To end poverty, guarantee everyone in Canada $20,000 a year.

http://www.theglobeandmail.com/news/national/to-end-poverty-guarantee-everyone-in-canada-20000-a-year-but-are-you-willing-to-trust-the-poor/article1806904/singlepage/#articlecontent

by steveklabnik • 16 years ago

77 144 16 years ago

theglobeandmail.com

steveklabnik4• 16 years ago

... think of the startup you could bootstrap, if this happened.

maxharris14• 16 years ago

This is ultimately self-defeating. Following the principle breached by this and countless other abrogations of individual rights, what right does anyone have to keep or reinvest the profits from a startup when that money could be taken and spent on exactly this sort of minimum income program?

steveklabnik4• 16 years ago

It's quite possible that this could end up _cheaper_ than the current welfare system, due to cutting through the bureaucracy and red tape needed to manage such a system.

It sounds to me like you're posing a philosophical question about the nature of the problem, and I'm talking about a specific scenario if this was actually implemented.

semanticist2• 16 years ago

This is - essentially - a proposal to increase individual freedom by repurposing the existing welfare system.

The taxes that you pay already are higher than they need to be to deliver the aid they're intended to deliver, because they have to pay for a bureaucracy to assess 'need', check for fraud (more restrictions = more room for fraud = more time/money spent fighting fraud), and even to educate people on the often complex array of benefits available. This system would be much simpler to administrate, there'd be no need to educate people on their available options, and without having to deal with enforced conditions and other eligibility restrictions dealing with fraud would be simpler and cheaper.

The only argument I can see for opposing this is a moral one, that you want to force people to behave in certain ways before you'll assist them. I always find those kind of arguments really skeevy.

captain_mars• 16 years ago

And if your business creates cheap products for mass consumption (such as $1 iPhone apps), this might translate into more consumers for you, as well.

AlexC043• 16 years ago

Can I vote this up twice?

A little over a year ago, I moved returned to Canada (Toronto) after five years in the UK. One of the most striking things I noticed was the difference in homelessness between here and there.

I later read Gladwell's article about homelessness. The story of Million Dollar Murray http://www.gladwell.com/2006/2006_02_13_a_murray.html

A homeless man who they had to repeatedly pick up off the street because he kept drinking himself into a stupor and falling down. (Hospital bills, etc..)

Apparently he cost the state 1 Million Dollars over 10 years.

So $20,000 per year $100,000/per year? Suddenly that low end guarantee is a serious cost savings.

Now certainly - "Murray" wouldn't get away with costing ONLY $20,000 per year ... but in a safe, (partially) supervised area, he'd have cost a lot less than $100k.

Gladwell also mentions that the data shows "most people" won't leech off these programs forever. Most have an innate drive to want to improve themselves.

Some will but actually - it's probably still cheaper than "Murray".

I am 100% in favor of a program like this - in principle.

Now try and introduce it at a Texas town hall meeting :) With FOXNEWS cameras in attendance.

bretthopper• 16 years ago

>One of the most striking things I noticed was the difference in homelessness between here and there.

So what is the difference?

AlexC043• 16 years ago

I'm not entirely sure what the UK is doing differently. I didn't even notice that it "wasn't there" until I got back. It was only after I returned that I realized the difference.

I know that in Toronto, I sometimes get the feeling that the streets are paved with the homeless.

Maybe it was the Socioeconomic status of the area I was living in, but it just seems so much more prevalent here.

The UK does however seem to have 'council housing' projects that I think act as a buffer for many. The jobless and those on very low income, can obtain housing from the local council (municipal government). Essentially the risk of becoming completely homeless was very low.

The only reference to their housing program I could find quickly was an article about why landlord shouldn't take DSS tennants http://www.propertyinvestmentproject.co.uk/blog/reasons-why-...

But essentially it's a program where the municipality pays the rent directly.

I think the level of social assistance must cover quite a bit of the difference.

I really must add the caveat that I didn't study the problem while I was in the UK and am certain that there must be some homelessness there somewhere - but - it really isn't anything like what's in Toronto (and Ottawa that I've seen).

Monkeyget• 16 years ago

Coming from belgium I have seen big differences with homelessness in Canada. Not only are there more homeless in Canada but their composition is different too.

