A New Approach to Aid: How a Basic Income Program Saved a Namibian Village(spiegel.de)
spiegel.de
A New Approach to Aid: How a Basic Income Program Saved a Namibian Village
http://www.spiegel.de/international/world/a-new-approach-to-aid-how-a-basic-income-program-saved-a-namibian-village-a-642310.html
9 comments
One aspect of Basic Income that seems to be forgotten quite often is the absence of guilt. The poor no longer need to feel guilt or shame about welfare, it's a right they share with everyone else. Those who don't need it can spend it on luxuries without the guilt associated with 'wasting' money.
Genuinely curious about the macroeconomics of this - how is the "basic income" not quickly pushed down to the lower-bound where it quickly stops being a livable wage?
That is, if say, $500/week was the basic income level, wouldn't the price of everything rise quickly to subsume that $500 almost immediately, as it moves the lower-bound from $0 to $500?
If not, that's wonderful, and I'd like to learn more about the idea of a society where you can still get rich but will never be in poverty.
That is, if say, $500/week was the basic income level, wouldn't the price of everything rise quickly to subsume that $500 almost immediately, as it moves the lower-bound from $0 to $500?
If not, that's wonderful, and I'd like to learn more about the idea of a society where you can still get rich but will never be in poverty.
Generally the macroeconomics are somewhat in uncharted territory here, which is what makes it interesting. While the transfer of payments insures everyone has _some_ ability to function in the economy, it does not change ordinary capitalist incentives (if you work you get more money, if you work well you can get a lot more money). But proponents suggest that it moderates missapplication of economic output because you aren't spending tax money on welfare offices and rules and hearings etc. You have a valid citizenship card and every month, regardless of who you are, you can walk into the BI office and pick up your stipend check.
The first useful question is, what does this do to the quantity demanded of goods in the economy? One answer is that it does nothing, people wanted food before, they want it now, except that now they have a bit of money to allocate to food. If you raise the price of your soup because anyone can buy it now, you still lose out in your soup sales to a competitor who will sell for the old price. Unlike establishing price floors as things like the farm subsidies do and which encourage over production of unneeded goods, you continue to have market forces which dictate the goods that come to market.
The second question that people toy with is the question of productivity. If everyone is getting a check every couple of weeks for doing nothing, won't they just stay home and sleep all day? Why would they even take minimum wage jobs?
The challenge there is endemic to the current welfare system that is popular in the US which reduces welfare payments in proportion to earned income. This creates an inversion layer where the first 20 - 30 hours per week of work do nothing to change their monthly take home pay. With a BI system every hour worked is additional money in your pocket at the end of the month. Working 20 hours a week in a minimum wage job not converts living at the resident hotel into living in a small studio apartment. Which is to say it has a direct impact on the quality of life experienced by the individual.
And the software engineer making six figures? She might take here bi-weekly BI check and help others, or go out to dinner at a fancy restaurant, or save it for a durable goods purchase. For her, its like "free money" so its easy to spend (which also helps the economy).
Screw the Military budget, The FED has pumped trillions into the economy with its quantitative easing strategy. Which was characterized as "dropping money out of helicopters". Had they in fact dropped money out of helicopters, the experience of the cash for clunkers program suggests the economy would grow much more quickly than it has, and more effectively because it would grow by new workers entering the workforce, transfer payments which would land directly into the 'cilia' or outer layers of the domestic economy like rents, food, clothes, and durable goods.
This idea sounds stupid when you first hear it. I certainly thought it was, but I've been researching the questions above and looking at things (like cash for clunkers) which might provide some insights into the possible effects, and it is definitely not Marxism or pure socialism. It's something different than that, and it is made possible by the fact that individuals in the US economy generate more output than in any previous time.
The first useful question is, what does this do to the quantity demanded of goods in the economy? One answer is that it does nothing, people wanted food before, they want it now, except that now they have a bit of money to allocate to food. If you raise the price of your soup because anyone can buy it now, you still lose out in your soup sales to a competitor who will sell for the old price. Unlike establishing price floors as things like the farm subsidies do and which encourage over production of unneeded goods, you continue to have market forces which dictate the goods that come to market.
The second question that people toy with is the question of productivity. If everyone is getting a check every couple of weeks for doing nothing, won't they just stay home and sleep all day? Why would they even take minimum wage jobs?
The challenge there is endemic to the current welfare system that is popular in the US which reduces welfare payments in proportion to earned income. This creates an inversion layer where the first 20 - 30 hours per week of work do nothing to change their monthly take home pay. With a BI system every hour worked is additional money in your pocket at the end of the month. Working 20 hours a week in a minimum wage job not converts living at the resident hotel into living in a small studio apartment. Which is to say it has a direct impact on the quality of life experienced by the individual.
And the software engineer making six figures? She might take here bi-weekly BI check and help others, or go out to dinner at a fancy restaurant, or save it for a durable goods purchase. For her, its like "free money" so its easy to spend (which also helps the economy).
Screw the Military budget, The FED has pumped trillions into the economy with its quantitative easing strategy. Which was characterized as "dropping money out of helicopters". Had they in fact dropped money out of helicopters, the experience of the cash for clunkers program suggests the economy would grow much more quickly than it has, and more effectively because it would grow by new workers entering the workforce, transfer payments which would land directly into the 'cilia' or outer layers of the domestic economy like rents, food, clothes, and durable goods.
This idea sounds stupid when you first hear it. I certainly thought it was, but I've been researching the questions above and looking at things (like cash for clunkers) which might provide some insights into the possible effects, and it is definitely not Marxism or pure socialism. It's something different than that, and it is made possible by the fact that individuals in the US economy generate more output than in any previous time.
I may have part of the answer. It makes the labor market freer. People talk about free markets, but the labor market cannot be free, you don't have the choice of not working, because then you can't afford to eat, and you die or steal. The minimum wage is an attempt to make the market less free by setting a price control, paired with welfare.
By having UBI the choice to participate in the labor market now exists. The market is more free.
It's not an inherently collectivist idea (socialism being extreme authoritarian collectivists). It's a collectivist libertarian idea (see the following link for history and moral philosophy): http://en.wikipedia.org/wiki/Geolibertarianism
By having UBI the choice to participate in the labor market now exists. The market is more free.
It's not an inherently collectivist idea (socialism being extreme authoritarian collectivists). It's a collectivist libertarian idea (see the following link for history and moral philosophy): http://en.wikipedia.org/wiki/Geolibertarianism
> Unlike establishing price floors as things like the farm subsidies do and which encourage over production of unneeded goods
While the programs are certainly not perfect, part of that is by design. The idea is to overproduce storable goods now, when you can, in case you cannot produce food in the future (crop failure, war, etc.).
> And the software engineer making six figures? She might take here bi-weekly BI check and help others, or go out to dinner at a fancy restaurant, or save it for a durable goods purchase. For her, its like "free money" so its easy to spend (which also helps the economy).
Given that a $100K salary puts one in the top 7%[1], wouldn't you have a different inversion layer here? i.e. The taxes paid to support basic income will exceed the income from basic income. As a result, I don't see it becoming 'free money' in the eyes of such people, it will be something to cling on to because it and more were earlier taken away.
[1] http://en.wikipedia.org/wiki/Personal_income_in_the_United_S...
While the programs are certainly not perfect, part of that is by design. The idea is to overproduce storable goods now, when you can, in case you cannot produce food in the future (crop failure, war, etc.).
