Why we should give free money to everyone

https://decorrespondent.nl/541/why-we-should-give-free-money-to-everyone/31639050894-e44e2c00

by epsylon • 13 years ago

147 164 13 years ago

decorrespondent.nl

gaius3• 13 years ago

No-one will oppose this more fervently than those employed on very good wages in the present system.

smartial_arts• 13 years ago

Why would they?

Personally, being taxed close to 37% (in Australia) already, I don't have any issues with my tax money being spent on that cause.

gaius3• 13 years ago

Because http://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem

The status quo - a large, expensive bureaucracy, employing many civil servants, social workers, etc - suits the interests of too many people.

Here in the UK we could sweep away the "welfare system", that spends nearly all of its effort making sure people get the "right" amount and replace it with some sort of basic income, for which we need 2 employees to maintain an automated system that pays everyone the same, a man to feed the dog, and a dog to bite the man if he tries to change anything.

peterjaap2• 13 years ago

Personally, being taxed close to 52% (in Holland), I don't have any issues with that either. Let's keep a close eye on the developments in Switzerland concerning basic income and take our lessons from that.

finishingmove• 13 years ago

You might think that at first, and it's probably true to some extent, but ultimately they would not oppose it too much.

It's good to see ideas of basic income resurfacing in Europe. Only a step towards a more distributed economy, but an important one for today's society -- which seems to be slowly crumbling for the most part.

johnchristopher2• 13 years ago

You might think that at first, and it's probably true to some extent, but ultimately they would not oppose it too much.

There's a fierce and vocal opposition on HN though. Hard to tell what it really means without knowing everyone's country, political views and other various characteristics.

davedx4• 13 years ago

I pay almost 50% in taxes here in the Netherlands, and wholeheartedly support this system. The current system is worse.

gaius3• 13 years ago

I mean the people employed to administer the current bloated and inefficient welfare system.

peterjaap2• 13 years ago

I think those that are employed on very good wages have a decent set of brains, and thus they can see that this is a good idea and therefore will NOT oppose it.

johnchristopher2• 13 years ago

Nope, that is a well-known bias that wealthy working people are de facto more intelligent.

keithnoizu2• 13 years ago

I was making a little over 120k a year when I was still in the states. (on sabbatical currently). Not a huge amount moneys sure but I can vouch for being more than happy to see a portion of that going to programs like this as I believe programs like this will have the best long term outcomes for the states economy and therefore myself as well.

Shivetya• 13 years ago

We are already giving tens of millions of people free money.

Basic income is institutionalized poverty. It is a world where we purposefully place people in permanent poverty. Give them enough to survive but not climb out of their situation. Essentially paying them just enough so they hopefully don't try to take other people's stuff.

The danger is that far too many people will accept this standard of living. It removes a great burden from government when it realizes it can buy off people for a fractional amount of what it would take to raise them up. It also makes the "feel good" crowd happy as they don't have to do anything themselves but feel that because they paid taxes that they in turn somehow helped.

Sorry, seen too many on on SSI/SSID, section 8, and such, to believe that just handing money out helps. It simply stagnates far more than it will ever elevate. It might work in countries where your choice is a dirt hut, being dragged into some regional conflict, places where survival is questionable at best.

allanb• 13 years ago

I'm not sure what the actual consequences of basic income would be, but at least this article references attempts at figuring out how such systems affect people. You're not bringing up any objections that aren't mentioned in the article.

And pointing to existing forms of welfare/social security misses the point entirely. Many who speak for basic income (including this article's author) argue that it's the heavy bureaucracy and stigma associated with such sollutions that cause people to be caught up in it.

dragonwriter6• 13 years ago

Many who speak for basic income (including this article's author) argue that it's the heavy bureaucracy and stigma associated with such sollutions that cause people to be caught up in it.

"Heavy bureaucracy" is a source of social cost, but neither it nor stigma are, as I see it, the real problem with means tested programs.

The real problem with means-tested programs is the perverse incentives of means-testing, which directly serve to inhibit people from progressing up the economic ladder by creating penalties for outside income (when, as is often the case, the programs have inadequate benefits to start with, this often forces people into under-the-table work just to survive, which has negative cultural effects as it erodes cultural acceptance of the rule of law.)

Retric• 13 years ago

While some people may find a 'basic' income sufficient many of them are already on government benefits anyway. The real issue with the current system is the effective marginal income tax causes people pay effective tax rates in the 80-120+% range stranding them in poverty. With basic income that does not happen you always keep most of what you earn so working more hours always useful.