There are more women and young people on the street. The ratio of whites(and presumably Canadians) to non-white(and presumably immigrants) is also higher. Something that is also remarkable are the obviously drugged people walking in the street.

Another difference lies in their behaviour. Many are polite and friendly, or at least that's how they come across when they say things such as "have a good day" after you told them no.

AlexBlom• 16 years ago

I've recently moved to Toronto from Australia and notice the same difference re: homelessness and begging.

tokenadult• 16 years ago

Book about a similar plan for the United States:

http://www.amazon.com/Our-Hands-Replace-Welfare-State/dp/084...

_delirium4• 16 years ago

It's interesting that this has never seriously gone anywhere, given that a number of prominent people on both the left and right have proposed it. Among many other people, supporters of a minimum income in some form include: Thomas Paine, Richard Nixon, Daniel Patrick Moynihan, Milton Friedman, George McGovern, Friedrich Hayek, Paul Samuelson, etc.

yummyfajitas6• 16 years ago

Friedman proposed a negative income tax, which is not the same thing. A negative income tax often increases the marginal utility of work (if the rates are not too large), a guaranteed minimal income always reduces it.

Assume a utility function U(P) (P is take home pay) which is downward sloping (i.e., dU(x)/dW < dU(y)/dW whenever x < y). This is just the law of diminishing marginal returns.

Negative income tax: take home pay is P = A x W, where A > 1 and W = wages. Marginal utility = dU(AW)/dW = A dU(AW)/dW. If A dU(AW)/dW > dU(W)/dW, negative income tax creates an incentive for work.

Basic minimal income: take home pay is P = BI + W (BI + basic income). dU(BI+W)/dW < dU(W)/dW. This is always a disincentive for work.

I'd really be curious, do you have more information on Hayek's support for minimum income?

_delirium4• 16 years ago

That's a version of the "negative income tax", like the current EITC, but not the one that Friedman proposed. His version refunds a proportion of unused deductions, and bottoms out at a guaranteed minimum income equal to the standard deduction times the refund rate.

In his version, there's an allowance calculated by family size, dependents, etc., and a "subsidy rate", which is the proportion of any excess allowance that's refundable. He proposed a 50% subsidy rate. If the allowance for a given taxpayer is $20,000, and the taxpayer earns $15,000, that leaves $5,000 in unused allowance, of which 50% is refunded, so the taxpayer gets a $2,500 transfer payment. If the taxpayer earns no income at all, the entire $20,000 is unused, of which 50% is refunded, so the taxpayer gets a $10,000 transfer payment.

So, if A is allowance, S is subsidy rate, and W is wages, the taxpayer earns W if W >= A, or W + S * (A-W) otherwise. The guaranteed minimum income is when W=0, and equal to S * A ($10,000 in the above example).

For Hayek, here's one of several places he discusses his rationale: http://books.google.com/books?id=nclLLOfnGqAC&pg=PA55. One reason is that, unlike many libertarians, he's strongly against private-sector safety nets through e.g. church charities, because he feels those inhibit human freedom by making people scared to leave their ethnic/religious/racial/social group for fear of losing its safety net, which he views as a variety of collectivism. So he sees a guaranteed minimum income as a way of promoting individual freedom and undermining the power of tribalist collectives.

billswift• 16 years ago

>guaranteed minimal income always reduces it

Not necessarily - simply provide everyone, no matter their income level with the basic payment; that also decreases the paperwork and the power of the bureaucracy to bully the recipients. Then, since everyone has the minimum to live on, have a fairly high, fixed percentage, income tax on all income. There would be no effects on the marginal utility of work, and shouldn't be too much on the average utility, provided the minimum really is only a minimum subsistence level.

fauigerzigerk2• 16 years ago

That of course depends on the specific model of negative income tax and basic income. There are many, and sometimes they are functionally equivalent. More importantly, you are implying a specific quantification of the desirability of being in the workforce. I doubt very much that the utility or rather desirability of free but forever limited money is the same as that of earned money that comes with an option for much more money and personal recognition. I think the incentive structure of these models is very complex and neither proponents nor opponents can really understand it.

ckuehne3• 16 years ago

O jeeze, I don't know where to begin with your calculation.

