Experiment in paying villagers in India an unconditional basic income

http://mondediplo.com/2013/05/04income

by xSwag • 13 years ago

267 225 13 years ago

r00fus2• 13 years ago

The opposite of austerity. I liked this part:

Direct cash payments cut out the many leaks and corrupt intermediaries. Delawa said: “The idea of unconditional income comes from the failure of conditional programmes. As soon as there are conditions, there is erosion. Conditionality means intermediaries, which means power, which means corruption.”

Corruption is the reason aid programs are so inefficient. By giving money directly to those impacted, the poor are empowered to save and concentrate their unconditional small wealth into larger pools and wield power of a sort.

rubinelli• 13 years ago

Even when corruption isn't an issue -- and it always is -- there is a lot of waste when some bureaucrat spends someone else's money. But this is their money, and they know exactly how much they would have to work to get it, so they spend on what they need.

And this money makes the whole economy flow in their previously cash-starved communities. The effect can be astounding.

tellarin• 13 years ago

Just look at Brazil's income distribution program: Bolsa Familia.

It has been shown to improve local economies and people's lives. Even though it is not completely unconditional and doesn't quite get to provide enough for basic needs.

mjn2• 13 years ago

That was the reason even Milton Friedman, otherwise pretty much the opposite of a socialist, though that a basic income was a good option even in western countries. His view was that just giving people unrestricted cash would cut out much of the corruption, inefficiency, and market distortion that creeps in once you start giving intermediaries the power to put conditions and restrictions on support. For example, with food stamps, he was skeptical that the restrictions requiring people to buy "proper" food with them produced better results overall than just giving people the equivalent amount in cash and letting them decide. For one thing, if individual recipients are choosing their food, rather than picking it from a list of food-stamp-approved choices, it completely removes the whole business of lobbying to be on the approved list, plus the bureaucracy of administering the list.

jasonwocky2• 13 years ago

The problem is that the economy is often seen as more than a mechanism for efficient allocation and transfer of resources: for many, it's also a source and enforcer of moral order.

"People who work hard and play by the rules should have a shot at success. People who don't work shouldn't be given handouts. Corporations who misbehave shouldn't be bailed out, because they're just incented to misbehave again. We should drug test welfare recipients even though it ultimately costs us more than it saves us, because drug addicts shouldn't get welfare." etc etc etc.

cadlin• 13 years ago

I couldn't tell if you were implying this, but FYI in the US today food stamps can be used on any food item that isn't prepared (i.e. already cooked).

john_w_t_b2• 13 years ago

Yes, I agree. Get rid of the conditions and pay people directly through bank transfers.

The public should push for a basic income in developed countries also. A universal basic income would provide a safety net for entrepreneurs and make it easier for people to pursue education or high risk ventures. It would eliminate vast numbers of bureaucrats and lawyers from programs like US Disability. $1.5 billion was spent on disability lawyers in 2010 (http://online.wsj.com/article/SB1000142405297020351840457709...)

Governments could pay for a universal basic income with pollution taxes. The overall program would be revenue neutral. People would be discouraged from wasting energy (e.g. gasoline) to do low value work.

r00fus2• 13 years ago

Basic income and government healthcare would be amazing for freelancers and entrepreneurs.

However all our politicians are owned by the corporatists. Effecting change like that seems asymptotic, unreachable.

scarmig8• 13 years ago

Austerity is perpendicular to this. You could very easily have a basic income but insist on a strict balanced budget, which would be austerity. You could also very easily have a basic income and a government deficit, which would be anti-austerity.

batemanesque5• 13 years ago

thank you for mentioning this. "austrian economics", for all its flaws, has little to do w/ current austerity policies

notahacker• 13 years ago

Direct payments on this scale don't solve the problem of rentiers that are able to extort the poor. Someone still has the power to directly hand out the cash, and record who has and hasn't received it. Someone still has the ability to dupe villagers into believing the cash payments are contingent upon his goodwill. And somebody still wields enough economic or social power over the villagers to direct most of the returns into his own pocket.

The article itself pointed out the real problem with the villagers was that the local landlord owned their land and their debts - a local landlord with the ability to raise everyone's ground rent, increase the work requirements for debt service and appropriate most of the direct cash payment for himself.

A compulsory purchase order served on the landlord, and/or some kind of rent control might well be a more effective long term solution to these villagers' long term needs - even though such schemes have obvious potential for bureaucratic abuse.

EGreg6• 13 years ago

To me, this sort of thing is common sense. All the austrian economics fans talking about better price signals as an argument for less regulation - all of them should consider using the same argument for giving an unconditional safety net to the poor.

When a poker player has a small stack at a table, he makes poorer choices. Similarly, poor people cannot optimally use their resources, but must avoid one potential crisis after another. If you free them from the rat race, you can even end minimum wage.

What I see in the USA for the past few years is really a class struggle manufactured by ideologues, people vilifying the rich, others vilifying the poor... but with increasing automation and outsourcing, more and more people will find themselves unemployed. If those people had money they'd spend it on basic necessities and the things they want the most. This in turn will empower those industries to produce more things people actually need, and innovate. Who knlows, maybe the poor will even be able to help fund solutions to their own challenges in their communities. Even Milton Friedman advocated for a negative tax.

mjn2• 13 years ago

> All the austrian economics fans talking about better price signals as an argument for less regulation - all of them should consider using the same argument for giving an unconditional safety net to the poor.

Interestingly, one of the founders of Austrian economics, F.A. Hayek, actually did argue for a minimum income: http://www.kmjn.org/snippets/hayek79_minimumincome.html

scarmig8• 13 years ago

Libertarians often are big pushers of a minimum income, actually. It's far more direct and efficient as a means of improving the welfare of the least productive, and it's the least prone to special interests pushing for tax cuts because of how much their good helps kids/the poor/whatever.

With a sufficient basic income, you could effectively get rid of Social Security, Medicare, Medicaid, food stamps, public subsidies in all types of places they're unnecessary or harmful. And you remove the disincentive effect on productivity that most welfare schemes have.

