Evelyn Forget, a health economist at the University of Manitoba, has done some of the best research on the results. Some of her findings were obvious: Poverty disappeared. But others were more surprising: High-school completion rates went up; hospitalization rates went down. “If you have a social program like this, community values themselves start to change,” Forget said.Evelyn Forget is such a great name that I almost want to believe what she's selling. But I'm one of those people who fear the lost incentive to work. I remember a professor here at UW some years ago propounding a guaranteed minimum income of $20,000. He just assumed most people would work so they could have more than that. What if you were just starting out in life and knew you could go work-free if you were willing to live on $20,000?
I'm sure if that deal were offered to me when I was 20, I'd have taken it. I'd have worked at living on that $20,000. Oh, yes, eventually I might have wanted to write a book called "How to Live Well on $20,000 a Year" — because it would have amused me and I wouldn't have minded some extra spending money.
But who knows what the psychology of it all would be? It's one thing to experiment on a tiny town in Manitoba, but what happens when it gets bigger... and less Canadian?
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I suspect the most important phrase in the article is "For a short period of time".
that's the problem with so many ideas from the left: they assume that human nature won't factor in. For example, when I learned of the employer mandate, I told a liberal friend of mine that either the increased cost would be passed to employees or to consumers or both, she went absolutely apeshit crazy calling me stupid, then a liar. They always seem to assume that changing one variable has no second or third order effects other than good ones.
And "tiny Canadian town". Where did the stipend come from: the study organizers or local taxing and redistribution?
You've got to be kidding, Althouse.
The "guaranteed minimum" thing is already reality.
And, we know what happens.
The article is hyperbolic, but only slightly.
Friedman recommended this-- sort of a EITC on steroids. The key is, it can't be too much-- you give people IN CASH, the same standard of living that they get from entitlement programs - Medicaid/Food Stamps/Housing Aid/Social Security/Disability/etc.
Then... all the other entitlement programs go poof! So overall, the government saves money.
Some people would probably choose to do nothing--but how is that different than the current situation.
The key is that with cash, people recieving only the minimum could make choices..where to live, how much to spend on food, etc. So those who didn't WANT to stay poor could, say, eat beans and rice but buy reliable transportation or start a business or get an education.
And the minimum would be low enough (20K for a single adult is too high) that most people would want to supplement it.... BUT, you wouldn't lose out, in the sense that everyone in the US would automatically get the 10K or whatever each year, and working more wouldn't reduce your benefit....
The idea is that it changes the economic calculus to make work MORE rewarding for the poor, and it's small enough that it won't dissuade the middle and upper classes from working.
The problem with current entitlement programs is that they actually discourage middle class behaviors like thrift, saving money, etc. For instance, if you are on foodstamps and save up 1000K for any reason, you're off the program. If you have too much equity in your car (again, 1000K) you lose them.
So they encourage people to spend everything they have... it's not worth saving up an emergency fund of 1500 if it means losing 900 a month in food stamps!
The absolutely only way this could hope to work on a national scale is if every other social welfare program disappeared.
Take national GDP, peg a percentage of that to the mincome project, and divide it equally over the populace.
Need health insurance, there ya go, pay it out of mincome. Need to pay for your kid's school lunches, there ya go. Broken car? Broken leg? House mortgage? Mincome or work for it.
But we all know of course that this is not what would happen. First, the people that did choose to work (and thus produced the GDP to take) would be UNFAIRLY taking $1,000 for themselves that could be more FAIRLY doled out to the 'needs-based'. Then, Congress would find itself with too much time and not enough influence on its hands and so would go about recreating every single program mincome was supposed to abolish.
In 1966 Robert Theobald wrote The Guaranteed Income.
As mentioned the key phrase is For a short period of time.
What is the overall societal/economic effect, say, over 20 or 40 years?
Didn't LBJ under the Great Society War on Poverty program promise to eliminate poverty, so where are we after spending hundreds of billions of $$'s ?
