00:13I'd like to start with a simple question:
00:18Why do the poor make
so many poor decisions?
00:23I know it's a harsh question,
00:25but take a look at the data.
00:27The poor borrow more, save less,
00:29smoke more, exercise less, drink more
00:31and eat less healthfully.
00:36Well, the standard explanation
00:38was once summed up by the British
Prime Minister, Margaret Thatcher.
00:41And she called poverty
"a personality defect."
00:46A lack of character, basically.
00:49Now, I'm sure not many of you
would be so blunt.
00:54But the idea that there's something
wrong with the poor themselves
00:58is not restricted to Mrs. Thatcher.
01:01Some of you may believe that the poor
should be held responsible
01:04for their own mistakes.
01:06And others may argue that we should
help them to make better decisions.
01:10But the underlying assumption is the same:
01:14there's something wrong with them.
01:18If we could just change them,
01:19if we could just teach them
how to live their lives,
01:22if they would only listen.
01:26this was what I thought for a long time.
01:31It was only a few years ago
that I discovered
01:33that everything I thought I knew
about poverty was wrong.
01:38It all started when I accidentally
stumbled upon a paper
01:40by a few American psychologists.
01:42They had traveled 8,000 miles,
all the way to India,
01:45for a fascinating study.
01:47And it was an experiment
with sugarcane farmers.
01:50You should know that these farmers
collect about 60 percent
01:54of their annual income all at once,
01:56right after the harvest.
01:58This means that they're relatively
poor one part of the year
02:04The researchers asked them to do
an IQ test before and after the harvest.
02:09What they subsequently discovered
completely blew my mind.
02:15The farmers scored much worse
on the test before the harvest.
02:20The effects of living
in poverty, it turns out,
02:22correspond to losing 14 points of IQ.
02:26Now, to give you an idea,
02:28that's comparable
to losing a night's sleep
02:30or the effects of alcoholism.
02:34A few months later,
I heard that Eldar Shafir,
02:36a professor at Princeton University
and one of the authors of this study,
02:40was coming over to Holland, where I live.
02:42So we met up in Amsterdam
02:44to talk about his revolutionary
new theory of poverty.
02:48And I can sum it up in just two words:
02:54It turns out that people
behave differently
02:56when they perceive a thing to be scarce.
02:59And what that thing is
doesn't much matter --
03:01whether it's not enough time,
money or food.
03:05You all know this feeling,
03:06when you've got too much to do,
03:08or when you've put off breaking for lunch
03:10and your blood sugar takes a dive.
03:12This narrows your focus
to your immediate lack --
03:15to the sandwich you've got to have now,
03:17the meeting that's starting
in five minutes
03:19or the bills that have
to be paid tomorrow.
03:23So the long-term perspective
goes out the window.
03:27You could compare it to a new computer
03:30that's running 10 heavy programs at once.
03:33It gets slower and slower, making errors.
03:35Eventually, it freezes --
03:37not because it's a bad computer,
03:39but because it has too much to do at once.
03:43The poor have the same problem.
03:46They're not making dumb decisions
because they are dumb,
03:49but because they're living in a context
03:51in which anyone would make dumb decisions.
03:54So suddenly I understood
03:57why so many of our anti-poverty
programs don't work.
04:02Investments in education, for example,
are often completely ineffective.
04:07Poverty is not a lack of knowledge.
04:10A recent analysis of 201 studies
04:13on the effectiveness
of money-management training
04:15came to the conclusion
that it has almost no effect at all.
04:19Now, don't get me wrong --
04:20this is not to say the poor
don't learn anything --
04:23they can come out wiser for sure.
04:26But it's not enough.
04:27Or as Professor Shafir told me,
04:30"It's like teaching someone to swim
04:32and then throwing them in a stormy sea."
04:36I still remember sitting there,
04:42that we could have figured
this all out decades ago.
04:45I mean, these psychologists didn't need
any complicated brain scans;
04:48they only had to measure the farmer's IQ,
04:50and IQ tests were invented
more than 100 years ago.
04:53Actually, I realized I had read about
the psychology of poverty before.
04:57George Orwell, one of the greatest
writers who ever lived,
05:01experienced poverty
firsthand in the 1920s.