Most academic libertarians, in my experience, aren't of the sort that thinks private property rights is the sole criterion and sole justification for everything; their opposition to government activities is based a lot more on how it distorts price signals, public choice issues, and issues of implementation. The basic guaranteed income sidesteps all of those.

eruditely• 13 years ago

>When a poker player has a small stack he makes poorer choices

This immediately shows you have not played poker seriously or have a working knowledge of poker knowledge. The framing of the question is wrong too,

cynicalkane• 13 years ago

Instead of jumping to conclusions, consider that the OP is probably talking about a typical person playing poker who is prone to making bad decisions for psychological reasons. Hey, that's just like most real-life people, which is what this article is about.

nbouscal• 13 years ago

When you're playing a small stack your Nash equilibrium actions do not extract as much EV as the actions you would make with a large stack. In other words, the best choices you can make with a small stack are poorer choices than the best choices you can make with a large stack.

lake99• 13 years ago

> All the austrian economics fans ...

Depends on why one is a fan of Austrian economics. There is this (strawman) group that Krugman loves calling "austerians". And then, there are others who subscribe to the idea of "Not Yours to Give". (http://www.fee.org/library/detail/not-your-to-give-2) Friedman was inconsistent. There is not much point ascribing an ideology to what he said. There is no scope for Austrian economics in India. I won't get into the "why" of that.

Our politicians love spending our money on schemes that get them votes. This is another such scheme. But, if I can give away a portion of my income directly to people who are extremely poor, (after proving that they, indeed, are), and declare that as a 100% tax deduction, I'd support it!

It won't happen. Our politicians will want to introduce a scheme that they can name after one of their dead party-members. They want to be seen as the direct benefactors. Come election time, they want to be able to tell the poor "now look, under the Narasimha Rao* scheme, we give you x hundred rupees each month. Vote for us, and we will double that amount."

* As if that's going to happen!

wisty• 13 years ago

Public choice theory, isn't it?

If they give everyone the same cheque, then no-one will feel special. No-one will feel reliant on the politicians for giving them a special handout.

jfoutz• 13 years ago

Here's a negative tax talk from Friedman. http://www.youtube.com/watch?v=xtpgkX588nM

I'm a big old lefty, but i found it pretty compelling.

jjoonathan10• 13 years ago

BI has the advantage that it retains 100% of the marginal incentive to work at the low end of the spectrum. This comes at a marginal cost to the entire system, poor and rich alike, but arguably the poor need to be incentivized more than the rich.

thatswrong0• 13 years ago

The negative income tax really isn't a left or right issue, despite the fact it was advocated for by a free-market proponent.

The only problem I have with it is not the idea itself (I quite like it), but instead the income tax all together and the entire tax code. In the U.S. we waste a ton of money every year conforming to the tax code and there are many simpler ways that we could collect federal government revenue. I especially don't like the idea of taxing income. Something like the Fair Tax solves this but introduces a few problems as well. It would interesting if we could develop a system which functions like the negative income tax but has the efficacy of a sales tax.

jacoblyles• 13 years ago

What would you think the odds are that we institute a minimum income policy and a large class of people still systematically make bad life decisions? Because I think it is quite large.

sciurus• 13 years ago

This has been tried in other places with positive results.

http://crookedtimber.org/2009/06/02/the-basic-income-grant-e...

laurentoget• 13 years ago

Le monde diplomatique is something i really miss about france. Love that someone is asking the real questions.

mynameishere• 13 years ago

I hear they have a website coming out.

tomjen3• 13 years ago

If you just start paying people money no matter if they work or not, what is their incentive to improve in life.

Frankly, this smells of people trying to sneak communism in through the backdoor.

And what do you do when they blow all their money on drugs (this will happen with some of them).

hayksaakian• 13 years ago

In theory, those who lead destructive lives (drugs) will die sooner (if the anti-drug claims are true) therefore removing themselves from the system.

I'd imagine the payments in this case are only enough for food and shelter. Spending $ on drugs makes it harder to obtain the other two.

Communism would be conditional income ("to each according to his means, etc."). What the article describes is unconditional.

mathieuh2• 13 years ago

Socialism would be conditional income, Full Communism would be unconditional.

enraged_camel2• 13 years ago

So basically, you don't know what communism is.

jjoonathan10• 13 years ago

To elaborate, communism aims for the abolition of private property and the elimination of class distinctions. BI aims for neither.

funkaster• 13 years ago

did you even read the article? My impression is that you did not read it, or did not even understood it. Also, you seem to have no idea what communism is about.

sfmcjgkbrbm2• 13 years ago

In communism there is no private property. You can't run business or be employed in any.

Minimum income is completely unrelated. It only means giving a few dollars for the poor so they don't starve or freeze to death. It's already done in developed countries (welfare) but in unreliable way.

Minimum income doesn't interfere with free market and accumulation of capital.

Dylan16807• 13 years ago

Because the money given is not enough to comfortably live on by itself, and definitely not enough to be wasteful. In communism the incentives aren't there because you can't get more money by working harder. With this plan you have all the time in the world to get money by working harder/at all.

If someone blows all their money on drugs they need a rehab facility.

Peaker• 13 years ago

Their incentive is getting even more money, so they can buy more than food and shelter.

Also, self fulfillment.

Throwing around words like "Communism" is not productive. It would be better if you only mentioned specific negative aspects.

gizmo6862• 13 years ago

We have a certain amount of work that needs to be done, this work takes a certain number of people to do it, call this number X. We have Y people who are willing to do the work.

At the moment, Y>X. If we give a small BI, then Y would decrease. This is not a problem, as Y>X. The question then becomes how how the BI should be. Given our current unemployment rate, the answer is greater than 0.

philwelch4• 13 years ago

If only it were that easy. The fact is that X >> Y, but not all parts of Y are useful to satisfy X.

EliRivers2• 13 years ago

"what is their incentive to improve in life"

Is that a serious question? What do you think their incentive to improve in life is? Here are some ideas for you:

To be healthier.

To live longer.

To have a nicer house and better living conditions.

To improve the lot of their family.

To travel and have new experiences.

Do you think that people want to live short lives of misery? "what is their incentive to improve in life"? Really?

