Basic Income Grant

[rowyn]

Ooooh, nifty!

This link is via shadesong, and it may seem like an odd thing for someone who often likes libertarian ideas to be interested in:

The idea is simple: The payment of a basic monthly income, funded with tax revenues, of 100 Namibia dollars, or about €9 ($13), for each citizen. There are no conditions, and nothing is expected in return. The money comes from various organizations, including AIDS foundations, the Friedrich Ebert Foundation and Protestant churches in Germany's Rhineland and Westphalia regions.

This paragraph is a bit perplexing, because it starts with "funded by tax revenue" and concludes with "the money comes from charity". From reading the rest of the article, it looks like the experimental version is funded by charity, with the hope of expanding it nationwide to an taxpayer-funded entitlement. I admit I generally have a bias in favor of charitable endeavors, because I prefer people to help other people voluntarily, rather than force being used to coerce a group of people to give up funds and then spending those funds to help people.

But the thing that really intrigues me is the "no conditions" part. Some years ago, I wrote about Charles Murray's book, "In Our Hands" (available as free download here), which posited replacing all existing social programs with a flat $10,000 annual income grant to all citizens over 21.

The thing that intrigues me about Murray's proposal is that it doesn't offer incentives against earning money of your own. Traditional assistance programs phase out if the person earns money outside the program: "we give assistanct to those who need it, so if you don't seem to need it we stop". Which makes sense on the surface, but it has the unintended consequence of offering people an incentive (aid funds) for not doing something you'd like them to do (earn money). Now, of course what people decide to do or not do is by no means based solely on specific economic incentives. Still, making economic incentives line up with desired results is generally a good thing. The economic incentives under Murray's plan still line up; granted, you might not need to work in order to eat and house yourself, but you will not lose any existing benefits by working, either.

And I've long thought it would be neat to try out his plan as an experiment, to see what would happen. Would people really stop working because their basic necessities were already seen to? Or would the lure of additional money be compelling enough to keep the economy strong enough to fund the entitlement? But the cost of running such an experiment for a town in the US is prohibitively high for a charity to tackle.

But the cost of a living stipend is much lower in Namibia! And look, some people are actually trying it! How cool is that? I will totally be following this to see how it goes long-term. I hope they're able to extend beyond the two-year original plan -- two years isn't really enough time to gauge the full effect either way.

Comments

[nkcmike.livejournal.com]

Welcome to the People's Republic of Haven?

[rowyn]

I guess that's one extrapolation. I always got the impression Haven's government put up barriers to work, though -- either removing the Dole if they worked, or some bureaucratic hurdles.

Also, one man's thought experiment isn't necessarily the same as a real-world experiment. >:)

[level-head.livejournal.com]

I like Murray's plan, as you know.

One effect that I'm unable to gauge in Namibia is the loan-collection/protection racket/sharecropper sorts of effects. In other words, that they receive a stipend, but through various circumstances don't see it.

Murray's plan may well be subject to that here; people commit their stipends to various credit purchases, and run themselves out of living cash.

It will be hard to prevent people from hurting themselves, or being stupid. We struggle trying to prevent ourselves from doing this, and I'm not always successful with me.

But Murray's plan is still the best proposal I've ever seen.

I attended a seminar this morning for non-profit board members; non-profit has become big business, and non profits are now 2.4% of the US GDP. There are 1.6 million of them in the US. And they generally are far more effective than the government at helping people in need -- and being able to tell which ones are. At ten times the bang for the buck -- and the buck being voluntary -- this is the way to go.

===|==============/ Level Head

[rowyn]

I think it's intriguing, and haven't heard of a no-strings-no-limitations entitlement plan being tried in the past, since aid programs are usually (intuitively) restricted to people who clearly need them. I don't think Murray's plan has any chance is the US, unfortunately. Too many people have a stake in the status quo, and while Murray's idea has cross-spectrum appeal, it has cross-spectrum opposition, too. And sweeping change of that sort generates a tremendous amount of understandable fear and resistance. :/

[jurann.livejournal.com]

Oh boy, open-ended "socialist" money give-aways! England proved that they don't work because when people get an unconditional sum of money, 90% or more of them waste it on "sin items" like tobacco, alcohol, drugs, fattening foods, etc. instead of using it for basic necessities. What a wonderful way for a government to be an "enabler". ;D The reason you socialize certain "systems" instead of giving out unconditional free currency is that you force consumers to only consume those items which are considered necessary on the government's dime. This whole concept reeks of a capitalistic loyalty-grab, and if you're a Libertarian then this is what De Tocqueville would call a "Depraved Sense of Equality". A Socialist like me would just call it a "bad idea", tried and true. =)

[rowyn]

Ahhh, that explains why my liberal friends hate this. Collective decisions about how to spend money = good, individual decisions = bad.

[terrycloth.livejournal.com]

Or you could look at it as 'here's a really obvious way to cheat the system: waste all your money on drugs, and then force people to give you MORE money for food and housing'. Because if they're even considering a system like this, you know they aren't actually planning to just let you starve.

Liberals actually hate it because you're giving lots of money to rich people for no good reason, though. "Wah wah wah, I make $100k a year so I don't get welfare. Those bums have it easy!"

[rowyn]

That's roughly as inherent a conclusion as "either development aid doesn't work or Africa is beyond help". >:)

... which is a reference to the linked article, which I'm not sure anyone read.

[jurann.livejournal.com]

I honestly didn't read the article, because there was no promise made for it having punch and pie. You can't have a town hall meeting without punch and pie, or a secret resistance movement meeting for that matter! ;D

Is Africa beyond help? I believe so. It might be best to let whoever is left there now just die out - pull out all modern technology and investment from Africa and let it burn itself out. Then once it's faded into evolutionary obscurity through natural selection, we go back and turn it into a big parking lot for new Target and Wal-Mart stores. Not very humanitarian, admittedly, but the situation in Africa is beyond bleak. =/

Not exactly.

[grendelkhan.livejournal.com]

Traditional assistance programs phase out if the person earns money outside the program: "we give assistanct to those who need it, so if you don't seem to need it we stop". Which makes sense on the surface, but it has the unintended consequence of offering people an incentive (aid funds) for not doing something you'd like them to do (earn money).

You're not the first person to have noticed that. In fact, people involved in administering social programs have noticed it. This is the justification for programs like the earned income tax credit (http://en.wikipedia.org/wiki/Earned_income_tax_credit#Impact), which smooth out the income/benefits relationship to avoid the perverse incentives you describe. It's a very solvable problem.

It would be interesting to see how people would react if the only things you had to work for were ridiculous prestige items; that is, if all of one's basic needs were met, and the only benefits to work were bling and personal status. I can't imagine what the employer-employee relationship would look like, there.