First, if the utility function was "downward sloping" nobody would ever work. It's the marginal utility that is assumed to slope downwards (I assume you know this, because you later argue as if you did). But this is the opposite as in your example: It should read dU(x)/dW < dU(y)/dW whenever x > y (not x < y).

More importantly, your negative income tax definition is faulty. A NIT has never the form proposed by you. It wouldn't make much sense. Also, if A > 1 (in fact, if A > 0) you always have an incentive to work in your model, assuming dU/dW > 0.

And by the way, I don't know where you received your math education, but dU(AW)/dW = A dU(AW)/dW does not follow. For example, let U(P) be a simple concave utility function U(P) = ln(P) = ln(AW). Then dU(P)/dW = d(ln(A)+ln(W))/dW = 1/W != A 1/W.

This is all not so bad. Everybody makes mistakes (maybe I made one above). What bothers me is that some hacker news readers have apparently upvoted you without ever checking the results.

karzeem• 16 years ago

Milton Friedman advocated an interesting, soft version of the minimum income called the negative income tax.

http://en.wikipedia.org/wiki/Negative_income_tax

dreeves• 16 years ago

An equivalent way to describe Friedman's negative income tax proposal is that everyone pays their taxes as normal and then $20k/year (or however much) is given back to literally everyone, regardless of income.

I like that version because it makes more clear that you don't have perverse incentives with respect to working: you never get more money by working less. The $20k/year is guaranteed unconditionally and you can supplement it with a job if you choose.

foobarbazoo2• 16 years ago

That's also the same as the FairTax, which is a major policy proposal in the US. And it involves sending everyone a check each month.

So this idea is actually not that far out for the US, at least.

I should also point out that the FairTax is primarily supported by conservatives at this point, though from my point of view, liberals should be even more supportive.

maxharris14• 16 years ago

Where will the $20,000 (times millions of recipients) come from?

waterside813• 16 years ago

Canadian tax payers. I think the article mentioned an increase in taxes (or a cut in spending from somewhere else) would have to fund it.

nerfhammer2• 16 years ago

In theory it could ultimately turn out to be profitable for tax revenue: 1) increased economic activity means increased taxable income from others; depends on the velocity of the money spent via the new income 2) if people can pull themselves up by their bootstraps via this sort of program that means more taxable income for the recipients later in their lives. Impossible to know how it would turn out in advance but interesting to consider.

klbarry• 16 years ago

Let's see: There's 44,000,000 Americans living below the poverty line. Times 20,000 a year (ignoring administrative expenses) is 880,000,000,000 (880 billion) yearly. I'm not sure where we could take this out of the budget.

philwelch11• 16 years ago

If you replaced existing welfare, food stamp, and Social Security programs with this guaranteed minimum income, not only would you break even, you'd probably fix the deficit to boot.

If you're of the opinion that poverty causes crime, you might save money there, too. However, most spending on law enforcement is not federal and having a large population of idle people who can't get jobs might actually increase rather than decrease crime.

gruseom5• 16 years ago

The cost would be partly offset by dismantling much of the welfare apparatus (Edit: as semanticist already pointed out here: http://news.ycombinator.com/item?id=1926049). It wouldn't even be too surprising if the measure largely paid for itself in this manner, especially if you consider side-effects like health care and prisons. It would be interesting to see some reasonably objective numbers on this.

watmough• 16 years ago

Another benefit, wages and living standards would rise, since there would be increased competition for workers.

Increased wages likely would drive better education and training, leading to a German-style skilled workforce. In turn, a skilled workforce is much less likely to be arbitrarily fired, look at German unemployment during the slowdown of the last two years.

For an analysis on one reason why the US is in such a mess, take a look at this article by Citi: http://www.scribd.com/doc/6674234/Citigroup-Oct-16-2005-Plut...

waterside813• 16 years ago

As a Canadian, I'd be willing to pay an extra $X in taxes just to see if this would work or not. They should probably roll it out provincially in isolated areas first rather than going the full 9 yards (or metres as the case may be.)

olalonde• 16 years ago

You wouldn't necessarily have to pay an extra if we cut down on public services and let people manage their money.

rapind• 16 years ago

While this is a perfectly logical statement, there's absolutelty no chance it would reduce the cost of public services in reality. We don't fire government workers, they just get new titles / department names.