Aloha• 13 years ago

I think the concept of the (Guaranteed Annual Income) http://en.wikipedia.org/wiki/Guaranteed_Annual_Income is the most effective way to deliver social services. The overhead is much lower than welfare, WIC or food stamps, meaning it costs less, and more benefit actually makes it to the poor.

jmathai9• 13 years ago

I believe this works when you give women money.

My dad does this sort of work in India and we've had many conversations about how you can't trust men with free money.

enraged_camel2• 13 years ago

That is not sexist at all.

evolve2k2• 13 years ago

Context on why girls and women: http://www.girleffect.org/why-girls/#&panel1-1

mtowle• 13 years ago

Labeling is dismissal, not refutation. The latter option is more difficult, but more effective. The former... well, not all dismissal is soapboxing, but all soapboxing is dismissive. "Who cares! Boxes are fun to stand on." Hey, can't argue there.

jmathai9• 13 years ago

It's not. There's plenty of studies that show the most effective ways to help a society is by empowering the women [1][2][3].

Standing for "equality" for the sake of "equality" doesn't actually benefit anyone.

[1] http://www.care.org/getinvolved/advocacy/pdfs/whyempowerwome...

[2] http://www.wfp.org/women4women

[3] http://www.guardian.co.uk/global-development-professionals-n...

mc-lovin5• 13 years ago

Funny how when things favor women they are just "objective facts" and therefore can't be labelled "sexist".

While all the things men are better have have already been proven to be results of cultural bias by esteemed sociologists...

gmack• 13 years ago

Another great organization working on this model is http://givedirectly.org, co-founded by the irrepressible Rohit Wanchoo. We had lots of discussion around this model, since his team had done a lot of research around it. It appears to be working well, and recently received a large donation from Google.

nn33• 13 years ago

"I’m going to save all the money I get and spend it on my son’s wedding.”" ... “But it’s a middle-class prejudice that the poor don’t know how to use money sensibly."

I don't want to sound like a "middle class prejudiced person" but spending all the saved money on a wedding doesn't sound very sensible to me.

mathieuh2• 13 years ago

Silly poor people thinking they can both survive and enjoy themselves a little, what nerve!

sfmcjgkbrbm2• 13 years ago

Maybe it's not for one-day wedding ceremony, but for wedding gift that lasts for long time.

gruseom2• 13 years ago

You cherry-picked that example. (Plus took it out of context—the quote talks first about food and medicine.) But even granting the point completely, the presence of such outcomes in a scatterplot says nothing about whether the approach is beneficial or not on the whole.

I find it exciting that this is at least partially amenable to objective experimentation. Why not try it and see? It takes a pretty rigid ideologue to not be open even to that much. (Not talking about you there, but about "they'll only spend it all on drugs" and so on.)

nn33• 13 years ago

I don't think I misquoted.

Yes I agree it's an interesting experiment and I like the idea in general.

But the article certainly doesn't do a good job arguing for it by quoting that crazy lady and containing such obvious contradictions.

munger• 13 years ago

Also in this article that seems sensible to me. Spending on higher quality foods, medicine, sewing machines, blankets, savings, starting businesses and even the occasional "luxury" like a TV or wedding.

"... in villages receiving payments, people spent more on eggs, meat and fish, and on healthcare. Children’s school marks improved in 68% of families, and the time they spent at school nearly tripled. Saving also tripled, and twice as many people were able to start a new business."

"...one showed the sewing machine she had saved for over a year to buy, another proudly announced she had nearly finished paying for her family’s television set, and another held up a 300-rupee blanket for the winter, of far better quality than the one it replaced..."

Sounds like overall they are responsible about what they spend on.

yzhengyu• 13 years ago

Yes, it doesn't sound sensible. But you are already biased by the situation presented. But look at it from a perspective of a Indian instead of just a poor person.

In India, plenty of social standing comes from willingness to spend on lavish events/customs - like weddings - to entertain friends, family, guests.

So, there is value. Of the social type.

That's the problem with many current social welfare systems - the poor are dictated by the types of aid is given to them. We rather have an overhead of up to billions of dollars obsessing over procedures, checks, regulations etc to ensure "unacceptable" outcomes do not occur.

And in there is the tendency for corruption, fraud, etc.

gijjk3• 13 years ago

The social status from a wedding -- is that a positive sum status game, or a zero-sum game?

toyg3• 13 years ago

An indian wedding is not just "a wedding" -- it's a huge social event that defines the social standing of a family in their community. A successful wedding will result in increased respect and trust for family members, which will likely have a direct economic impact: people will be more likely to lend you money at a favourable rate, they will entrust you with responsibilities and money (i.e. good jobs) and so on. It's also a great occasion for networking per se. In many rural communities, not just in India, wedding ceremonies are often an investment, not a cost. Think of it as a huge PR event where people are basically forced to attend (not attending a wedding of somebody you know, after being invited, is very disrespectful) and where you can sell them stuff while they enjoy themselves.

A huge dowry, now that is a waste of money, but it's not mentioned in the article.

jasonwocky2• 13 years ago

A huge dowry, now that is a waste of money, but it's not mentioned in the article.

Except that it may prevent your new in-laws from harassing your daughter so much that she freaking immolates herself.

http://articles.timesofindia.indiatimes.com/2013-04-14/rajko...

nn33• 13 years ago

So like a startup that burns all the remaining money on a single super bowl ad?

Paint me skeptical on the wisdom of such investments.

michaelochurch3• 13 years ago

What really gets me going is the realization of how much more value people would produce if they could own their lives outright instead of renting it from one boss to the next. There'd be less "work" of the traditional, low-productivity, subordinate zombie sense, but a lot more getting done.

I want to see BI not because I have an interest in not working. Rather, I want it to free people to work. Work is too important (both as a human need, and as a productive force in society) to leave it in the hands of the entrenched boss men who currently own Work.

It would be such an excuse-killer, too, to implement BI and get rid of compulsory labor. People could no longer justify making so little of their lives due to having to work. Now, it turns out to still be quite hard to make something of one's life but, when that excuse is gone, the only thing to say is "Yes, it's hard; but go on, do it."

