Utopia for Realists

by Rutger Bregman

Troy Shu
Troy Shu
Updated at: May 29, 2024
Utopia for Realists
Utopia for Realists

Dive into the visionary ideas of 'Utopia for Realists' - explore the power of direct cash transfers, universal basic income, and rethinking work-life balance. Unlock a roadmap for a more equitable, sustainable future.

What are the big ideas?

Utopian Thinking Rekindled

The book advocates for reinvigorating utopian thinking, not as rigid blueprints but as motivational visions to inspire societal changes, highlighting its role as the lifeblood of democracy.

Efficacy of Direct Cash Transfers

It presents compelling evidence on the effectiveness of direct cash transfers in fighting poverty. This approach is proven to significantly improve health, education, and economic outcomes compared to traditional aid methods.

Failure of the 15-Hour Workweek

Despite early 20th-century predictions by Keynes, the reduction in working hours has stagnated and in some cases reversed, suggesting a need to rethink work-life balance and productivity.

Benefits of Universal Basic Income

The book explores historical experiments and contemporary pilot programs that show universal basic income can enhance freedom, security, and equality in the face of automation and economic changes.

Technological Unemployment and the Precariat

Discusses the threat of widespread structural unemployment due to automation, advocating for radical solutions like UBI and a shorter workweek to address the rising 'precariat' class.

Rethinking Metrics of Economic Success

The book criticizes the inadequacy of GDP as a measure of progress and advocates for new metrics that encompass well-being, sustainability, and equity, reflecting a more holistic view of societal health.

Want to read ebooks, websites, and other text 3X faster?

From a SwiftRead user:
Feels like I just discovered the equivalent of fire but for reading text. WOW, WOW, WOW. A must have for me, forever.

Utopian Thinking Rekindled

The book calls for a revival of utopian thinking. Not the rigid, blueprint-like utopias of the past, but a more flexible, inspirational form of utopianism. These "alternative horizons" can spark the imagination and drive societal progress, serving as the "lifeblood of democracy."

The author contrasts two types of utopian thought. The first, the "utopia of the blueprint," imposes immutable rules and tolerates no dissent. This rigid approach has been rightly criticized. In contrast, the second form of utopianism offers not solutions, but guideposts - vague outlines that inspire us to change, rather than forcing us into a "straitjacket."

This flexible utopianism, exemplified by Thomas More's original work, understands that the perfect is the enemy of the good. It uses satire and humor to throw open the windows of the mind, challenging the status quo and exposing societal injustices. Utopias of this kind are not meant to be taken literally, but to ask the right questions and catalyze new ideas.

The book argues that in our modern era of technocracy and "problem management," we have lost sight of the power of utopian thinking. It's time to rehoist the sails and imagine new, bold visions for a better world. Only by embracing the "courage to be 'utopian'" can we overcome the erosion of our collective expectations and reclaim the transformative potential of ideas.

Here are examples from the context that support the key insight about reinvigorating utopian thinking:

  • The book contrasts two forms of utopian thought - the rigid "blueprint" utopia exemplified by Campanella's "City of the Sun" which tolerates no dissent, versus the more open-ended, inspirational utopia advocated by Thomas More that "offers not solutions, but guideposts" to spark the imagination.

  • The book states that utopias "throw open the windows of the mind" and are vital to counteract societies becoming "accustomed to the status quo" and blind to injustice. Utopias "ask the right questions" even if they don't provide ready-made answers.

  • The book cites philosopher Lyman Tower Sargent's view that "one needs to be able to believe passionately and also be able to see the absurdity of one's own beliefs and laugh at them" - highlighting how utopian thinking should inspire without being taken too literally.

  • The book argues that rather than dismissing all utopian ideas as dangerous, we should "rehoist the sails" and embrace "crazy dreams" like a 15-hour workweek or universal basic income, as "ideas, however outrageous, have changed the world, and they will again."

Efficacy of Direct Cash Transfers

Direct cash transfers are a highly effective approach to fighting poverty. Research has shown that simply giving money directly to the poor leads to significant improvements across a wide range of outcomes, including reduced crime, child mortality, malnutrition, and teenage pregnancy, as well as increased school performance, economic growth, and gender equality.

The benefits of direct cash transfers are clear. When poor people receive unconditional cash, they use it wisely to meet their most pressing needs, whether that's buying food, medicine, or starting a small business. This directly addresses the root cause of poverty - a lack of money. In contrast, traditional aid programs that provide in-kind goods or services often miss the mark and end up being less effective and more costly.

Importantly, direct cash transfers do not make the poor lazy or irresponsible. Studies have consistently debunked the myth that free money will be squandered on alcohol and tobacco. In fact, the opposite is true - cash handouts have been shown to increase work effort and productivity among recipients. The freedom to use the money as they see fit empowers the poor to make the best decisions for themselves and their families.