If anything the public service costs would increase as new oversight commities and other completely useless entities were created to manage the migration from our current system.

JabavuAdams4• 16 years ago

Bureaucrats need jobs, too.

gruseom5• 16 years ago

I like the experimentalness of it too, plus the fact that it goes against certain moral intuitions that have proven themselves rather fruitless in practice (bootstraps, blah blah). Real leaps tend to be counterintuitive. It does worry me that it seems dangerously write-only.

LostInTheWoods2• 16 years ago

This is the dumbest and most dangerous idea I've heard in a while. Go ahead and vote me down, but I hope some on this site have the common sense to see how bad this idea is. This is essentially welfare, and in the US, we've been down that road and we know exactly where it leads.

InclinedPlane• 16 years ago

I won't downvote you, could you explain why you think this is worse than the existing system?

davidj3• 16 years ago

search for my comment and I explain why it is wrong. Thanks for asking:)

maxharris14• 16 years ago

> common sense

That's precisely the trouble here. Following today's common sense, this seems like a great idea. To argue against it in a meaningful way, you have to attack the ethical root beneath it: altruism. To this end, I recommend reading The Virtue of Selfishness (google for it, if you haven't heard of it already.)

orangecat• 16 years ago

This is essentially welfare

Yes, and? The point is that we're already providing welfare, just often in a convoluted, inefficient, and counterproductive manner. The unfortunate fact is that some people can't provide for themselves. We can either ignore them, establish fifty government agencies to "help" them, or give them money. Option 1 isn't on the table, and 3 makes a lot more sense than 2.

smhinsey• 16 years ago

Where does it lead? It seems to me that the only thing we can say for certain is that it leads to a lot of partisan hand wringing and rancor. That's a problem with our dysfunctional American system, not a universal constant.

pessimizer2• 16 years ago

It'd be nice if you could fit an argument or non-vacuous statement between your insults, defiance, and vague innuendo.

Things to try:

1) This idea is dumb because... 2) This idea is dangerous because... 3) Welfare leads to...

gorbachev• 16 years ago

You're not seeing the forest from the trees.

I often wonder about the true motivation of some conservatives opposing any programs such as the one described in this article. If your agenda is to cut Government spending, shouldn't you think about ways to do that? It's well understood that preventive programs (such as the one described in the article) cost less than programs that deal with the consequences, e.g. prisons, hospitals to name two. So if your agenda is to cut Government spending, shouldn't you advocate for programs such as this?

So when on the other hand these people speak about cutting spending, and then cutting every preventive program in the books, they're not only failing to achieve what they advocate for (in the long run), but also causing real harm for people affected by these program cuts.

So to answer the comment I'm responding to. The goal of programs like this is not to "be nice", but to actually reduce to overall spending. I don't understand why it's dumb or dangerous at all.

burgerbrain2• 16 years ago

How about instead of offering everybody $20,000 a year, we offer everyone a government job that pays $20,000 a year?

There's no sense in paying people without receiving something in return and there are always infrastructure improvements that could be made.

gojomo3• 16 years ago

With a stipend, the money is theirs. With a government job, some of their salary would go to a politically-potent union that constantly lobbies for raises. Might not be worth the 'work' they're doing!

burgerbrain2• 16 years ago

>With a government job, some of their salary would go to a politically-potent union that constantly lobbies for raises.

That sounds like a separate unrelated issue. Hand each worker a check for $1,666 each month they work, and leave it up to them how to spend it. It would (obviously) be untaxed...

_delirium4• 16 years ago

Well, proponents from a libertarianish direction hope that it would be a way to structure a social safety net with minimal economic distortion. Instead of a whole bunch of programs (food stamps, welfare, medicare, employment insurance, etc.), just have one transfer of cash money. But if all those people become government employees, that hardly reduces economic distortion, because now you have a giant state workforce. Some libertarian-leaning folks, like Hayek, also think that people would be able to better self-direct their labor than the government could, e.g. by using the minimum payment to bootstrap small businesses.

semanticist2• 16 years ago

That's too simplistic:

How do you handle someone who has a low-paid job that earns $10,000 a year? Make them quit their job? Part of the benefit of this approach versus a minimum wage is that it can make low-paid jobs viable. With your suggestion it wouldn't make sense for any job to pay less than $20,000 a year.