Just throwing money at things is not necessarily the way to go.
Also scale is critical. On a limited basis, it might be effective but not so on a grand scale.
And how do you keep people from moving in?
"Also scale is critical. On a limited basis, it might be effective but not so on a grand scale."
How do you know?
No minimum would be "enough", because human wants are limitless. That's before you factor in envy--$20 K might be enough but someone else has more.
There would be constant pressure on the minimum to go up. Politicians, spending other people's money on other people, would find it easier to give it to them. There has never been any serious rollback to the welfare state, it just keeps getting bigger.
We have welfare... food stamps.. social security disability.. free stuff at many such places as Salvation Army.
So there is no way people can starve here in the US unless they want to starve.
But TAXES kill off more incentive than anything else right now.
Kind of hard to work 14 hours a day go build a dream but then the tax man takes it away.
Robert Cook said...
"Also scale is critical. On a limited basis, it might be effective but not so on a grand scale."
How do you know?
11/13/13, 1:34 PM
Somebody has to write the check to float those people. Are you volunteering? As for me, I have better uses for my money.
But who knows what the psychology of it all would be? It's one thing to experiment on a tiny town in Manitoba, but what happens when it gets bigger... and less Canadian?
Detroit. And Chicago.
This is like a pilot public school teaching program tested in the university elementary school on professors' kids with dedicated student teachers with research interest in the program.
And they never understand why the City PS resist copying it, and when forced to, the method fails abysmally.
Also you have to understand that "the poor" are just cannon fodder. The important part is the agency and its employees, who definitely deserve higher remuneration for their public spirited sacrifices and dedication to the public welfare.
How do you know?
Engineer much??
Take a look at the Obamacare website debacle. It will never scale up.
I suspect the most important phrase in the article is "For a short period of time".
Bingo. Obamacare's utter failure is an anomaly. Most gov't programs don't shit the bed for years.
They basically ALL end up shitting the bed, some just take longer.
Wouldn't it have been cheaper to just people money as opposed to Obama's stimulus and Obamacare proposals?
Hell, can anybody name an actually SUCCESSFUL Obama policy? Just one.
Bush had the AIDS in Africa thing and the surge. Also had the tax cuts and prosecution of accounting fraud.
Obama...has jack.
I think the size of the community is the key factor here. In a small town where everyone knows each other, the stigma of not working or leaching off of others would probably be enough to spur people to work. But in a much larger community, where you can choose to associate only with other recipients of stipends and not know personally those who are working and supporting you? Probably not!
Everyone else jumped on the "short period of time".
I'll ask: is there a social difference between a small town in Manitoba and a big city in the U.S.?
I mean the kind of social difference that would break this effort if it were tried, at a large scale, in the U.S.
Successful policy - wherein success is that it accomplished it's stated-to-the-American-people goal?
Well... tell you what, it wasn't what he aimed for but he kept the Olympics and all its guaranteed residual bullshit out of the country for another four years. I'm willing to meet the left half way here and give him props for that.
True. Chicago actually was saved by not having the Olympics.
How could they hope to afford the Games given that they have zero money?
Who's footing the bill? When they get tired of working hard to foot the bill while the others get their minimum income, who will foot the bill then, or will the "footers" be forced by government power to work to continue "footing"?
What I find most disturbing about these schemes is the the disincentives they create to get off assistance. They need to be phased out at some level. So if you begin to earn an income the assistance need to be phased out, e.g. for every dollar earned you lose 50 cents of benefit. That's a 50 percent marginal tax rate even if you're not paying any income tax. That's a very strong deterrent from working, and a big incentive to remain dependent.
What happens when the parents receive minincome and there's no money left over at the end of the month to feed the children. Of course, we can't allow the children to starve, so a program for that must be added.
Or, suppose someone does not use part of the minincome to purchase medical insurance but shows up at the hospital emergency room? Can't let them die, so a program for that must be added.