EX: Someone on unemployment can get 340$ a week for 6 months and goes away if you have a job. Minimum wage is less than 8.50$ an hour so you could make less money working a 40 hour week than taking unemployment. Social Security has similar issues where someone on disability can't take a greater job a Walmart for extra income without losing far more money.

hooande• 13 years ago

It is a world where we purposefully place people in permanent poverty. Give them enough to survive but not climb out of their situation.

This idea was addressed by some of the points raised in the article. Many of the homeless people mentioned in the first section spent their money to better themselves with education. Students were able to study without as much financial concern, mothers were able to spend more time with their children.

The opposite of what you said is true. Our current social welfare system is a trap. It's almost impossible to develop new skills while being forced to apply to jobs that you can never get. It's hard for someone working overtime at McDonalds to find time to go to classes or develop new skills. Some people will accommodate themselves to living only on basic income, but those people weren't going to succeed no matter what opportunities they were given. Motivated people on the margins will benefit greatly from a little financial help.

If you've seen the harm done by our current welfare systems, why don't you want to pursue alternatives? Basic income isn't supersized welfare. It's a whole new concept that will open up opportunities that a lot of the poorest people never dreamed were possible.

prodigal_erik• 13 years ago

purposefully place people in permanent poverty

They're already there, this is just a less brutal version of it.

The danger is that far too many people will accept this standard of living.

It's the best possible outcome for people rendered unemployable by automation. We can either invent degrading makework to waste their time, or acknowlege what the market is telling us--our civilization is productive enough we no longer need everyone able-bodied (and some who aren't) working for their whole adult lives.

dragonwriter6• 13 years ago

Basic income is institutionalized poverty.

No, basic income as a change from means-tested welfare programs is a step away from institutionalized poverty by removing perverse incentives.

Give them enough to survive but not climb out of their situation.

The difference between basic income and means-tested programs is that it focus on giving them at least enough to survive but not reducing that if they expend the effort to find additional income, so that recipients are not inhibited from improving their condition.

The actual level of basic income can be more than minimal survival necessity of course; the practical limits depend on productivity and increase with progressive automation (which is what makes it a system well-adapted to deal with an economy evolving in a way in which mass unskilled wage labor is increasingly unnecessary.)

The danger is that far too many people will accept this standard of living.

If too many people accept the standard of basic income for the economy to support, it will drive inflation which will reduce the standard of living provided by basic income until it is no longer accepted by too many. It has an inherent negative feedback control structure.

Sorry, seen too many on on SSI/SSID, section 8, and such, to believe that just handing money out helps.

Those programs are not like basic income, in fact, basic income is designed specifically to address the fundamental features of those systems which make them into permanent poverty traps.

brokenparser4• 13 years ago

  "The problem with socialism is that eventually
   you run out of other people's money"

                            -- Margaret Thatcher

jhaglund6• 13 years ago

Can't tell if sarcasm, considering that Thatcher's move was to privatise, until she ran out of public assets.

This pithy quote is also wrong because it assumes the economy is a zero sum game and misses the point that this article is trying to make -- that giving away money would be cheaper and have better results than the current system of welfare.

vixen99• 13 years ago

Blair and Brown in the UK demonstrated the truth of this quote and we and our descendants here will continue to pay the price for generations to come.

Clearly I'm a very bad person because if I were to suddenly receive a significant cash injection I'd lay down tools and disport myself with books, music and a spot of travel. Everyone to his or her own. However it's good to know that the rest of humanity are mostly above this kind of thing.

lcedp2• 13 years ago

The problem with quotes about money that money is considered to be some limited resource akin to wood and spending money is like burning the wood.

brokenparser4• 13 years ago

The problem with left wingers is that they assume money can be printed at will without realising inflation will turn their wealth into dust before you can say "poverty".

141133• 13 years ago

After all, Thatcher did so much good for the UK didn't she? I mean, destroying more or less all heavy industry, and building up an untenable financial sector backing for the economy was a great idea wasn't it? Oh, and of course, it definitely wasn't her actions which caused much of the north east to be thrust into poverty was it?

Margaret Thatcher is possibly the worst person you could ever quote on any issue like this.

I'm glad she's dead - hopefully her hateful policies will die with her soon.

brokenparser4• 13 years ago

I'm glad she's dead

Hate on a dead person, for real? You must be great fun at parties. I wish the dead would be remembered for the good they brought, but almost a year later she's still much misunderstood.

yummyfajitas10• 13 years ago

I don't get it. According to the article, Basic Income causes working hours to drop 9% in the American controlled experiment. They try to explain it away by acting as if 9% is small, and providing anecdotes suggesting in some cases it might be a good thing.

