How to Make a UBI Work in the United States

By Topher Cliver

The concept of a universal basic income (UBI) is a wonderful idea and some would argue, a necessary next step in world economics, but we, at least in the United States, will not be able to implement it. I fear that there is no country in the world will be able to successfully transition from a modern economy to a UBI although I’m glad to see some experimentation and would be happy to be proven wrong. Communism, pure capitalism and other idealistic philosophies can sound like a utopia in philosophical discussions but applied to the real world of humanity, it falls prey to be manipulated by the seven deadly human sins of greed, gluttony, sloth, wrath, envy, lust and pride not to mention the overlaying vice of power. Those who work, already complain of those who do not. Those with resources already fight tooth and nail to avoid surrendering them to distribute to others. A UBI, while perhaps one option to smooth our path to the singularity, will not be tolerated in the United States, even if the alternative is all out anarchy.

Let's take a step back and describe what a Universal basic Income is and then we can dissect it further. While called a number of different things including, but not limited to, basic income (BI), basic income guarantee (BIG), Guaranteed Minimum Income, Living Wage, and Unconditional Basic Income, it will be referred to here as Universal Basic Income (UBI). It is the idea of an income distributed across all citizens of a country uniformly, regardless of their income or situation. It would be an amount that is sufficient for one to survive without additional income. Proponents of the UBI cite a number of reasons why it should be implemented which broadly fall into one of two camps, the redistribution of wealth or to counter unemployment. These are their core ideas and most within each group would add an adjective to the name such as more efficient, better, more just, less burdensome, etc. for the redistribution of income and technological, growing, permanent, fluctuations, etc. for unemployment. There are other rationales that fall outside these groupings but they are fringe cases and so will not be addressed here as most proponents at their essence fall into one of these two camps...

This is not a new idea as variations of the theme go back at least as far as Thomas Paine's Agrarian Justice of 1795 (1) and for most of the time since, has been discussed more as a means of wealth redistribution as a type of social justice. The concept has been gaining strength of late, fueled by the camp who sees it as a means to deal with what they believe is an imminent surge in technological unemployment that many futurists predict will happen. Technological unemployment occurs when advances in technology replace human workers faster than new jobs fitting the skillset and ability of the newly unemployed workers are created. An example of this is what may happen when driverless cars and trucks hit the mainstream and put millions of drivers of cabs, trucks, delivery vehicles and scores of other people out of work with no new jobs arising requiring driving skills. That also does not take into account the millions of jobs that support the workers who do those jobs from truck stop employees to uniform makers to cooks and wait staff at the diners they eat at, and on and on.

One vision of how this may play out would be a situation where millions are not only unemployed but unemployable and the massive additional burden on an already strained social welfare system would lead to the system collapsing. The social welfare system need not hit the point of collapse before conditions would arise, that throughout history, has fueled revolutions. People starving, but kept busy by work in exchange for food, are too busy surviving to protest. Take away a person's ability to earn their daily bread and force them to watch their family starve or go without, combined with the time previously consumed in labor, and the seeds of revolt will grow into the garden of revolution. This scenario of course goes any number of ways, but the point is, that none of them are good no matter what your social class before it starts.

The argument goes that everyone from the person whose job is at risk up to the one percenters, as they have been come to be called, should support a UBI as a means to prevent this revolt and still mostly, if not entirely, preserve the capitalist system we have today. That seems like a cut and dry case of why all people should be on board with a UBI, but for that to be so you must presume that most people believe technological unemployment is imminent and that most people will weigh the challenges of a UBI with a rational perspective. While there are many books and articles predicting technological unemployment there are many other books and articles saying that it is all hype and fear mongering. There is a much clearer consensus on global warming and yet many people in the United States, including several prominent politicians, still deny it is a threat and fight against it thus preventing action. Technological unemployment will likely move much, much faster than global warming.

