An Experiment with Guaranteed Income

[Jack Hays]

I have thought for some time that it might be wise to eliminate all our current entitlements (social security, welfare, etc.) and replace them with a simple guaranteed income floor across the board. Here's an interesting experiment aimed at finding out what happens when you do that.

• 
  
  Lifestyle
  We're about to find out what happens when you give poor people basic income for life
  
  Over the past decade, interest has grown in an ostensibly unorthodox approach for helping people who don’t have much money: just give them more of it, no strings attached. In the old days of policymaking by aphorism-give a man a fish, feed him for a day!-simply handing money to the poor was considered an obviously bad idea. How naïve-you can’t just give people money. They’ll stop trying! They’ll just get drunk! The underlying assumption was that the poor weren’t good at making decisions for themselves: Experts had to make the decisions for them. As it turns out, that assumption was wrong. Across many contexts and continents, experimental tests show that the poor don’t stop trying when they are given money, and they don’t get drunk. Instead, they make productive use of the funds, feeding their families, sending their children to school, and investing in businesses and their own futures. . . . .

 

[Lutherf]

I'm all for this. If you give me a mere $80k/yr (adjusted annually for inflation) I promise that I will never be poor again.

 

[Henrin]

It's still robbing the treasury to provide for peoples individual needs.

 

[joG]

I have thought for some time that it might be wise to eliminate all our current entitlements (social security, welfare, etc.) and replace them with a simple guaranteed income floor across the board. Here's an interesting experiment aimed at finding out what happens when you do that.

• 
  
  Lifestyle
  We're about to find out what happens when you give poor people basic income for life
  
  Over the past decade, interest has grown in an ostensibly unorthodox approach for helping people who don’t have much money: just give them more of it, no strings attached. In the old days of policymaking by aphorism-give a man a fish, feed him for a day!-simply handing money to the poor was considered an obviously bad idea. How naïve-you can’t just give people money. They’ll stop trying! They’ll just get drunk! The underlying assumption was that the poor weren’t good at making decisions for themselves: Experts had to make the decisions for them. As it turns out, that assumption was wrong. Across many contexts and continents, experimental tests show that the poor don’t stop trying when they are given money, and they don’t get drunk. Instead, they make productive use of the funds, feeding their families, sending their children to school, and investing in businesses and their own futures. . . . .

I am pretty sure that that is a good solution. Every serious analysis i have seen over time makes guaranteed minimum income seem more sensible than our present systems in the OECD.
The US ran experiments to this topic in the 1970s, if I recall. The results were mostly encouraging. I have been arguing for 20 years with my political friends that it should be undertaken or at least wider experiments undertaken. But there is massive resistance to this innovation from public bureaucracy employees and their unions, as the greatest number of their jobs would go.

 

[Carjosse]

I am pretty sure that that is a good solution. Every serious analysis i have seen over time makes guaranteed minimum income seem more sensible than our present systems in the OECD.
The US ran experiments to this topic in the 1970s, if I recall. The results were mostly encouraging. I have been arguing for 20 years with my political friends that it should be undertaken or at least wider experiments undertaken. But there is massive resistance to this innovation from public bureaucracy employees and their unions, as the greatest number of their jobs would go.

That was Canada, we tested in a small town in Manitoba. The new federal Liberals and the Ontario Liberals I think are trying to do more experiments.

 

[joG]

That was Canada, we tested in a small town in Manitoba. The new federal Liberals and the Ontario Liberals I think are trying to do more experiments.

That is interesting and I will read up on it. The examples hidden behind the cobwebs of my mind were done in the US in the late 1960s to early 1970s. I am not sure that there were only two or whether there were more.

 

[JC Callender]

I'd rather have a single guaranteed income over the dozens of social programs and tax credits now available. But ultimately I would rather have neither and leave it up to the citizens to love and provide for one another on their own terms as they did before all of these programs.

 

[Socrates1]

I'm all for this. If you give me a mere $80k/yr (adjusted annually for inflation) I promise that I will never be poor again.

Well just tap your heels together 3 times after throwing hands full of pixie dust and wait . :lamo

 

[Lafayette]

I have thought for some time that it might be wise to eliminate all our current entitlements (social security, welfare, etc.) and replace them with a simple guaranteed income floor across the board. Here's an interesting experiment ...