Given the overwhelming evidence, direct cash transfers should be a central part of any effective anti-poverty strategy. This simple, low-cost approach delivers far better results than traditional development aid programs. By putting money directly in the hands of those in need, we can make significant strides in the fight against global poverty.

Here are some examples from the context that support the key insight on the efficacy of direct cash transfers:

  • In Namibia, figures for malnutrition dropped from 42% to 10%, truancy fell from 40% to virtually 0%, and crime declined by 42% after the introduction of cash handouts.

  • In Malawi, school attendance among girls and women surged 40%, regardless of whether the cash came with or without conditions.

  • In Liberia, an experiment gave $200 to "the shiftiest of the poor" - alcoholics, addicts, and petty criminals - and three years later they had spent the money on food, clothing, medicine, and starting small businesses. As one researcher noted, "If these men didn't throw away free money, who would?"

  • Studies have shown that in 82% of cases in Africa, Latin America, and Asia, alcohol and tobacco consumption actually declined when poor people received unconditional cash transfers.

  • The "lazy poor people" argument has been disproven - research shows that when the poor receive no-strings cash, they actually tend to work harder.

  • Providing $100 worth of free meals to students translates to 2.8 additional years of educational attainment, three times the impact of providing free uniforms.

  • Deworming children for just $10 per treatment has been shown to yield 2.9 additional years of schooling, a much greater impact than many other interventions.

The key point is that direct cash transfers, with few or no strings attached, have been proven through rigorous studies to be a highly effective and efficient way to improve a wide range of outcomes for the poor, from health and education to economic growth and reduced crime. The evidence consistently shows that poor people are able to make good use of the money to address their most pressing needs.

Failure of the 15-Hour Workweek

The 15-hour Workweek Prediction Has Failed to Materialize. Despite early 20th-century forecasts by renowned economist John Maynard Keynes that people would be working just 15 hours per week by 2030, the reality has been quite different. In many wealthy countries, work hours have actually increased or remained stubbornly high, rather than declining as anticipated.

This stagnation in reduced work hours suggests a need to rethink our approach to work-life balance and productivity. The once-promising vision of a future filled with abundant leisure time has not come to fruition. Instead, many people find themselves overworked, stressed, and struggling to balance their careers with other important aspects of life.

To address this issue, we must critically examine the factors that have prevented the realization of the 15-hour workweek prediction. This may involve reconsidering outdated workplace norms, incentive structures, and societal attitudes towards work. By taking a fresh look at these challenges, we can develop innovative solutions to help people achieve a healthier, more sustainable work-life integration.

Here are examples from the context that support the key insight about the failure of the 15-hour workweek prediction:

  • In the 1930s, economist John Maynard Keynes predicted that by 2030, the workweek would be reduced to just 15 hours. However, this "dream now seems farther off than ever" as there are "hardly a politician around still willing to endorse" the idea of a shorter workweek.

  • The context notes that the "dream of a shorter workweek" has been "trampled" and that there is "hardly a politician around still willing to endorse it, even with stress and unemployment surging to record levels."

  • The passage states that Keynes' prediction of a 15-hour workweek by 2030 was an "extrapolation of the trend that had begun around 1850 into the future." However, this trend towards shorter workweeks has "stagnated" and in some cases "reversed" in recent decades.

  • The context provides examples of early 20th century pioneers of shorter workweeks, like Henry Ford and W.K. Kellogg, whose experiments demonstrated the benefits of reduced work hours. However, the passage notes that the "dream of a shorter workweek" has now been "trampled" and is seen as politically unviable.

The key point is that despite early 20th century predictions and experiments showing the benefits of reduced work hours, the trend towards a shorter workweek has stalled or even reversed, suggesting a need to rethink approaches to work-life balance and productivity.

Benefits of Universal Basic Income

Universal Basic Income (UBI) offers a powerful solution to the challenges posed by automation and economic disruption. By providing all citizens with a guaranteed minimum income, UBI can enhance freedom, security, and equality in profound ways.

Extensive research has shown the transformative benefits of UBI. Unconditional cash transfers have been linked to reductions in crime, child mortality, malnutrition, and truancy, as well as improvements in school performance, economic growth, and gender equality. Crucially, studies demonstrate that UBI does not discourage work - in fact, it often enables people to work harder by meeting their basic needs.

Rather than trapping people in poverty, UBI frees them to pursue education, start businesses, and invest in their communities. It recognizes that prosperity is built on the collective efforts of past generations, and that this wealth should be shared equitably. UBI represents a bold, forward-thinking approach to ensuring all members of society can thrive in the face of technological change.

Here are some examples from the context that support the key insight about the benefits of universal basic income:

  • In Namibia, figures for malnutrition dropped from 42% to 10%, truancy fell from 40% to virtually 0%, and crime decreased by 42% after the introduction of cash handouts with few or no strings attached.

