Entrepreneurs

Top Silicon Valley tech exec on cash handouts: Let's eliminate poverty for all Americans

Sam Altman, president of Y Combinator
Photo by Bloomberg

It's de rigeur for the many of the richest of the rich to tout the benefits of giving cash handouts to all American citizens, in part as a way to end poverty. The idea, called universal basic income (UBI), is for every individual to be paid a regular sum of money regardless of employment status.

One of the tech elite who has an interest in universal basic income is self-made multimillionaire and Y Combinator President Sam Altman. "Eliminating poverty is such a moral imperative and something that I believe in so strongly," Altman tells CNBC Make It.

"There's so much research about how bad poverty is. There's so much research about the emotional and physical toll that it takes on people.

"I think about the amount of human potential that is being wasted by people that are not doing what they want to do. I think about how great it would be to undo that. And that's really powerful to me," he says.

"I think about the amount of human potential that is being wasted by people that are not doing what they want to do." -Sam Altman, President of Y Combinator

Indeed, poverty affects how children's brains develop and how well children perform on tests, according to a 2015 study published in the medical journal, JAMA. Poverty is also a cause of poor physical health. According to the World Bank, this is because poor people don't have the resources they need to learn about good health or the access to health care.

So under Altman's leadership, Y Combinator, a top start-up investment and mentorship program, is doing an experiment to better understand UBI — giving the residents of Oakland, Calif. cash handouts to see how the money affects individuals' behavior. Y Combinator has hired a program director and the study is underway, but but Altman declines to share any further updates.

In recent months, tech billionaires Mark Zuckerberg, Elon Musk and Richard Branson have all publicly talked about universal basic income as a possible solution to both poverty and impending mass of unemployment as a result of automation and artificial intelligence.

Some have taken umbrage with the idea that titans of industry, from their thrones of extreme wealth, are taking pity on those whom they may well have exploited to get to the pinnacle of capitalism.

Altman himself sold his first company, Loopt, for more than $43 million. Since 2014, he has been running Y Combinator, which has the likes of Aribnb, Dropbox and Stripe in its portfolio. The combined valuation of the start-ups Y Combinator has funded is north of $80 billion.

He has noticed the increased attention universal basic income is getting and has been surprised by it. Unlike the skeptics, he's encouraged — eliminating poverty is a goal that should be a priority for everyone, he says.

"Why is it okay for somebody that's in the middle class to say, 'Hey, I think we should eliminate poverty' but not okay for Zuckerberg to say that?" says Altman to CNBC Make It. "I am happy to hear people in poverty talk about it. I am happy to hear billionaires talk about it."

In his commencement speech at Harvard, Zuckerberg said that growing up in a financially stable household (his father was a dentist) meant that he had the freedom to try launch Facebook, which currently has a market capitalization of $488 billion. Zuckerberg himself, at 33 years old, is worth $70 billion, according to Forbes.

Altman does not begrudge Zuckerberg his billions, nor does he find his comments on cash handouts tone deaf.

"I don't like to blame the wealthy for all the problems. I would be more willing to blame the politicians than Zuckerberg, but I don't think Zuckerberg has done anything wrong. In fact, I think he's created a product that he deserved to get really rich for," Altman says to CNBC Make It.

"He was born, as he has said, into a lucky circumstance, which allowed him to take a risk and that's not fair. Everybody should be allowed to take a risk, whether they were born to rich or poor parents. That's part of what something like a basic income might do. So again if people are saying, 'Hey, I really benefited from not growing up in poverty, and I was able to take a risk and it paid off but I wouldn't have been able to take that risk if I was in poverty. So I think we should eliminate it for everybody else,' that feels really consistent to me. It's something that I respect."

Altman also has a 10-point agenda for improving his home state, California, in addition to his UBI efforts.

Says Altman: "I think if we can eliminate poverty for all Americans, that's a really good thing to do."

See also:

This Silicon Valley tech leader wants to fix California's housing crisis by scrapping the $64 billion bullet train from L.A. to S.F.

Elon Musk says robots will push us to a universal basic income—here's how it would work

Here's new evidence minimum-wage hikes result in workers being replaced by robots