April 30, 2016


What Would Happen If We Just Gave People Money? (Andrew Flowers, 4/25/16, 538)

Daniel Straub remembers the night he got hooked on basic income. He had invited Götz Werner, a billionaire owner of a German drugstore chain, to give an independent talk in Zurich, where Straub was working as a project manager for a think tank. He had read an article about the radical proposal to unconditionally guarantee citizens an income and spent a few years casually researching the idea. Straub had heard Werner was a good speaker on the topic, and that night in 2009 he was indeed excellent at connecting with the audience, a sold-out house of 200. "It was a very intense evening; people were paying attention," Straub recalled.

Werner posed a pair of simple questions to the crowd: What do you really want to do with your life? Are you doing what you really want to do? Whatever the answers, he suggested basic income was the means to achieve those goals. The idea is as simple as it is radical: Rather than concern itself with managing myriad social welfare and unemployment insurance programs, the government would instead regularly cut a no-strings-attached check to each citizen. No conditions. No questions. Everyone, rich or poor, employed or out of work would get the same amount of money. This arrangement would provide a path toward a new way of living: If people no longer had to worry about making ends meet, they could pursue the lives they want to live.

Straub had studied business, international policy and psychology at school and spent years working for IBM, the International Red Cross and a Montessori school. Basic income "struck a nerve," he said. "People are burned out more than ever. You come to Switzerland and talk to people, they aren't happy. They fear for their jobs. There is a gap between the economic possibility in this country and the quality of life." [...]

The original seed planted by Friedman's negative income tax idea eventually blossomed into the Earned Income Tax Credit, thought by both conservative and liberal economists to be one of the more effective anti-poverty programs in the U.S. because it manages to encourage work while avoiding the benefits cliff. The argument for a basic income as an anti-poverty program over something like the EITC is that it would be easier to administer.

What do we know about giving a guaranteed income to everyone? Not much. Negative income tax policies such as the EITC target specific groups, usually the poor. They have been tested. But basic income is often pitched as universal -- everyone would get the same amount, regardless of their circumstances. And that has never been examined in a rigorous way.

The closest research we have to how a universal basic income could work comes from a small town in Canada. From 1974 to 1979, the Canadian government partnered with the province of Manitoba to run an experiment on the idea of providing a minimum income to residents. The result was MINCOME, a guaranteed annual income offered to every eligible family in Dauphin, a prairie town of about 10,000, and smaller numbers of residents in Winnipeg and some rural communities throughout the province.3 MINCOME remains one of the most influential studies of basic income in a rich-world country.

Evelyn Forget, now an economist at the University of Manitoba, was a student in Toronto at the time. "I knew this was happening in Manitoba. I just stopped hearing about it," she said. When Canada's governing party changed midway through the MINCOME experiment, funding dried up and the researchers were told to archive their data for later analysis. No database was created, and the results of MINCOME were not examined.

Decades later, Forget started digging for the data. She unearthed 1,800 dusty cardboard boxes -- with information on each family receiving MINCOME -- at Canada's National Archives. Forget digitized the materials and matched MINCOME records with those in the database of Canada's universal health insurance program, which was introduced around the same time. That allowed her to compare the health of those receiving MINCOME to the health of similar people who didn't. It resulted in a blockbuster research paper, decades in the making: "The Town With No Poverty," published in 2011.

Families receiving MINCOME had fewer hospitalizations, accidents and injuries, Forget found. Mental health hospitalizations fell dramatically. And the high school completion rate ticked up during the years of the experiment, with 16-to-18-year-old boys, in particular, more likely to finish school. Younger adolescent girls were less likely to give birth before age 25, and when they did, they had fewer kids.

The program brought most recipients above Canada's poverty line. And the employment effects in Dauphin were modest. "For primary earners -- those with full-time jobs -- there was virtually no decline" in work, Forget said. "Nobody was quitting their jobs." Cash from the government eased families' economic anxiety, allowing them to invest in their health and plan over a longer horizon.

MINCOME is now serving as inspiration for basic income's comeback in Canada. The Liberal Party, which recently swept to power behind Prime Minister Justin Trudeau, is seriously flirting with the idea. There are several popular petitions to add it to the party's platform, and a Liberal-dominated committee in Parliament is recommending the federal government study the idea. In its 2016 budget, the provincial government of Ontario announced plans to conduct a basic income pilot this year.

The reality could hardly be less complicated : we currently distribute wealth via jobs, but the entire capitalist project--which is now universal-- is at war with them (in the form of technology, free trade, open immigration, and the like). So we will find another means of achieving the same end.

Universal Income serves, at minimum, the following conservative goals:

*Business efficiency--getting rid of makework jobs

*Government efficiency--getting rid of duplicative programs and bureaucracy

*Liberty--leveling the playing field for all citizens

*Community--providing citizens with more time to spend with family, church, social organizations, local government, etc.

What makes the trend towards this sort of solution so powerful is that opponents offer no other alternative except to protect jobs at any cost, the sort of anti-capitalist guff of Donald Trump (protectionism, nativism, unreformed Second Way social programs, etc.)

Posted by at April 30, 2016 9:38 AM