Etc. Pretty soon you have restored most every benefit program that was supposed to be removed and you have added minicome on top of those programs.
It's like Alaska!
I think a guaranteed minimum income might work as an streamlined alternative to other welfare programs. Make sure the payment is daily. A daily cash card. Spend it on food, on drugs, on lottery tickets, whatever you want. It's yours.
Because, if you think about it, Shouting Thomas is right. A guaranteed minimum income already exists. Except that it's bifurcated into multiple programs all with their own perverse requirements for entry and exit.
Stop them all and replace them with a guaranteed minimum allowance. Everyone adult gets one, no matter what. Every dime you earn on top of your guaranteed minimum allowance is yours, after taxes.
Here's where I get harsh. Minors don't get the check. The moral hazards are too severe. It would make the program impossible to administer. Kids get lunch.
Kids get lunch.
This. Even when the parents are buying meth, there's a chance.
Obamacare. These class of projects do not scale well from local or regional implementations, since economic development and accountability are proportionate to proximity.
But would the parents be as likely to spend cash on meth when they also had to spend it on food?
Even bad parents love their kids, and kids are annoying when they're hungry-- it's easier just to feed them so they leave you alone...
When you relieve someone of all their responsibilities, you free them up to buy meth. If Mom has to budget and has the opportunity to build up savings for big stuff, meth may look like less of a good deal.
It's like Alaska!
Titus, with your raging provincialism, you should recognize that the Alaksan payments are in return for the arduous task of living in fucking Alaska.
Unknown said...
Who's footing the bill? When they get tired of working hard to foot the bill while the others get their minimum income, who will foot the bill then, or will the "footers" be forced by government power to work to continue "footing"?
11/13/13, 2:16 PM
I'd like to know what the people footing the bill get for their coerced generosity. Maybe gardening, laundry and other services should be also coerced as compensation.
Titus said...
It's like Alaska!
Think real hard.
Where does the money come from?
"Even bad parents love their kids...."
Some do; some don't, and some of these neglect or beat or abuse their kids, or rent them out to be sexually abused or otherwise used as chattel.
People are capable of really nasty things.
It's hard to think of a life that wouldn't be improved with an extra twenty grand. I would have had a much different life if I weren't poor as a youth and young man.....There was a program aimed at encouraging poor people to own their own homes. The theory was that home ownership encouraged middle class values. As I recall, there were some problems with the implementation of that program......Its just a matter of time before the libs come up with a program that makes us all happy, productive citizens. Keep spending more on education, i.e. teachers' salaries. That's a sure fire way to make our kids better people.
I've lived on $20,000 or less a year for most of my adult life. It isn't that hard, as long as I don't spend too much. I'm also married, so that helps. In that time I've never taken any government benefits other than the GI Bill and my military pay when I was young. No unemployment, either.
Simple rules for being poor-
Don't party or do drugs. Don't go to bars. This is an amazing waste of time and money. Maybe single young professionals can afford it, but I can't.
Don't eat out. Just don't.
Work. Work more. Keep working. This brings in money, which you need more than anyone else because you're poor. What else are you going to do with your time? You don't have any money to spend.
Get married. Stay married. Simply combining households and incomes elevates you to the middle class, even if you aren't making that much. It's an amazing difference.
Fooling around with single women is expensive and not very rewarding in the long run. Plus...
Don't have children out of wedlock, and if you are married don't get divorced and pay child support. This is a great way to avoid having to support yourself and other people without the benefit of a combined household. THIS IS THE BIGGEST TRAP PEOPLE FALL INTO.
Pay medical bills without hesitation. I never scrimped on going to the doctor, and I never let my wife do it, either. Sickness is usually far more expensive than the cure. And it sucks- I've seen people destroyed because they wouldn't go to the doctor.
Avoid debt. When you are poor, you have to be neurotic about debt. I destroyed all my credit cards and didn't get a new one for ten years.
... but also spend money when required. Don't be penny wise and pound foolish. When an opportunity is available, find a way. The idea is to not be poor, and sometimes that requires spending money to buy a car or get an education.