  • In Malawi, school attendance among girls and women surged 40%, regardless of whether the cash came with or without conditions. The author notes that "Time and again, the ones to profit most are children. They suffer less hunger and disease, grow taller, perform better at school, and are less likely to be forced into child labor."

  • A study in Liberia found that when "the shiftiest of the poor" - alcoholics, addicts, and petty criminals - were given $200, they spent the money on "food, clothing, medicine, and small businesses" rather than on alcohol and tobacco. The author notes that this challenges the "lazy poor people" argument.

  • Research has shown that when the poor receive unconditional cash, they actually tend to work harder, rather than becoming lazy or dependent. The author cites a "Biblical explanation" from a bishop in Namibia, who said the cash "did not make them lazy; instead, it enabled them to be on the move."

  • The author notes that universal basic income could fundamentally change the historical distinction between the "deserving" and "undeserving" poor, providing a guaranteed minimum for all and reducing poverty.

Technological Unemployment and the Precariat

Technological unemployment poses a grave threat, as automation increasingly replaces human labor. This is creating a growing precariat class - people in low-wage, temporary jobs with no job security or political voice. As machines become more capable, even skilled jobs are at risk of being automated.

To address this crisis, radical solutions are needed. A universal basic income (UBI) could provide a safety net and allow people to adapt to the changing job market. Likewise, a shorter workweek could spread available work more evenly. These measures could empower the precariat and prevent social unrest as traditional middle-class jobs disappear.

The stakes are high. If we fail to act, the bedrock of modern democracy - the middle class - may crumble, leading to a dystopian future of mass unemployment and inequality. Policymakers must be bold and innovative to ensure technological progress benefits all of society, not just the elite. The time to implement solutions like UBI and shorter workweeks is now, before the precariat class becomes a dangerous force.

Here are relevant examples from the context to support the key insight about technological unemployment and the precariat:

  • The context discusses how the number of employees at the largest American companies has dropped dramatically, from an average of 430,000 in 1964 to only a quarter of that by 2011, despite the companies being worth twice as much. This illustrates how automation and technological progress can lead to structural unemployment.

  • The context cites estimates that 47% of American jobs and 54% of European jobs are at high risk of being usurped by machines in the next 20 years. This highlights the widespread threat of technological unemployment.

  • The context describes the emergence of a new "precariat" - a "surging social class of people in low-wage, temporary jobs and with no political voice." This precariat class is a consequence of automation displacing traditional middle-class jobs.

  • The context references the historical Luddite movement, where skilled workers like the "Yorkshire Luddites" violently protested the introduction of new weaving machines that threatened their livelihoods. This illustrates how technological change can create a dangerous class of displaced workers.

  • The context suggests that to address this issue, radical solutions like universal basic income (UBI) and a shorter workweek may be needed to provide for the growing precariat class displaced by automation.

Rethinking Metrics of Economic Success

The book argues that the Gross Domestic Product (GDP) is an outdated and flawed metric for measuring a country's progress and well-being. GDP solely focuses on economic growth, ignoring crucial factors like environmental sustainability, social cohesion, and individual happiness.

The author contends that we need to move beyond this narrow, quantitative measure and develop a new "dashboard" of indicators that capture the multifaceted nature of societal development. These could include metrics related to community service, job quality, knowledge and education, and even the precious resource of time.

The key insight is that there is no such thing as a truly "objective" or "neutral" metric. All statistical measures reflect certain assumptions and biases. Therefore, we must carefully consider what we choose to measure and how it guides our actions as a society. The goal should be to develop a more holistic and humanistic set of indicators that truly reflect what makes life worthwhile.

Ultimately, the book calls for a fundamental rethinking of how we define and pursue economic success. Rather than single-mindedly chasing GDP growth, we must seek a more balanced and sustainable path that prioritizes human flourishing alongside material prosperity.

Here are examples from the context that support the key insight of rethinking metrics of economic success:

  • The book criticizes the GDP as an inadequate measure, noting that it "came in very handy during wartime" but is no longer suitable for the post-war era, as it "no longer captures the shape of our economy."

  • It highlights alternative metrics like the Genuine Progress Indicator (GPI) and Index of Sustainable Economic Welfare (ISEW) that incorporate factors like pollution, crime, inequality, and volunteer work - going beyond just economic growth.

  • The Happy Planet Index is mentioned as a ranking that factors in ecological footprints, showing that developed countries like the US rank near the bottom.

  • The book discusses how simple rankings like the UN's Human Development Index or OECD's Better Life Index can conceal more than they reveal, as the wealthier countries become, the more difficult it is to measure their wealth.