For comparison, the great recession resulted in a 3.4% drop in GDP. Now, a 9% drop in work will result in less than a 9% drop in GDP (wealth is increasingly produced by machines, not people, resulting in a lower labor share of income), but even so, 9% is big.

By the way, as I always ask when this topic comes up, can someone link to actual studies? I.e., hard data rather than an innumerate reporter breathlessly advocating a proposal because it sounds cool?

Incidentally, a back of the envelope calculation (http://www.chrisstucchio.com/blog/2013/basic_income_vs_basic...) suggests that it would be vastly cheaper to adopt FDR's employer of last resort policy. If we are going to adopt a radical overhaul, lets consider the full search space.

[edit: some sources about the third world are cited on the right, not the bottom, and I missed them on first reading. Thanks davidx.]

bandushrew• 13 years ago

that is a very narrow way to look at it.

the 9% 'drop in work' will be offset by the increase in consumption caused by a large range of people suddenly having more purchasing power,

businesses will have to increase production, and hire more workers to do so.

they will have to pay the workers more to entice them in, and provide better working conditions.

this will generate more work, and higher consumption.

spurgu• 13 years ago

And artists will have more time/freedom to create and thus inspire people, and from that create more happiness for the general population, which cannot directly be measured in terms of money, but is still very valuable.

lazyjones2• 13 years ago

businesses will have to increase production, and hire more workers to do so.

they will have to pay the workers more to entice them in, and provide better working conditions.

this will generate more work, and higher consumption.

The problem is, noone has tried to see the complete picture by adding up these effects. The net effect is probably negative, unless this is introduced all over the world simultaneously.

Businesses will hire more people and pay them more => prices will go up, purchasing power for domestic products will go down (i.e. the same income will afford fewer domestic products). Imports will go up because those products will be cheaper than before in comparison. Exports will go down for the same reason.

Therefore, a large part of the expected higher consumption will go to imports / foreign profits. Due to reduced exports, domestic production will go down instead of up. Since jobs cost more now, there will be even fewer of them than expected.

Overall, countries which introduce this, will suffer.

yummyfajitas10• 13 years ago

We'll have less wealth created, but more people will be willing to spend money consuming it. All that means is prices will go up.

Your Keynesian story may eventually play out - the real value of the BI might be inflated away, resulting in people going back to work. Perhaps that will completely mitigate the problem, or perhaps it will merely result in a new equilibrium which only hax 0 < X% < 9% fewer people working. But why create the problem in the first place?

If 100 people produce 10 apples each, you have 1000 apples. If 9 of them quit, you have only 910 apples.

thedufer2• 13 years ago

they will have to pay the workers more to entice them in, and provide better working conditions.

Source? Widespread BI is usually proposed alongside abolishment of the minimum wage. This means that you'd expect wages at the low end to start reflecting job comfort more - crappy jobs (trash pickup?) would have to be paid more to entice people, but cushier jobs may well see pay go down.

maxk42• 13 years ago

the 9% 'drop in work' will be offset by the increase in consumption caused by a large range of people suddenly having more purchasing power

That money didn't come from nowhere. There is an equal decrease in purchasing power for others due to the increased taxes needed to fuel such an expensive scheme.

davedx4• 13 years ago

There are links to the studies in the right hand side alongside the text. Here you go:

Homeless study: http://www.jrf.org.uk/publications/support-rough-sleepers-lo...

Experimental evidence from Uganda: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2268552

An Experimental Assessment of the Women’s Income Generating Support (WINGS) Program in Uganda: http://www.poverty-action.org/sites/default/files/wings_full...

OECD study "Just Give Money to the Poor - The Development Revolution from the Global South": http://www.oecd.org/dev/pgd/46240619.pdf

It's a bit harder to find as they're not at the bottom of the article where they usually are. But the author of the article did cite several studies. Did you choose to ignore them?

yummyfajitas10• 13 years ago

I missed them, thanks.

But the main studies I was interested in are still not there. Specifically, the US and Canada controlled experiments from the 70s (the one it claims reduces labor by "only" 9%).

Given how radically different the first and third world are from each other (one example: in the third world the poor usually work, in the first world they usually don't), I don't see much sense in extrapolating Uganda experiments to the US.