Never buy a new car. Ever, for any reason. Let someone else eat the depreciation. If you have a large down payment you can avoid interest, too. Those two things are most of the cost of a car and are easily avoided. On a side note, everyone seems to have a nice car stereo system... but I spent the money on tires.
Education is a way out of being poor, but not as much or in the way most people think. What actually happens is that poor people often take student loans so that they can avoid working... then fail out of college. Having accomplished nothing, they are back where they started, only with debt.
Real education isn't that expensive and tends to pay off relatively quickly. If you education plan doesn't pay for itself within a couple years, it's probably a bad idea. Don't go be a lib arts major when you are poor! It takes too long to get ahead. Something that turns you into a skilled worker instead of unskilled is an immediate payoff. Other, richer, people can argue about the non-financial benefits of a liberal arts education... you're poor, and don't have the luxury.
Ignore the people around you who don't get it. Whatever is "fun" usually isn't fun anymore when it means living in a horrible apartment or not having a reliable car. I've specialized in making ends meet in jobs that are supposedly terrible. Currently, I'm working 60 hours a week delivering pizzas. All I do is avoid the stupid mistakes everyone else makes. And I'm now comfortably middle class.
Poverty is social and behavioral, not economic. I'm utterly convinced that it's within the power of almost anyone to not be poor if they make it a priority. It takes willpower more than anything else.
A guaranteed income would allow me, and others like me, to attempt building a career at more risky endeavors - such as a career in art or design. Not a bad deal.
I am one of those schmucks that would probably continue to work even though I'd won the lottery - I'd just be picker about what I did.
John Lynch:
Excellent advice. I especially like your description of poverty as "social and behavioral". That is exactly right. People across economic, social, intellectual, etc. classes can be equally impoverished. The necessary requirement to avoid corruption is self-moderating, responsible behavior, and specifically to curb the ego.
Like the Scandinavian countries, junk like this only works when there is a high level of trust that nearly always stems from extreme homogeneity.
It really isn't surprising to see the crazy Left aping the racial purity homogeneity of the Nazis.
John Lynch - YES! In this household, that is how we've lived our lives and have instilled the same in the kids. Live below your means and plan for when life kicks you in the pants because it will.
It is truly frustrating though, when you do work long, hard hours, plan and sacrifice to get to a better place and then watch your tax dollars get wasted on one failing 'program' after another, on people who are happy just being fed and vaccinated or gaming the system.
Titus, with your raging provincialism, you should recognize that the Alaksan payments are in return for the arduous task of living in fucking Al
My understanding is that money comes from oil revenue, and I think part of the idea was that if the state got and used this windfall, that it would grow the government, and when it ran out, the wouldn't be able to downsize.
But it does apparently make living up there a bit easier. Most everything from "outside" costs more, and sometimes quite a bit more. Remember flying from Fairbanks to Barrow on a specially equipped 737. They remove most of the seats in the winter and fly mostly cargo - which is how most stuff gets there then. Not cheap. When we were there, there was maybe an hour of maybe darkness. This is reversed in the winter, which is one reason that I couldn't live in parts of it year round.
Cook, as is usual I think, shows why the left makes such a hash at running the government. What could go wrong? Plan works great in a small town that is likely highly homogenous, and probably decently intermarried. Why wouldn't work in a country that extends coast to coast, and from the tropics to the arctics, with great diversity in backgrounds, religions, politics, national origin, with 300+ million people? Should scale up just fine. Just like HealthCare.gov.
One reason that we can't expect it to scale is that some of its success may be because everyone knows everyone there. Slackers can be shunned. Much harder to do if the slackers are inner city minorities in Chicago, and you live in NW Montana, as I currently do. They see it as their due, having elected Obama twice to the Presidency. I see them as leeches, empowering the federal govt to take the fruits of my labor by force for them, so that they can continue not working, but still have most of the important things that people who work have.
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