> And the software engineer making six figures? She might take here bi-weekly BI check and help others, or go out to dinner at a fancy restaurant, or save it for a durable goods purchase. For her, its like "free money" so its easy to spend (which also helps the economy).
Given that a $100K salary puts one in the top 7%[1], wouldn't you have a different inversion layer here? i.e. The taxes paid to support basic income will exceed the income from basic income. As a result, I don't see it becoming 'free money' in the eyes of such people, it will be something to cling on to because it and more were earlier taken away.
[1] http://en.wikipedia.org/wiki/Personal_income_in_the_United_S...
A very well reasoned theory. I am always highly skeptical about basic income schemes, however you definitely began to persuade me, however I'm not am there yet. My concern would be inflationary pressures. If everyone makes $x per year, then everyone would want a minimum of a studio apartment instead of the residence hotel. Yet there isn't an increased supply of apartments. So prices rise, negating the benefit. So now these residence hotels can charge a higher price because the people can now afford it. However, to pay for basic income, now you must increase taxes, which results in a lower marginal profit for property owners, which creates a disincentive to keep building, which further constricts supply and raises costs. Even discounting tax revenue increases that would be necessary to fund a basic income, supply and demand still apply. In you lower the cost of something (either by lowering the price or increasing the ability of people to pay the current price,) you reduce supply. So we're back were we started, except those people who have saved money over the course of their life now find it less valuable, thus reducing their purchasing power and thus resulting in decreased demand, thus lowering prices. However in that scenario, it simply redistributes the wealth from the savers to the group you are trying to help. Great for the special interest (the poor) but at the expense of the whole. Because, a basic income isn't creating new wealth, it's rearranging existing wealth while also reducing the incentive to create new wealth through higher taxes. One could say "reduce the defense budget," which is a valid idea, however the defense budget is also responsible for a huge amount of economic activity (see the US economic recovery during WWII as an example.) Sonwith reduced defense spending, you also reduce the jobs from that industry, which puts additional stress on a basic income system. Of course, I reject the Keynesian premise that defense spending boosts the economy, but what does boost the economy is lower taxes; it incentivizes production which then provides more jobs and increases the amount of capital available for real wealth creation, which helps everyone -- even the profoundly poor. After all, compared to countries like India, Mexico, etc, the American poor are far better than the poor of those counties-- because there is far greater wealth and thus a more powerful economic engine and thus increased opportunity. Poverty rates in the U.S. have remained unchanged since the War in Poverty. Why? Redistribution doesn't solve anything.
> so its easy to spend (which also helps the economy).
If money is not spent, it is invested (not hoarded). Even putting money in a bank is investing it, as the bank loans it out to people who spend it.
The idea that giving money to someone to spend is better than to someone who invests makes no sense to me.
If money is not spent, it is invested (not hoarded). Even putting money in a bank is investing it, as the bank loans it out to people who spend it.
The idea that giving money to someone to spend is better than to someone who invests makes no sense to me.
One of the more interesting things that I believe this period will contribute to the field of economics is the question of investment vs spending.
That savings become investment because the bank can only make money when the money it holds works for it, is a principle that we all learn in Econ, however after the Mortgage crisis and the response to it, there has been a twist. For very large banks, and for most US citizens they only have very large banks to interact with, they stopped investing in the outer layers of the economy. Banks stopped lending to a large swath of people in part because as a large portion their deposits could be consolidated into very large pools which were used in more abstract investment schemes. Even today if you read Bank of America's annual report you will note that their investments benefit a much smaller percentage of the population than they have in the past[1]. There are merchant banks that are investing in local infrastructure but retail banks, historically a big component in that area, still suffering from the malaise of the breakdown between banking and trading which still has a cloud over them.
I don't think the book is written yet on the entirety of the challenges set up by the consolidation of capital, it certainly will provide fodder for a number of Phds in the discipline :-) But the events of the last 15 years have shown us that when you consolidate large amounts of capital into the hands of a few, their choices on investing it disenfranchise a number of previously valid capital markets. You will note that it is tied in with Piketty's observations and others about dis-contiguous capital pools. When the .01% start disenfranchising the the .99% it might feel to us in the 99% like the Gods fighting amongst themselves on Olympus, but it seems to have really material effects at a micro and macro economic level.
I am convinced, although I don't feel that my belief is widely held, is that direct transfer payments in BI (or UBI) schemes "work" because they force capital diffusion. And it is the market forces that seek to consolidate that capital that pull the capital through the economy. I originally held the opinion that such diffusion, which has to come at the cost of taxing those capital pools in the first place, would remove the incentives for those people to collect it (the old 'communist trap' you learn about, if you're not going to get to keep it, why work for it). The change though is the force multiplier effect of modern technology which has increased productivity for those who employ it far far above that of previous workers. That and a growing inefficiency of the existing transfer payments system have suggested we may have reached that point where the combined increase in efficiency of abolishing welfare and a modest tax on very large capital consolidations could provide an outsized economic benefit. The danger (or the trick of it if you will) is to manage the capital burden so that it remains a positive benefit. You essentially want a 'leaky bucket' algorithm for capital diffusion. Which is why I expect that until the next shoe "drops" which is the complete relaxation on the energy component[2], such systems will never be sufficient, in and of themselves, to be a 'living stipend'.
[1] I realize that much of Bank of America is trying to unwind some disastrous CountryWide mortgages.
[2] That would occur if we were to crack the fusion problem such that energy production was no longer limited by external factors.
That savings become investment because the bank can only make money when the money it holds works for it, is a principle that we all learn in Econ, however after the Mortgage crisis and the response to it, there has been a twist. For very large banks, and for most US citizens they only have very large banks to interact with, they stopped investing in the outer layers of the economy. Banks stopped lending to a large swath of people in part because as a large portion their deposits could be consolidated into very large pools which were used in more abstract investment schemes. Even today if you read Bank of America's annual report you will note that their investments benefit a much smaller percentage of the population than they have in the past[1]. There are merchant banks that are investing in local infrastructure but retail banks, historically a big component in that area, still suffering from the malaise of the breakdown between banking and trading which still has a cloud over them.
I don't think the book is written yet on the entirety of the challenges set up by the consolidation of capital, it certainly will provide fodder for a number of Phds in the discipline :-) But the events of the last 15 years have shown us that when you consolidate large amounts of capital into the hands of a few, their choices on investing it disenfranchise a number of previously valid capital markets. You will note that it is tied in with Piketty's observations and others about dis-contiguous capital pools. When the .01% start disenfranchising the the .99% it might feel to us in the 99% like the Gods fighting amongst themselves on Olympus, but it seems to have really material effects at a micro and macro economic level.
I am convinced, although I don't feel that my belief is widely held, is that direct transfer payments in BI (or UBI) schemes "work" because they force capital diffusion. And it is the market forces that seek to consolidate that capital that pull the capital through the economy. I originally held the opinion that such diffusion, which has to come at the cost of taxing those capital pools in the first place, would remove the incentives for those people to collect it (the old 'communist trap' you learn about, if you're not going to get to keep it, why work for it). The change though is the force multiplier effect of modern technology which has increased productivity for those who employ it far far above that of previous workers. That and a growing inefficiency of the existing transfer payments system have suggested we may have reached that point where the combined increase in efficiency of abolishing welfare and a modest tax on very large capital consolidations could provide an outsized economic benefit. The danger (or the trick of it if you will) is to manage the capital burden so that it remains a positive benefit. You essentially want a 'leaky bucket' algorithm for capital diffusion. Which is why I expect that until the next shoe "drops" which is the complete relaxation on the energy component[2], such systems will never be sufficient, in and of themselves, to be a 'living stipend'.
