Notes & Summary - "Utopias For Realists" By Rutger Bregman
The Case for a Universal Basic Income, Open Borders, and a 15-hour Workweek.
Notes & main ideas from each chapter here below. My personal comments in blue. Download these notes as a PDF file
Chapter 1 : The Return of Utopia
"Progress is the constant realization of utopias" - Oscar Wilde.
Modern land = Cokagne = paradise, land of plenty, era of wealth and abundance.
But now Utopia died. We're stuck, unable to come up with better than the present => That's the purpose of the book : exhort us to pursue & believe in more radical ideas.
(Comment : It reminded me of this great short poem from Eduardo Galeano : "Utopia lies at the horizon. When I draw nearer by two steps, it retreats two steps. If I proceed ten steps forward, it swiftly slips ten steps ahead. No matter how far I go, I can never reach it. What, then, is the purpose of utopia? It is to cause us to advance")
2 types of utopias : 1/ Blueprints : immutable rules that tolerate no dissension. Leads to fascism, Stalinism. 2/ Doesn’t offer ready-made answers, but asks the right questions. Offers guidelines and seeks to inspire. New utopias should be based on experimenting, iterating, improving. Several utopias, plural, confronting ideas.
Need for passionate people, dreamers who believe in Utopias & have the courage to pursue new paths.
Chapter 2 : The 15-Hour Workweek
Biggest challenge of the 21st century : leisure time.
1930, Madrid, JM Keynes gives a lecture. His calculations about technological progress => humans will only have to work 15 hours per week in 2030. Many experts (among them Marx) : in the future, more leisure time, used for improving "the art of living" (mental and physical activities).
Businessmen conducted experiments : - 1926, Henri Ford, founder of Ford Motors Company. Implements the 5 days workweek. Results : productivity increased. Rested workers = more effective workers. Also, an employee with no free time to enjoy life = won't buy his cars to enjoy them. - Kellogg (Cornflake king) => 6-hour workday. Results : also an increase in productivity.
Past those thresholds, productivity decreases => Negative correlation between working hours & productivity.
Research confirms it : if you’re constantly drawing on your creative abilities, you can't be productive for more than 6 hours/day on average.
The general idea among businessmen, thinkers & sociologists at the time : Expansion of "enforced leisure", "forced free time" = boredom, mental instabilities, increased violence, immorality.
Politicians' biggest fear = citizens having more free time to think about & question government's choices.
Post 2nd WW prosperity: short workweeks as an essential part of "the American way" of living. Everyone thought they will only get shorter in the future.
But big change in the 80's! Weekly hours worked started increasing. Main reason : feminist revolution. Research from early 20th century didn’t anticipate having so many women in the labor market. With more women working, men should have been working less, but it didn’t happen.
Another reason : a change in terms of values in the 80's = Workaholics. See Apple employees wearing T-shirts that read "working 90 hours a week and loving it!".
Biggest criticism against shorter workweeks = we can’t' afford it. Explosion of consumption in 20th century based on credit/debt => need to repay it. Time is money and "Leisure time is too expensive".
Also, blurred lines between work & personal life due to smartphones & technology => Harvard Business School study : managers in developed countries spend 80/90 hours per week working OR monitoring work and remaining accessible through electronic devices.
=> in fact, biggest challenge of 21st : not more leisure & boredom, but more stress, mental problems & uncertainty.
Many surveys of employees offering trade-offs (more free time vs option 2) show they mostly favor having extra free time for things like family, social involvement and recreational activities.
How can we achieve that ? 20-30 hours’ workweek should be a collective social and political ideal => reverse the incentives!
Example of a bad incentive : today it's financially more interesting to have 1 person working overtime than to hire a new employee. Because some labor costs (healthcare benefits etc) paid per employee instead of per hour.
Chapter 3 : why we should give free money to everyone
London 2009. An experiment with 13 homeless men. Used to cost 400K pounds per year in social services.
New experiment : Put the choice in the hands of the poor. No food stamps, no shelter => give them 3K pounds per month per person. Free money, no obligations.
=> Each person had clear idea about their most urgent needs. Smartphone, dictionary, classes etc.
1 year later, 7 out of 13 had a home. Most following classes, learning a job. Not only they won't cost society => now they will contribute to social life and pay taxes.
Majority of experiments using hard data prove that giving free money to poor people leads to successful outcomes.