How about people that simply can't work, due to long-term illness, disability, or age? Another benefit to this approach is that it simplifies administration of welfare/benefits so that you don't need to prove illness/disability to get the money. This also helps to remove stigma associated with disability, which is a Good Thing for society.

What if there's no need for your government labour where you live, but there is elsewhere? Do you create busy work for people - which will incur capital/material costs and management costs - or do you start forcing people to relocate?

Pretty much the entire point of this way of handling welfare is that you do pay people without receiving anything directly in return or enforcing how the money is spent. That way people can gain the freedom to decide how to spend it themselves and will largely make good choices. (And even when they make bad choices, the state is no worse off than under the current system.)

jhrobert4• 16 years ago

OTOH, what is the "sense" of so called "working poors"?

"slavery" comes to mind.

sedachv• 16 years ago

What would you have people do?

We've pretty much run out of ideas for how to use poorly educated labor. The current US unemployment numbers illustrate this problem.

Paying people to receive an education would be much more worthwhile IMO. Let a million grad students bloom.

gojomo3• 16 years ago

Worth a test on a small scale. I'd be most worried about very long-term multi-generational effects, given that such a program could be impossible to undo or adjust once people get used to it -- like other broad-based entitlements.

For example, the first generation to enjoy such a guaranteed minimum income might still have the traditional ambitions... but over time and with practice, the bohemian ideal of making-do on just the guarantee could grow in attractiveness. And, the discretionaty time offered by the stipend could be directed chiefly at lobbying/politicking/mass-protesting for ever-larger benefits. After a few generations, might we get a combination of the worst stereotypical qualities of both the 'underclass' and 'trust-funders'?

It's the sort of positive-feedback loop that -- like financial leverage tricks and other forms of moral hazard -- can build on itself until disasterous collapse.

philwelch11• 16 years ago

The only solution would be a tradeoff no one would agree to--guaranteed minimum income, but no franchise for net negative taxpayers.

melvinram3• 16 years ago

By that you mean "The right to vote". Here in the US I haven't ever heard of the word used in that context so I thought other's would find it useful to know what you meant.

http://www.google.com/dictionary?langpair=en|en&q=franch...

Qz• 16 years ago

That's an absolutely terrible idea.

gojomo3• 16 years ago

A milder form of the same would be to have a bicameral legislature, where one house is elected by universal suffrage (including the perpetually dependent), and another house limited to those who are net-positive taxpayers. (Or perhaps similar: subject to a poll tax equal or larger than the guaranteed minimum income.)

An interesting question is whether government employees and large government contractors count as dependents for representation purposes or not. Some of the same tight-feedback-driving-increased-benefits-without-regard-for-true-value loops that are of concern in the generous-welfare case are also at play with regard to civil servants and large companies wholly dependent on government spending.

groaner• 16 years ago

Won't this just attract the slackers of the world to come live in Canada, or the part of Canada that tries this? If this is intended as a sort of experiment, it can only be done in a closed environment.

mmastrac• 16 years ago

I imagine that our current immigration policies would be sufficient to prevent this. There are probably a large number of people who would want to become citizens solely for our health care or existing safety net.

berntb• 16 years ago

Let me be frank: It seems to be like that already for Sweden, which is a welfare state with the most open borders in EU.

That said, most immigrants to Sweden do seem interested in working -- there just seems to be a strange glut of uneducated people, compared to the available jobs.

(Remember, it is a welfare state -- high minimum wages.)

Educated people that can choose country prefer places with lower taxes -- which are high in Sweden to pay for the welfare state.

Edit: The real problem is that Sweden might be on the way to ghettos, US-style in a few decades. :-( A sociologist might mutter something about a perfect storm to generate a criminal underclass, also US-style. :-(

Edit 2: Worst case, I could go to Canada... Would love to relearn my French, anyway. :-)

gruseom5• 16 years ago

It takes a lot of energy to switch countries (barring something like the EU). By definition, most slackers aren't going to make the effort.