[1] I realize that much of Bank of America is trying to unwind some disastrous CountryWide mortgages.
[2] That would occur if we were to crack the fusion problem such that energy production was no longer limited by external factors.
Investing is effectively lending it out to someone else to spend to your mutual benefit (them by spending it efficiently to make economic gain, and you by getting a cut of that economic gain.)
If nobody's spending, though, you can 'invest' all you want - there's no broader economic gain from letting someone else hoard your money instead of doing it yourself. You'll only gain interest from those willing to trade their long term interests for their short term ones. There's simply more supply of money, and less demand for it, resulting in less return on your investments.
As an (extreme and unrealistic) example, your bank isn't going to give you a high interest rate if the only person spending money instead of investing it all is Bob, who's occasionally willing to borrow at 1% to buy a new TV when his old one breaks. In fact, you'd be lucky for them to even be willing to store your dollars without a fee: What's in it for them? They've already got what they need to lend to Bob covered a million times over.
Consumers aren't the only ones buying, but their lack of buying has knock-on effects on broader investment opportunities - if Bob's the only one buying TVs, TV manufacturers certainly won't be spending money on fancy new equipment. Their suppliers won't be spending money building new mines for materials or manufacturing equipment for construction. This all translates into fewer opportunities for investments, and less demand for your money with which to invest.
If nobody's spending, though, you can 'invest' all you want - there's no broader economic gain from letting someone else hoard your money instead of doing it yourself. You'll only gain interest from those willing to trade their long term interests for their short term ones. There's simply more supply of money, and less demand for it, resulting in less return on your investments.
As an (extreme and unrealistic) example, your bank isn't going to give you a high interest rate if the only person spending money instead of investing it all is Bob, who's occasionally willing to borrow at 1% to buy a new TV when his old one breaks. In fact, you'd be lucky for them to even be willing to store your dollars without a fee: What's in it for them? They've already got what they need to lend to Bob covered a million times over.
Consumers aren't the only ones buying, but their lack of buying has knock-on effects on broader investment opportunities - if Bob's the only one buying TVs, TV manufacturers certainly won't be spending money on fancy new equipment. Their suppliers won't be spending money building new mines for materials or manufacturing equipment for construction. This all translates into fewer opportunities for investments, and less demand for your money with which to invest.
[deleted]
People usually invest in producing some thing. In order for that thing to have value, you need people who spend to buy it. It seems pretty simple to me.
As for why it might be better to give money to someone to spend than to someone who invests: someone who can't afford to spend needs money more than someone who can afford to invest.
As for why it might be better to give money to someone to spend than to someone who invests: someone who can't afford to spend needs money more than someone who can afford to invest.
[deleted]
I thought Cash for Clunkers was looked down upon because it sucked up a lot of the cheap, affordable cars. (Genuinely curious.)
Warning, highly simplified economics.
The basic income is a form of wealth distribution. The poorer people get a larger share of the economy at the cost of the richer people getting a smaller share.
Assuming that we have the capacity to produce enough stuff for everyone to live off of, then we could give everyone a livable wage by putting 100% of the money into the basic income.
The downside to this is that (for the most part) a basic income mucks with the incentive structure, so it results in us having a lower production capacity [0]. The hope is that our production capacity is sufficiently large that we can have a much smaller percent of money go into basic income where it is still a livable wage, but small enough that it does not shrink our total capacity significantly.
Additionally, you also have to look at how elastic the supply of basic necessities are (that is to say, how much prices increase with demand). In the USA (and probably other countries), food is highly elastic, so prices would not raise significantly. Housing is weird (because politics and zoning), but we would expect to see more low cost housing to be built to match the demand, however this would take a while to occur.
[0] At a macro level, it can be argued that a basic income could actually increase production capacity, but that is not relevant to your question.
The basic income is a form of wealth distribution. The poorer people get a larger share of the economy at the cost of the richer people getting a smaller share.
Assuming that we have the capacity to produce enough stuff for everyone to live off of, then we could give everyone a livable wage by putting 100% of the money into the basic income.
The downside to this is that (for the most part) a basic income mucks with the incentive structure, so it results in us having a lower production capacity [0]. The hope is that our production capacity is sufficiently large that we can have a much smaller percent of money go into basic income where it is still a livable wage, but small enough that it does not shrink our total capacity significantly.
Additionally, you also have to look at how elastic the supply of basic necessities are (that is to say, how much prices increase with demand). In the USA (and probably other countries), food is highly elastic, so prices would not raise significantly. Housing is weird (because politics and zoning), but we would expect to see more low cost housing to be built to match the demand, however this would take a while to occur.
[0] At a macro level, it can be argued that a basic income could actually increase production capacity, but that is not relevant to your question.
Warning, more highly simplified economics. Another possibility is that the redistribution acts as a true Keynesian stimulus, giving money directly to those who will immediately spend it (rather than banks), increasing demand and bringing us out of a recession. But who knows.
The economics are so complex that unless someone tests it at least at a town-wide level, nobody can predict the outcome. This Namibian town and Dauphin, Manitoba are two such sites. Some other experiments have failed because tests were not done with 100% of the local population, which creates an unwanted interaction between the BI and non-BI group.
A very simplified view of a basic income is that your new post BI income becomes a percentage of the population's average income plus 1 minus that percentage of your current income:
> I_post_bi = aI_ave + (1-a)I_pre_bi
If a=0 we have capitalism, a=1 communism.
For small 'a', this does change individual incentives a bit, but not much for those with very high income. That is because your incentive to produce is a function of how much more you will make (as a percentage) vs. how much more time you invest (as a percentage). For incomes much larger than the basic income, this ratio remains the same.
What is the optimal 'a'? Who knows. Just start with a low one and slowly increase it to find out.
If one really wanted incentives to be neutral across the board, one could try:
> I_post_bi = a*(I_pre_bi)^p, where 0 < p < 1, a<1
This would be a subsidy for lower incomes and a (pre-Reaganeque) progressive tax for higher incomes.
The more important question is what will happen to the group that is around the cusp of working/not-working. Some may choose not to work post-BI. Some may choose to stay home and take care of the kids, elderly parents (which is not necessarily "bad" for the economy when you factor in future earnings of children and reduced health care costs of parents). Some might even choose to start a business.
The economics are so complex that unless someone tests it at least at a town-wide level, nobody can predict the outcome. This Namibian town and Dauphin, Manitoba are two such sites. Some other experiments have failed because tests were not done with 100% of the local population, which creates an unwanted interaction between the BI and non-BI group.
A very simplified view of a basic income is that your new post BI income becomes a percentage of the population's average income plus 1 minus that percentage of your current income:
> I_post_bi = aI_ave + (1-a)I_pre_bi
If a=0 we have capitalism, a=1 communism.
For small 'a', this does change individual incentives a bit, but not much for those with very high income. That is because your incentive to produce is a function of how much more you will make (as a percentage) vs. how much more time you invest (as a percentage). For incomes much larger than the basic income, this ratio remains the same.