05:04"The essence of poverty,"
he wrote back then,
05:07is that it "annihilates the future."
05:11And he marveled at, quote,
05:13"How people take it for granted
they have the right to preach at you
05:18as soon as your income falls
below a certain level."
05:20Now, those words are every bit
as resonant today.
05:27The big question is, of course:
05:30Modern economists have
a few solutions up their sleeves.
05:33We could help the poor
with their paperwork
05:35or send them a text message
to remind them to pay their bills.
05:38This type of solution is hugely popular
with modern politicians,
05:44well, they cost next to nothing.
05:48These solutions are, I think,
a symbol of this era
05:52in which we so often treat the symptoms,
05:54but ignore the underlying cause.
05:59Why don't we just change the context
in which the poor live?
06:03Or, going back to our computer analogy:
06:05Why keep tinkering around
with the software
06:08when we can easily solve the problem
by installing some extra memory instead?
06:12At that point, Professor Shafir
responded with a blank look.
06:16And after a few seconds, he said,
06:21You mean you want to just hand out
more money to the poor
06:26to eradicate poverty.
06:28Uh, sure, that'd be great.
06:31But I'm afraid that brand
of left-wing politics
06:34you've got in Amsterdam --
06:36it doesn't exist in the States."
06:38But is this really
an old-fashioned, leftist idea?
06:43I remembered reading about an old plan --
06:45something that has been proposed
by some of history's leading thinkers.
06:48The philosopher Thomas More
first hinted at it in his book, "Utopia,"
06:52more than 500 years ago.
06:55And its proponents have spanned
the spectrum from the left to the right,
06:58from the civil rights campaigner,
Martin Luther King,
07:01to the economist Milton Friedman.
07:05And it's an incredibly simple idea:
07:09basic income guarantee.
07:16It's a monthly grant, enough to pay
for your basic needs:
07:19food, shelter, education.
07:21It's completely unconditional,
07:23so no one's going to tell you
what you have to do for it,
07:26and no one's going to tell you
what you have to do with it.
07:29The basic income
is not a favor, but a right.
07:31There's absolutely no stigma attached.
07:34So as I learned about the true
nature of poverty,
07:37I couldn't stop wondering:
07:39Is this the idea
we've all been waiting for?
07:42Could it really be that simple?
07:46And in the three years that followed,
07:48I read everything I could find
about basic income.
07:50I researched the dozens of experiments
07:52that have been conducted
all over the globe,
07:54and it didn't take long before I stumbled
upon a story of a town
07:57that had done it --
had actually eradicated poverty.
08:02nearly everyone forgot about it.
08:05This story starts in Dauphin, Canada.
08:09In 1974, everybody in this small town
was guaranteed a basic income,
08:14ensuring that no one fell
below the poverty line.
08:17At the start of the experiment,
08:19an army of researchers
descended on the town.
08:23For four years, all went well.
08:26But then a new government
was voted into power,
08:29and the new Canadian cabinet saw
little point to the expensive experiment.
08:33So when it became clear there was
no money left to analyze the results,
08:37the researchers decided to pack
their files away in some 2,000 boxes.
08:44Twenty-five years went by,
08:46and then Evelyn Forget,
a Canadian professor,
08:50For three years, she subjected the data
to all manner of statistical analysis,
08:54and no matter what she tried,
08:56the results were the same every time:
08:59the experiment had been
a resounding success.
09:05Evelyn Forget discovered
09:06that the people in Dauphin
had not only become richer
09:09but also smarter and healthier.
09:10The school performance of kids
improved substantially.
09:15The hospitalization rate decreased
by as much as 8.5 percent.
09:20Domestic violence incidents were down,
09:21as were mental health complaints.
09:24And people didn't quit their jobs.
09:26The only ones who worked a little less
were new mothers and students --
09:30who stayed in school longer.
09:32Similar results have since been found
09:34in countless other experiments
around the globe,
09:37from the US to India.
09:43here's what I've learned.
09:45When it comes to poverty,
09:48we, the rich, should stop
pretending we know best.
09:54We should stop sending shoes
and teddy bears to the poor,
09:56to people we have never met.