Those who dismiss technological unemployment point to the many times in the past where the same or similar thing was said. They have a bevy of examples from oxen pulling plows replacing men with hoes, to tractors replacing oxen, to industrial farms replacing individual farmers. You can find many examples in the computer age as well if you look at computers replacing jobs over the course of the last forty years. There were once rows of bookkeepers with manual calculators that were replaced by spreadsheets, and travel agents replaced by travel sites, and on and on. The argument is that these advancements increase productivity and so create more opportunity than they replace, which is how the rates of unemployment remain low despite an ever growing population and the absorption of women into the workforce on a large scale over the course of a generation. There have been, and will continue to be anecdotal tragedies, but the thought goes that the people who work hard and learn new skills will persevere.  All of these new technologies are, and will continue to be, disrupting but society adjusts to the new realities and moves forward.

The counter argument is that it's different this time because of the pace of change and the size of the skill gap in those that will be displaced as just the technology we see clearly becomes mainstream. Those who foresee technological unemployment as an issue unlike anything mankind has ever seen before, look at the expanding prosperity in places like China that has grown by way of millions of Chinese moving from the farm to the factory. They foresee a rapid reduction in the need for human labor as robotics advance and replace huge numbers of workers due to competitive pressures to take advantage of the enormous cost savings, productivity and quality improvements. UBI proponents see the robotization of Chinese factories happening now with companies like Taiwanese giant Foxconn (2) betting heavily on this development now. If you look one step beyond that then the question begs asking, if a robot can make goods and you can stick robots anywhere, why would you choose to make goods thousands of miles from the end users and incur shipping costs? That does not even factor in large scale industrial 3D printing. What happens when 100 million, 300 million or more Chinese are out of work?

But while potential revolts in China loom large for American Foreign policy, they don’t necessarily influence America’s domestic policies, especially if the shelves of Walmart are filled with even cheaper products made right here in the United States. From our self-centered perspective, hundreds of American jobs, in the realm of the shrinking number of jobs still requiring a human, in automated factories are much better than the millions of the foreign jobs replaced. This will be offshoring’s revenge and we can call it automation onshoring. American domestic policy will be influenced when a significant fraction of the 12.5 million food preparation jobs, 6.5 million construction jobs,  4.1 million driving jobs, 3.8 million maid/janitorial jobs, and 2.5 million customer service jobs(3) start taking a significant hit within the same decade due to technology advances. If you look at professions such as Accountants, Hair stylists, Dental hygienists. Pharmacy techs, firefighters, landscapers, post office workers and data entry workers, these groups could easily see job reductions due to technological advances and they represent another 4.4 million US jobs(3).

To put this in perspective the great recession of 2008-9 represented a loss of 8 million jobs (4). If half of the jobs in just the categories mentioned above were to be lost to automation that would represent more than twice that lost to the great recession and that does not even begin to touch other categories or the supervisory and management layers or any of the millions of workers in industries who support human workers in these industries. Skeptics may say this is hyperbole and in some instances counts on technologies we have no line of sight to. While there is a hint of truth to this statement we can look at one subset being self-driving cars and it is obvious that the question is not if, but when that will start affecting the 4.1 million driving jobs currently held by humans. Fast food restaurants like McDonald’s (5) are already experimenting with automated restaurants. It's easy to see that the most significant cost of doing business in most companies is the employees, so any technology that does their work at an equal or lesser cost will not be a choice but a necessity in a competitive environment.

So this brings us back to the growing support of the idea of a UBI, which its proponents say would create a social safety net so that people could survive without work. A UBI would allow people to train for other jobs through education, internships and apprenticeships without worrying about how to pay for food and shelter. A UBI would allow people to pursue meaningful work instead of performing unfulfilling work that is hated, debilitating, demeaning and or otherwise harmful. A UBI would eliminate the homeless problem and because it would go to everyone, it would eliminate the need of tracking and means testing. A UBI indeed seems like a panacea until we look at the some of the practical difficulties in implementing one in the United States.