Contrary to popular belief, didn't use it for alcohol or gambling or tobacco. Study by World Bank shows that tobacco and alcohol consumption generally declined among 82% of the recipients. => "Poverty is not lack of character, it's a lack of cash".
From right to left political spectrum, many experts agree with basic income. "Not as a favor, but as a right". Author calls it "the capitalist road to communism".
Manitoba, Canada. Dauphin, small town, 13K inhabitants. Experiment : 90K dollars a year for every family of 4.
After 4 years, a conservative government is elected and puts an end to it. No analysis of the results was ever conducted.
Professor Evelyn Forget. Got the results in 2009. Analysis showed it was a success, based on many parameters.
4 other experiments around same time in USA. 1964, Lyndon Johnson, "war on poverty". Democrats & Republicans agree on a big welfare reform. But needed large scale social experiments first.
1968, Nixon presented the Bill about basic income. Called it "the most significant piece of social legislation in our nation's history". The bill passed the House of Representatives. But democrats opposed it in the senate, wanted a higher basic income. After months of negotiations, the bill was disproved.
For sociologist Albert Hirschman, Utopia is generally attacked on 3 grounds. - Futility : not possible. - Danger : high risk. - Perversity : will degenerate into dystopia.
But when Utopia becomes reality, it becomes widely accepted, a common place. Happened with democracy previously.
What about basic income? - Futile ? First time in history, rich enough to finance it. Eradicating poverty in USA = 175 billion dollars = 25% of US military spending.
- Dangerous ? Will people work less? Research shows work is something we NEED to do, whether paid or not. No job = unhappiness.
- Perverse? "Welfare state degenerated into a system of suspicion and shame". People are monitored. Humiliation and scrutiny. Would need to change.
(Comment : In any case, the welfare state as inherited from the 20th century has to change, whether there's basic income or not. In a context of forced unemployment, freelancing & part-time jobs, pensions & other benefits shouldn't be dependant on having a steady job.)
Other trends showing the need for more security (that's what basic income offers) : Greater flexibility in the labor market. Globalization means more competition, eroding middle classes. Growing inequality. Smarter robots taking jobs.
Should be seen as a dividend on progress, made possible by the work of past generations.
(Comment : in many instances throughout the book, the author doesn't provide any advice about how these solutions should be implemented. More aggressive tax policies seems to be the main solution).
Chapter 4 : Race against the Machine
The fear of machines and automation taking people's jobs. Risks : structural unemployment and inequality.
Accelerated technological advances in 21st century = Growing competition between humans and robots for jobs.
Real income (inflation adjusted) in fact decreased in most developed countries.
In 1965 : - Gordon Moore (IBM), Moore's Law. Computer chips will soon power devices able to do vast numbers of calculations per second. - 1st container => More exchange of goods.
The chip and the container + globalization = the world became a small village with increasing number of interactions at the speed of light.
Most economists in 20th century thought the ratio of capital to labor would always stay constant. 2/3 for labor, 1/3 for capital.
But nowadays : 56% for labor in industrialized countries. Main cause : technological progress.
"The smaller the world gets, the fewer the number of winners". Globalization favors the creation of oligopolies in various sectors.
Trend = Lighter companies, less employees, more software, larger market share, but more risks of being disrupted.
- 1964 vs 2011. Top 4 largest American companies. Workforce decreased by 75%. But total value doubled. - 1997, Deep Blue defeated Kasparov in a chess game => In first wave, machines replaced humans’ physical power. In the new wave, they replace humans’ mental capacities. - A study by Oxford University : 47% of all American jobs and 54% of all those in Europe will probably be replaced by machines in the next 20 years.
But this happened in the past (start of 20th century) and wages and employment didn't disappear. A study from 1963 : new technologies wiped out 13 million jobs, but also created 20 million new ones.
Globalization not the biggest problem here. Because even outsourcing may stop : in the future, all factories will be on national soil and automated.
Problem is "the great decoupling", starting around 2000. Innovation and productivity keep increasing, but employment stays low.
The Luddites : those who hated technological progress because it endangers humanity by putting everyone out of work. 19th century, they attacked factories. Many unions used those same arguments in 20th century. 21st century => The Luddites are back.
Short term consequences : Every person who has a skill that can be replaced by smart robots will lose her job. The rich (social reproduction, inheritance) and the well educated (able to create and interact with robots) will have a larger share of the wealth.