Sometimes I wonder, though, if we invented institutional Work to justify mediocrity, and make it OK. It's often portrayed as an oppression brought in by deceptive, aggressive Boss Men; but I also think people willingly participate because it's a way to substitute mediocre/subordinate social acceptance for the much more intermittent reward/thrill of genuine work. Boss men definitely were more principal in driving Work to its current state, but it was a coevolution.

andrewflnr4• 13 years ago

Don't forget that it comes out of the excess of those who do decide to work. I'm not confident that if this was rolled out globally, there would be enough people who really decide to "make something of their lives" to support the system. Sure, a lot of them will hate themselves if they don't, but, honestly now, how often does that stop laziness? Don't look at yourself to answer, look at the culture.

EGreg6• 13 years ago

Studies show welfare spending has reduced poverty dramatically and measurably in ALL countries studied.

http://en.m.wikipedia.org/wiki/Welfares_effect_on_poverty

Other studies show, however, that it has diminishing returns, especially as it leads to poverty/ghetto culture. However this is changing with technology, internet and mobile phones. People are more docile than in the 90s with the gangsta rap craze.

jjoonathan10• 13 years ago

Free market principles still apply: if all plumbers retire when BI starts then the price people are willing to pay to hire a plumber will increase until somebody decides it's worth doing again. What if it becomes impossible for you to hire a plumber? Well, that would be the sound of opportunity knocking ;)

michaelochurch3• 13 years ago

With BI, there are going to be some people who use it as an excuse to slack off. They're not ambitious or energetic and, relieved of the need to make something of their lives, they probably won't do much. That's true.

Here's a question: how much are they doing right now? My guess: not much. Given the high rate of unemployment that exists already, it seems like society's value for unskilled work is pretty low already. So I don't think the bulk loss to society in having the least ambitious ~10-20% slack off is that bad, especially if a large number of people are more engaged in their work.

Parasites at the bottom of society are pretty harmless. Parasites at the top, on the other hand, are extremely damaging. We have a lot of the second kind. Because people have to work and most need a steady income that just barely meets expenses, that pretty much means they end up in a subordinate role, there's a class of useless people called "executives" who have total control over the economy (and mediocritize it, because it's best for their positional stability to do so) because people are terrified of losing the jobs and incomes.

If there's a trade-off between having more parasites at the bottom of society who don't work vs. having more parasites at the top who ruin others' work, I'd take the former, hands down.

Retric2• 13 years ago

BI, does not remove the benefit from traditional employment. Rather it removes the bureaucracy and cutoffs around traditional government benefits. Currently, you get no benefits if your disabled for 5 months and a significant check if it's 6 months. With BI, you get the same money either way, and while it's probably less than the 6 month benefit the risk reduction is worth a lot.

Better yet, get laid off and want to try making iOS apps? Just do it, your benefits are unaffected if you want to start a company.

Now, the downside is currently upper middle class people get higher disability benefits/social security payments. With BI that goes away, society does not care how old you are or what you made you get the same basic income as everyone else. So you better have savings if you want keep living in a high cost of living area.

rayiner2• 13 years ago

I'm convinced that you could give everyone exactly the same income, and people would work for artificial "prestige points."

mempko• 13 years ago

I would argue that the current institution of work is what causes laziness. When people day in and day out go to work for 8 or more hours a day to a job they hate. When they come home, there is nothing left but wanting to be "lazy". I suspect that this trait is learned in our current environment.

derefr2• 13 years ago

> I also think people willingly participate because it's a way to substitute mediocre/subordinate social acceptance for the much more intermittent reward/thrill of genuine work.

The drive to seek "intermittent rewards/thrills" isn't universal. Specifically, in people with naturally low dopamine responsivity[1][2], it's almost non-existent. Within this group, you don't tend to see anyone who enjoys casinos and/or casual-social-mobile games, for example; they experience no dopamine hit from one session, so they aren't drawn to replay.

There's a categorization system of psychological reward profiles, originally derived from MMO play-styles, called the Bartle test (http://www.mud.co.uk/richard/hcds.htm). Of the four Bartle types, people with low dopamine responsivity are almost never "Achievers"--instead tending to focus on the other three. Here's the description of the category:

> Achievers regard points-gathering and rising in levels as their main goal, and all is ultimately subserviant to this. Exploration is necessary only to find new sources of treasure, or improved ways of wringing points from it. Socialising is a relaxing method of discovering what other players know about the business of accumulating points, that their knowledge can be applied to the task of gaining riches. Killing is only necessary to eliminate rivals or people who get in the way, or to gain vast amounts of points (if points are awarded for killing other players).

In a business context, people who aren't Achievers are almost[3] inherently MacLeod "Losers."

---

[1] Low dopamine responsivity is diagnosed around 7% of the time as ADD/ADHD. It is so widely prevalent in modern populations, though, that many doctors refuse to recognize, diagnose, or treat for that condition, dismissing it as "a healthy psychological state which just doesn't mesh very well with the expectations of the labor market." However, you will frequently find that someone treated for ADD/ADHD, whether or not it is a real condition, will become a Bartle "Achiever" where they previously were not.

[2] People who have had chronically-low dopamine responsivity their whole lives also tend, more than the median member of the population, to self-identify as either "nerds" or "creatives" (or both.) When you don't derive any internal "rush" from competing with others (whether "doing the sports" or "going into finance" or "making the sale"), you tend to need to "make your own fun"--which leads to such pursuits as programming, science-fiction, and Minecraft; or to painting, writing, composing, et al. There is a reason, besides their market value, that an MBA in a down market will "hustle", while an Illustration-major will work as a barrista.

[3] The "Explorer" play-style/reward-profile gives them the ability to also be "Technocrats" (in your terminology), though.

jjoonathan10• 13 years ago

> The drive to seek "intermittent rewards/thrills" isn't universal.

Perhaps not, but so long as the market can offer something to everyone people will still have incentive to work. Basic Income doesn't mean you can afford everything without working.

The market is extraordinarily good at producing carrots yet we seem hell-bent on using sticks. I think there's room to improve on that front.

batemanesque5• 13 years ago

do you have sources on "low dopamine responsivity", the ADD/ADHD connection, or the "nerd"/"creative" thing?

lifeisstillgood• 13 years ago

Ok you just expanded my mind and gave description to a whole new vista - can you write this up as a book?

saraid216• 13 years ago

I'm pretty sure Dr Bartle would object to generalizing HCDS out to the general population.