Besides that, Canada already has rules in place that deny full welfare benefits to recent immigrants.

fauigerzigerk2• 16 years ago

What you describe is a fear of what people might do if they are not forced to work. None of us really knows, but my feeling is that it is natural for humans to go out and explore things, make things, strive for recognition by others, etc. Homer Simpson does not expemplify the natural equilibrium of the human psyche.

What you describe is exactly the current situation in Europe, but the reason is not some bohemien ideal. The reason is fear. By tieing entitlements to a lot of conditions people are incentivised to stay put in their current status once it is officially acknowledged. Once you have your piece of paper that makes you unfit for work you avoid doing anything that could threaten that hard won status. I personally know people who live off benefits but would much rather work if they were not threatened with losing _all_ of their benefits the day they start to take up self-employed work.

JSig3• 16 years ago

As you hand out more free money you just cheapen the money in everyone's pocket and make them poorer. The 20k you just gave away won't even buy the amount of goods it would have before you created the program. This is just some redistribution of wealth gimmick. Giving away money does not address the source of poverty. Would you patch your code this way?

To end poverty you must fix the education system. Perhaps vouchers would encourage competition and force schools to compete for students by improving the quality of education. Perhaps someone would have to balls to end the process by which bad teachers are transferred from school to school because the union and public admin refuse to do something about it.

To end poverty you must cut the costs of education. There is no reason a 4 year college should cost what it does today. Look at what some administrators and professors make compared to what they do. Look at the quality of what you can learn on the internet for free. These need to come in line. State universities don't need water parks.

To end poverty we must educate on safe-sex.

To end poverty we must encourage healthful eating choices. We must get partially hydrogenated oils and all the other crap out of are food.

To end poverty people in the US must realize that left/right blue/red republican/democrat foxnews/msnbc is a false paradigm. People must not be divided by these things. People must see past all of this noise and see who is working against the best interest of people in favor of the people who hold the most money. People must see that all policies we have are in fact creating more poverty. To end poverty, we must fix the source of the problem - the united states congress and the federal reserve.

JSig3• 16 years ago

To end poverty we need a gov that does not lie when it says it supports affordable housing for people.

Affordable housing does not mean a 0% down FHA loan on an overpriced home costing the person 2/3 monthly income with some jacked ARM.

Affordable housing is to quit jacking with MBS and let housing fall to its proper market prices at which point it becomes affordable and buyers come in.

People need to understand that renting is just fine and home ownership is NOT for everyone.

It's fairly obvious that gov action in regards to home ownership has impoverished many people this past decade while making a killing for the banking elite. This trend continues to this day.

ugh• 16 years ago

I’m not sure whether a program financed by taxes (either existing tax revenue by cutting other spending or additional tax revenue by raising taxes or both) has to lead to inflation. Could you elaborate on that point?

It’s certainly possible for certain tax increases to affect everyone or nearly everyone and consequently lead to a rise in the cost of living and inflation. Increasing the sales tax would certainly seem to increase the cost of living, making the stipend worth less. That is not the only way to finance such a program, though.

JSig3• 16 years ago

Your right. I concede that without knowing the parameters of this program I can not claim that it will create price inflation.

In an environment in which a private entity (federal reserve) is printing money willy-nilly it makes you pretty cynical.

nazgulnarsil• 16 years ago

it saddens me that I had to scroll through comments for awhile before I see someone bring up that money isn't a magic static store of value.

taxes don't mean anything in terms of ability to spend to the guy with the printing press. taxes under the current Bretton Woods II policy maintain aggregate demand for dollars. The oil trade being conducted exclusively in US dollars is for the same effect. Nothing escapes supply and demand.

Kilimanjaro2• 16 years ago

Most people will spend it on drugs, alcohol and gambling. I say give them some money for basic food and shelter and some more (plus training) to start their own business so they can learn to be self sufficient and not to depend on the government.

As the saying goes, give them a fish...

jhrobert4• 16 years ago

give them a fish... and they can start thinking.