The response in 20th century = invest in education. It worked at the time. But because only basic skills were needed (reading, writing, basic math) to produce a big impact. Nowadays, more complex skills are needed => Need for a radical solution.
Need for a future where paid labor is not the main way of living. Kill the idea that we have to work to be able to live.
Solution : massive redistribution. Of money (basic income), time (shorter working week), taxes (on capital instead of labor).
3 options for french economist Piketty : inclusive growth (unlikely), high taxes on capital (doable) or World War III (let’s hope not).
(Comment : - See Piketty's work about the growth of inequality (return on capital consistently superior to GDP growth). Piketty's solution : a progressive and more aggressive tax on wealth.. - Unemployment will fatally lead to a drop in consumption (see Marx's theory) and force the businesses to realize these changes are for their own good. We need more people like Henry Ford who understood this a century ago. Many big Corp are starting to voluntarily increase their minimum wages.)
Chapter 5 : The End of Poverty
18th century : "poverty was just another fact of life". Win-lose mentality. Politics & business were all about cheap wages. This mentality led to slavery.
20th century : was popular to attribute poverty & mental problems to individual choices & genetic factors => giving free money to the poor wouldn't have any impact.
Margaret Thatcher called poverty "a personality defect". Conservatives view = the solution resides in the individual, personal responsibility to get out of poverty.
University professor, Costello. Research about an indian tribe. Before and after a new casino built on their land (1997). Their annual earnings (rented land) grew from 500$ to 6K$ per year.
His findings : mental health, school results improved, lower crime rates, parents now had more time to invest in childrens education. => yes, free money works. Poverty not a personal defect.
For economists : poverty leads to having a “scarcity mentality”. Prevents you from focusing on the long-term. Too many urgent problems to solve. No perspective. Limited "mental bandwidth". Research shows poverty = 13 to 14 IQ points lost!
=> Free money solves that by giving more security about the future.
(Comment : the main idea he tries to convey is that the whole society pays the cost of poverty, whether it is financially (taxes etc) or in terms of risks (crime, sicknesses etc.).
Utah, 2005, war on homelessness. A new program : people are given free apartments.
A homeless individual costs society 16K$ per year. An apartment + counseling cost 11K$. Strategy called "housing first" = a home is the pillar to get back to normal life.
Same program in the Netherlands gave top results. 2 years : 6,5K people off the streets. "Every euro invested in fighting and preventing homelessness the Netherlands enjoys double or triple returns in savings on social services, police, and court costs."
A win-win policy!
(Comment : IMHO Having a roof over your head, being able to sleep comfortably, shower, wear clean clothes, provides a sense of security and a higher self-esteem. If free money is the pragmatic approach, housing is more effective from a psychological POV)
Chapter 6 : The Bizarre Tale of President Nixon and His Basic Income Bill
1969, Nixon, war on poverty. 1600$ a year for family of 4. Equivalent to 10K$ a year today.
But an advisor showed him a report about “The Speenhamland system”, similar experiment in England 150 years before. Negative results. The experiment said to be a threat to the foundations and incentives of capitalism.
Nixon's opinion changed. His basic income would come with incentives to work and tougher conditions. Was wokfare rather than welfare.
Years later : it was discovered that the report was written way before any analysis of the data & results. It was only opinions from businessmen & the clergy.
=> Despite that, the "Speenhamland experiment" still used by many experts today as main argument against free money. Starting from 80's, assistance to the poor seen as a favor, not a right.
The problem is analyzed from the wrong angle. Government invests to help people acquire skills & get job interviews. The problem is attributed to supply (the unemployed should try harder!) but it’s a demand problem.
Keynes in early 20th : Poverty & unemployment is "simply because there isn't enough paid work for everyone".
Chapter 7 : why It Doesn’t Pay to Be a Banker
1968, garbage collectors in New York go on strike. 10K tons of trash uncollected per day. A week later, the union gets the concessions it demanded.
Would the fundamentals of our urban daily lives be as damaged if other types of workers went on strike (consultants, bankers, lawyers etc)? These jobs help shifting wealth, not create it. But the real "agents of prosperity" (teachers, nurses, farmers) are paid way less than these shifters.
Historic trend = a shift from the agricultural sector (decreasing price of food & low wages for the farmers) towards services jobs.