The closest they ever come is citing the same newspaper article about Mincome that everyone else cites: http://www.winnipegfreepress.com/local/dauphins-great-experi...

svdree• 13 years ago

But these experiments don't really prove anything w.r.t. basic income, do they? Of course, if you give a small, isolated group of people more money, their lives will improve. But that doesn't generalize to the entire population, especially since that population has to come up with the money to begin with.

jhaglund6• 13 years ago

If we can have an increasing GDP while most of America experiences stagnation (as with the recent recovery) who's to say we can't have decreasing GDP coupled with improving quality of life? (at least for a short period) As you point out, machines are doing far more of the work that workers once did.

Another policy of FDR's New Deal was the creation of the 8 hour day (many people still worked 12-14 hour days until then: http://en.wikipedia.org/wiki/Eight-hour_Day#United_States). Perhaps reduced hours allowed more laborers to move into the workforce, and could be a more competitive and cheap way of supporting a broad middle class.

yummyfajitas10• 13 years ago

Most of America has not experienced stagnation. They have experienced a consistent increase in employment compensation and a consistent increase in consumption.

http://research.stlouisfed.org/fred2/series/ECICOM

http://research.stlouisfed.org/fred2/graph/?g=qG0

The only "stagnation" that has occurred has been a shift in compensation from taxable wages to untaxed non-wage benefits.

The fundamental problem is that with a drop in labor we will have fewer goods and services. No matter how you slice it, that's a drop in (real, not necessarily nominal) consumption.

keithnoizu2• 13 years ago

You can reduce working hours while increasing revenue if workers are using this to train in and land better paying careers that complement their skill sets better.

mattmanser• 13 years ago

I certainly don't think a 9% drop in working hours is a 9% drop in GDP.

Doesn't make a single lick of sense to me. The real world simply doesn't work like that at all. Not everyone in a country contributes exactly the same figure to GDP.

Also, a couple of lines down listed a huge number of cost savings and higher earnings and new employment created.

So.... Did you just not read on a paragraph more?

yummyfajitas10• 13 years ago

I certainly don't think a 9% drop in working hours is a 9% drop in GDP.

From my post: "Now, a 9% drop in work will result in less than a 9% drop in GDP..."

The next few lines cite no stats. They just quote someone saying the decline was "undoubtedly compensated in part by other useful activities". As I said, "can someone link to actual studies?"

(Note: I realize studies in Uganda are linked, but I'm talking about the US and Canada studies, which had a 9% and 13% drop in hours worked according to uncited numbers in this article.)

ronaldx• 13 years ago

* Why do you think GDP is the most significant stat? I suggest that GDP primarily represents the status of the wealthy, and that working people may not be sensitive to GDP. Why is GDP your KPI, rather than, the status of the poorest in society?

* Why do you think a drop in working hours would cause a drop in GDP at all? I would assume the working hours lost would be at least below average productivity, and could be negative productivity, as the false incentive for people to create 'work' for themselves is reduced.

epsylon• 13 years ago

Remember the homeless guy who coded an app? Imagine what a basic income could do to the millions of people whose brainpower is mostly dedicated to surviving day to day, week to week, month to month. (Because indeed, poverty taxes our brain [1])

The article provides really strong examples in why a 9% drop in working hours does not necessarily mean a drop in "created wealth". (In fact, I'd argue that many European social democracies work on average less than US workers, yet still maintain a very high GDP)

[1] http://www.theatlanticcities.com/jobs-and-economy/2013/08/ho...

makomk• 13 years ago

At least some of those working hours were probably spent doing work that, if supply and demand actually functioned normally in the job market, could not exist because the employers valued it at less than the cost of supplying that work in terms of keeping the workers fed, housed and capable of work.

scotty79• 13 years ago

9% drop in work might result in no drop in GDP, increase in work efficiency or even raise in GDP because this 9% goes somewhere, pesonal development, smarter consumption better care for the children or often long overdue maintenance of belongins.

In recent recession US industry shed a lot of workers with no intention of hiring them back and yet production and revenue already exceeded prerecession levels.

Work does not create wealth. Tools create wealth. There's always plenty of hands wanting to grab the tool and brains eager to learn how to swing it and modern tools require less and less of both.

dragonwriter6• 13 years ago

it would be vastly cheaper to adopt FDR's employer of last resort policy

The employer of last resort policy is perhaps a useful emergency policy for dealing with mass unemployment in an industrial-era economy, but its a rather bad long-term policy because make-work inhibits, rather than enables, risk-taking, entrepreneurship, and skill realignment, and it has serious limitations in an increasingly post-industrial economy.

