on everything, at the same time
Lack of unity is just one consequence of such an initiative, the reality is that there are many other side effects. For example, even in that book I’m reading, they identified that relative poverty is worse than absolute poverty – what that means is that people have more mental problems when there is a lot of inequality in their community, whether or not they are not actually in poverty in terms of food, shelter and healthcare. Some of the poorer people today, have more ‘wealth’ than many of the rich people 200 years ago. However, they still feel worse, because the gap between the haves and the have nots has become greater.
How do you fix inequality?
It would make sense to focus on fixing inequality first. But how do you do that? By taking more from the rich and giving it to the poor. But, if you do that by just increasing taxes, businesses migrate to countries that don’t do that – so again it must be a global effort.
Countries have their own eco-systems and they don’t always agree with each other, they also look for opportunities to improve their own economies which might go against the rest of the world. And even if there was global tandem in reducing inequality, eventually it starts to have a negative effect.
The two extremes of equality
Once you reach a level of equality where it feels like there is no reason to be competitive, to push yourself harder to get ahead in life, people stagnate. Why should I work when I can get almost the same benefits without working? Why should I spend 10 years studying to be a doctor when someone can do the easiest job and make almost the same amount as me?
Essentially, you have 2 extremes and neither of them work. As soon as you approach any extreme, there is a lot of resistance that leads to change. Either via new governments, or sometimes via war. This is why history tends to repeat itself – it’s a complete cycle:
The cycle of equality and inequality
At times when equality is becoming ‘too good’, people stagnate and resist, this creates opportunities for policies that push ‘less equal’ society and people take them up. Over time, slowly this momentum builds up. It takes years if not generations for people to accept change so it’s often not immediately clear when this is happening. As the initiatives and inequality grows, it passes an imaginary middle line, where the number of people happy with the new path starts to reduce, while the number of people unhappy starts to grow.
The momentum keeps the policies in one direction, but it starts slowing down. The resistance is starting to push from the other side of the extreme. Sometimes, there can be temporary switches in direction due to events in the world, but often the overall direction is one way until the resisting faction becomes greater and the direction flips over. This cycle keeps repeating itself, no matter how long it takes.
Make the world a better place by making it easier to stay in the mid-point optimum
The problem with the above cycles is that the momentum is too strong, and that the effects of reaching one extreme can be painful for a long time. If you want to continue making the world a better place, we have to help make people more understanding of change. I.e. There has to be quicker self-correction when we shift between the optimum between improving life for everyone with new innovations and productivity, and sharing those benefits to everyone so that no one feels left behind.
This will mean that even the poorest in the world’s life improves and the difference between one class to the other does not become too large, yet large enough for people to chase their dreams.