First and foremost is the issue of cost. Proponents says that much of the cost of a UBI is already accounted for in the outlays and the administration of programs that could be eliminated by the implementation of the UBI such as welfare, unemployment and food stamps. In 2011, the amount spent on means tested social welfare programs from state and local governments, including Social Security OASDI and Medicaid,  was just a shade under 2.3 Trillion dollars(6). This is no small sum but when you divide that by the 312 million citizens in 2011 then that comes to about $7,400 per person. Assuming we strived for a UBI that was above the poverty threshold in 2011 of just under $11,500(7), then an additional sum of 1.28 trillion dollars would be needed.

This of course assumes that, in 2011 dollars, someone could actually live off of less than $1000 per month. Surely, many people do, but it would be very harsh existence to live a live where tremendous compromises in health, safety and basic needs would need to be made in an environment where the other social safety nets were also dismantled. The combination of rent, basic utilities and enough food to cover the minimum calories needed would, in most areas of the country, not be met by this amount. Remember, in this scenario there are no more food stamps, welfare, section 8 housing or Medicare. There is a whole other argument to be made here that a large number of people competing for the same housing at the bottom would also cause a spike in rents for those units further stretching the allowance. That brings us to health care. We would be back to giving homeless people without health care some money which is better than we do now, but I believe would call for a larger stipend which in turn increases the tax gap.

So really without getting mired in the details, there is a gap between the cost savings of abolishing several social programs and the cash needed to pay out a workable UBI. You could just raise taxes so that the people who are making enough to not need a UBI pay additional taxes equal to the UBI they will receive and in essence net them out to zero. This would be an accounting trick and would indeed get us closer to the break-even number, but even though it would net to zero for the higher earners, it would be a tax increase first that then was offset by a UBI. That is significant in the United States and we will come back to that later on. So even if we abolish all the social programs, leave the UBI at the poverty level and even if we create a tax that nets the UBI of upper earners to zero, there is still a gap between the money saved or collected and the money needed to fund the program.

As the title denotes, this is an American centric article. I am a proponent of the idea of a UBI and truly hope that it can be made to work in some way somewhere in the world. As for the United States, there are several barriers in the way of trying this grand experiment, let alone making it successful. First if which is that the easiest answer to close the funding gap would be to levy taxes of one sort or another. That is simply not politically viable in the US at this time and what would appear to be some time to come. The people who would be most impacted by such taxes are the same people who control much of the political machinery of both parties and would muster tremendous resources to combat and defeat any such attempt. Don’t forget, we would be talking about an income tax increase that nets out the UBI for upper tier earners and then taxes from another source to make up the gap. No matter if the additional tax would come from income, corporations, excise, estate tax or some other source the same powerful group would be most impacted and would fight it tooth and nail.

To people from other countries this may seems ridiculous given the fact that this a democracy, as the people who would benefit outnumber the people who wouldn’t. While I could not argue against the ridiculousness of the issue I can point out that it doesn’t matter in United States. I could write a whole other article citing the reasons why people here don’t vote with their self interest in mind. I could point out that this is a republic and the power elites have lawfully gamed the system so that votes can be distributed in such a way as to overcome the raw number of voters by winning artificially created voting districts in a winner take all system. I could point out that taxation is perhaps the greatest boogeyman of them all in American politics and opposition to them is at the heart of what America was founded on and is at its core. That is at the least the lore we have been taught and choose to believe. To most Americans, taxation is slavery, oppressions and the antithesis of the freedom we so prize.

The state of politics in the US is such that any and every viable candidate from one of the two major political parties swears to not raise taxes in any way and to actively oppose the raising of taxes by others(8). Both parties are financially tied by the campaign contributions of the corporations and wealthy individuals whom these taxes would be levied against. The contributions are the lifeblood of politics in the US and necessary for winning elections at nearly any level of office from the national level down to the smallest municipality. Some would further argue that this opposition to taxation is interwoven into the American dream, whereby each of us believes we are a just a few years of hard work, an invention, a rich uncle dying, a stock tip, a business idea, a lottery ticket or some magic beans away from being one of those top earner spots so we don’t want to impose a burden on our future selves.