What is the optimal 'a'? Who knows. Just start with a low one and slowly increase it to find out.
If one really wanted incentives to be neutral across the board, one could try:
> I_post_bi = a*(I_pre_bi)^p, where 0 < p < 1, a<1
This would be a subsidy for lower incomes and a (pre-Reaganeque) progressive tax for higher incomes.
The more important question is what will happen to the group that is around the cusp of working/not-working. Some may choose not to work post-BI. Some may choose to stay home and take care of the kids, elderly parents (which is not necessarily "bad" for the economy when you factor in future earnings of children and reduced health care costs of parents). Some might even choose to start a business.
> If a=0 we have capitalism, a=1 communism.
I realise you're intentionally oversimplifying, but it's worth pointing out that Marx wrote page up and page down to complain about simplistic ideas about redistribution, including simplistic ideas put forward by other socialists and communists about the practical politics of redistribution.
To Marx, under socialism it seemed reasonable to push individual incomes closer to an equal proportion of their contribution to production (but even then distorted in various way by welfare), while under communism he made the point that distribution would explicitly be unequal not just as a side effect of imperfections, but as a fundamental property of the system, because the goal according Marx would be for distribution to follow need independent of your ability to produce, and peoples needs are wildly divergent.
Under no circumstances did he advocate a "flat" equal distribution per person (nor anything similar to that). Instead he explicitly argued for unequal distribution. In the Critique of the Gotha Program, he wrote:
"Further, one worker is married, another is not; one has more children than another, and so on and so forth. Thus, with an equal performance of labor, and hence an equal in the social consumption fund, one will in fact receive more than another, one will be richer than another, and so on. To avoid all these defects, right, instead of being equal, would have to be unequal."
He then went on to argue the famous "from each according to ability, to each according to his needs!" [as a goal for an advanced communist society] after explicitly pointing out the unequal nature of such redistribution, and went on to write:
"Quite apart from the analysis so far given, it was in general a mistake to make a fuss about so-called distribution and put the principal stress on it."
Instead, according to Marx "any distribution whatever of the means of consumption is only a consequence of the distribution of the conditions of production themselves" - in other words, it is the working class control of the means of production that is important; redistribution would follow from that - an argument that e.g. the Bolsheviks either learned from or ignored, depending on how cynical you are about their intentions, when they started reigning in their early experiments in worker control in favour of the control of their party.
I realise you're intentionally oversimplifying, but it's worth pointing out that Marx wrote page up and page down to complain about simplistic ideas about redistribution, including simplistic ideas put forward by other socialists and communists about the practical politics of redistribution.
To Marx, under socialism it seemed reasonable to push individual incomes closer to an equal proportion of their contribution to production (but even then distorted in various way by welfare), while under communism he made the point that distribution would explicitly be unequal not just as a side effect of imperfections, but as a fundamental property of the system, because the goal according Marx would be for distribution to follow need independent of your ability to produce, and peoples needs are wildly divergent.
Under no circumstances did he advocate a "flat" equal distribution per person (nor anything similar to that). Instead he explicitly argued for unequal distribution. In the Critique of the Gotha Program, he wrote:
"Further, one worker is married, another is not; one has more children than another, and so on and so forth. Thus, with an equal performance of labor, and hence an equal in the social consumption fund, one will in fact receive more than another, one will be richer than another, and so on. To avoid all these defects, right, instead of being equal, would have to be unequal."
He then went on to argue the famous "from each according to ability, to each according to his needs!" [as a goal for an advanced communist society] after explicitly pointing out the unequal nature of such redistribution, and went on to write:
"Quite apart from the analysis so far given, it was in general a mistake to make a fuss about so-called distribution and put the principal stress on it."
Instead, according to Marx "any distribution whatever of the means of consumption is only a consequence of the distribution of the conditions of production themselves" - in other words, it is the working class control of the means of production that is important; redistribution would follow from that - an argument that e.g. the Bolsheviks either learned from or ignored, depending on how cynical you are about their intentions, when they started reigning in their early experiments in worker control in favour of the control of their party.
Keynesian stimulus is only a temporary measure to create inflation to get around sticky wages. Namibia's inflation rate is 5%/year. If wages are sticky 10% below marginal product, then any BI in Namibia should last well under 2 years.
http://www.tradingeconomics.com/namibia/inflation-cpi
Also, even testing at a town wide level is insufficient. This BI is merely a transfer of resources from outside the town into the town. How could that not make the town richer?
At the nation level the only way to accomplish that is imperialism.
http://www.tradingeconomics.com/namibia/inflation-cpi
Also, even testing at a town wide level is insufficient. This BI is merely a transfer of resources from outside the town into the town. How could that not make the town richer?
At the nation level the only way to accomplish that is imperialism.
>The basic income is a form of wealth distribution. The poorer people get a larger share of the economy at the cost of the richer people getting a smaller share.
This is much too basic an understanding of the real value of a fixed quantity of dollars to people in different economic classes. $100 to someone making $4,000 a week is a drop in the bucket, $100 to someone making $300 a week is magic.
This is much too basic an understanding of the real value of a fixed quantity of dollars to people in different economic classes. $100 to someone making $4,000 a week is a drop in the bucket, $100 to someone making $300 a week is magic.
Sure, the rationale behind all wealth redistribution systems and welfare programmes is that poorer people who are [net] recipients need the money more than richer people who are [net] contributors. BI is no different to any other income redistribution programme in that respect.
Of course when assessing the marginal value of a fixed quantity of dollars to different people one also has to take into account their individual preferences, and there's certainly an argument that the net $100 taken out of the income earned in the sixty-first freelance hour worked by a software developer paying for a very expensive condo in San Francisco has more value to them than the extra $100 received by the person who quit their job after BI was introduced because they didn't need an additional income source and found working a bit boring.
Obviously there are many people with little or no source of earned income that desperately need that $100 and would happily work longer and harder than the software developer for less money. Non-BI wealth/income redistribution programmes generally try to distinguish - with hugely varying degrees of success - between those who would find the extra $100 magic and those that don't.
BI is unique in terms of welfare reforms in assuming that factors such as willingness to work and living costs are essentially meaningless when it comes to determining how much people need handouts.
Of course when assessing the marginal value of a fixed quantity of dollars to different people one also has to take into account their individual preferences, and there's certainly an argument that the net $100 taken out of the income earned in the sixty-first freelance hour worked by a software developer paying for a very expensive condo in San Francisco has more value to them than the extra $100 received by the person who quit their job after BI was introduced because they didn't need an additional income source and found working a bit boring.
Obviously there are many people with little or no source of earned income that desperately need that $100 and would happily work longer and harder than the software developer for less money. Non-BI wealth/income redistribution programmes generally try to distinguish - with hugely varying degrees of success - between those who would find the extra $100 magic and those that don't.
BI is unique in terms of welfare reforms in assuming that factors such as willingness to work and living costs are essentially meaningless when it comes to determining how much people need handouts.
As I mentioned below, in this small-scale case BI looks like it increased production capacity. But it was really an injection of capital into a community that had almost literally no capital whatsoever. At and sometimes below mere subsistence.
Would be interesting to see it play out in a community with a higher baseline.
Would be interesting to see it play out in a community with a higher baseline.
Isn't that the proposed mechanism for how BI increases capacity? By injecting capital into low capital communities, you increase their ability to produce. Of course, to see if this is an actual increase in production, we would also need to look at the opportunity cost associated with taking that money in the first place.
