The Canadian Mincome Experiment of 1974-79

http://www.huffingtonpost.ca/2014/12/23/mincome-in-dauphin-manitoba_n_6335682.html?utm_hp_ref=canada-business

by tempestn • 12 years ago

119 97 12 years ago

wdewind2• 12 years ago

Not shocking because this is HuffPo, but this isn't a good article, and I suspect it's because Mincome (minimum income) did not really provably work (I'm not saying it didn't work, I'm saying there isn't data showing it did).

The article is filled with anecdotes of people who appreciated having extra money given to them by the government (shocking). The only time it actually get's close to examining the big picture is here:

In 2011, Forget released a paper distilling how Mincome affected people’s health using census data. She found overall hospitalization rates (for accidents, injuries, and mental health diagnoses) dropped in the group who received basic income supplements.

AFAICT it did not examine whether or not this made the Mincome project "worth it."

So there's nothing here really, or maybe there is, but not in this article.

_delirium• 12 years ago

I agree; this was a pretty disappointing article. It doesn't add much information beyond just the bare fact of pointing out that the Mincome experiment took place, colored with some anecdotes. Even the short Wikipedia article is more informative: https://en.wikipedia.org/wiki/Mincome

WestCoastJustin• 12 years ago

This seems to come up now and again, so there is actually many articles about this topic floating around. Wikipedia has a pretty good overview [1, 2], for something little more in-depth check out the University of Manitoba's TOWN WITH NO POVERTY report [3], even Al Jazeera actually has a nice piece with interview from several recipients [4]. If you search Google there is countless good pieces about this experiment [5, 6, ..].

[1] http://en.wikipedia.org/wiki/Guaranteed_Annual_Income

[2] http://en.wikipedia.org/wiki/Mincome

[3] http://public.econ.duke.edu/~erw/197/forget-cea%20%282%29.pd...

[4] http://america.aljazeera.com/articles/2014/8/26/dauphin-cana...

[5] http://www.cbc.ca/news/canada/manitoba/1970s-manitoba-povert...

[6] http://www.winnipegfreepress.com/opinion/columnists/dauphins...

notahacker• 12 years ago

That's kind of the OP's point though: these articles, including the academic one, are all rich in anecdotes and poor in anything resembling hard analysis. We learn that people are warmly nostalgic bout experiments which gave their community more money from outside, that Dauphin residents saw improvements to their general health relative to other areas, which admittedly may have been helped by a relatively new hospital, and that withdrawals from the labour market were small, though people knew the programme was a temporary experiment, the payments weren't that big and labour market conditions were very different then. Major hypothesized downsides to universal BI such as effects on local inflation (of housing costs in particular) weren't recorded as part of the original study.

I've always found it strange that Hacker News, a site populated by mathematically-inclined people responsible for all kinds of ingenious micro-optimizations to maximise customer lifetime value by market segment or optimise the ads displayed to demographic X, has so much love for the idea that the optimal formula for distributing benefits intended to tackle poverty is as simple as $WELFARE_BUDGET / $POPULATION_SIZE. Especially based on evidence as thin as these articles

unchocked• 12 years ago

There is something here: that basic income has been tried. I wasn't aware of that, and although there's precious little conclusion to be drawn it is important to know that it has happened.

wdewind2• 12 years ago

That's my point: it hasn't been tried. It was "tried" in a hyper localized economy, temporarily, without proper data being recorded. For all intents and purposes we still know nothing.

pervycreeper• 12 years ago

There may be a good case to be made for a minimum basic income (portmanteaus notwithstanding), but one is not to be found in this article.

nwah12• 12 years ago

A basic income without accounting for the Law of Rent cannot create any sustainable solution. That is why a Citizen's Dividend, funded by a Land Value Tax, is necessary.

16bytes2• 12 years ago

For those unversed in economic theory, care to explain why a basic income--analogous to the one presented in the article or otherwise--is not a sustainable solution?

ctdonath• 12 years ago

The concern is, on the whole, those receiving & relying on a basic income find a right to the fruits of the labors of others, without any incentive toward their own productivity. Many people find that with a little care, they can live nicely on little - and if that little is just given to them, then they can occupy their time just fine with mundane leisure (eating, mating, entertaining) and ongoing demand for more. Why contribute to national productivity when idleness is encouraged & funded?