1970, Ireland Bank employees go on strike. Economy doesn't suffer much. Solution : the chèques cleared at the 11K pubs of the country = had lots of cash on hands + local pubs knew people, knew who could be trusted.
=> Bankers' added value to society is overrated. Ireland's experiment shows that main reason of their existence : our lack of social cohesion and regular interactions.
The phenomenon of "bullshit jobs" today. Pointless & superfluous. No added value to society.
Example of high frequency traders. Profiting off microseconds of latency. Does this provide any tangible value to society ?
A survey by the Harvard Business Review : 12K managers, 50% said their job had no "meaning and significance", 50% don’t agree/understand their company’s mission.
Thatcher & Reagan's tax cuts in the 80's => massive career switches, from teachers & engineers to bankers & accountants.
(Comment : it's just a matter of worldview. If you start by acknowledging the primacy of free markets, then actors like short sellers, brokers and traders are very useful since their activity helps make the markets more efficient).
How to change that? Start from education. Teacher is the most influential profession.
Nowadays, education seen as a mean to acquire skills to survive in the labor market, to get hired => restructure education around ideals and values. And the job market will adapt.
(Comment : not sure the market will adapt to our dreams bro… )
New York learned the lesson. Today, garbage collector makes 70K/year after 5 years of work.
(Comment : This chapter seemed too repetitive and idealistic. Like many things in the book, not laying out a plan or explaining how it would be made possible, nor how to deal with the main hurdles).
Chapter 8, New Figures for a New Era
GDP : "the sacred measure of progress".
Many flaws : black market activity & unpaid labor not considered. Digitalisation & free products can even cause contraction of GDP (see Skype, WhatsApp in telecoms). Doesn't consider qualitative criterias (inequality, child mortality, citizens health etc).
2011, Japan, The Sendai seaquake. 235Bn$ of damages. Equivalent GDP of Greece. The reconstruction efforts put Japan back on the path of growth. Same happened after WW2. But just a quantitative growth, didn't solve any of society's most pressing problems.
GDP is a recent concept. 1931, after the great depression. US president Hoover needed a global view of the economic state of the nation. The economist Kuznets laid the foundations of what would become the GDP. His report to congress became a bestseller. Policymakers and media used it widely => became the agreed upon concept to estimate a nation's overall economic performance. Presented as the ultimate scientifically efficient way to measure progress.
20th century : Growing popularity of economists, statistics & math, bigger influence on policy making = the economy seen as a machine you can play with, adjust.
But GDP is only useful during war times (that's when it all started). War = sense of urgency = it’s acceptable to borrow from the future, pollute the environment and go into debt.
Kuznets himself warned in 1962 "Distinctions must be kept in mind between quantity and quality of growth”
We face new challenges, different from post-war era. Climate change, inequality, automation => A new era needs new criterias. Sadly there's a lack of alternatives.
(Comment : - Couldn't agree more. GDP doesn't make any sense anymore. We're living in the information age. There has never been so much available data about the state of individuals & corporations (and almost in real time). We have all the necessary tools to make more precise & detailed evaluations. Yet we're sticking to a 20th century indicator... - Again, here the author mentions some existing indicators, but doesn't offer any solid alternative.)
Chapter 9 : Beyond the Gates of the Land of Plenty
Era of Abundance. Yet everyone doesn't have access to most basic products and services.
A study by the World Bank : 85% of all Western aid in the 20th century was used differently than intended and with little effects.
Esther Duflo, MIT, Poverty Action Lab, conducting studies on international aid. The impact of Aid in the 20th century wasn't well measured. New experts now adopt a more data-driven approach : Control panels and research groups. One panel gets the treatment, the other one gets the placebo. => RCT (randomized controlled trials).
"The randomistas don’t think in terms of models. They don’t believe humans are rational actors" : They test everything !
Duflo used RCT in Hyderabad, India, to demonstrate that there is no evidence that microcredit is effective to combat poverty. Her data shows that handing out cash works way better.
Let's use data to test another option that could end poverty => Open borders.
Like GDP, borders are a recent concept. After the start of WW1, an international conference in 1920. Powerful countries agreed to the use of passports (afraid of spies, need to keep track of people's movements).
Probability of success in life today too dependant on place of birth. + Too many people unable to access places where their skills would be more valued by the labor market.