The underlying assumption was that the poor weren’t "good" at making decisions for themselves: Experts had to make the decisions for them.

As it turns out, that assumption was wrong. The poor make crucial decisions that are commensurate with their existence. No money - no great expenditure, and out of self-commiseration, perhaps lots of alcohol (games, debts) to forget momentarily the distress of sensing that "we are not like all the others". (No, I am not making excuses for their misbehaviour!!!)

Give them the money they need for a basic level of existence, and see what happens!

They are human beings like you and me, and they want the best for themselves and their families. If not, then they have to be taught that there are other, better, modes of existence. But an effort is necessary to achieve them, they are not for "free".

Which is the sort of basic truth, just one of them, that they should have been taught from the very beginning. (If not in the family, then at school.)

Everybody has a chance, but the very fact that risk is an integral part of our lives, means that not all will succeed as much as they may have wanted. But, that should never-ever mean that more than 50 million people are incarcerated below the Poverty Threshold that is, where parents are earning $24K per year income for a family of two adults and two children.

Not ever - especially in a county where the median income is $52K a year and the average income closer to $73K.

It's just not fair - it's inhuman ...

 

[Lafayette]

It's still robbing the treasury to provide for peoples individual needs.

So, you are saying that the Treasury, which we all own as citizens, is more important than human lives?

What planet do you live on ... ?

 

[Lafayette]

I'm all for this. If you give me a mere $80k/yr (adjusted annually for inflation) I promise that I will never be poor again.

Confucius say, "Engage mind before making comment".

Or suffer ridicule ...

 

[Henrin]

So, you are saying that the Treasury, which we all own as citizens, is more important than human lives?

What planet do you live on ... ?

I'm saying the treasury is to be used towards those government actions that act to codify and enforce law designed to uphold the rights of the citizens.

 

[Lafayette]

I'd rather have a single guaranteed income over the dozens of social programs and tax credits now available. But ultimately I would rather have neither and leave it up to the citizens to love and provide for one another on their own terms as they did before all of these programs.

The dozens of "social programs" derives from the fact that we do not have all the same needs.

It is simplistic to think that throwing money at people will solve a complex problem. It is necessary, but insufficient. Two other criteria are necessary. A job-market that is improving, and a minimum wage that will provide sufficient income for more than a subsistence living.

The first is in the making presently, the second requires further political pressure to overcome a false sense that the country cannot afford it ...

 

[Jack Hays]

The dozens of "social programs" derives from the fact that we do not have all the same needs.

It is simplistic to think that throwing money at people will solve a complex problem. It is necessary, but insufficient. Two other criteria are necessary. A job-market that is improving, and a minimum wage that will provide sufficient income for more than a subsistence living.

The first is in the making presently, the second requires further political pressure to overcome a false sense that the country cannot afford it ...

"The country" does not afford (or not) any specific level of minimum wage.

 

[Lafayette]

"The country" does not afford (or not) any specific level of minimum wage.

Why not?

Because your BigMac will cost 20 cents more?

Hardly a consideration, el Cheapo ...

 

[Jack Hays]

Why not?

Because your BigMac will cost 20 cents more?

Hardly a consideration, el Cheapo ...

Has nothing to do with me. Has to do with what the economy will sustain.

 

[Mycroft]

A couple things come to mind while reading that article.

1. Unless I totally misunderstand what I'm reading, it appears to me that the article is saying that since it can be shown that government assistance in the form of a single cash payment is better than the piecemeal, multi-program approach then that is a suitable reason for creating a guaranteed income to all citizens.

Sorry, but I don't buy it. I don't see the one being any kind of justification for the other. Government assistance and guaranteed minimum are two entirely different concepts.

2. Where will the money for this guaranteed minimum income come from? Simply ending all current government assistance programs won't free up enough to pay for a guarantee minimum income for everyone.

3. On the other hand, if one accepts the idiotic spinning arguments of those who say the government can spend as much as they want without any economic consequences then yeah...we all should lobby the government to give everyone...oh...a couple hundred thousand a year.

4. btw...TANSTAAFL!

 

[brothern]

I'm all for this. If you give me a mere $80k/yr (adjusted annually for inflation) I promise that I will never be poor again.