Many will contend that having the basics covered will encourage the poor to be more productive by not limiting their efforts to mere existence (a la "might one take time to learn programming if not obligated to a 16-hour-a-day job just to pay rent & buy food?"). Many contend this is absurd, as those not inclined toward productivity are not going to become inclined without any reason to. Reality is a complex mix of these, the overall expectation being grounded in one's faith (or lack thereof) in human productivity sans motivation.

Basic income also risks devaluing money. The purpose of currency is representation of value; if someone is not creating value, their money has no value to represent. Money taken from someone and given to others (taxation for BI distribution) gives workers nothing in exchange for their efforts; money received for zero productivity may be squandered a la "easy come, easy go". Concern is akin to minimum wage: a gallon of gas will always be worth about 20 minutes of clerking at a gas station, regardless of the number placed upon the currency used to pay for the work and buy the gas. Basic income would skew low-number pricing: higher prices may continue to represent greater value accurately, but pricing of mundane goods/services would inflate as those purchasing have done nothing to acquire the currency buying them.

Basic needs have a cost to fulfill. Making it easy to fulfill those needs without social contribution reduces overall societal productivity, rewarding idleness and punishing productivity, lowering national GDP. Requiring people to work (true welfare cases aside) encourages productivity, including in work people would rather not do but for need to provide for one's own basic needs.

Reverse question is worth asking: how can basic income possibly be sustainable?

dllthomas14• 12 years ago

Out of curiosity, would you consider yourself a Georgist?

nwah12• 12 years ago

Yes, I do consider myself a georgist.

sologoub3• 12 years ago

This seems very different from basic income discussed today. What they essentially describe is an expanded need-based assistance program. US provides a tax credit for very low income that essentially results in negative tax.

The Swiss referendum called for unconditional payment. To me, the unconditional nature is the preserving factor that incentivizes people to earn more, while knowing they are protected. A needs based system results in fear of losing what little you have. Low income housing in extremely desirable areas works in similar manner and traps people, instead of incentivizing them to seek higher paid employment because that higher pay will make them not qualified for the subsidy, yet not able to afford the area.

bane12• 12 years ago

Right, I personally find it exhausting how this experiment keeps getting raised up as the gold standard for basic income policy. Mincome is a terrible data point for basic income advocates.

A needs based system results in fear of losing what little you have. Low income housing in extremely desirable areas works in similar manner and traps people, instead of incentivizing them to seek higher paid employment because that higher pay will make them not qualified for the subsidy, yet not able to afford the area.

Ding ding ding! Mincome is not much different than a restructured welfare program, not a basic income program. At best it's a Partial Basic Income scheme, which is more or less what we have as welfare/benefits today.

Basic Income programs guarantee a minimum standard of living, which Mincome did not. Mincome guaranteed a below poverty level standard of living, which then required people to continue working. It's just like getting a few dollars per hour raise. If this happened for everybody in the economy, it'd just be called inflation and standards of living would remain about the same after adjustment.

To put Mincome into perspective, the amount it paid is about what you get from Social Security (in the U.S.) without retirement savings or investment plans. Ask any retired person living on a fixed income of solely Social Security income how they get on.

Island economics are poor predictors for global economic effects. And any workable UBI scheme has to assume two things:

1) Most of the workforce would drop out and enjoy the minimal, but completely free standard of living it affords them.

2) Labor (which provides the input capital for the UBI scheme) thus becomes punitive. Each person working is supporting multiple people who aren't. Rational actors won't do that (exacerbating #1 above), so to get anybody working, there has to be a forcing mechanism to get them into the labor pool.

tbrake• 12 years ago

Your first assumption is a needlessly pessimistic view of the quality/quantity of intrinsic motivation in most people. By the same token something like "most people would drop out and enjoy the freedom of pursuing their passions, working on what they enjoy and spurring smaller scale local economies etc" might be equally naively optimistic, but I don't think the truth is at either extreme.

dllthomas14• 12 years ago

This is a little rambly, but...

The fact that it wasn't unqualified is hugely important.

I think you're not too far off in knock-on effects if we implement too high a basic income, and for the record I think the Swiss proposal runs significant risk of being too high (although I welcome the experiment). I think, however, that a basic income should be enough to live, but not enough to live comfortably without savings, another source of income, or cooperation.

One thing to bear in mind, regarding poverty levels, is that there's a tremendous difference between having $X while working 60 hours a week, and having $X while putting that same effort into living better.

rapind• 12 years ago

The idea of unconditional payment is interesting, and I'm almost on board, but...