These seemingly insurmountable obstacles lie on the revenue savings side of the equation. The cost savings side has equally if not greater obstacles. Eliminating welfare, Medicaid, food stamps etc. from the poor, in exchange for a UBI, would be a relatively simple thing if nothing else had to change. It is a cliché in American politics that its third rail is the Social Security program. Third rail referring to the third track of some rail systems that supplies the electric power, that if you were to touch, you would die. Poor people don't’ vote in high numbers and certainly don’t wield political power in the United States but the senior citizens of this country most certainly do and clichés become so for a reason. Even if you could convince the senior citizen lobby to trade in their social security payments for a UBI, you have still another problem. The average amount of retirement payment for a worker in 2011 was over $14 thousand a year (9). Just moving the UBI to an even 14k per person increases the gap more than another $780 billion dollars leaving a more than $2 trillion dollar shortfall.

A counter to this argument may be that the rapid increase in unemployment due to technology and automation will lead to social upheaval that will force these opposition groups to concede that a UBI is better than anarchy. This is a dilemma addressed in my book Plato’s Dream: Crisis of the Employment Singularity. Historically people with no jobs, hungry stomachs and nothing to lose tended to topple regimes. If this pace of change stretches out over decades there is a chance that the groups opposed to a UBI would come to see the writing on the wall and accept that it is a viable solution to the greater problems we face. What seems more likely is that technological change will happen at an exponentially faster rate and hit in spurts that cause strains on the existing infrastructure and increase the difficulty and cost of implementing a UBI. Change happens slowly in the US and in spurts and stops. If technological unemployment happens in a linear fashion then addressing it in such a matter is feasible but, if as everything else technological, it follows an exponential curve then the odds makers would likely wager on anarchy over decisive vast political change affecting every single person living in the US.

What we haven’t talked about here is the American work ethic. We have a vast societal mythology around the Protestant, or sometimes called, the Puritan work ethic (14) that merged into the immigrant ethos of coming to America and working hard and making it big. You see this theme carried out today in the stories of hard working smart people bootstrapping their company in a garage and going on to become tech billionaires. America is the land of opportunity but opportunity is not to be given, it is to be seized. Americans hate to give something for nothing. They fight against mandated handouts and this is why welfare reform (10) or workfare was supported and passed by members of both parties in the 1990’s. The idea of taking money from working members of society and giving it to non-working members of society is repugnant to many Americans and the antithesis of the American dream and the American work ethic.

So how do you make a UBI work in the US? The short answer is, you don’t. The more nuanced answer is you would have to sell it as a UBE or Universal Basic Employment. In order to pull that off you would have to radically redefine what employment means, but it could be done. In my book, Plato’s Dream: Crisis of the Employment Singularity, The leadership of the country’s elite saw the inevitable chaos that would ensue from mass unemployment and compromised with a wise and charismatic political leader who had the vision to make universal employment work.

The idea of creating jobs for everyone is not new and can be seen in the FDR’s new deal and in the concept of make-work (11) where jobs are provided as a means of income even if the cost of the work done has value less than the work produced. A number of the alphabet soup agencies of the New Deal, most notably the WPA(13), did exactly that and employed millions of Americans to create roads, buildings and any number of other projects of which many still stand today. Creating massive education, training and apprenticeship programs on the scale of the GI Bill coupled with make-work programs would allow people to acquire knowledge and skill necessary to find a job that has not been automated away. The traditional make-work cliché is to pay people to dig a hole and then pay another person to fill them up. Instead, a series of large scale, society benefiting projects could be undertaken the likes of the interstate highway system, Panama Canal, Hoover dam, the transcontinental railroad or other grand project that would have immeasurable benefit to all of society. They would only be make-work jobs in that using humans having to learn the skills on the job would not be the most efficient means of construction.

Just a few monumental projects may include the following: Create a smart electrical grid that extends throughout the nation to every existing structure. Manufacture and install solar panels on the roof of every building in the United States starting with the sunniest states. Create a free daycare system universally available despite income so that parents can work as they need. Creation of local micro farms and greenhouses throughout the nation with the goal of free fruits and vegetables for all US citizens. A Hyperloop (12) and/or high speed rail connecting the major US cities. How about repairing the thousands of bridges and millions miles of roads and other neglected infrastructure maintenance and repair needed throughout the country. These are just a few ideas but they all have a payoff of one sort or another from the energy generation and more efficient use to free food and daycare giving us a healthier and more productive citizenry to the business benefits of better transportation.