Right, that's the kicker. It's really easy for 1st world people to inject trivial (to them) amounts of capital into 3rd world places. But that's microeconomics playing out, not macro. In this case the source of the money was completely decoupled from the people receiving it. If they had to pay themselves a basic income, the story is different.
Here in the 1st world any basic income which we try has to be paid by us too. It's doable. But it's not a panacea. http://www.vox.com/2014/10/8/6946565/progressive-taxes-are-n...
Here in the 1st world any basic income which we try has to be paid by us too. It's doable. But it's not a panacea. http://www.vox.com/2014/10/8/6946565/progressive-taxes-are-n...
The downside to this is that (for the most part) a basic income mucks with the incentive structure.
"Mucks with" is not a positive term. And to be sure, there are employers for whom the introduction of UBI would be a very negative thing. But there are people (many more, I suspect) who would see UBI as a positive development. These people would not say "it mucks with the incentive structure". They would say "it improves the incentive structure by making it more humane".
Why? Because if you were an employer with a business model that relied on easy access to the bottom end of the labor market, abject fear would cease to be a viable management tool. In a world with lower barriers to quitting you'd no longer be able to pad your margins by exploiting workers in a way that would be inconceivable if they didn't live in constant terror of hunger and homelessness, should they suffer any disruptions in their jobs. To put it more politely, as a manager, you'd have to make more use of carrots and rely less on sticks. This would certainly muck up the game of anyone who relied on nothing but sticks, but again, that would be an improvement in the eyes of many.
Consider, for example, the employers that refuse to give people full-time work to avoid paying benefits while simultaneously refusing to give people regular schedules, which bars them from taking seconds jobs. These employers are demanding full time availability for part time returns, and getting the on-call time for free. This is atrocious. While I can only speculate here, I suspect this practice would be far less common in a world where people desperate enough to put up with this abuse were significantly fewer and further between.
What opponents of UBI must concede is that the end of labor extracted on highly unfavorable terms from people who fear for their very survival does not mean the end of labor in general. As most people on HN know, there are many reasons besides basic survival that motivate people to expend effort. Taking some of the negative power out of employer's hands would re-focus their efforts on developing non-abusive ways to keep people expending effort on their behalf.
That's bad news for managers who lack the ethics to be managers in the first place. It's good news for decent managers who no longer find themselves lumped together with thugs and thieves (and yes, wage-theft is endemic at the lower rungs of the economy).
I should point out, too, that only a fraction of the work that people do is also paid employment. Any mother who works full time raising her kids can attest to this. The same could be said of working out regularly. UBI acknowledges that there are all sorts of socially beneficial activities that require considerable effort, but don't require formal employment by staffed organizations.
At present, when we say "work" what we really mean "work done directly for someone else in exchange for money". It's important to note that while UBI may, indeed, reduce incentives to work directly for terrible people who pay a pittance, it doesn't mean that people will stop working for the good of themselves or others in general. Indeed, given our intrinsically social nature, freeing people from the monsters may lead to a spike in the output of socially beneficial effort.
"Mucks with" is not a positive term. And to be sure, there are employers for whom the introduction of UBI would be a very negative thing. But there are people (many more, I suspect) who would see UBI as a positive development. These people would not say "it mucks with the incentive structure". They would say "it improves the incentive structure by making it more humane".
Why? Because if you were an employer with a business model that relied on easy access to the bottom end of the labor market, abject fear would cease to be a viable management tool. In a world with lower barriers to quitting you'd no longer be able to pad your margins by exploiting workers in a way that would be inconceivable if they didn't live in constant terror of hunger and homelessness, should they suffer any disruptions in their jobs. To put it more politely, as a manager, you'd have to make more use of carrots and rely less on sticks. This would certainly muck up the game of anyone who relied on nothing but sticks, but again, that would be an improvement in the eyes of many.
Consider, for example, the employers that refuse to give people full-time work to avoid paying benefits while simultaneously refusing to give people regular schedules, which bars them from taking seconds jobs. These employers are demanding full time availability for part time returns, and getting the on-call time for free. This is atrocious. While I can only speculate here, I suspect this practice would be far less common in a world where people desperate enough to put up with this abuse were significantly fewer and further between.
What opponents of UBI must concede is that the end of labor extracted on highly unfavorable terms from people who fear for their very survival does not mean the end of labor in general. As most people on HN know, there are many reasons besides basic survival that motivate people to expend effort. Taking some of the negative power out of employer's hands would re-focus their efforts on developing non-abusive ways to keep people expending effort on their behalf.
That's bad news for managers who lack the ethics to be managers in the first place. It's good news for decent managers who no longer find themselves lumped together with thugs and thieves (and yes, wage-theft is endemic at the lower rungs of the economy).
I should point out, too, that only a fraction of the work that people do is also paid employment. Any mother who works full time raising her kids can attest to this. The same could be said of working out regularly. UBI acknowledges that there are all sorts of socially beneficial activities that require considerable effort, but don't require formal employment by staffed organizations.
At present, when we say "work" what we really mean "work done directly for someone else in exchange for money". It's important to note that while UBI may, indeed, reduce incentives to work directly for terrible people who pay a pittance, it doesn't mean that people will stop working for the good of themselves or others in general. Indeed, given our intrinsically social nature, freeing people from the monsters may lead to a spike in the output of socially beneficial effort.
Do you have a rough estimate of how much fear-based productivity will be lost in the short term, and how much will be lost in the long term as the market adjusts? Emotional arguments are well and good, but what if it turns out that the economy was in fact running on fear?
There's growing evidence that fear is hugely counterproductive. That's because the relentless stress is causes turns out to be an inhibitor of economic growth, rather than an accelerant. If the economy is, in fact, being run on fear then it's safe to say that it's seriously underperforming vis-a-vis an economy in which people generally felt happy and secure.
https://hbr.org/2014/11/the-hard-data-on-being-a-nice-boss
https://hbr.org/2014/11/the-hard-data-on-being-a-nice-boss
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Another important fact is that the rich and poor treat resources differently. The poor tend to consume while the rich tend to invest. (This is also the justification of stimulus targeting the poor.) I.e., if you tax the hell out of some rich guy, he has less money to put into Uber or SpaceX.
This is a very simplistic view. It is also, strictly speaking, incorrect. You can't possibly argue that poor people consume more in absolute terms thus you must mean as a percent of wealth. But this is not a good measure. A person in a given society will feel the need for some base level of consumption and for a poor person this necessarily will be a higher percent of their wealth than for a rich person.
Upper middle class to low end rich invest money in stocks, bonds, real estate. They aren't investing in startups or the next big thing. Taxing the "hell out of some rich guy" allows society through its elected representatives to make such investments and to invest in things that society deems useful (at least in theory). It's through this mechanism that one gets the space program in the 1960s. The Hoover dam, the highway system, clean water, etc. Private investments could not possibly have produced the moon landings, etc.
Upper middle class to low end rich invest money in stocks, bonds, real estate. They aren't investing in startups or the next big thing. Taxing the "hell out of some rich guy" allows society through its elected representatives to make such investments and to invest in things that society deems useful (at least in theory). It's through this mechanism that one gets the space program in the 1960s. The Hoover dam, the highway system, clean water, etc. Private investments could not possibly have produced the moon landings, etc.