Progressive automation means that era of wage labor is waning -- what we need is a transition to an economy of microcapital, and viewing a substantial share of taxation as being rents on the commons that are redistributed equally to the citizenry is probably the best way to get there. Pointless make-work wage-labor for a growing undercapitalized underclass while the overclass lives on larger and more concentrated capital stocks is not a good alternative.

ishener2• 13 years ago

if i was given free upvotes, i would not just sit around and do nothing, i would upvote this article so much more!

ishener2• 13 years ago

my favourite line:

‘Poverty is fundamentally about a lack of cash. It's not about stupidity,’ author Joseph Hanlon remarks. ‘You can't pull yourself up by your bootstraps if you have no boots.’

dualogy• 13 years ago

Poverty is fundamentally about a lack of cash.

The more you know!

swah• 13 years ago

Read Von Mises!

Robin_Message• 13 years ago

Why?

What did he say that relates to a basic income and where can I read more?

(All I, and I suspect many people, know about him is that he is supposedly the correct answer to economics, promulgated all over the internet by crackpot^H^H^H^H^H^H^H idealistic libertarians.)

professorTuring2• 13 years ago

Ok, great. Since I belong to everyone, I will accept any "natural" amount of money from anyone. Thank you.

Find my paypal account in my profile.

ctdonath3• 13 years ago

There's the core problem: those pushing the "just give 'em money" idea always focus on forcing others to give money ... they won't proactively act on their own opinions by giving away large sums of their own money.

tekalon• 13 years ago

I support this, and I already give a good amount to charity and would definitely give to a government or private program that did this.

professorTuring2• 13 years ago

I guess you don't have sense of humour...

teekert• 13 years ago

I imagine a problem would be to determine exactly what the level of this salary would be... Enough for an apartment? single room? Food and Clothing? Or would the economy evolve to make the values of money such that you can just live from the basic income?

What stops people from wanting more and more making just sitting at home gaming more and more attractive?

What would I do? Start working the absolute minimum to keep my house, feed my kids and start something or my self? How many people would do that?

kijin4• 13 years ago

The most important lesson that we should draw from experiments like Mincome is that we need more experiments of this type.

Dauphin, Canada was one town in one country in an era that is now forever gone. Since 1973, the politics has changed, the economy has changed, and culture, religion, ideology, and (of course) technology have also undergone tremendous changes. The Internet alone should be a total game changer. Mincome serves as a good anecdote and inspiration, but it is largely meaningless to argue (for|against) basic income based on that data alone. We need more data points, and we need them to be more up to date.

Because right now, all we have are a precious few data points from 40 years ago and/or from the other side of the globe, and a bunch of hopeful statements that haven't really weathered any test of evidence (e.g. economic efficiency will increase, or not; people will be happier, or not). Without solid evidence, statements like that are little more than expressions of ideological preference, both on the left and on the right. </edit>

The experiment should be repeated, as many times as possible, in various times and places, and for longer durations (5 years, 10 years, 20 years, long enough to study a generation of children who grow up under the scheme). Accumulate enough data to support arguments (whether pro or con) that are based more on actual evidence than on anecdotes and ideological assumptions.

Will it be possible to implement a basic income of $20,000+ per year in the United States in 2014? Absolutely not, the political environment is not ready for it. But will it be possible to run basic income experiments on a smaller scale (Vermont, are you listening?) throughout the next two, three, four, five decades? Of course it's possible, and at the end of it we'll be a lot more capable of 1) making informed decisions and 2) squashing the opposition. It doesn't matter whether you support or oppose basic income today. Show me data or GTFO.

yummyfajitas10• 13 years ago

A thousand times, this. But in addition, we need to get politicians to wait for the experiment to finish and look at results before pushing policies. For example, basically no states have changed their plans to expand Medicaid as a result of the Oregon Medicaid Experiment, in spite of the fact that the results surprised everyone.

A truly depressing fact - the best experiment in public health policy since 1974 was an accident, caused solely by the fact that Oregon didn't have enough money to expand Medicaid for everyone. Depressing, no?

kijin4• 13 years ago

The real world isn't a perfect laboratory, so sometimes you must make do with data supplied by accidents and coincidences ;)

Having said that, yes, it's truly depressing that politics can't seem to wait for proper results. As one of the most influential papers in my field of study (STS) says, "the speed of political decision-making is faster than the speed of scientific consensus formation." Sometimes this is forgivable -- if global warming is real, we can't afford to wait for its ill effects to become obvious, can we? -- but in other times, big-P politics just gets in the way of a good research program. Throwing in a bunch of confounding factors halfway through an experiment and whatnot.

hawleyal• 13 years ago

In contrast, I would disagree that the most important thing is that we need more experiments.