1. Is it tax free? If not then it's not equal right?

2. How do you avoid it simply translating into inflation / lower dollar?

3. Does it save money elsewhere to pay for itself, or are taxes increased?

justincormack• 12 years ago

Most suggestions involve increased taxes.

buttsex• 12 years ago

Some money would be saved by eliminating the current welfare system and replacing it with UBI.

dllthomas14• 12 years ago

Regarding 1, I'm not 100% clear on what you mean.

Typically the money would not itself be taxed. It would offset taxes and, for those making enough money, could take the form of a tax credit.

Hopefully that covers your question.

cheez• 12 years ago

I think Milton Friedman's series of videos had a nurse (?) who embodied this exact catch-22.

narrator• 12 years ago

If you count lost benefits, the working poor can have marginal tax rates in some instances over 100%.

http://www.cnn.com/2013/02/08/opinion/mccaffery-marginal-tax...

dochtman• 12 years ago

See also this article from last year:

https://decorrespondent.nl/541/Why-we-should-give-free-money...

mrbabbage• 12 years ago

Your point about housing is spot-on.

I'm not sure I understand how an unconditional payment achieves any more desirable objectives than an EITC-style negative income tax. Under a negative income tax, a marginal increase in income still results in a marginal increase in take home pay; you can't get penalized by earning more, so the policy preserves the incentive for people to earn more. To me, this seems preferable to an unconditional payment because you're focusing all of the dispersed money on people who need it.

hawkice• 12 years ago

Or, to speak about economic efficiency: you are focusing money on people who will spend it. Doesn't do a lot of good to sit in a rich person's bank account, but if you get the money moving, that's job creation at it's most basic.

Chinjut• 12 years ago

An unconditional basic income funded by income taxation amounts to the same thing as a negative income tax (i.e., an income tax system with the possibility of negative taxation). The two are precisely equivalent.

tolmasky• 12 years ago

One potential side effect of a minimum income is to make the U.S. (or any country implementing it), even more immigrant hostile. These programs usually only consider the effects in a vacuum, not with respect to much larger population that wants to get in. Either immigration needs to be restricted, or you have a "lower" non citizen class that doesn't get these benefits from the beginning (ironically perpetuating more inequality). Milton Friedman discussed this fundamental contention between welfare and free immigration, and it's coveted a little here: http://m.youtube.com/watch?v=3eyJIbSgdSE .

jimmaswell• 12 years ago

Would prices not rise so much that the constant factor of the basic income pretty much becomes the new 0?

noarchy• 12 years ago

I've noticed the number of articles on "mincome" or "basic income" ramping up quite a bit in places like reddit, and to a lesser extent on HN. I don't necessarily have a problem with this, but are there groups actively trying to get this idea out on social media, hence all of the articles that I'm seeing? It may be that the idea is gaining organic momentum, on top of that, but I've been wondering about this of late.

waterside81• 12 years ago

Maybe a bit of both? With income disparity growing, technology supplanting many "blue-collar" jobs, poverty not really being tackled effectively, it's natural for folks to think about alternative means of sustaining our economy.

samspenc• 12 years ago

I'm wondering who will be sponsoring / supporting this mincome? Won't it be coming out of government taxes - and thus a higher tax rate?

jedmeyers• 12 years ago

I also rarely even see back of a napkin calculations on how much money will be given away, what will be the source of the money, etc.

freshyill• 12 years ago

Not necessarily. Wouldn't a minimum income plan also mean the end of other welfare plans?

gaius2• 12 years ago

No. The welfare system is incredibly expensive to operate! I mean, in terms of the administrative overhead, the armies of bureaucrats, etc. Scrap all that, make a simple, unconditional payment - nothing to administer, no fraud to investigate, and it becomes very affordable - without raising taxes either.

But it won't work in the real world, because it will be too easy to buy votes by promising more and more. This basic income needs to be fixed at a level of bare subsistence only. Like here in the UK we have a problem with government housing now - I don't begrudge anyone a roof over their heads, but it has morphed into, with at least one spare bedroom, in the area of you choosing for life even if you no longer need it, etc. Thats not fair on the people paying for it, and it's not fair on the people on the waiting list.

minikites• 12 years ago

Taxes are at historic lows, we should raise taxes regardless because infrastructure is crumbling nationwide.

bane12• 12 years ago

You'll also notice that nobody advocating it has even the slightest whiff of an economic model that makes it work. In UBI schemes, money is treated like an endless well of fairy dust that can be sprinkled all over the population and magic will happen. Numbers are thrown out all over the place and realistic actor models on the micro and macro economic levels are never provided.