  • It cites the economist William Baumol's cost disease, which explains how prices in labor-intensive sectors like healthcare and education increase faster than automated sectors, arguing this should be seen as a "blessing" rather than a "disease" as it reflects the need to allocate more resources to these vital areas.

The key point is that the book advocates moving beyond narrow GDP-focused metrics to develop new measures that capture a more holistic view of societal well-being, sustainability, and equity.


Let's take a look at some key quotes from "Utopia for Realists" that resonated with readers.

The great milestones of civilization always have the whiff of utopia about them at first. According to renowned sociologist Albert Hirschman, utopias are initially attacked on three grounds: futility (it’s not possible), danger (the risks are too great), and perversity (it will degenerate into dystopia). But Hirschman also wrote that almost as soon as a utopia becomes a reality, it often comes to be seen as utterly commonplace. Not so very long ago, democracy still seemed a glorious utopia. Many a great mind, from the philosopher Plato (427–347 B.C.) to the statesman Edmund Burke (1729–97), warned that democracy was futile (the masses were too foolish to handle it), dangerous (majority rule would be akin to playing with fire), and perverse (the “general interest” would soon be corrupted by the interests of some crafty general or other). Compare this with the arguments against basic income. It’s supposedly futile because we can’t pay for it, dangerous because people would quit working, and perverse because ultimately a minority would end up having to toil harder to support the majority.

New ideas that aim to improve society are often initially met with skepticism and criticism. People argue that they are impractical, risky, or even harmful. However, once these ideas become a reality, they are often seen as ordinary and unremarkable. History has shown that this pattern has repeated itself, with even concepts like democracy being initially dismissed as utopian fantasies.

Besides being blind to lots of good things, the GDP also benefits from all manner of human suffering. Gridlock, drug abuse, adultery? Goldmines for gas stations, rehab centers, and divorce attorneys. If you were the GDP, your ideal citizen would be a compulsive gambler with cancer who’s going through a drawn-out divorce that he copes with by popping fistfuls of Prozac and going berserk on Black Friday. Environmental pollution even does double duty: One company makes a mint by cutting corners while another is paid to clean up the mess. By contrast, a centuries-old tree doesn’t count until you chop it down and sell it as lumber.

The traditional measure of a country's success overlooks many positive aspects of life and actually benefits from people's misfortunes. It's a system that thrives on problems, not solutions. A person's struggles, such as addiction or illness, can be lucrative for certain businesses. Meanwhile, natural wonders like ancient trees are only valued when they're exploited for financial gain.

Poverty is fundamentally about a lack of cash. It’s not about stupidity,” stresses

The root cause of poverty lies in a scarcity of financial resources, rather than a lack of intelligence or ability. It is a simple matter of not having enough money to meet one's basic needs. By providing cash directly to those in need, we can empower them to make the best decisions for themselves and their families, rather than relying on external aid or guidance.

Comprehension Questions

0 / 27

How well do you understand the key insights in "Utopia for Realists"? Find out by answering the questions below. Try to answer the question yourself before revealing the answer! Mark the questions as done once you've answered them.

1. What are the two contrasting types of utopian thoughts discussed?
2. How does the second form of utopian thought, as discussed, differ in its intent from the first?
3. What argument is made for the necessity of this flexible form of utopian thinking in modern society?
4. What is the role of satire and humor in the described utopianism?
5. Why is it important not to take utopias literally, according to the concepts discussed?
6. What are some key positive outcomes associated with direct cash transfers to the poor?
7. How do poor people typically utilize unconditional cash transfers?
8. What misconception about direct cash transfers has been consistently debunked by studies?
9. What makes direct cash transfers a preferable approach to traditional aid programs?
10. What typically happens to work effort among the poor when they receive direct cash transfers?
11. What was the early 20th-century prediction about work hours and how has reality differed?
12. What does the stagnation or increase in work hours indicate about current work-life balance?
13. What should be reconsidered to address the failure of work hours to decrease as predicted?
14. How does Universal Basic Income (UBI) contribute to reducing child mortality, malnutrition, and crime?
15. What effect does UBI have on work behavior according to studies?
16. How can UBI potentially change the socio-economic landscape in terms of education and entrepreneurial activities?
17. What shifts in societal views does UBI encourage regarding the distinction between the 'deserving' and 'undeserving' poor?
18. What is technological unemployment, and how does it contribute to the growth of the precariat class?
19. What is a universal basic income, and how might it address the challenges posed by technological unemployment?
20. Why might reducing the workweek be considered a solution to the challenges of automation and technological unemployment?
21. What are the potential societal consequences if no actions are taken to mitigate the impacts of technological unemployment?
22. How did the historical Luddite movement illustrate the social impact of technological advancement?
23. What does GDP measure and why is it considered inadequate for assessing modern societal progress?
24. Why is it important to develop a 'dashboard' of new indicators for societal development?
25. What assumptions underpin traditional economic metrics like GDP, and how do they influence societal actions?
26. How do alternative metrics like GPI and ISEW differ from GDP?
27. What is the signifiance of incorporating metrics such as ecological footprints or resource allocation to vital sectors in new indicators?