If you have more than others, give them some.

EpicEng• 13 years ago

well that's a nice sentiment, but I'm afraid you'll have a hard time of bringing the rest of humanity around to your way of thinking. Pie in the sky, wishful thinking does not solve problems.

loceng• 13 years ago

You need a proper framework to overlay onto the data as well, so you can better understand or interpret what it could be saying. If more people had a core understanding of economics, then we'd all realize that costs are greatly inflated due to certain systems that exist and self-perpetuate - those systems can be influenced to incentivize different behaviours and patterns though.

kijin4• 13 years ago

Not just economics but also philosophy and an awareness of our shady preconceptions. See my reply to notdrunkatall downthread.

notdrunkatall11• 13 years ago

I'm generally against the notion of a basic income, as I believe that if you remove the incentive to work to survive, vast swaths of people will simply choose not to do anything, but I am certainly not against the idea of trying it in small experiments and seeing what happens.

And as for these experiments, I wonder how many of the test subjects were low-income prior to the introduction of basic income?

The fear isn't that people with a so-called 'Protestant' work ethic will stop working, is it? The fear is that if we implement a basic income in the USA, that, well, to put it bluntly, blacks and latinos, and, to a lesser extent, whites will simply stop working.

If you want to get better data, and more specifically, if you want to alleviate the concerns that most people have with a basic income, give a poor black or latino community a basic income and monitor what happens. If the experiment turns out to be a success, do it a couple more times, each time in different locales across the country. That's the data you need if you really want to make a basic income a political possibility. Everything else is just half-measures.

dasil0032• 13 years ago

Well we currently have welfare, and we know that there are cases where that prevents someone from taking a job because it will be mean a net loss. Basic income will be an improvement in this regard at least because there is much less disincentive to work if it doesn't mean losing something.

felipe3• 13 years ago

I believe that if you remove the incentive to work to survive, vast swaths of people will simply choose not to do anything

Three-quarters of adult recipients of the Brazilian basic income system do work [1].

Like the parent commenter said, "without solid evidence, statements like that are little more than expressions of ideological preference, both on the left and on the right."

[1] http://motherboard.vice.com/blog/how-giving-cash-directly-to...

smirksirlot2• 13 years ago

The fear is that if we implement a basic income in the USA, that, well, to put it bluntly, blacks and latinos, and, to a lesser extent, whites will simply stop working.

That's ridiculously racist. Poverty being tied to race doesn't necessarily have to do with innate work ethic.

mcv4• 13 years ago

Have you read they article? They gave notoriously homeless people in London 3000 pounds each, and most of the homeless used it quite effectively to get their lives back in order.

The very idea that there's a lazy underclass that needs to be forced to work against their will is a really big part of the problem here. If there's anything that keeps the poor from being productive, it's their lack of money. The constant worry about basic survival drains their energy and attention and keeps them from getting their lives back on track. Give them some leeway, and they may surprise you, as this and many other experiments keep showing.

jcampbell1• 13 years ago

I think there has been a few Native American tribes that have received basic incomes from casino revenues. It would be interesting to know the effects. Saudi royalty gets guaranteed income and there is wide range of payments from as little as $1000/month up to $50,000+/month. Those payments have been going on long enough to measure the effects.

codex2• 13 years ago

How so you test for national inflation on a small or even medium scale?

dschiptsov2• 13 years ago

Giving money to 13 people proves nothing, it cannot even be considered as an experiment, while giving money to a substantial percentage of population will result in a commodities price hikes or inflation.

thedufer2• 13 years ago

It isn't, and doesn't claim to be, an experiment on the economic consequences. But it absolutely is an experiment on human psychology, which as far as I can tell is all it claims to be.

ctdonath3• 13 years ago

Moreso, giving money to people who have a core work ethic (ingrained as military veterans) but need a boost is quite different from giving money to people who have always been just given money their whole lives (Nth-generation welfare recipients) and have no work ethic.

jbb555• 13 years ago

This is just insane. For a start exactly can you give free money to everyone, where exactly does it come from? The only source of money is other people. So you'd be taking away money from one group of people and giving it to others. You are discouraging the ones who get money from working because they get free money instead. You are discouraging those from whom you took the money because what's the point in working if someone is going to take away your money and give it to those who don't.

I don't just consider this unworkable, I consider it basically evil.

nathell• 13 years ago

The question of where the money comes from is a valid one, and, perhaps surprisingly, your statement "The only source of money is other people" is wrong. To start with, read up on "money creation" and "fractional reserve banking."

ctdonath3• 13 years ago

Money is not wealth, money is the representation of wealth. Creating more currency does not increase the value available within an economy. Creating more money without creating more value for it to represent just results in inflation.