You can't possibly argue that poor people consume more in absolute terms thus you must mean as a percent of wealth.
The relevant measure: http://en.wikipedia.org/wiki/Marginal_propensity_to_consume
...allows society through its elected representatives to make such investments and to invest...
Which is irrelevant to this conversation since we are discussing taxing people to pay for consumption.
The relevant measure: http://en.wikipedia.org/wiki/Marginal_propensity_to_consume
...allows society through its elected representatives to make such investments and to invest...
Which is irrelevant to this conversation since we are discussing taxing people to pay for consumption.
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> That is, if say, $500/week was the basic income level, wouldn't the price of everything rise quickly to subsume that $500 almost immediately, as it moves the lower-bound from $0 to $500?
How would that happen? Alice's and Bob's grocery stores still have to compete for customers.
How would that happen? Alice's and Bob's grocery stores still have to compete for customers.
The assumption for that kind of scenario is that supply is static, which is clearly not the case for a lot of things. If supply is entirely static, then injecting $500 extra demand might drive the combined price of the supply up $500..
Of course it misses the elasticity of the supply, but also that the supply is not exclusively paid by people for whom $500 makes up all that large part of their demand, so even if there is a price rise, the primary effect of that price rise will "just" be to alter the degree of redistribution (making the $500 worth a bit less to the recipient, and make providing it cost a bit more to the people eventually footing the bill).
Of course it misses the elasticity of the supply, but also that the supply is not exclusively paid by people for whom $500 makes up all that large part of their demand, so even if there is a price rise, the primary effect of that price rise will "just" be to alter the degree of redistribution (making the $500 worth a bit less to the recipient, and make providing it cost a bit more to the people eventually footing the bill).
Sure, but Alice's and Bob's grocery stores expenses have risen, right? Because taxes have risen to support BI.
But their demand has risen, which may help them secure better deals with suppliers. It is not automatically a given that their overall costs would increase.
Also, even if they do raise prices, the price rise will be averaged over all their customers, most of whom will be spending far more than whatever the added spend from basic income would be, so will alter the degree of redistribution and the cost, not in any way eviscerate the benefit to those it is meant to help.
Also, even if they do raise prices, the price rise will be averaged over all their customers, most of whom will be spending far more than whatever the added spend from basic income would be, so will alter the degree of redistribution and the cost, not in any way eviscerate the benefit to those it is meant to help.
It's far from clear exactly how much of a tax rise would be necessary. Present social assistance programs are astoundingly wasteful and could be by and large replaced with a simple BI scheme.
Of course, there might be a bunch of social workers, bureaucrats, administrators, and other folks living on BI as their primary income for a while, but part of the point of the system is to take away the stigma of that.
Of course, there might be a bunch of social workers, bureaucrats, administrators, and other folks living on BI as their primary income for a while, but part of the point of the system is to take away the stigma of that.
People used the money as capital to create new economic activity- bakery, chickens, concrete blocks, etc.
A lot of money seems to have gone to education, which had excess capacity it could use to fill new demand at current prices.
It's not stated, but it sounds like most of the villagers aren't paying any kind of rent. I've always suspected that rent would be the place basic income might vanish into rising costs. Would be interesting to see how that turned out.
Anyway, it sounds in this case like most of the money was used as capital, which is a win for everyone.
A lot of money seems to have gone to education, which had excess capacity it could use to fill new demand at current prices.
It's not stated, but it sounds like most of the villagers aren't paying any kind of rent. I've always suspected that rent would be the place basic income might vanish into rising costs. Would be interesting to see how that turned out.
Anyway, it sounds in this case like most of the money was used as capital, which is a win for everyone.
Maybe the poor don't feel guilt, but the argument is deceptive. For the rich BI works just like a small tax deduction. Lets say a rich person pays taxes for $1000 and receives $10 as basic income. It just amounts to paying $990 in taxes. And the poor receive $10 BI and pays no taxes. As others mentioned it's just a redistribution of wealth. Make it look otherwise to not feel guilty is to deceive oneself.
To me, the most interesting part of this is the way that it fosters entrepreneurs. If it were "just" about guaranteeing people have enough money to buy food, it would still be good to do, but a much harder sell. But this looks more like YC for the bottom of the pyramid. That might be the greatest wealth creation scheme of all time.
Every time Basic Income is discussed here in the first world, people mention monthly amounts that would sustain their comfortable lifestyles. The article links to a project where the basic income grant was just about enough to reduce extreme poverty (about 45 times minimum hourly wage, that would mean USD 400-500/month in the US/Europe), thus conclusions (both for and against) about much higher basic income schemes in the developed world are not valid.
By the way, with the US military budget you could provide similar Basic Income for about 3.75 billion people. Just saying ...
By the way, with the US military budget you could provide similar Basic Income for about 3.75 billion people. Just saying ...
You had me going right until the closing line
The reason the United States has to spend so much on defense - constantly one-upping the bad actors of the world [1] - is because no other nation will ( or wants to ? ). Perhaps if Western Europe stepped to its end of the bargain, U.S. won't have to.
President Obama summed it up nicely in a recent 60 Minutes interview with CBS News' Steve Kroft:
http://www.youtube.com/watch?v=ygHN-vplJZg
http://www.onr.navy.mil/media-center/fact-sheets/electromagn...
[2] President Obama: People Don't Call Beijing, Moscow, They Call Us When Trouble Comes Up In The World
https://www.youtube.com/watch?v=6XZRQgT9D5k
http://www.cbsnews.com/news/president-obama-60-minutes/
> By the way, with the US military budget you could
provide similar Basic Income for about 3.75 billion
people. Just saying ...
The reason the United States has to spend so much on defense - constantly one-upping the bad actors of the world [1] - is because no other nation will ( or wants to ? ). Perhaps if Western Europe stepped to its end of the bargain, U.S. won't have to.
President Obama summed it up nicely in a recent 60 Minutes interview with CBS News' Steve Kroft:
Steve Kroft: I think everybody applauds the efforts
that you've made and the size of the coalition that
has been assembled. But most of them are contributing
money or training or policing the borders, not getting
particularly close to the contact. It looks like once
again we are leading the operation. We are carrying...
President Obama: Steve, that's always the case.
That's always the case. America leads. We are the
indispensable nation. We have capacity no one else
has. Our military is the best in the history of
the world. And when trouble comes up anywhere in
the world, they don't call Beijing. They don't call
Moscow. They call us. That's the deal.
Steve Kroft: I mean, it looks like we are doing 90
percent.
President Obama: Steve, there is not an issue ...
when there's a typhoon in the Philippines, take a look
at who's helping the Philippines deal with that situation.
When there's an earthquake in Haiti, take a look at who's
leading the charge making sure Haiti can rebuild. That's
how we roll. And that's what makes this America.[2]
http://www.youtube.com/watch?v=ygHN-vplJZg
http://www.onr.navy.mil/media-center/fact-sheets/electromagn...
[2] President Obama: People Don't Call Beijing, Moscow, They Call Us When Trouble Comes Up In The World
https://www.youtube.com/watch?v=6XZRQgT9D5k
http://www.cbsnews.com/news/president-obama-60-minutes/
What has our immense military budget exactly achieved? It hasn't defeated ISIS, brought peace to Syria, stopped Putin's aggressive expansionism, or ended North Korea's nuclear testings. Maybe Western Europe isn't interested in the bargain to begin with. From what is the US defending itself against with excessive military spending when we already have nuclear weapons that function as an effective deterrent? It doesn't seem like our military budget is preventing worldwide crises and nuclear development in rogue countries.