Action Questions

0 / 9

"Knowledge without application is useless," Bruce Lee said. Answer the questions below to practice applying the key insights from "Utopia for Realists". Mark the questions as done once you've answered them.

1. What seemingly 'impossible' societal improvement can you conceptualize today, and what steps would you take to communicate this vision to others?
2. How can you use humor and creative expression to challenge the status quo and promote forward-thinking ideas in your community?
3. How can you advocate for or support the implementation of direct cash transfer programs in your community or internationally?
4. What measures can you take to ensure accountability and transparency in the administration of direct cash transfers to maximize their impact?
5. How can you advocate for and implement more flexible working schedules within your workplace to move towards a healthier work-life balance?
6. How can you advocate for the implementation of UBI programs in your community to address local social and economic issues?
7. What steps can you take to educate others about the misconceptions surrounding UBI and its ability to encourage productivity rather than laziness?
8. What initiatives can you support or start in your community to help people adapt to technological changes in the job market?
9. How can you advocate for or implement diverse economic measures in your community to ensure a more comprehensive understanding of well-being and success?

Chapter Notes

1. The Return of Utopia

Here are the key takeaways from the chapter:

  • Dramatic Improvement in Human Conditions: Over the past 200 years, the human condition has dramatically improved, with billions of people becoming rich, well-nourished, clean, safe, smart, healthy, and occasionally even beautiful, in contrast to the extreme poverty and poor living conditions that characterized most of human history.

  • Unprecedented Progress: In just a fraction of human history, per capita income has increased tenfold since 1850, and the global economy is now 250 times larger than before the Industrial Revolution, when nearly everyone was poor, hungry, dirty, afraid, stupid, sick, and ugly.

  • Decline of Extreme Poverty: The percentage of the world's population living in extreme poverty has dropped from 94% in 1820 to under 10% today, and even those considered "poor" now enjoy an abundance unprecedented in world history.

  • Advancements in Health and Longevity: Significant improvements in health and longevity have been achieved, with life expectancy more than doubling since 1900, the eradication of smallpox, and dramatic reductions in child mortality, malnutrition, and the impact of diseases like polio, measles, tuberculosis, and malaria.

  • Increased Intelligence and Civility: Average IQ scores have risen, and the world has become more peaceful, with a significant decline in war casualties and criminal activity over the past decades.

  • Disillusionment with the "Land of Plenty": Despite the remarkable progress, there is a sense of disillusionment and a lack of purpose, as the author argues that the "Land of Plenty" has become a "bleak paradise" where people struggle to find meaning and a reason to get out of bed in the morning.

  • Erosion of Utopian Thinking: The author suggests that the modern era has seen a decline in utopian thinking and the ability to imagine a better world, with politics reduced to technocratic problem-management and a fear of radical ideas about a different future.

  • Need for a New Utopian Vision: The author calls for a return to utopian thinking, not in the form of rigid blueprints, but as a way to spark the imagination and inspire change, recognizing that conflicting utopias are the lifeblood of democracy.

2. A 15-Hour Workweek

Here are the key takeaways from the chapter:

  • Keynes' Prediction of a 15-Hour Workweek: In 1930, the economist John Maynard Keynes predicted that by 2030, the Western standard of living would have multiplied to at least four times that of 1930, and people would be working just 15 hours a week. This prediction was based on the trend of declining work hours that had begun around 1850.

  • The Failure of Keynes' Prediction: Contrary to Keynes' prediction, the workweek has not continued to decline. After the 1980s, work hours have actually increased in many countries, as women have entered the workforce and work-life balance has become more challenging.

  • Productivity and Work Hours: Research has shown that there is an inverse relationship between work hours and productivity. Shorter workweeks can actually increase productivity, as seen in experiments by Henry Ford and W.K. Kellogg. Overwork leads to decreased productivity and increased errors.

  • Benefits of a Shorter Workweek: A shorter workweek can have numerous benefits, including reduced stress and burnout, improved work-life balance, greater gender equality, and reduced environmental impact. It can also help address issues like unemployment and inequality.

  • Obstacles to Reducing Work Hours: There are significant obstacles to reducing work hours, including the perception that it is too expensive, the blurring of work and leisure, and the cultural status associated with long work hours. Reversing these incentives will require collective action by companies and countries.

  • Preparing for a Future of Leisure: While the 15-hour workweek remains a distant utopia, the trend towards more leisure time is likely to continue. We need to prepare for this future by rethinking education, work, and how we spend our time, in order to make the most of increased leisure.