A gallon of gas is (all else equal) worth about 20 minutes of mundane labor. Printing more money and legislating the gas station attendant's pay to $60/hour will just result in gas costing $20/gallon.

hcarvalhoalves• 13 years ago

Here's an idea: why don't we stop giving free money to the government instead?

If I didn't had to work half of the year and give ~40% of my income to a corrupt government I could have more money/time to invest and improve other people's lives directly, and a party wouldn't be able to manipulate the poor with welfare programs and stay in power indefinitely. The elite largely manages to avoid taxes anyway... the current system just slaves the workers in the name of good intentions, and is incompetent/corrupt at spending the money.

EDIT: For those who don't know, Brazil already runs a program like that since 2003. The government spends in that program about half of the budget estimated for public hospitals, roads, water and sanitation. It didn't changed the situation of the poor, public services are still crap (the only the poor have access to), there's no infrastructure to generate jobs where these poor people live. The end result is that we now have a portion of the population dependent on the federal government, and that's used to manipulate elections.

OhHeyItsE• 13 years ago

Yeah, but it's not about helping people - it's about sending a message

(at least, in the US)

dsugarman• 13 years ago

we should definitely find a way to get cash to the poor, but I think there may be private market solutions like a taskrabbit for social projects that employee the underprivileged to do social good financed by the wealthy.

141133• 13 years ago

But that's entirely against the point of the article! If you're employing people, they're not getting a chance to improve - just scrape by.

harryh• 13 years ago

There are 314 Million People in the US. We can't afford to give everyone enough money to have a meaningful impact on poverty. Seriously people, do the math! It's basic arithmetic.

In order for the welfare state to be effective, it needs to be targeted towards the people that need it.

mietek• 13 years ago

"Modern methods of production have given us the possibility of ease and security for all; we have chosen, instead, to have overwork for some and starvation for others. Hitherto we have continued to be as energetic as we were before there were machines; in this we have been foolish, but there is no reason to go on being foolish forever."

— Bertrand Russell, "In Praise of Idleness"

If you agree, sign the EU unconditional basic income petition:

http://basicincome2013.eu

http://www.avaaz.org/en/petition/our_chance_to_end_poverty

11thEarlOfMar2• 13 years ago

In general, it is basic human nature to be active and productive, and interact with and contribute to a society. The poor have that nature as well, and in most cases they are poor due to a lifetime of adverse family circumstances or perhaps one bad decision ( http://priceonomics.com/what-its-like-to-fail/ ). They can then be trapped as poor simply from having no time to plan an exit and no runway to execute it.

My observation is that the 13 homeless persons in London found that having the cash gave them time away from the full-time activity of surviving so they could think, reflect and plan, and, it gave them the runway to execute their plan.

This concept of basic income has been occupying my thoughts quite a bit lately, particularly when I venture in to San Francisco. Each time I think about it, as a thought experiment before reading this article, I can see far more good coming from it than harm.

What I think, and seems to be supported by the article, is that giving (for example) $1,000/month to every adult in America would play out like this: A family of 4 would have $24,000 per year guaranteed income. If both parents worked minimum wage jobs earning another $16k each, and I do believe they would, they'd have a household income of $56k on minimum wage jobs. They could situate in a reasonable school district, afford to pay more rent for a safe neighborhood, afford reasonable health care and focus on raising their kids. The kids will do better in school, the family can feed themselves less unhealthy food, there will be less anxiety about the basics and less domestic conflict.

The studies in the article -seem- to support that outcome.

$12,000/year per adult not already on welfare or social security would cost about $2 Trillion per year. To put that into perspective, Social Security costs $1.3 Trillion in 2013. Cost of all social welfare programs was $529 Billion. The GDP came in at around 17 Trillion.

The US could afford it if we really wanted to. So what I'd like to hear are the counter-arguments. Is it inflationary? I'd say it has to be. Is it fair? If every American receives it, regardless of their wealth, then I don't see how it would be unfair. Is it realistic? It seems that the US was pretty close to something along these lines in the 60's and Obama finally got universal health care through. Perhaps it is realistic enough to at least put a true, modern pilot program in place and convince ourselves one way or the other. It really seems better than the alternative: Status quo for the homeless and the poor.

codex2• 13 years ago

Most of the poor are renters. If you gave everyone $12k more a year, why wouldn't everyone's rent (and other expenses) simply rise by $12K?