Also, to 'lifeisstillgood, Bartle actually expands on his paradigm in the book Designing Virtual Worlds, where he introduces another axis for the four types (bringing it to eight) and also specifies two progressions between the types as players grow.

http://www.amazon.com/Designing-Virtual-Worlds-Richard-Bartl...

The man is alive and kicking and will probably take questions.

AndrewKemendo• 13 years ago

>Sometimes I wonder, though, if we invented institutional Work to justify mediocrity, and make it OK. It's often portrayed as an oppression brought in by deceptive, aggressive Boss Men; but I also think people willingly participate because it's a way to substitute mediocre/subordinate social acceptance for the much more intermittent reward/thrill of genuine work.

Very interesting hypothesis. If true, it would answer a lot of questions about poor performance of large organizations and also explain to me why so many people I have worked with are comfortable with said mediocrity.

rtpg2• 13 years ago

actually a thing I've noticed in Japan (lifetime employment AND labor shortage) is there's a lot of silly 'institutional work' that is created for less capable members of certain groups. For example, guys whose only job is to just say "be careful please" around construction sites all day long. It's weird, but in a way it ensures these guys can still get some income.

pandaman5• 13 years ago

I have experienced the end result of this as I happened to be born in the USSR. There was not that much more value, quite the opposite - "poor" people in the USA nowadays live much better than not just the middle but most of the ruling class in the USSR.

jjoonathan10• 13 years ago

BI is NOT communism. We are not trying to abolish private property or wealth disparities or social classes. In fact, we're trying to make the market even free-er: right now the supply of labor is rigid (everyone must work to live) but supply exceeds demand so the free market sends the price of labor to 0. There are two alternatives: let the supply of labor drop via BI or establish price controls on labor (or pray for the economy to keep growing, but that ship has sailed). Price controls shift the problem around and don't solve the underlying issue: supply exceeds demand. Unfortunately, we have chosen price controls over letting the market equilibrate itself.

ANY solution that solves the supply-exceeds-demand issue of labor MUST either create leeches (decrease supply) or continuously grow the economy (increase demand). I think it's easier to create the leeches and call them a cost of doing business. BI is the supply-side economics of labor.

Incidentally (this is unrealted because BI is not communism), I'm not convinced that the USSR failed because of communism/socialism/stalinism/capitalism/whatever. I'm no historian, but it looks like what happened is that the US fought an economic war with the USSR via an arms race. We spend a $ on our military to force them to sped a $ on theirs. They ran out of money first because they had a smaller economy coming out of WWII. This opinion is not very well researched or highly informed (I base it off starcraft strategy, heh). Please tell me if I have gone wrong; I will be neither surprised nor offended.

6d0debc071• 13 years ago

Another narrative is that centrally planned economies tend to go under because once you increase market place participation via provision for basic education and industry to the same levels as everwhere else you have to increase the per-capita production and that's something that's very hard to do without the insights that come from actually working as part of the individual industries.

Which is to say that centrally planned economies have a lot of low hanging fruit for countries that aren't very advanced to start off with, when the fixes are still fairly simple, but are crippled in the long term as the complexity/fluidity of the problem goes up.

chipsy• 13 years ago

I call it "the right to quit."

dxbydt• 13 years ago

We issued $2000 per head debit cards during Katrina ( http://www.wave3.com/Global/story.asp?s=3818003&clientty... ). These villagers have a Katrina every single day of their lives, so it makes sense.

andrewflnr4• 13 years ago

If it makes sense, that's not why. The reason we started giving people money during Katrina was precisely the change in their circumstances, not their steady-state condition. Suffering, at least the perception of it, is largely relative to previous experiences.

Your comment is especially ironic given your username. ;)

temphn• 13 years ago

The thing about the basic guaranteed income is that it's not usually thought through beyond the first step.

Let's extrapolate it out. Say you receive this income. What would you do? Perhaps you would go down to the store and purchase rice. The storekeeper has to work to manage the store, the truck driver drove the rice to market, and the rice farmer had to plant and harvest the rice.

A portion of your rupee today goes to the storekeeper. But a portion also diffuses back to the driver and the rice farmer. Those signals are the signals for them to keep doing what they are doing. Yes, it's true that the storekeeper bought the rice in advance of your purchase, but if you look at this as an iterated purchase: in general money flows opposite the flow of goods/services.

They accept your money today on the tacit belief that you have provided enough value to someone else, somewhere else that it will even out in the end when it is their turn to consume.

However, if the state either takes money (via tax) or centrally creates money (via inflation) to give a "guaranteed basic income", it is essentially forcing the store owner, truck driver, and rice farmer to work for free. The monetary signal becomes broken and no longer signals that the person on the purchasing end has produced something in return for this rice.

The shopkeeper, driver, and farmer don't have the vocabulary to articulate this in highfalutin', dispassionate tones. But they can understand that while they are slaving away at work, the person buying their rice is getting something for nothing. And that something is to a nontrivial extent coming directly out of their hide (in the form of taxes or monetary dilution).

This is why the passive voice isn't so helpful here - "paying an unconditional basic income" takes away the role of agency. The state is taxing citizens and forcing them to provide services to people who aren't producing anything in return ("unconditional").

Different people have different definitions of justice, but many of those citizens will leave once they understand what is going on. After all, you would leave a company structured like that, which diluted down your equity or awarded an unconditional salary to the flagrantly unproductive. And so you would leave a country structured like that.

And when people of this sort leave en masse, there is no shopkeeper, truck driver, or rice farmer where the "guaranteed income" can be spent.

andrewflnr4• 13 years ago

You can skip the "money as a signal" argument and still get that it's not fair. But don't the rice farmer and store keeper get the same thing, plus what they make from their business? That's how I've always imagined this sort of thing.

EGreg6• 13 years ago

I strongly disagree with the overall idea expressed here - it seems to be based on a misconception. I was with you until this point:

They accept your money today on the tacit belief that you have provided enough value to someone else, somewhere else that it will even out in the end when it is their turn to consume.