3. Why We Should Give Free Money to Everyone

Here are the key takeaways from the chapter:

  • Free Money Works: Studies from around the world have shown that providing unconditional cash transfers to the poor leads to positive outcomes, including increased incomes, reduced poverty, improved health and education, and more. This challenges the common perception that the poor cannot handle money responsibly.

  • Universal Basic Income: The idea of providing a universal, unconditional basic income to all citizens has been proposed by many prominent thinkers throughout history. It is seen as a way to provide a social safety net, reduce poverty, and give people more freedom and security in the face of economic changes like automation.

  • The Mincome Experiment: In the 1970s, the Canadian town of Dauphin conducted a large-scale experiment with a guaranteed basic income called Mincome. The results showed positive impacts, including improved health outcomes and school performance, without significant reductions in work hours.

  • Failed Attempts at Basic Income in the US: In the late 1960s and early 1970s, the US came close to implementing a nationwide basic income program, with support from both Democrats and Republicans. However, the proposals ultimately failed to pass in Congress, in part due to concerns about potential impacts on work and family structure.

  • Overcoming Objections to Basic Income: Common objections to basic income, such as that it is futile, dangerous, or perverse, can be addressed. Basic income is financially feasible, may not significantly reduce work, and could provide more dignity and freedom than the current welfare system.

  • Importance of Pilot Programs: Small-scale pilot programs, like the one in London providing free money to homeless individuals, are important for testing basic income and changing how we "talk about, think about, and describe the problem" of poverty.

4. Race Against the Machine

Here are the key takeaways from the chapter:

  • The Rise of Machines and Automation: The chapter discusses how machines and automation have been replacing human labor over the past century, starting with the replacement of draft horses by motorized vehicles and continuing with the rise of robots, computers, and other technologies that can perform tasks previously done by humans.

  • Declining Wages and the "Winner-Take-All" Economy: The chapter explains how technological progress has led to a decline in real wages for many workers, as labor becomes less scarce and people compete with machines. It also describes the "winner-take-all" economy, where a small number of companies and individuals reap the vast majority of the benefits of technological change.

  • The "Great Decoupling" of Productivity and Jobs: The chapter notes that in the past, productivity growth and job growth went hand-in-hand, but in recent decades, productivity has continued to rise while job growth has stagnated, a phenomenon known as the "great decoupling."

  • The Threat of Structural Unemployment: The chapter cites estimates that up to 47% of American jobs and 54% of European jobs are at high risk of being automated in the coming decades, raising the specter of widespread structural unemployment.

  • The Decline of the Middle Class: The chapter discusses how the hollowing out of middle-skill jobs is leading to the erosion of the middle class, with a growing divide between "lousy jobs" and "lovely jobs."

  • The Specter of the "Precariat": The chapter warns of the potential rise of a new "precariat" class of people in low-wage, temporary jobs with no political voice, similar to the Luddites of the 19th century.

  • The Need for Radical Solutions: The chapter suggests that addressing the challenges posed by automation and technological change will require radical solutions, such as a shorter workweek, universal basic income, and a progressive tax on wealth.

Key terms and concepts:

  • Moore's Law: The observation that the number of transistors in a dense integrated circuit doubles about every two years, leading to exponential growth in computing power.
  • Winner-Take-All Society: A phenomenon where a small number of individuals or companies reap the vast majority of the benefits of technological change and economic growth.
  • Labor Market Polarization: The widening gap between "lousy jobs" and "lovely jobs," with a decline in middle-skill jobs.
  • Precariat: A new social class of people in low-wage, temporary jobs with no political voice or job security.
  • Luddites: 19th-century textile workers who protested the introduction of new machinery that threatened their livelihoods.

5. The End of Poverty

Here are the key takeaways from the chapter:

  • Poverty can be eliminated through direct cash transfers: The opening example of the Cherokee tribe in North Carolina shows that providing direct cash payments to people living in poverty can have dramatic positive effects on their mental health, behavior, and economic outcomes. This challenges the common view that poverty is a "personality defect" that individuals must overcome on their own.

  • Poverty impairs cognitive function: Experiments conducted by researchers Eldar Shafir and Sendhil Mullainathan demonstrate that the mere thought of a financial setback can impair the cognitive abilities of people living in poverty, causing them to make "dumber" decisions. This is not because they are inherently less intelligent, but because poverty consumes their "mental bandwidth".

  • Inequality is a major driver of social problems: The chapter cites research showing that income inequality, rather than just low incomes, is a key predictor of a wide range of social problems like poor health, crime, and lack of social mobility. Reducing inequality may be as important as reducing poverty itself.

  • Anti-poverty programs can pay for themselves: Studies show that investments in reducing child poverty, such as through cash transfers, can generate significant long-term returns through increased earnings, reduced social service costs, and higher tax revenues. Tackling poverty can thus be a cost-effective policy for governments.