When challenged, they all point to Mincome, which wasn't a UBI experiment, as some kind of evidence. And the evidence from Mincome (when you read the writeup) is that it didn't work very well from the point of a UBI scheme, it achieved approximately zero of the proposed benefits of UBI.

But you know, reading and math are hard I guess.

stefantalpalaru2• 12 years ago

money is treated like an endless well of fairy dust that can be sprinkled all over the population and magic will happen

Money is an artificial resource meant to create a level of indirection between the buyer and the seller. The amount of money in circulation at a certain point in time does not explain why some people eat better than others. If you want to argue against UBI on the basis that resources are too scarce to be enough for all of us, you need to talk about the actual resources.

On the agricultural side, we have overproduction in Europe and in Italy the cultivated terrain is smaller every year.

tempestn2• 12 years ago

It's likely mostly due to the positive feedback loop. I've become interested in the idea of a basic income from reading stories via HN, and I posted this because (which I agree it isn't really a test of basic income) it is related, and I hadn't heard about it before.

blazespin• 12 years ago

A basic income guaranteed as long as you stay on birth control makes sense to me. Start paying a small amount at puberty. As soon as you have a child you lose access to it until your children are adults. This will work for men once we have reversible sterilization.

This would solve so many problems in this world.

benpbenp• 12 years ago

Honest question, what problems do you think this would solve?

Is it that you don't want people to have children until they are financially capable of supporting them?

It is indeed a grave responsibility to provide for one's offspring while they are still in the brood. But the upside of the situation, even in the unfortunate circumstance where one cannot make such financial provision, is no less than the creation of a brand new, fully conscious member of the human species, capable of experiencing the full wonder and surprise of being, who otherwise would have no chance of ever existing at all.

Furthermore, and here I risk delving into platitudes, children are quite literally the future of society. The continued production of children at a healthy clip is absolutely essential to the continuation of all the things we, as humans, value highest.

Hence it seems deranged to me to be so afraid of any monetary hardship that one should seek to positively disincentivize childbearing with such a broad and punitive measure. You are tampering with processes of infinite value and you do so at infinite risk.

As a smaller, more concrete objection, what about those who are initially of sound bank account, but then fall into hardship sometime after they've commenced in their procreative endeavours? Are they to be punished as well? In light of this possibility, why not take the opposite tack, and instead reward every new human life with a large gift to help pay for the cost of the upbringing?

tokenadult• 12 years ago

I posted an article about a guaranteed basic income a bit more than a year ago,[1] and my posting of the article was prompted by noticing that other Hacker News participants had commented about such policies before, followed by my reading some articles that summarized Charles Murray's book about a guaranteed basic income. Ideologically, Murray would probably be even more in favor of no government welfare payments at all (but ask him directly for his current view), but when he wrote his book In Our Hands: A Plan to Replace the Welfare State,[2] Murray's basic argument was that governments are already spending billions and billions of dollars derived from taxpayers for means-tested welfare programs or other income transfer programs that are more complicated administratively than a guaranteed basic income, and a nationwide guaranteed basic income covers everyone at less administrative expense.

Murray's book goes into detail about how much a program of guaranteed income for everyone would cost in the United States, and suggests some probable effects that would have on everyone's everyday behavior. I read the book a year or two after it was published.

Murray's own summary of his argument[3] and reviews of his book[4] may inform the discussion here. Big public policy proposals are not easy to discuss, but the big public policy proposal of a guaranteed basic income for all is a response to existing policy of supposedly targeted social welfare programs that are just about equally expensive in the benefits they provide, but much more costly to administer.

As a matter of personal opinion, I am still thinking about whether or not a basic income guarantee is a good idea, but I definitely want to figure out if spending no more in total for social welfare by directly transferring cash to all citizens would simplify administration of welfare programs and allow more individual choice about how to use the money.

[1] https://news.ycombinator.com/item?id=6309882

[2] http://www.amazon.com/books/dp/0844742236

[3] http://www.irp.wisc.edu/publications/focus/pdfs/foc242a.pdf

[4] http://www.aei.org/article/society-and-culture/poverty/in-ou...

http://www.conallboyle.com/BasicIncomeNewEcon/MurrayReview.p...

http://www.richmondfed.org/publications/research/region_focu...

http://mises.org/misesreview_detail.aspx?control=296

The Canadian Mincome Experiment of 1974-79

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