Most merchants will not care whether you earned you money by doing one thing or another, found it in the street, got it from a rich uncle or the government. What they want to know is whether they will be able to exchange it for things they (and their business) need. If printing 1% more money results in a 1% increase in GDP, for instance, then there will be no inflation (simplification but mostly true) and everyone accepting the money an keep getting goods at the same prices.

A lot of times money is created for being invested, eg banks giving loans to finance ventures. This money has to be backed by some demand for the money - usually that is tied to the credit of the issuer. The credit of a government is backed by the tax income from those doing business in its jurisdiction. As long as that place attracts business, it will have tax revenue and therefore its money will cotinue to be valued. If it attracts 2% MORE business with 1% more money that's benefitting its economy.

As for your idea of fairness, getting something for nothing ... well that's why humans have societies and civilizations in the first place. Just by virtue of being human, you get all this nice stuff you wouldnt get in the jungle. We set up these systems to get something just for being human. And if we are to get anything, it is a safety net for all to prevent them from DYING due to market discipline. Limited liability corporations dont need it but HUMANS do.

And finally -- your expectations rise every decade with human progress. Do you really think we, the people living today, EARNED all the knowledge and advances and systems people invented in history who lived in the past? No, we ALL get the benefit for free. So how is your inheritance from humanity more deserved than preventing people from dying just by virtue of being human? Isnt that just... civilized?

auctiontheory2• 13 years ago

I get the sense that you have no concept of what grinding, inescapable, lifetime, poverty looks like.

many of those citizens will leave once they understand what is going on

Are you talking about the article about rural Indian villages, or something else? Who is leaving for where?

scarmig8• 13 years ago

I'm sure you realize this, but to make it explicit: that argument applies to virtually all government activity. From Social Security to Medicare to public roads to even the creation and enforcement of private property rights themselves. All of those things cost money, and for all of those things the government taxes some people and gives money to incentivize the labor of others.

And that's all fine and good to object to: I don't agree wholeheartedly with that idea, but I'm much more sympathetic to it than the average American, let alone the average anything else.

But you should still support a basic minimum guaranteed income, or at least replacing our current system of government benefits with it. Because it does not distort the market in the same way that all those other welfare schemes do. It's virtually impossible to be manipulated to favor any particular person or interest group, simply because everyone gets it. And while most current forms of welfare highly discourage work, the basic income doesn't because it doesn't phase out: instead of having de facto hidden marginal tax rates in excess of 100%, you get a simple and clear marginal tax rate that's the same as the list price.

dllthomas5• 13 years ago

> It's virtually impossible to be manipulated to favor any particular person or interest group, simply because everyone gets it.

Well, you can raise or lower the stipend and associated taxes, to benefit those with low or high incomes, respectively (in the short term). Hopefully there's some amount that is both sufficiently optimal theoretically and sufficiently politically attractive that we can settle on a single policy for managing that, though...

visarga2• 13 years ago

> However, if the state either takes money (via tax) or centrally creates money (via inflation) to give a "guaranteed basic income", it is essentially forcing the store owner, truck driver, and rice farmer to work for free

We live in a society where production is large enough to cover all basic needs. That we still have famine, lack of health care and education is a big failure. Especially children - they are innocent, they are not responsible for this unequal situation.

Come next 20 years, robotics and A.I. will replace most of the work force. Then people will have to get BI to survive.

Consider the BI as an dividend from the common technological wealth of humanity. The rich own technology, exploit natural resources more and have financial tools that give them a huge advantage.

They can't hog the resources while other people starve, remain sick and uneducated. We don't need the morality of the industrial workforce of year 1900 any more.

EliRivers2• 13 years ago

"And so you would leave a country structured like that."

So which country with zero welfare do you live in? Is it a nice place to live?

naradaellis• 13 years ago

I don't get this argument. So the farmers, the truckers, the shopkeepers etc., will all quit right? This will cause supply of food to fall. But there is still demand for food, as always, thus prices soar.

And now, because of BI, all the people demanding food have money to pay for it. Thus, huge market opportunity to start a farm and get ahead?

Or perhaps, the farmers, truckers and shopkeepers wouldn't actually quit like you suggest.

gijjk3• 13 years ago

> After all, you would leave a company structured like that, which diluted down your equity or awarded an unconditional salary to the flagrantly unproductive.

Not me. I am a selfish monster, and if my company paid me more (and treated me better) than I could get elsewhere, I would let them do horrible things like piss away money on losers.

Most people are selfish like me.

whiddershins2• 13 years ago

Poor people=people without money. Give poor people money. Then they are less poor. Radical.

auctiontheory2• 13 years ago

This program could change more lives than (gasp!) Facebook. Radical.

mc-lovin5• 13 years ago

Economists have long known that negative income tax (which is equivalent to a guaranteed basic income) is theoretically optimal under the usual assumptions of perfect markets and perfect rationality. However only very few economists, such as Milton Friedman, have advocated it as a practical policy.

On the one hand, guaranteed income is much more resistant corruption, since the distribution of money follows a simple rule where there is no discretion on the part of officials, and is similarly resistant to other kinds of rent seeking.

On the other hand, through traditional welfare systems, governments may be able to determine who is really in need, and thus save money on giving out welfare to people who could be earning more if they had to. Governments can also give out welfare in kind rather than cash, helping people to make better choices, or make welfare conditional on getting education or training.

I very much doubt that a negative income tax could improve over the best administered welfare systems such as Australia's. What is interesting is whether countries with much less ability to administer public services, would be better off with a guaranteed income.

gruseom2• 13 years ago

Relying on governments to do the following:

  * determine who is really in need
  * helping people to make better choices

seems absurd to me, and more a defense of the guaranteed income than a critique of it. Faith in perfect markets is hogwash, but so is this level of faith in bureaucracy; even a wise individual would have trouble making these kinds of judgments personally.

mc-lovin5• 13 years ago

These decisions aren't made at a personal level.

E.g. when you provide people with free healthcare instead of giving them money, your are implicitly constraining their choices. Same for food stamps, free public transport for the poor, etc.