  • Homelessness can be effectively solved through a "housing first" approach: The example of Utah's successful program to provide free housing and support services to the homeless demonstrates that a "housing first" strategy, rather than temporary shelters or criminalization, can dramatically reduce homelessness while also saving money for the government.

  • Poverty is a solvable problem, not an inevitable condition: The chapter traces how poverty was once seen as a natural and even desirable state, but argues that with modern economic productivity, poverty is no longer an unavoidable fact of life. Targeted policies can significantly reduce or even eliminate poverty.

6. The Bizarre Tale of President Nixon and His Basic Income Bill

Here are the key takeaways from the chapter:

  • The Past Offers Perspective and Possibility: History can help put our present challenges into perspective, but more importantly, it can reveal alternative possibilities that we may have forgotten or overlooked. Exploring the past can inspire us to imagine a different future.

  • Nixon's Basic Income Plan and the Shadow of Speenhamland: In 1969, President Nixon was on the verge of enacting a groundbreaking basic income program, but a briefing on the historical Speenhamland system in 18th-century England caused him to change course. The Speenhamland system was initially seen as a failure, but more recent historical research has shown that it was actually quite successful in alleviating poverty.

  • The Myth of the Lazy Poor: The Royal Commission Report on Speenhamland in 1832 was largely fabricated and used to justify the dismantling of the system, perpetuating the myth of the lazy poor. This myth has persisted and been used to attack welfare programs ever since, even though the historical evidence does not support it.

  • The Consequences of Abandoning Basic Income: When Nixon's basic income plan failed, it paved the way for the rollback of the welfare state under Reagan and Clinton. The shadow of Speenhamland and Nixon's rhetoric about the "deserving" and "undeserving" poor laid the foundation for these cutbacks, making the idea of a basic income for all Americans seem "unthinkable" today.

  • The Surveillance State and the War on the Poor: Modern welfare systems have become increasingly punitive and intrusive, turning into a "surveillance state" that treats the poor with suspicion and forces them to jump through hoops to prove their worthiness. This approach is counterproductive and perpetuates the cycle of poverty, rather than addressing its root causes.

  • The Right to a Decent Life: The fundamental lesson of the Speenhamland system and Nixon's basic income plan is that poverty is not a necessary evil, and that everyone has a right to a decent standard of living, regardless of their employment status. Abandoning this principle has had dire consequences for the most vulnerable members of society.

7. Why It Doesn’t Pay to Be a Banker

Here are the key takeaways from the chapter:

  • Wealth Creation vs. Wealth Shifting: Some jobs, like garbage collection, create tangible value for society, while others, like banking and law, mostly just shift wealth around without creating much value. The latter group often earns higher salaries despite their limited contribution.

  • The Paradox of Progress: As economies become more productive and efficient, an increasing number of people can earn money without contributing anything of tangible value to society. This has created a system where the richer and smarter we get, the more expendable we become.

  • Bullshit Jobs: Many people work in jobs they consider to be pointless or superfluous, known as "bullshit jobs." This phenomenon has grown alongside the expansion of the service sector and higher education, as clever minds find ways to make money without creating value.

  • The Irish Bank Strike: During a 6-month bank strike in Ireland in 1970, the economy continued to function without major disruption, as the Irish developed a decentralized, trust-based system of informal banking through pubs and other local institutions. This showed that banks may need people more than people need banks.

  • Financialization and Inequality: The explosive growth of the financial sector has increased its share of the economic pie without necessarily creating more wealth. This has coincided with rising inequality, as the financial sector has become adept at extracting rents and redistributing wealth without a democratic mandate.

  • Reinventing the Economy: To address the problems of bullshit jobs and financialization, the author suggests policy interventions like a financial transactions tax and higher taxes on top earners. This could steer talented individuals away from wealth-shifting professions and towards more socially productive work.

  • Rethinking Education: Rather than just preparing students for the job market, education should focus on instilling values and ideals that can shape the future economy and society. This could involve incorporating more humanities, arts, and philosophy into the curriculum.

8. New Figures for a New Era

Here are the key takeaways from the chapter:

  • The GDP as a Flawed Metric: The Gross Domestic Product (GDP) is a widely used metric to measure a country's economic progress, but it has significant limitations. The GDP fails to account for many important factors that contribute to societal well-being, such as unpaid labor, environmental damage, and the negative impacts of certain industries.

  • The Origins and Evolution of the GDP: The GDP was developed in the 1930s by economist Simon Kuznets to help policymakers understand the state of the economy during the Great Depression. Over time, the GDP became the dominant metric for measuring economic progress, despite Kuznets' warnings about its limitations.