> The reason the United States has to spend so much on defense ... is because no other nation will
I don't think it's clear which way the causality runs there.
I don't think it's clear which way the causality runs there.
Yes but if others are not because we are...how does one do the hand-off without leaving a gap in worldwide military operations?
What I was hinting at with my closing line that the first world spends a lot of money apparently fighting - among other things - symptoms of poverty and illiteracy. Perhaps there's a better way to spend some of that money, although the military-industrial complex would disagree strongly.
As for the "the US does it because noone else will" - true, but it's not because we don't want to spend the money and sacrifice our troops. It's because we still believe that fighting fire with fire is wrong (and the results so far speak for themselves).
As for the "the US does it because noone else will" - true, but it's not because we don't want to spend the money and sacrifice our troops. It's because we still believe that fighting fire with fire is wrong (and the results so far speak for themselves).
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The premise of Basic Income is that money will go directly to the needy, and won't be wasted in bureaucracy, etc. But I'm not sure how it'll work practically.
I live in SF. Every day I see dozens of homeless people, camped out on the sidewalks or under overpasses, panhandling.
So suppose you introduce BI into this. Let's say every homeless person in SF gets $1500/month (or pick a number). The homeless person, say, decides to blow it all on hookers and blow, and is out that money in 2 days. Now what happens to him? He's still on the streets. Who will take care of him? Who will pay for his emergency room visits? Who will clean up after he takes a dump on the street? Who will provide him with food and clothes?
Please don't get me wrong: I'm all for some magic wand which removes poverty, even if it means more taxes for me. But I don't know how BI will work in practice.
I live in SF. Every day I see dozens of homeless people, camped out on the sidewalks or under overpasses, panhandling.
So suppose you introduce BI into this. Let's say every homeless person in SF gets $1500/month (or pick a number). The homeless person, say, decides to blow it all on hookers and blow, and is out that money in 2 days. Now what happens to him? He's still on the streets. Who will take care of him? Who will pay for his emergency room visits? Who will clean up after he takes a dump on the street? Who will provide him with food and clothes?
Please don't get me wrong: I'm all for some magic wand which removes poverty, even if it means more taxes for me. But I don't know how BI will work in practice.
Who took care of the homeless person before?
The point is not that it will cure all societal ills, but that there are a substantial percentage of poor people who are not poor because they lack the ability to spend money wisely, but because they've been thrust into situations that are beyond their ability to solve without cash.
For starters, it is extremely expensive to be poor, to the extent where certain situations are far harder to claw yourself back out of than it is to remain out of them in the first place - but sometimes people get knocked down into that hole. Basic income provides a means to protect a lot of people from those kind of situations.
Basic income further changes the dynamics even for those who end up messing up: Aid towards those people can then focus on addressing the problems that prevent them from making proper use of the income, rather than be limited by their lack of income.
A lot of problems poor people struggle with are related: Mental health problems can trigger poverty, but poverty can also drive people far into depression and make other problems worse by virtue of making treatment difficult; physical health suffers, and reduced access to health care makes it worse; alcohol and drug problems are a frequent escape, and while they won't disappear with basic income, treating addictions without addressing the situations which contributed to driving people into addictions is vastly harder. You will not automatically solve the mental health and addiction problems, but you can reduce homelessness to predominantly a health/addiction problem (as it is in many countries with decent welfare systems, even without basic income) and leave yourself with a smaller challenge.
Consider that your argument is similar to that of the Namibian farmer in the article, who assumed that people would just spend it on alcohol. The reality is that while he was right about some people, he was also wrong about a lot of people, who were able to not only change their own situation, but contribute to further improve the situation of others (e.g. the money helped some start businesses, but also contributed to creating a market for those businesses).
It is irrelevant whether or not your hypothetical homeless person is still on the streets. The more relevant question is how many are helped off the streets or otherwise see their lives improve, and whether the improvements seen are worth the cost.
The point is not that it will cure all societal ills, but that there are a substantial percentage of poor people who are not poor because they lack the ability to spend money wisely, but because they've been thrust into situations that are beyond their ability to solve without cash.
For starters, it is extremely expensive to be poor, to the extent where certain situations are far harder to claw yourself back out of than it is to remain out of them in the first place - but sometimes people get knocked down into that hole. Basic income provides a means to protect a lot of people from those kind of situations.
Basic income further changes the dynamics even for those who end up messing up: Aid towards those people can then focus on addressing the problems that prevent them from making proper use of the income, rather than be limited by their lack of income.
A lot of problems poor people struggle with are related: Mental health problems can trigger poverty, but poverty can also drive people far into depression and make other problems worse by virtue of making treatment difficult; physical health suffers, and reduced access to health care makes it worse; alcohol and drug problems are a frequent escape, and while they won't disappear with basic income, treating addictions without addressing the situations which contributed to driving people into addictions is vastly harder. You will not automatically solve the mental health and addiction problems, but you can reduce homelessness to predominantly a health/addiction problem (as it is in many countries with decent welfare systems, even without basic income) and leave yourself with a smaller challenge.
Consider that your argument is similar to that of the Namibian farmer in the article, who assumed that people would just spend it on alcohol. The reality is that while he was right about some people, he was also wrong about a lot of people, who were able to not only change their own situation, but contribute to further improve the situation of others (e.g. the money helped some start businesses, but also contributed to creating a market for those businesses).
It is irrelevant whether or not your hypothetical homeless person is still on the streets. The more relevant question is how many are helped off the streets or otherwise see their lives improve, and whether the improvements seen are worth the cost.
> Who took care of the homeless person before?
That implies that the current "inefficient" infrastructure will still be needed after BI. That doesn't seem like a good use of resources; it just adds a massive tax burden on top of the current system.
BTW: I'm not arguing from philosophy, but from actually seeing homeless people on the streets every day. Each and every one of them seems to have mental and physical problems, and every one of them seems addicted to various substances (and incapable of taking care of their own finances).
That implies that the current "inefficient" infrastructure will still be needed after BI. That doesn't seem like a good use of resources; it just adds a massive tax burden on top of the current system.
BTW: I'm not arguing from philosophy, but from actually seeing homeless people on the streets every day. Each and every one of them seems to have mental and physical problems, and every one of them seems addicted to various substances (and incapable of taking care of their own finances).
http://www.psmag.com/science/vancouvers-free-heroin-injectio...
They gave 322 homeless street addicts free opiates, which allowed them to sort their lives out since their day to day activities weren't entirely consumed with scoring heroin. Property theft and street violence also plummeted, saving ambulance costs for overdoses, and the police and courts millions which was all in the full SALOME study as most of the addicts used property crime to fund their addictions.
I imagine BI would do the same. Instead of being on an automatic pilot mode of desperately finding money for drugs and booze everyday there would be time to reflect and maybe seek out detox.
They gave 322 homeless street addicts free opiates, which allowed them to sort their lives out since their day to day activities weren't entirely consumed with scoring heroin. Property theft and street violence also plummeted, saving ambulance costs for overdoses, and the police and courts millions which was all in the full SALOME study as most of the addicts used property crime to fund their addictions.