Determining who is in need means, for example, not giving welfare to people who are not genuinely searching for work. This is a difficult decision to make but it is done fairly well in Australia. It is mostly based on objective criteria e.g. filling in a list of places where you applied for work, showing up to interviews that are arranged for you.

I suspect that your objection is not to the general principles listed above, but rather to listing them explicitly without any disclaimers like "I know the government often gets this wrong" etc.

rmckayfleming• 13 years ago

The Canadian government tried this in Manitoba in the 1970's as well: http://en.wikipedia.org/wiki/Mincome

StavrosK• 13 years ago

What I took from the article is that there are people living on four dollars a month.

dhughes• 13 years ago

Maybe it's the culture that makes it work in India although a billion people and so many levels of culture it's hard to say if that even true.

Doesn't the UK have a huge problem with generations of families on welfare who never work?

I can't see this working in Canada either a lot people on EI (employment insurance) are on it for decades, some all their lives. I know some people who just become accustomed to living on $8,000 per year just enough to get drunk and buy smokes. Although a lot of them have cash under the table jobs too so in a way they do want to or need to work.

analyst74• 13 years ago

I think Canada is an excellent example in support for BI, as the social net is so great that there is no real poverty.

However, in spite of the fact that there are ways to live on social security, only a very small number of people choose to do that. It shows that social security does not stop people from having ambitions.

raverbashing• 13 years ago

Well, in Canada, if you can't support yourself, you'll freeze to death on the coming winter.

gsnedders2• 13 years ago

> Doesn't the UK have a huge problem with generations of families on welfare who never work?

No, it doesn't. Though yes — it happens. But it's so rare it's scarcely worth mentioning except if you're trying to push an agenda.

JofArnold2• 13 years ago

> Doesn't the UK have a huge problem with generations of families on welfare who never work?

It's a very different concept of welfare to the one Professor Standing and others propose here. The UK brand of welfare requires you to give up your dignity by completing endless forms and checks in the hope that - if your particular brand of requirements fit the definitions laid out by the state - you'll be allowed to live an all-to-often hopeless and impoverished quality of life. Day-to-day you're worrying about food and rent; there's no money for recreation, no money to clothe your children in a respectable way and no money to go on holiday like all your workmates and childrens' friends. You're trapped in your house and there's no opportunity to learn and to retrain in order to make a new life for yourself. Those that do get out of the spiral are those that have super-human resilience and determination over a number of years. The difference a basic income could make to the UK could be enormous. It would change this country over night. It doesn't even matter if a few percent of people abuse it - it is far outweighed by opportunities it will give to those who wish to turn their lives around.

rumcajz• 13 years ago

It really depends on the existing structure of the society. I guess that in, say, turn-of-century Sicily or present-day Somalia the money would pretty fast end in the hands of local crooks.

aneth42• 13 years ago

I consider myself pretty economically conservative.

After a lot of thought about the future of employment, automation, the effect of wealth distribution, safety nets, and many other factors, I finally concluded that paying all citizens/residents (determining who may be the hardest problem) an equal subsistence wage, enough to cover cheap housing in low demand areas and food, would be of both social and economic benefit to all. Critically, at the same time, drugs should be legalized, regulated, and available to addicts in controlled environments.

The threat of starving sick homeless in the street, the basic tenet of laissez faire capitalism, is not a humane incentive for a modern society, nor is it beneficial to a developed economy.

whiddershins2• 13 years ago

this is an extremely rational response.

aneth42• 13 years ago

I should add, this is, in fact, a socialist distribution of wealth scheme. That money must come from somewhere if it is not to be inflationary, and it comes from taxes on incomes and properties. The benefit to society and the economy should far outweigh the cost. Those with investments will benefit from the broader base of lower-middle class income to spend money with the companies they are invested with. Those with high income will benefit from a stronger economy supported by the middle class. Those with property will benefit from the reduction in crime, homelessness, poverty, and generally improved social environment.

The only downside is the reduced incentive to work. That is real. Many who are now employed may choose not to work, which will increase wages for those who choose to work and reduce involuntary unemployment, which will be on the rise regardless as automation reduces the need for unskilled labor. There is more incentive to work when everyone, employed or unemployed, receives the same minimum income rather than the current situation, where working only earns the differential between unemployment and wages.

Unemployment will likely reach 25% in the next 30 years due to increased economic efficiencies, regardless of whether we have a means of supporting the unemployed.

cookingrobot• 13 years ago

I think there's one opportunity you're missing. If you give non-workers enough only for basic needs, then they are basically outside the interesting part of the economic system. They don't make meaningful decisions about where their spending goes.

If instead you give them more than that - enough to have disposable income, then all of that spending will trickle up to those who choose to create and work. (all economics besides redistribution are trickle up economics). This means healthy markets and rewards for staying in the workforce. So we get the benefits of capitalism and innovation, instead of just feeding and sheltering most of the population with basics.

kfk3• 13 years ago

BI income should be available to people that really need, because in most countries there are no resources to give it to everybody. Even if there were, I challenge who believes in BI to tell me if the State could not put that money in research, education or just decrease taxes and get a better outcome for its people (and humanity).

We have a lot of deadly diseases and a growing need to utilize more and more efficiently our scarce resource (food, energy, etc.), we need research, we need development, we need innovation. I really struggle to see that coming any faster, or at all, in a world were resources are spent to let a big portion of the population stay at home.

And please, let's not mix what goes on today, the unemployment rates, with historic economic circles. We are seeing this unemployment since when? 2008? 5 years are not enough to draw drastic conclusion on an economy and its workforce. By the way, 10% unemployment rate says nothing, look at the active population, which usually ranges above 40%, counting kids and pensioners. Which is quite a high number if you ask me, it's not true we don't need workers anymore, you know...

visarga2• 13 years ago

As the workforce will be replaced more and more by robots and machine learning / A.I., people will be left jobless. BI will have to be adopted.

kfk3• 13 years ago

They probably said that also in the 19th century and look at us today, have we seen a drastic reduction of the active work population in 2 centuries? No.