The purpose of the WPA during the depression was to give the breadwinner in each family employment until more permanent work came along. It did just that until World War II transformed the economy and created a worker shortage (13) that eliminated the need for the program. The goal of this proposed new version should be to give meaningful employment while training workers for a job that is still in demand in the new economy. To achieve this, the workers would need to work only two to three days a week and then train the remaining two to three days in the work week. Once a worker's skillset was sufficient, they could graduate to an apprenticeship program in the line of work they were training for in order to complete their training. Companies could partner with government to exchange training and apprenticeship for free labor.

There are a number of issues that could arise that should be planned for and avoided at the onset of the program including corruption by either or both political parties, cronyism, nepotism, companies taking advantage of free labor, workers lacking incentive to work or move through the program and the distribution of projects throughout the country and community. The issue of corruption is the most important and most daunting. A collection of independent agencies with broad power and overlapping areas of review would need to oversee the programs to ensure it was fair and not a tool of political manipulation. The penalties for abuse would need to be severe for both the participants but especially for the overseers. The programs and their oversight would also need to be 100% transparent while protecting the personally identifiable information of the individual workers

In order to motivate workers to learn and work hard and to motivate employers to participate in apprentice programs and to hire on these newly trained employees, a system of incentives should be set up for all involved. The employees should be rated for their work and for their engagement in their education against all other employees doing similar work or study and rewarded financially with bonuses. Apprentices should be rotated regularly though businesses so that businesses are incented to hire on the best people before they move on to the next company. At the heart of the program should exist, competition, oversight, and transparency. It should be a system based on carrots and should only bring out the stick when dealing with corruption in any and all its forms.

A retooled WPA for the 21st century could be an effective Universal Basic Employment and Training program (UBET). It would cost a tremendous amount of money and require political cooperation and coordination on a scale this country has not seen since World War II. The main problem is that the American Republic is a reactive system rather than a proactive one. We massively reacted to the Depression, World War II, the Cold War and to a smaller scale to innumerable crises in between. We are good at reacting but not very good at prevention. Fear, threat and tragedy are what is usually required to fuse enough of the American ideologies into action on a massive scale so a preventative measure such as a UBET program, while not impossible, would be quite out of character.

A more likely scenario would be an America with very high unemployment and a shrinking international consumer market for our exports as technology allows manufacturing to become automated, on demand, and located close to the end consumer to minimize logistical costs. Corporations will truly have to be international in order to serve markets around the globe and the people needed to run these companies will be fewer and also located around the world near the means of production. Large companies had always been located around their human labor force but in the future they will need to be located around their consumers so the nations of consumption will become the nations of production and the concept of importing and exporting manufactured goods will disappear.

In a situation such as this, the American government will have less resources and power than they have at present and its ability to command and fund a UBET style program will become even more difficult to pull off. Government revenue will drop if taxes increase beyond a certain point as more of the wealthy will offshore their income as corporations due today to avoid tax. Sales tax revenue decrease as more and more people have less to spend and the cost of what we need to live decreases. The positive side of this is that by this time UBET wages large enough to provide enough for people to survive could be low enough due to technological advancements that it could, even with their diminished resources, be affordable for governments.

The question then becomes, how does America start moving toward a UBET program now instead of waiting until there are riots in the streets? A first step may be to create a pilot UBET as a welfare and unemployment replacement with the premise that everyone is worthy of gainful employment. The premise is sound and fits with American ideals about work as it offers employment instead of a handout. The training is bundled with work with the further intention that society will be gaining a more useful worker at the end. Set the program up with a degree of competition where groups compete to complete the same kind of tasks and workers are objectively rated on their work with incentives that could include the choice of jobs and more time for training and you will have a market effect. You would then have the seeds of a program that would have appeal to both major parties and the libertarians alike. Granted there will be elements each of those groups could find to not like and then there is the issue of where funds come from, but this is the foot in the door.