7 studies show that open borders would increase global GDP by 67% to 172%. A study by the World Bank : If 3% more immigrants had access to the developed countries, the world’s poor countries would have $305 billion more in revenue.
Lifting all barriers on goods and capital would lead to an increase of worldwide GDP of ~100 Bn $. Impact of Open Borders => 65 Trillion dollars more according to economists!!!
Today, only 3% of the world’s population lives outside their country of birth. Our current type of globalization = the world is open for goods, services, money, but not for people.
(Comment : - Doesn't digitalisation help somehow solve this problem? See development of remote work. - Studies show globalization meant a more equal distribution between developed/developing countries of the wealth created in the 21st century)
Main counter-arguments against open borders :
- Fear of losing one's job : Didn't happen when women entered the work force in 70's. Open Borders = more consumption, more opportunities for everyone. Not a game of musical chairs.
- Lower average wages because of immigrants : Study by Center for Immigration Studies showed it had no impact on wages.
- Too lazy immigrants, apply for welfare rather than seek jobs : There's no proof that countries with better social safety attract more immigrants (no correlation). Studies proving that the net financial contribution of immigrants to a country is positive.
- They'll never go back home : it's the opposite. Tougher immigration policies & border enforcement = immigrants cross the border less often, only a few illegal immigrants ever take the risk of going back home.
(Comment : See Branko Milanovic's piece about the risks of immigration for social cohesion and its eventual impact on the welfare state.)
History proves that free movement of people is a powerful tool against poverty. Humanity evolved by moving between lands. See Italians and Irish people going to USA in late 19th century.
(Comment : See how China remained marginalized during many decades before Mao and paid the price in terms of development)
Sadly, current trend : 75% of all border walls & fences in the world were built after 2000.
Chapter 10 : How Ideas Change the World
"The difficulty lies, not in the new ideas, but in escaping from the old ones" - JM Keynes.
"Cognitive dissonance" = when reality clashes with our convictions, we’d rather adjust reality than change our opinions. We may become even more stubborn than before.
(Comment : social media bubble, reflection & solidification of our own opinions).
Question now is HOW?
Study shows sudden shocks work well. Example : warnings about the "Islamic threat" started in early 90's in USA, but only had wide attention after 9/11.
So, is change something gradual or sudden & violent ?
(Comment : - See Naomi Klein's book, "the shock doctrine". - IMHO Change is gradual then sudden. Ideas take time to propagate. Then once a threshold is reached, they grow exponentially & become widely accepted.
September 2008, collective cognitive dissonance. Banking crisis = the experts' faith in capitalism was challenged. Yet, after the Occupy movement and some attempts here and there, no big changes => neoliberal policies still implemented.
Why didn't the 2008 crisis lead to any meaningful change? => Because the world had no real and bold alternative. That's why we should keep dreaming and sharing bold ideas = to build credible alternatives whose time will soon come.
The example of Friedrich Hayek and Milton Friedman : neoliberalism was their "Utopia". But were part of the minority back then. Postwar reconstruction : Keynesian ideas and socialism were the main ideology.
(Comment : even Republicans in USA had more leftist policies than current socialists in Europe. The majority of the world was, with varying degrees, in favor of socialism).
1947, founded the Mont Pèlerin Society. A think tank. Philosophers, economists, historians gathered in this Swiss village. Goal = to fight the spread of socialism.
Basic ideology = government's intervention is the root of all problems, free markets are the solution to every problem.
Deployed their ideas through many means : media, research reports, education, advisory.
Turning point = 70's, inflation in oil prices, recession then stagflation. They had predicted it! Journalists rose their theories to fame. Thatcher and Reagan did the rest.
=> In 30 years, their idea, once seen as radical and marginal, was ruling the world.
Today looks like the end of history. As if neoliberalism has definitely won.
An era dominated by micro-problem solvers. Managers & technocrats leading the world. Not big believers or idealists. No big narratives to guide us.
=> "We need the courage to be Utopians"
(Comment : - Always thought that effectiveness of ideologies is contextual. Neoliberalism and representative democracy were good enough to take humanity to our current state of development. But maybe it's something else that's supposed to take us further. - See Carlota Pérez' theory (in french) : current problems due to the absence of update of the politico-institutional framework despite massive changes in the techno-economical framework. - See Bayrou : "si on pense tous la même chose, c'est qu'on ne pense plus").
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