VLM3• 13 years ago

And if you pull up a graph of the velocity of money, boosting that a big might not be the worst possible outcome given the past couple decades trends (straight down)

11thEarlOfMar2• 13 years ago

I think the poor who felt trapped would be more likely to move than stay put. The incumbent landlords in poor neighborhoods would see a % of their renters move out, and a % of new renters move in, perhaps off the streets. We'd want to study the net effect of that.

Those who moved out would then be moving into areas with higher rents and mixing with those renters. So a dollar-for-dollar rent increase seems unlikely.

Some renters would find they now have enough income to buy a home and some would, vacating apartments for renters from poorer areaa.

Some home owners would find they have enough to afford a larger home and would move up.

But others would invest the new income, or pay for the kids college, or take more vacations, or buy new cars more often.

The economic impact is complex and unknown and needs to be studied. I happen to believe it is a worth an in-depth study and worth spending some of my paid-in taxes on.

dragonwriter6• 13 years ago

Most of the poor are renters. If you gave everyone $12k more a year, why wouldn't everyone's rent (and other expenses) simply rise by $12K?

If they did, that would be a sure sign of an unregulated supply monopoly which most developed nations have tools designed to address. In a competitive market, increased demand resulting from consumers having more money is expected to result in market clearing unit price, but also in quantity traded.

You see some price increases, particularly in goods disproportionately purchased by the poor, but the increases in average prices would generally be less, proportionately, than the increase in incomes of the groups purchasing them. The exception would be goods where there is an unregulated (or poorly-regulated) supply monopoly.

VLM3• 13 years ago

"They could situate in a reasonable school district"

Absolutely not! The 10% percentile income will always live in the 10% percentile neighborhood. All it means is housing prices and walmart prices and food prices will simply go up to match the income.

The reason a minincome will go thru, is a large retailer will get the idea that the best way to boost revenue would be for their prices to go up, and the best way for their prices to go up would be for their shoppers to have more money, and we've spent decades working as hard as we can to eliminate all lower and middle class jobs, so ...

marknutter• 13 years ago

The thing about basic income that doesn't make sense to me is how to set it. Basic income for someone living in rural South Dakota is going to be drastically different for someone living in San Francisco.

krupan• 13 years ago

If we do implement a basic income and do away with other forms of welfare, how far will we go with the "doing away?" I assume we'd get rid of programs like food stamps and WIC. What about other forms of government welfare, like Pell grants? Student loans? Farm subsidies? Obamacare? There's a lot you could cut that would make this an easy sell for conservatives and/or libertarians. There's a lot that you could argue needs to be kept even though we've added basic income that would make this a very hard thing to sell.

the_watcher• 13 years ago

Do we not already do this to some extent with welfare? I know it's not optimal, and honestly, I tend to fall closer to the belief that if we are going to have welfare systems, they are more effective if you just give cash rather than the convoluted and easily gamed system we have now, so I see where this is coming from. To address worries about drug/alcohol abuse and the like, maybe some kind of system where you qualify for a bit more if you submit to testing or something like that? Not sure if it's workable or what externalities that introduces, but in general, giving more freedom to spend your safety net aid seems like a win to me.

whatevsbro2• 13 years ago

People get carried away with the idea of handing "free money" out to poor people, without realizing that there is no such thing. All money has to come from somewhere.

If a government is handing out money, there are three options:

  1) Money has been confiscated from other people.
  2) Money has been printed.
  3) Money has been borrowed.

That's it. Money always has to come from somewhere, and governments simply don't acquire any without some consequences.

twic• 13 years ago

I fear you are labouring under a misapprehension. The "free" in "free money" refers to the fact that it doesn't directly cost the recipient anything. Like "free healthcare". Nobody is claiming that the government can obtain the money for free.

whatevsbro2• 13 years ago

I fear you are labouring under a misapprehension

Nah, I know what I'm talking about :)

It's important to point this stuff out because most people think that anything paid by the government is somehow "free", as if governments could use as much money as they please for all eternity. In reality, they can't, and the Western world is in the process of finding that out first-hand.

mcv4• 13 years ago

Actually, the article points out that the government might actually save money by giving it away for free, rather than implementing all sorts of complicated restrictions and checks and hiring people to enforce those.

elwell• 13 years ago

The thirteen people seem to have been periodically checked-up on; they surely felt a bit of accountability as the subjects of an experiment. Give out "free money" on a large scale, and the accountable disappears; with it, likely the positive outcome.

Why we should give free money to everyone

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