  • The Disconnect between GDP Growth and Quality of Life: In many developed countries, economic growth as measured by the GDP has not translated into meaningful improvements in quality of life. The chapter cites examples where increases in the GDP have been accompanied by rising inequality, environmental degradation, and other social problems.

  • The Need for Alternative Metrics: The chapter argues that it is time to move beyond the GDP and develop new metrics that better capture the multifaceted nature of societal progress. Potential alternatives discussed include the Genuine Progress Indicator (GPI), the Index of Sustainable Economic Welfare (ISEW), and the Happy Planet Index.

  • The Importance of Measuring What Matters: The chapter emphasizes the need to measure the things that truly contribute to human well-being, such as community service, education, healthcare, and environmental sustainability. It argues that these areas are often undervalued in traditional economic metrics like the GDP.

  • The Role of Government and the "Cost Disease": The chapter introduces the concept of "Baumol's cost disease," which explains why the costs of labor-intensive services like healthcare and education tend to rise faster than the costs of more automated industries. It suggests that this should be seen as a positive development, as it reflects a shift towards investing in the things that truly matter.

  • The Need for a New "Dashboard" of Progress: The chapter calls for the development of a comprehensive "dashboard" of indicators that can track progress across a range of domains, including economic, social, and environmental factors. This dashboard would provide a more holistic and nuanced understanding of a country's development.

9. Beyond the Gates of the Land of Plenty

Here are the key takeaways from the chapter:

  • Randomized Controlled Trials (RCTs) are the gold standard for evaluating the impact of development aid: RCTs involve dividing people into treatment and control groups and comparing outcomes, which allows researchers to isolate the causal impact of an intervention. This approach has overturned many conventional beliefs about what works in development aid.

  • Cash transfers are one of the most effective anti-poverty interventions: RCTs have shown that directly giving cash to the poor is more effective at improving outcomes like health and education than many traditional development programs.

  • Intuition and theory often fail to predict the real-world impacts of development programs: Seemingly logical ideas like distributing free textbooks or mosquito nets have been shown to have little to no impact when rigorously tested, highlighting the importance of empirical evaluation.

  • Open borders would be the single most powerful anti-poverty measure: Allowing free movement of labor across borders could increase global GDP by 67-172%, dwarfing the impact of traditional development aid. However, this idea faces significant political resistance.

  • Borders are the primary driver of global inequality: The location where someone is born has a much larger impact on their income and life prospects than individual characteristics like race, gender, or class. This represents a profound injustice.

  • Common arguments against immigration are largely unfounded: Fears about immigrants taking jobs, depressing wages, or being unwilling to work are not supported by empirical evidence. Immigration can actually benefit the native population.

  • Increased border enforcement has been counterproductive: Tighter border controls have reduced the circular migration patterns that previously characterized many migrant flows, leading to more permanent settlement of unauthorized immigrants.

10. How Ideas Change the World

  • Cognitive Dissonance: When reality clashes with our deepest convictions, we tend to recalibrate reality rather than amend our worldview. This makes it difficult to let go of our beliefs, as doing so affects our sense of identity and position in social groups.

  • Educated People and Conviction: Educated people are more unshakable in their convictions than others, as an education provides them with tools to defend their opinions. They use their intellect to obtain what they want to be the answer, rather than the correct answer.

  • Sudden Shocks and Idea Change: Sudden shocks can lead to rapid changes in opinions and beliefs. Events like the 9/11 attacks can cause fringe viewpoints to become mainstream. The Enlightenment model of information-gathering and reasoned deliberation may not be the primary driver of idea change.

  • Group Pressure and Conformity: Group pressure can cause people to ignore their own senses and conform to the majority opinion, even when it is clearly erroneous. However, a single opposing voice can make a significant difference in breaking this conformity.

  • The 2008 Financial Crisis and Idea Resistance: The 2008 financial crisis presented a significant opportunity for new ideas to emerge, but instead, old convictions were reinforced. The lack of viable alternatives and the deeply entrenched nature of existing ideas prevented meaningful change.

  • The Rise of Neoliberalism: Neoliberal thinkers like Friedrich Hayek and Milton Friedman dedicated their lives to building "castles in the sky" with the belief that their ideas would one day become dominant. Through a coordinated effort, they succeeded in transforming the global policy landscape within a few decades.

  • The Dominance of Economists and Technocrats: The rise of neoliberalism has led to a world dominated by economists and technocrats, where political decisions are often presented as neutral and objective, with little room for alternative ideas. This has stifled the development of new, transformative ideas.

  • The Importance of Utopian Thinking: The author argues that we need thinkers who have the "courage to be 'utopian'" and to dream of a better world, as ideas, however outrageous, have the power to change the world. This is the lesson of the Mont Pèlerin Society and the rise of neoliberalism.


What do you think of "Utopia for Realists"? Share your thoughts with the community below.