One cannot think with an empty stomach

Kilimanjaro2• 16 years ago

"I say give them some money for basic food and shelter and..." == start thinking

"start their own business so they can learn to be self sufficient" == learn to fish

jhrobert4• 16 years ago

http://en.wikipedia.org/wiki/Basic_income_guarantee

Towle_• 16 years ago

To end prosperity, guarantee everyone in Canada $20,000 a year.

petercooper2• 16 years ago

Amusingly, the UK is trying to backstep out of this sort of system (though a less generous one) that has bred a "workless class" who find it pays better to not work rather than start working and both pay taxes and lose "valuable" recreation time smoking and watching Jeremy Kyle.

jhrobert4• 16 years ago

well... aren't they exercising their "free will"?

mdda• 16 years ago

But part of the problem in the UK is that the highest tax rates paid are those by the working poor : As more money is earned, benefits are subtracted at an alarming rate. That means there's a huge disincentive for getting off the couch.

The idea of this 'flat payout' is that it provides a baseline - and any money earned thereafter is a pure win (even after you pay taxes on the money earned).

yummyfajitas6• 16 years ago

Reading the article, it sounds like they already have some version of the basic income guarantee already in place. According to the article, Nicole Gray (the subject of the article) already subsists on government provided income.

Currently, if you want to avoid work and take advantage of income support, you must navigate an unpleasant bureaucracy and perhaps endure suffer feelings of shame. If you get a job instead, you can avoid this unpleasantness. This is an incentive for work. The only thing that the proposal seems to add to the table is removing this incentive for work.

Why would we want to do that?

AlexC043• 16 years ago

Doesn't it also reduce the cost of that bureaucracy?

The article also argues that people actually have an intrinsic motivation to work (to get nice things for themselves and their children).

Notice the bits about the findings in Nimibia?

yummyfajitas6• 16 years ago

Is the bureaucracy of welfare distribution a significant portion of the cost?

The article also argues that people actually have an intrinsic motivation to work (to get nice things for themselves and their children).

If your sole motivation for work is to get nice things for you/your kids, and someone hands you free money, why bother working?

As for Namibia, it doesn't seem that Namibia replaced a welfare system with work incentives by a welfare system without. All they did was create a welfare system. News flash: giving money to poor african villagers can help.

jgoewert• 16 years ago

I first read of a similar idea 7 years ago in a piece by Marshall Brain.

http://www.marshallbrain.com/robotic-freedom.htm

Skip down to "Capitalism Supersized" for the meat of the idea. It is one of those experiments I would love to see in reality, as I believe I would still be inventing and trying to better myself and the lives of those around me without having to worry about that pesky "job" thing. Though, the main risk I see isn't the people blowing their money, but the inflation and greed this would cause.

phlux• 16 years ago

With ~300MM people in the US, to provide everyone of them $20K would cost $6T.

Assuming you get the maximum draw off EDD of $450/week - that is equal to $23.5K per year.

So, for those '99ers' (Those on EDD for ~99+ weeks), they are already receiving greater than the $20K this article states.

However, assuming the current unemployment rate of 9% -- we are spending ~$600B per year on unemployment at this time. (unless I screwed my numbers)

melvinram3• 16 years ago

I'm not convinced. I'd pay extra taxes for a limited time to see if this would work but I suspect it wouldn't.

My conclusion is based on one assumption: The source of financial problems is either bad money management or lack of enough earning capacity. Giving away free money fixes neither in the long term (this is another assumption.)

If their problem is bad money management, giving them more money and hoping that they'll fix their money management habits sounds like a very ineffective approach to fixing the problem.

If their problem is lack of earning capability, that needs to be addressed through education and job creation. Giving a single mother with 2-3 kids an extra $1500 per month might make her life a lot easier but it won't allow her to begin earning an extra $1500 on her own unless she uses the extra money to make very smart choices. Given the real world demands that she would be under, it seems that probability is not likely in her favor and again seems like an ineffectively approach to solving the problem.

The article really boiled down to: give people free money and they'll make wise decisions to help themselves. It didn't provide enough arguments to support that thesis and from just my understanding of human nature, I can't see this being an effective approach to solving the problem of poverty.

omouse• 16 years ago

If their problem is lack of earning capability, that needs to be addressed through education and job creation.