I imagine BI would do the same. Instead of being on an automatic pilot mode of desperately finding money for drugs and booze everyday there would be time to reflect and maybe seek out detox.
These negative stereotypes of how impoverished people will spend their money are usually not true in practice. See the following:
https://www.givedirectly.org/pdf/litreview_2.pdf
http://www.poverty-action.org/blog/cash-or-cows
http://www.dominionpaper.ca/articles/4100
Consider, for example, the case of the woman who was arrested for leaving her 2 kids in a hot car while she went in for an interview. There was a huge outpouring of support for her, and people collected $114K for her, to help her out. What did she do with the money? Read here: http://ktla.com/2014/11/19/mom-who-received-114k-in-donation...
> The homeless person, say, decides to blow it all on
> hookers and blow, and is out that money in 2 days.
> Now what happens to him? He's still on the streets. Who
> will take care of him? Who will pay for his emergency
> room visits? Who will clean up after he takes a dump on
> the street? Who will provide him with food and clothes?
You can ration funds like welfare programs already do for at-risk groups. For example, instead of paying $1500/month, you could do a direct deposit of $375/week or $50/day. Furthermore, a basic income is not designed to completely replace programs offered to the disabled or other special needs groups (although it would help). A basic income is designed to remove the perverse tax incentives and byzantine bureaucracy heaped on the "normal" patch-of-bad-luck group.
> For example, instead of paying $1500/month, you could do a direct deposit of $375/week or $50/day.
... and thus will be born the "BI loan" industry: take $1000 now, and we'll collect your $375/week.
... and thus will be born the "BI loan" industry: take $1000 now, and we'll collect your $375/week.
We need to stop thinking of the economy in terms of individuals. Suppose that a significant percentage of people currently on welfare will use their basic income responsibly. We have all of the money we saved on them to spend on those who use it irresponsibly.
Homeless people camped out under overpasses are only one small and very visible kind of poverty in America (maybe the only visible sign in SF proper at this point, for all I know).
[deleted]
"The money comes from various organizations, including AIDS foundations, the Friedrich Ebert Foundation and Protestant churches in Germany's Rhineland and Westphalia regions."
So this was straight up a cash infusion. I don't think anyone questions that if money gets injected into a local economy that this improves the standard of living. This isn't Basic Income, this is a new way to distribute aid.
Still, congrats to the project it sounds like they are going good.
So this was straight up a cash infusion. I don't think anyone questions that if money gets injected into a local economy that this improves the standard of living. This isn't Basic Income, this is a new way to distribute aid.
Still, congrats to the project it sounds like they are going good.
> I don't think anyone questions that if money gets injected into a local economy that this improves the standard of living
Yet the article starts with just that claim, from a local farmer, and it is a common objection to aid programs that provides monetary aid from people who presumes that poor people are guilty of causing their own predicament.
> This isn't Basic Income, this is a new way to distribute aid.
It is both. The point is that that by not means testing the aid, and by providing it in predictable cash payments on a regular schedule instead of crisis aid, or doling out specific types of aid, such as health services or bags of rice, you obtain substantial benefits that you don't get through other types of aid programs.
Yet the article starts with just that claim, from a local farmer, and it is a common objection to aid programs that provides monetary aid from people who presumes that poor people are guilty of causing their own predicament.
> This isn't Basic Income, this is a new way to distribute aid.
It is both. The point is that that by not means testing the aid, and by providing it in predictable cash payments on a regular schedule instead of crisis aid, or doling out specific types of aid, such as health services or bags of rice, you obtain substantial benefits that you don't get through other types of aid programs.
> I don't think anyone questions that if money gets injected into a local economy that this improves the standard of living.
That vastly depends on how the money is injected. If it's injected into two warring militant groups or effectively into the pockets of some local dictator or in general to local group that does harmfult things it will degrade average standard of living.
That vastly depends on how the money is injected. If it's injected into two warring militant groups or effectively into the pockets of some local dictator or in general to local group that does harmfult things it will degrade average standard of living.
> This isn't Basic Income, this is a new way to distribute
> aid.
It's called Unconditional Cash Transfers. It is BIG, except the money comes from a different country's citizens. My buddy at USAID can't stop raving about their efficacy...
http://en.wikipedia.org/wiki/Unconditional_cash_transfer
http://en.wikipedia.org/wiki/Unconditional_cash_transfer
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The difference is in a BI system like we usually talk about, the BI is funded by local taxes.
In this case, foreign dollars were used to fund the cash grants, so your parent is arguing it's not a welfare-type BI system but simply a different form of aid distrubtion.
In this case, foreign dollars were used to fund the cash grants, so your parent is arguing it's not a welfare-type BI system but simply a different form of aid distrubtion.
Basic income is a way to redistribute wealth within a (relatively) closed system, not a way to distribute aid that is coming from outside a closed system.
> So this was straight up a cash infusion.
Its very similar to welfare, unemployment insurance, and social security in the US though (without the added bureaucracy costs). The only difference is the funding source (an NGO instead of a government).
Its very similar to welfare, unemployment insurance, and social security in the US though (without the added bureaucracy costs). The only difference is the funding source (an NGO instead of a government).
Just noticed that this was written in 2009. Any updates on the experiment in the five years since then?
It sounds like they ran out of money for a while and stopped the grant: http://www.economist.com.na/general-news/699-big-resources-d...
They then got some additional funds and started it up again: http://allafrica.com/stories/201407170971.html
They then got some additional funds and started it up again: http://allafrica.com/stories/201407170971.html
They are still doing it http://allafrica.com/stories/201407170971.html
This is from 2009. Apparently the pilot program is over:
"From January 2008 to December 2009 the BIG Coalition implemented the world-wide first Basic Income Grant pilot project in Otjivero - Omitara, Namibia. After the conclusion of the Pilot Project a monthly bridging-allowance (N$ 80) to all who participated in the pilot was paid regularly until March 2012."
From: http://www.bignam.org/BIG_pilot.html
Edit: another comment says it it resumed: http://allafrica.com/stories/201407170971.html
"From January 2008 to December 2009 the BIG Coalition implemented the world-wide first Basic Income Grant pilot project in Otjivero - Omitara, Namibia. After the conclusion of the Pilot Project a monthly bridging-allowance (N$ 80) to all who participated in the pilot was paid regularly until March 2012."
From: http://www.bignam.org/BIG_pilot.html
Edit: another comment says it it resumed: http://allafrica.com/stories/201407170971.html
I'd like to see that in Russia. There villages are dying for the last 40 years. Providing basic income in rural economies would save Russia too.
If philanthropy became a bigger part of our culture, I believe we could achieve something similar to basic income. Of course, that starts with individuals getting in the habit of giving and encouraging others to do the same. A couple things I have found:
1) The starfish parable ("it made a difference to that one") is the right mindset. It can be daunting when you consider how much is needed compared to how comparatively little is in your bank account. Instead visualize at what was made possible by your donation.
2) As a general rule, I think it makes more sense to give habitually over the course of a career than it does to wait until the end of your career. This probably applies more to stable jobs than startups, though.
1) The starfish parable ("it made a difference to that one") is the right mindset. It can be daunting when you consider how much is needed compared to how comparatively little is in your bank account. Instead visualize at what was made possible by your donation.
2) As a general rule, I think it makes more sense to give habitually over the course of a career than it does to wait until the end of your career. This probably applies more to stable jobs than startups, though.