Universal Basic Income and Social Entrepreneurship

November 19, 2018

This blog post introduces the reader to the contentious concept of universal basic income [UBI]. While UBI is both celebrated and critiqued at all points on the political spectrum, this post focuses on the impact that UBI could have on a social enterprise ecosystem.

On August 31st, Ontario’s newly elected Conservative government announced that they would be ending the recently established Universal Basic Income [UBI] pilot project at the end of the 2018-19 fiscal year, citing cost concerns. The short-lived experiment—which would have provided 4,000 low income Ontarians with an ongoing guaranteed and unconditional sum of money to meet their basic needs—sought to measure if, and how, this alternative to traditional modes of social assistance would improve outcomes related to food security, health, education, and employment. Based on the response to news of the premature program wind down, it might appear that UBI advocacy comes solely from the political left. However, UBI receives both support and criticism from all points on the political spectrum. While increasingly forwarded by anti-poverty organizations and civil rights groups, UBI is also present in the writings of radical free market economists like Milton Friedman and Friedrich Hayek, who argued that setting a minimum income floor could increase individual freedom while serving as an alternative to a heavily bureaucratized social welfare system. 

Recently, UBI has also received growing support from many corners of the business community. Most notably, tech entrepreneurial giants like Elon MuskRichard Branson, and Mark Zuckerberg have made the case that UBI will prove necessary as work becomes increasingly automated. Robert Reich—professor of Public Policy at University of California at Berkeley and former Secretary of Labor in the Clinton Administration—draws on a simple metaphor to describe this phenomenon:

Imagine a small box—let’s call it an iEverything—capable of producing everything you could possibly desire, a modern-day Aladdin’s lamp. You simply tell it what you want, and—presto!—the object of your desire arrives at your feet. The iEverything also does whatever you want. It gives you a massage, fetches you your slipper, does your laundry and folds and irons it. The iEverything will be the best machine ever invented. The only problem is, no one will be able to buy it. That’s because no one will have any means of earning money, since the iEverything will do it all.

In other words, the business world must grapple with the fact that, as technological innovation continues to increase efficiency and profitability, it risks displacing jobs that provide citizens with the resources necessary to purchase these products. According to Musk, Branson, and Zuckerberg, UBI is one way to counter this inevitability. 

While this “automation” argument receives the bulk of the limelight due to the celebrity status of its proponents, advocates of UBI from the world of social impact have begun highlighting a very different argument: UBI will be good for social entrepreneurship.

2017 study conducted by the Centre for Social Innovation and the Mowat Centre, for instance, suggests that UBI can de-risk social entrepreneurship by eliminating a major factor that prevents social enterprises—and enterprises in general—from getting off the ground: a fear of failure. According to the Toronto-based social entrepreneurs interviewed as part of the study, the security associated with a guaranteed lifelong basic income would provide social entrepreneurs with the confidence to create new ideas and take risks, leading to more social innovation. This is vital, the authors claim, because the risks associated with launching a social enterprise are not equally felt. Specifically, the financial risks of failure are much more severe for a social entrepreneur lacking economic security. This reality further characterizes the experiences of social entrepreneurs from other marginalized communities since economic inequality maps onto forms of discrimination like racismanti-indigeneityhomophobia, and transphobia in Canada. And yet, these are the very people that are most needed to lead social enterprises as they possess important knowledge about the community-specific social issues that social enterprise is best positioned to address, and are further embedded in important social networks within these communities. In this way, de-risking social entrepreneurship through UBI wields the potential to unlock a valuable source of community-led social innovation, thereby creating a more diverse, democratized, and representative social entrepreneurship ecosystem where innovations and ideas emanate from the community, rather than parachuting in via a one-size-fits-all model. 

Another potential benefit of UBI is its ability to protect social entrepreneurs from the financial stress, anxiety, and illness that often accompanies social enterprise work. For example, at the World Economic Forum’s most recent Annual Meeting, nearly 50% of the social entrepreneurs in attendance reported struggling with burnout and depression. And this was not a typical sample size. Rather, these were some of the world’s more successful social entrepreneurs whose ventures had already been scaled. While entrepreneurs are already predisposed to burnout due to the fact that they are always on the clock and have a unique investment in the work that they do, social entrepreneurs have an added level of deep emotional commitment to the social problems their work addresses and the communities they work with. 

A Contested Concept

UBI is a unique social policy innovation in that its supporters (and critics) come from all philosophical and political positions. For example, within the business community alone, UBI is touted as a pathway to skills training, the re-valuing of charitable work, the reduction of government regulation, and the ability for people to avoid taking on work out of survival anxiety. At the same time, some community organizers argue that UBI is too individualistic, replacing collective forms of providing social welfare by emphasizing the individual consumer. 

Whatever your perspective, there is one thing that is clear: UBI is likely to remain a mainstay in social policy debate. Within this context, it is important to examine what effects it might have on the social enterprise ecosystem. 

Written by Adam Saifer, Monieson Centre Post Doctoral Fellow, Centre for Social Impact