[Review] Fair Shot: Rethinking Inequality and How We Earn
May 08, 2018
More than fifty years after President Lyndon Johnson launched a War on Poverty in America, an estimated forty-five million Americans still live below the poverty line, and many critics of government have declared its efforts in this area an utter failure. At times, the scope and persistence of the problem can cause even the most committed anti-poverty activist to despair. But what if the solution to poverty was as straightforward as putting cash directly in the pockets of the people who need it?
That's what Chris Hughes, a co-founder of Facebook and an Obama campaign aide who in 2016 co-founded the Economic Security Project — a group committed to advancing the debate around unconditional cash transfers and guaranteed basic income in the United States — proposes in his new book, Fair Shot: Rethinking Inequality and How We Earn. Or as Hughes puts it boldly at one point: "Government should provide a guaranteed income of $500 a month to every adult who lives in a household making less than $50,000 per year and who is working in some way."
It's not a new idea. In August 1969, having narrowly defeated Democrat Hubert Humphrey in one of the closest presidential elections in U.S. history, President Richard Nixon unveiled a vision for welfare reform that included a guaranteed income. "What I am proposing," Nixon told his fellow Americans in a televised speech, "is that the federal government build a foundation under the income of every American family with dependent children that cannot care for itself — and wherever in America that family may live." The Family Assistance Plan that emerged from the administration a few years later proposed using a negative income tax to guarantee an income floor of $1,600 ($11,000 in today's dollars) for a family of four. But while the bill passed the House with bipartisan support, it failed to make it out of the Senate Finance Committee, leading its chief architect, future New York senator Daniel Patrick Moynihan, to later observe: "The program was both too much and too little; too radical, too reactionary; too comprehensive, not comprehensive enough."
The failure of the plan wasn't a complete loss. In 1974, as Hughes reports, Nixon signed a bill that created a guaranteed income for the elderly and disabled; today Supplemental Security Income provides nearly nine million Americans with a monthly income of $735. And a few years after that, Congress passed the Earned Income Tax Credit (EITC), which provides a refundable credit on a sliding scale to low- and moderate-income working individuals and families. Over the years, lawmakers on both the right and the left have praised the EITC, which annually provides $70 billion in cash to 26 million working families and individuals and has helped lift 10 million people out of poverty. Indeed, every president since Gerald Ford has "signed a bill to significantly increase the benefit."
Hughes is aware, of course, of the success and popularity of the EITC, which is why he and his colleagues at the Economic Security Project believe a tax credit should be the basis of any new policy to guarantee a basic income for Americans. But there's a crucial difference between his proposal and the Earned Income Tax Credit: how it's paid for. Hughes proposes a solution that, in his words, is "more directly tied to the problem" — namely, to have "the top earners in our country, people like me who have benefited massively from…new economic forces, to pay a small part of our fortune forward." And his rationale is straightforward: the growth of companies like Amazon, Apple, and Google — and the wealth amassed by the one percent at the top of the income pyramid — have come at the expense of ordinary working Americans. He argues, for example, that Facebook's incredible success and exponential growth was the direct result of rapid advances in technology, the globalization of trade and financial flows, and the rise of finance/venture capital. Those same forces, in turn, resulted in the loss of millions of American jobs to automation and the transformation of mid-century America's world-beating industrial economy into a "gig economy" that generates lots of poorly paid part-time positions that leave too many hard-working Americans struggling to get by.
Hughes is a progressive idealist, and it should come as no surprise that he believes wealthy Americans should pay their "fair share," or that "we all benefit from a society that is more just and fair." Morality aside, however, there's also a demand-side economic argument to be made: when low- and middle-income Americans have extra cash in their pockets, they're more likely to spend it in the short term than are one-percenters who don't need and wouldn't particularly miss the extra dollars they would pay in higher taxes.
At the same time, Hughes is careful to note the objections wealthy people and critics on the right often have to a guaranteed basic income, the most common of which might be stated as: "How much is an extra $100 or $200 a month really going to help anybody struggling to get by?" But as a woman in Ohio told Hughes as he was researching his proposal, "[A]nyone asking that question has never had to choose between buying groceries and making rent."
Beyond the economic case, Fair Shot argues that readers from all backgrounds — but especially those in the social sector — need to reexamine their objections to giving cash directly to those who need it. Hughes is puzzled by such objections and admits that at times in the past he struggled to formulate an intellectual justification for the approach. But after a couple of trips to Africa, where he witnessed firsthand the often-disappointing results generated by top-down anti-poverty interventions, he had an epiphany: "Why was my default to trust an educated outsider or nonprofit executive with resources rather than the poor themselves?" And why does the "idea that the poor might know the best way to solve their problems" seem so radical when, in reality, it isn't?
While many have proffered "solutions" to the problem of income inequality, few come to the issue with the kind of the perspective that Hughes, a co-founder of one the world's largest and most powerful companies, has. What makes Fair Shot so inspiring isn't its bold and straightforward approach to the problem of poverty in America. It's Hughes' open, honest, and refreshingly human exploration of how his own background, upbringing, and experience led him to advocate for a guaranteed income for low-income and working people, paid for by people like himself. Fully aware of the role chance has played in his own good fortune, he sincerely believes it is his obligation and moral responsibility to pay forward that success. America in 2018 is not the America of Lyndon Johnson's Great Society, or even the relatively liberal America of the early 1970s. But as the title of the book's final chapter suggests, Americans owe each other something. A basic income seems like a good place to start.