This kind of thinking assumes that there are people fundamentally flawed that can't support in any way our society. This is just unacceptable. Also, work force is also a scarce resource and as all scarce resources we need to optimize it, not to waste it.

corwinstephen• 13 years ago

I'm in love with this idea, but I'm concerned that it wouldn't work on a grander scale. If everyone in the country had the same basic income, wouldn't the cost of goods and services naturally rise just high enough that the basic income becomes negligible? If I were a land lord, my first thought would be, "Okay, so since everyone is now making $300 rupees/month more, I'm just going to raise the rent by $300 rupees." I feel like it only works in the experiments because the BI group still interacts with the non-BI group.

deadairspace• 13 years ago

But the landlord is also receiving an extra $300. The landlords who increase their prices will lose out to those who keep their prices the same.

downandout3• 13 years ago

I think that this is awesome, but I have to say that none of these people should be having children. To bring a child into extreme poverty not only makes the poverty worse, but is an act of selfish cruelty perpetrated against a child that had no choice in the matter. I would make the basic income conditional: if you need this money, then don't have any more kids. I am not saying you must be rich to have children, but you should at least be able to feed and clothe them.

lostlogin• 13 years ago

Asking people not to have children is not a good thing to do. Educate them on when/how but don't make a rule. It's a slippery slope to a dark place. Poverty doesn't affect a representative portion of the population. It's going to hit certain races, religions, groups etc harder. As soon as someone cries eugenics/racism, what do you say? You can't claim its being done to help group X if group X disagree. Don't start down the hole and it won't go wrong. That said - I can't imagine having a child in circumstances anywhere near these levels, and I too think this project is awesome.

downandout3• 13 years ago

The choice faced is either allowing unsustainable societies to die off, or subject ever more children to the unspeakable tragedy of being forced to live in those societies. This may sound harsh, but the world simply cannot sustain all of the children that humans choose to produce. The compassionate and humane thing to do is ensure that these people do not pass on their legacy of misery.

gsnedders2• 13 years ago

In communities like the one described it's not uncommon for children to be an economic asset — yes, it's a cost for the first few years of their life, but once they are able to help tending animals and fields they can produce sufficient food to sell that they cover their living expenses.

downandout3• 13 years ago

What you are saying is akin to slavery, and it's wrong. Children shouldn't be conceived with an eye toward making them work on the family farm, and they certainly shouldn't be forced into manual labor.

karlmdavis• 13 years ago

For many of the poorest families, having children is a way to generate more household income and a retirement guarantee of sorts. (Apologies for how callous that sounds.)

It seems to me that the birth rate has gone down nearly everywhere, as income has gone up. I believe that's likely to apply to BI as well.

Millennium• 13 years ago

One problem with these social experiments is that they never run for long enough. It takes a good 3-4 generations to really see the effect a policy change will have on a society: you need to look at people raised by people who do not remember what came before. Instead, we look at a paltry 5-10 years and consider the matter settled, when the real effects are only just beginning.

JofArnold2• 13 years ago

Here is a video introduction from SEWA and Prof Guy Standing: http://www.youtube.com/watch?v=MtYtwiG-uAM

wahsd• 13 years ago

The intro narrative is a perfect example for why humanity needs a new model on the most fundamental level. It's an issue on par with the atrocity of slavery, one human owning another, their ancestors, and their off-spring; and is actually a holdover from that dark, sadistic, and unrestrained psychotic age of humanity.

Inheritance; it needs to die and die fast and hard. The guaranteed success simply through birth is a disgusting human perversion well represented by monarchies and aristocracies of old and new all around the world.

A child born to a wealthy person is already going to be so advantaged over those who simply weren't lucky enough to have come out of the right vagina and a product of the right sperm; there is zero justification for their inheritance of anything on top of it.

If anything, those who are the offspring of the most wealthy, should be eligible for nothing, while those of the most poor should inherit from their parents tax free.

Mark these words; the economy that works out this model and implements it will surge past all others who don't. It would empower and support all that opportunity cost and monopolistic waste that comes from the current system of oppressing the masses at artificial support for the wealthy.

I realize most won't be able to comprehend the notion, and will reject it as humans so quickly do when they are faced with something that contradicts their understanding of how the world works; but what I suggest is on the scale of impact like moving from serfdom to capitalism, from slavery to equal freedom. It will be the next positive evolution in human history.

nazgulnarsil• 13 years ago

The best take on BI (or NIT) I've seen: auction the unemployed. This solves so many of the problems it's not funny. http://www.morganwarstler.com/guaranteed-income-auction-unem...

Dewie3• 13 years ago

If we get to a point in time when most people don't have to work, because of automation and such, and they start instituting a basic income (as opposed to it all going to the elite), then I think that the difference between people when it comes to money is going to become incredibly noticeable. The people that actually dedicate themselves to some kind of structured work - especially the ones that have to invest time into learning the trade, and are held responsible if they screw up, for example doctors - are probably going to be paid much more than the people on basic income. Of course, the people on basic income can do productive things, too, but they aren't held to the same standard as the people that are officially employed - so the people that are in official employment are going to be depending much more than the basic income for having less freedom then all the people on basic income. Then there is going to be an incredible competition for the jobs and the people that miss out is going to suffer socially because they have less affluence to flaunt, and thus less status.

There are going to be people that don't care about prestige, of course. The artistic types in particular could have it great.

habosa• 13 years ago

I like this idea, and I just have one question that maybe someone more knowledgeable can answer for me.

If you give everyone an unconditional base income, won't the price of goods and services eventually rise reflect/negate this? I don't see why I wouldn't raise the price for the X I'm selling if I knew that everyone buying it now had a lot more money.

Isn't this part of why things in America are so much more expensive than those in India in the first place? The people in the article are buying food for a family on < $0.25 which in America would not even buy a single meal of the same ingredients. It's not that they're eating crappier eggs or rice than we are, but we just have more money to buy these things and manufacturers know that. How do you prevent this in the Basic Income system?

cheez• 13 years ago

Milton Friedman strikes again (though he advocated a negative income tax)

known• 13 years ago

I believe implementing https://en.m.wikipedia.org/wiki/Perestroika aka https://en.m.wikipedia.org/wiki/Communal_Award is the permanent solution

Experiment in paying villagers in India an unconditional basic income

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