09:58And we should get rid of the vast
industry of paternalistic bureaucrats
10:02when we could simply
hand over their salaries
10:04to the poor they're supposed to help.
10:08Because, I mean, the great
thing about money
10:11is that people can use it
to buy things they need
10:13instead of things that self-appointed
experts think they need.
10:17Just imagine how many brilliant scientists
and entrepreneurs and writers,
10:23are now withering away in scarcity.
10:26Imagine how much energy
and talent we would unleash
10:28if we got rid of poverty once and for all.
10:31I believe that a basic income would work
like venture capital for the people.
10:37And we can't afford not to do it,
10:39because poverty is hugely expensive.
10:42Just look at the cost of child poverty
in the US, for example.
10:45It's estimated at 500 billion
dollars each year,
10:50in terms of higher health care
spending, higher dropout rates,
10:54Now, this is an incredible waste
of human potential.
11:00But let's talk about
the elephant in the room.
11:03How could we ever afford
a basic income guarantee?
11:07Well, it's actually a lot cheaper
than you may think.
11:10What they did in Dauphin is finance it
with a negative income tax.
11:13This means that your income is topped up
11:15as soon as you fall
below the poverty line.
11:18And in that scenario,
11:19according to our economists'
best estimates,
11:22for a net cost of 175 billion --
11:25a quarter of US military spending,
one percent of GDP --
11:30you could lift all impoverished Americans
above the poverty line.
11:34You could actually eradicate poverty.
11:38Now, that should be our goal.
11:41The time for small thoughts
and little nudges is past.
11:44I really believe that the time has come
for radical new ideas,
11:48and basic income is so much more
than just another policy.
11:51It is also a complete rethink
of what work actually is.
11:57it will not only free the poor,
12:00but also the rest of us.
12:03Nowadays, millions of people feel
12:05that their jobs have little
meaning or significance.
12:08A recent poll among 230,000 employees
12:12found that only 13 percent of workers
actually like their job.
12:18And another poll found that as much
as 37 percent of British workers
12:22have a job that they think
doesn't even need to exist.
12:26It's like Brad Pitt says in "Fight Club,"
12:28"Too often we're working jobs we hate
so we can buy shit we don't need."
12:33Now, don't get me wrong --
12:35I'm not talking about the teachers
and the garbagemen
12:37and the care workers here.
12:39If they stopped working,
12:42I'm talking about all those well-paid
professionals with excellent résumés
12:46who earn their money doing ...
12:48strategic transactor peer-to-peer meetings
12:50while brainstorming the value
add-on of disruptive co-creation
12:53in the network society.
12:56Or something like that.
12:58Just imagine again how much
talent we're wasting,
13:01simply because we tell our kids
they'll have to "earn a living."
13:05Or think of what a math whiz working
at Facebook lamented a few years ago:
13:09"The best minds of my generation
13:11are thinking about how
to make people click ads."
13:18And if history teaches us anything,
13:21it is that things could be different.
13:23There is nothing inevitable
13:25about the way we structured our society
and economy right now.
13:28Ideas can and do change the world.
13:30And I think that especially
in the past few years,
13:33it has become abundantly clear
13:34that we cannot stick to the status quo --
13:36that we need new ideas.
13:40I know that many of you
may feel pessimistic
13:43about a future of rising inequality,
13:48But it's not enough
to know what we're against.
13:51We also need to be for something.
13:52Martin Luther King didn't say,
"I have a nightmare."
14:04I believe in a future
14:05where the value of your work
is not determined
14:08by the size of your paycheck,
14:09but by the amount of happiness you spread
14:11and the amount of meaning you give.
14:13I believe in a future
14:15where the point of education is not
to prepare you for another useless job
14:18but for a life well-lived.
14:21I believe in a future
14:22where an existence
without poverty is not a privilege
14:25but a right we all deserve.
14:30We've got the research,
we've got the evidence
14:32and we've got the means.
14:33Now, more than 500 years after Thomas More
first wrote about a basic income,
14:37and 100 years after George Orwell
discovered the true nature of poverty,
14:41we all need to change our worldview,
14:44because poverty
is not a lack of character.
14:47Poverty is a lack of cash.