The ratio of the total sum of the basic income stipend as compare to Kenya's median income is roughly 0.35.
Translating that to an experiment being carried out in the USA; the recipients would be receiving roughly $20k/yr.

 

[brothern]

A couple things come to mind while reading that article.

1. Unless I totally misunderstand what I'm reading, it appears to me that the article is saying that since it can be shown that government assistance in the form of a single cash payment is better than the piecemeal, multi-program approach then that is a suitable reason for creating a guaranteed income to all citizens.

Sorry, but I don't buy it. I don't see the one being any kind of justification for the other. Government assistance and guaranteed minimum are two entirely different concepts.

I think you are misunderstanding. The reason that, for example, Finland is progressing with their own experiment in this area is that they've figured out that the total cost of all of their welfare programs together ends up being MORE THAN the cost of just giving everyone in the country a recurring cash payment that meets the poverty level.

2. Where will the money for this guaranteed minimum income come from? Simply ending all current government assistance programs won't free up enough to pay for a guarantee minimum income for everyone.

Then you're in for a big surprise. You ought to realize that the cost of welfare isn't just the amount of support given to people - it's additionally the cost of running a dozen or so massive organizations, which employ thousands of people to deliver public assistance.

3. On the other hand, if one accepts the idiotic spinning arguments of those who say the government can spend as much as they want without any economic consequences then yeah...we all should lobby the government to give everyone...oh...a couple hundred thousand a year.

4. btw...TANSTAAFL!

 

[Mycroft]

I think you are misunderstanding. The reason that, for example, Finland is progressing with their own experiment in this area is that they've figured out that the total cost of all of their welfare programs together ends up being MORE THAN the cost of just giving everyone in the country a recurring cash payment that meets the poverty level.

Perhaps you can supply a reference to support this statement? I didn't see anything in the article that says any such thing about Finland...not even at that link about Finland's intention to conduct their experiment.

Then you're in for a big surprise. You ought to realize that the cost of welfare isn't just the amount of support given to people - it's additionally the cost of running a dozen or so massive organizations, which employ thousands of people to deliver public assistance.

You got any hard numbers? Or, are you just speculating? In other words, how much would it cost our government to give every citizen a guaranteed income? In fact, how much would that income be? $20k? 30? 50? Whatever...pick a number and multiply it by 3 or 4 hundred million or so. Heck, $20k times 300 million is $6 Trillion. We could stop ALL government spending and not free up enough money to cover that cost.

 

[brothern]

Perhaps you can supply a reference to support this statement? I didn't see anything in the article that says any such thing about Finland...not even at that link about Finland's intention to conduct their experiment.

This has been well publicized since last fall. My apologies, I assumed you had read about it.
https://www.weforum.org/agenda/2015/12/finland-basic-income/

You got any hard numbers? Or, are you just speculating? In other words, how much would it cost our government to give every citizen a guaranteed income? In fact, how much would that income be? $20k? 30? 50? Whatever...pick a number and multiply it by 3 or 4 hundred million or so. Heck, $20k times 300 million is $6 Trillion. We could stop ALL government spending and not free up enough money to cover that cost.

$20K/yr is only what Americans would be getting, if the Kenyan experiment was directly translated into the US.
If it were truly replicated in the USA, it'd have to be a scheme like one of the various structures that Finland is testing out. Where the given assistance is at or less than the federal poverty level, and there was some sort of phase out schedule.

 

[Lafayette]

Has nothing to do with me. Has to do with what the economy will sustain.

Exactly!

It will cost peanuts to pinch-off from Net Profit and give it to the bottom, where it will do the most good. The money-in-pocket will be employed in enhanced spending, thus boosting the economy and reducing further unemployment.

At this level of the pay-scale, the employees concerned save "nada", it all goes into consumption.

The argumentation for and against is mixed. Here is my sampling of arguments:
*Two arguments for a higher minimum wage:
**From the Dept. of labor, Minimum Wage Mythbusters
**From research, Effects of raising the minimum wage: Research and key lessons Excerpt:

Earlier studies have indicated that some businesses will cut jobs to pay employees more. In February 2014, the nonpartisan Congressional Budget Office issued a report, “The Effects of a Minimum-Wage Increase on Employment and Family Income,” that explores two scenarios: Raising the minimum wage to $10.10 or to $9.00. The report concludes that there are distinct trade-offs. Under the $10.10 scenario, there would likely be a reduction of about 500,000 workers across the labor market, as businesses shed jobs, but about 16.5 million low-wage workers would see substantial gains in their earnings in an average week. Under the $9.00 scenario, the labor force would see a reduction of 100,000 jobs, but an estimated 7.6 million low-wage workers would see a boost in their weekly earnings.