What's the point of creating more jobs if they don't give you benefits or the wages are still fairly low?

d2viant• 16 years ago

Then perhaps you're creating (or training for) the wrong jobs. There are many vocations out there that provide benefits and have rather large earning potentials.

smithbits• 16 years ago

But what if those aren't the only two causes of poverty? I don't know if the idea has merit or not, but I think poverty is much more complicated than that.

melvinram3• 16 years ago

I fully acknowledge that the two causes I listed may not be the only reasons for poverty.

I guess my main point was that it's important to understand and treat the causes, not the symptoms.

nodata• 16 years ago

What if the deal was: they get 20k, but the government manages their money?

mml• 16 years ago

This seems like a great way to drive up rents. Poor people don't tend to hang on to their money, they're awfully tempted to do things like pay rent, make car payments, and buy things to eat. Not that I blame them, I do these things too.

Such a scheme would essentially be an indirect subsidy to all those the poor do business with. A rising tide lifts all boats.

abalashov• 16 years ago

Which is basically another way of saying "printing money," which, as we know, causes inflation. Money can be flooded into the economy by means other than cheapening interbank lending rates.

mthoms• 16 years ago

Except we are not talking about creating money, we're talking about re-allocating that which already exists (via taxes). Not the same thing.

foenix• 16 years ago

http://www.wolframalpha.com/input/?i=(the+population+of+cana...

neworbit• 16 years ago

It seems like this would cause a lot of low-end inflation as rental prices of cheap housing and such adjusts to the fact that people can now pay more reliably for such things.

Equally important, it seems like it'd suddenly be hard to hire someone to a position making (say) $27,000 a year when their alternative is to simply collect $20,000 a year - so a lot of lower-paying jobs will vanish... and the ones that adjust $ to compensate will of course have to pass on the costs to their customers. I'd expect an abrupt spike in the prices of restaurants, grocery stores, and the like.

It's an interesting thought experiment but sure to cause some social upheaval.

known• 16 years ago

Will you pay $20,000 extra taxes to prevent crime i.e you don't need police force?

bryanlarsen• 16 years ago

We owe the existence of Linux to something very much like this. Finnish students not only do not have to pay tuition, they also receive a basic living supplement. Therefore Linus was in no hurry to finish his degrees, and spent his time doing Linux instead / as well.

We'd also end up with more entrepreneurs. Under this scheme, your startup would be "ramen profitable" without any income.

Currently, Canadian welfare pays $3 to bureaucrats for every $1 given to recipients. Most of the money to fund it comes from there.

I'm a huge proponent of this scheme -- I like to combine it with a "flat income tax" -- give everybody $20,000, and tax all income at a flat rate. The resulting curve is nice and progressive, as well as nice and simple, saving even more money on bureaucrats.

gruseom5• 16 years ago

Canadian welfare pays $3 to bureaucrats for every $1 given to recipients.

That's exactly the kind of irrationality it would be a pleasure to see swept away.

I'm a huge proponent of this scheme

Who in Canadian politics is actually advocating it? The article mentions Hugh Segal. This is not someone with much power. So I guess my question is, of those advocating it, who has the most power?

If nothing else, it would be a counterexample to the principles that nothing in Canadian politics ever changes or is ever interesting. Hey, we could even call it Worthwhile Canadian Initiative! (http://en.wikipedia.org/wiki/Flora_Lewis)

davidj3• 16 years ago

The is absolutely the most horrible idea ever, and on so many levels morally and ethically wrong. First off, the $20,000 has to come from taxes; so this means higher taxes for people who are productive and produce in society. Probably would require atleast more than 51% taxes; what is the purpose of working if the government is just going to steal from you more than you make? Second, what is the incentive to better yourself, train for better skills, and get an educate when you are guaranteed a basic income -- there are no incentives. Third, politicians love the dependent mentality this creates: voters will never ever vote against the welfare state and so this lets the politicians to do all sorts of draconian legislation, because they can always threaten to reduce welfare if the citizens don't go along with the state -- and the citizens will always vote for more welfare. Fourth, this creates a bureaucratic state that can pick and choose winners and losers: instead of your quality of life being based on if you are a hard worker, your time and money investment and your risks/rewards, your quality of life is based on a central planning state sponsored bureaucracy. This can be politically motivated. Fifth, this keeps the poor poorer and the rich richer by eliminating the incentive to better oneself.

To end poverty, guarantee everyone in Canada $20,000 a year.

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