A successful UBET program that replaces welfare and unemployment and then organically expands as technological unemployment becomes worse is what is needed. If we are all wrong, and I don’t think we are, then we have created a better system for getting the unemployed, unemployable, unskilled and people who are unmotivated an opportunity to earn their money and become skilled. There would be challenges such as daycare and afterschool care but some of the very people in the program could be utilized to solve those and similar issues for other people in the program. The key is starting now when the cost and scope, while large, are not insurmountable and the timetable is such that the kinks can be worked out of the system before it needs to be drastically ramped up.

Proponents of the UBI would be quick to point out that the U stands for universal and both welfare and unemployment have entry criteria. I would propose that anyone could enter the UBET program with no entry criteria. Their pay would be at the low end of the scale so well employed people could certainly enter the program but the pay difference would be a disincentive. If employed people, say a fast food worker, wanted to quit their job and join the program to increase their education there should be nothing to stop them. This would further stimulate demand at their level of employment and increase pay which would pull some people out of the program and into the workforce as well. Many of the innovations in the pipeline would displace workers at this end of the pay and skill level end of the spectrum first and hardest so this pull into the program should not be an issue.

If we had a UBET in place, and if technological unemployment were to accelerate into a hockey stick shaped curve, then the issue would only be one of scaling an existing infrastructure rather than creating a system from scratch. Further down the line, if the unemployment continued up the hockey stick then the answer is simply a broadening of what we call employment for the people in the UBET program. As traditional work is subsumed by technology we can look at anything that contributes some value to society as “work”. People would be paid to follow their passions and would only need to show that they were doing something and not have to show a financial profit. One of the biggest arguments against a UBI is that it pays people to sit on the couch where a UBET, at a later stage, would pay people to do what they love and what they are good at and would create a tremendous societal profit. The U would need to mean universally available and not universally given.

Technology may eventually dictate that a UBET be universally needed, but no need forcing that issue while cost is still a reality that we have to deal with. Social security need never be touched or dismantled. Instead we could simply apply an option to delay social security as long as a person likes if they prefer to instead enter the UBET program. We could even offer greater monthly benefits the longer they delay just as we offer lesser benefits for taking benefits early. If technological unemployment takes a significant number of jobs as many suspect it will, the social security benefits will have to decrease or at least not rise so that at some point UBET is a better option than social security for most seniors and allow that program to organically scale down without ever having to anger the large voting constituency it serves. People are living longer and more vivaciously at older ages than ever before and a UBET option allows people to work as long as they want and pursue training to be whatever they want to become at any age. Social Security could morph into a UBI to compete with a UBET and could be the transition to a workerless society.

To sum up, a UBI is not now politically viable in the US and by the time enough people would be displaced by technological unemployment that it would be a political answer, it would not be financially viable. In order to make such a safety net tenable in the US we need to replace handouts with work to placate the right and add training to satisfy the left while infusing a strain of competitiveness to appease the libertarians and those with libertarian leanings in the two leading parties. Implementing it now would financially doable and would allow time to work to fine tune the program so that when it needed to scale up, it could do so in a timely and efficient manner. By making it universally available instead of universally given, the issue of cost is addressed as well as the issue of the political third rail of American politics in that we would not have to touch social security. In time, it would in essence come close to a UBI as once all the traditional jobs are gone and revenue is generated by technology, then we could pay people to create value for society and we can expand what that means over time so that all people could get paid to do what they are passionate about and to do something, anything of value for society. A Universal Basic Income program is a philosophical idea that works well in a thought experiment where people behave in the interest of others, whereas a Universal Basic Employment and Training program works in the real world where people are self-interested and need to be held accountable by the rest of society. A UBI is not politically or financially viable in the US for the foreseeable future while a UBET is, and is also scalable to counter the potential exponential scale of technological unemployment while and when it happens.

By Topher Cliver, the Author of

Plato’s Dream: Crisis of the Employment Singularity

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