**From the Bureau of Labor Statistics: Percent of hourly workers at or above the current minimum wage
*

Against raising the minimum wage, excerpt from article above: Critics assert that the real effects of minimum-wage increases are negative: they hurt businesses, raise prices and ultimately are counterproductive for the working poor, as they can lead to unemployment. For a good sense of the partisan argument — and the statistics and studies that are often cited — see these position pieces from the right-leaning American Enterprise Institute and the left-leaning Center for American Progress.

The question is clearly for each of us to decide personally, but the "facts of the matter" have been expressed above.



My Point?

The answer to the question "Is it worth it?" is not clear cut - but neither is the prospect of massive unemployment in the poorest classes the only option. In an economy that is growing jobs, the people laid off will have a chance to be reemployed at the higher minimum wage were it passed by a Dem Congress (both the HofR and the Senate) come next year.

And yes, some will be permanently unemployed unless they return to post-secondary education to obtain a certificate indicating that they have obtained additional skills levels. Which is why such training must be made available free, gratis and for nothing.

 

[Frank Apisa]

The dozens of "social programs" derives from the fact that we do not have all the same needs.

It is simplistic to think that throwing money at people will solve a complex problem. It is necessary, but insufficient. Two other criteria are necessary. A job-market that is improving, and a minimum wage that will provide sufficient income for more than a subsistence living.

The first is in the making presently, the second requires further political pressure to overcome a false sense that the country cannot afford it ...

Good luck with either of those.

MY GUESS: There will NEVER be enough decent paying jobs for everyone who needs and wants one...EVER AGAIN.

 

[Lafayette]

As regards the BLS chart that I put up, it is important to note that the data comes from 2010/11 - perhaps the worst point in the aftermath of the Toxic Waste Mess, when the Great Recession was announced.

That chart is likely to have changed significantly since. However, it's breakdown in terms of those affected is a fine example of who suffers most from the lack of a Minimum Wage. And, to my mind, it is our class of the Insufficiently Educated.

If we can throw away money on F-35s, why can't we do the same for these people? The result would be very-interesting to see ...

 

[Lafayette]

THE ONLY WAY OUT

Good luck with either of those. MY GUESS: There will NEVER be enough decent paying jobs for everyone who needs and wants one...EVER AGAIN.

You may indeed be right. But I find your pessimism is perhaps exaggerated.

The post-war years (1950/1990) were four decades of economic expansion powered by the necessity to rebuild from the devastation of WW2. However, in 1971, there was only one person who actually saw an Emerging China.

He was a Frenchman by the name of Alain Peyrfitte, who wrote a book titled "Quand la Chine s'éveillera... le monde tremblera", which was never translated into English (When China Awakens ... the World Will Tremble).

That has come to pass, and we are still "trembling". Because we don't know what to do about it? For sure, we should have seen it coming in the 1990s.

Which is why I keep insisting on The-Only-Way-Out. It must be a Aggregate Enhancement in education, produced by a massive infusion in public-spending, to enhance the skills/competencies in two very different classes of individuals:
*Those presently in secondary schooling, and
*Those having graduated, and presently unemployed because they do not have the necessary credentials (diploma or experience).

In the first-instance, school-testing already shows those secondary-level schools that are not up-to-standard. We must address that problem, and it is not Mission Impossible with significant restructuring of some Public School systems (against Federal funding).

In the second instance, a Tertiary Education can be provided at state-institutions of higher-education (vocational, 2 & 4-year degrees) at very low cost, by means (again) of Federal funding.

MY POINT?

And to those who wail that the "gummint aint got da muney", I say "bollocks!" If we are spending 20% of the budget on the DoD, then we can shift some of that funding to Education (for usage as described above)!

Frankly, the single Future Danger to the country's economy exists in our inability to retrain/enhance the Skills & Competency Sets of Americans - and to do so throughout their professional lifetimes.

This is not a problem that we can waive away by employing Wishful Thinking. Where there's a will, there must be a way ...