This basic income idea has been popping up a lot lately. And there's some merit to it, but there's some major problems too.
The biggest problem I see is giving people cash. Why not instead give each adult a voucher for housing (just barely adequate for cheap housing) and each person $5/day food stamps (or something similar), regardless of income.
Everyone gets a lower stress level this way. The risk of being homeless or hungry go to near zero. It doesn't matter if you're unemployable, or starting a business, or between jobs. You know you're going to be okay.
While giving people cash seems to have the same effect, it doesn't. At least here in the US, money problems are (mostly) a money-management problem. Many people use any cash they get to pay for whatever seems the most pressing at the moment - whether it's rent or a big screen TV. People buy the TV when they have money and rent isn't due yet, then have a little unexpected expense and can't pay rent. The stress level hurts them, hurts their families, causes increased expenses (e.g. payday loan).
My parents were like this, in six-figure-income years and in dead-broke years. It hurt us quite a bit. And "loaning" them money NEVER helped - they'd pay the mortgage today and then buy the TV when the next payday came in. And there's LOTS of people like this, which is why there's a payday loan on every corner.
Now, we've taken care of my mom by covering her housing and utilities directly. And her stress level is down a lot. It works great. This would have also helped me a lot when I was a student. And it means more startups - since all startups would be "ramen profitable" by default. And in the US, we could fund this with about a 10% tax (probably less if we took some funds out of SS, disability, section 8, etc.).
Take a look at GiveDirectly, which focuses on direct cash payments to the poor instead of traditional centrally planned aid actions. https://www.givedirectly.org/
One of their early findings was that people in Kenya in thatched roof homes used their money to get tin roofs, an intervention that was on nobody's radar, and greatly improved quality of life.
People are in poverty /by definition/ because they don't have money, and are generally painfully aware of what their biggest challenges are.
The parent was talking about American poor who do have enough income for housing and food but spend it on luxuries instead because of mismanagement. Kenya poor are probably completely different - not having enough for either housing or luxuries so when get get money, housing probably comes before a big TV.
Maybe they're different? Maybe not? Maybe the parent poster's parents were anomalous, and we shouldn't slag an experiment on the basis of one anecdote?
Let's do a study and find out! The point of the basic income experiment is that people don't have much of an idea of how it will play out - except that the study in Manitoba seemed to support the idea that the poor know what they need.
The housing voucher wouldn't cover school books, electricity bills, gas to get to work, or materials to keep a small business going. All of which also come up in the GiveDirectly outcomes.
On point 3, the initial Givedirectly interventions gave cash to the poorest members of a village, which created resentment and social problems; going forward, they just give money to everyone in a village. If anything, they've learned to use /fewer/ evaluations on giving money out, and explicitly avoid getting involved in accountability beyond exit surveys. The point is to reduce overhead and increase impact, exactly what we hope to have from a basic income scheme.
I'm definitely in the camp that believes that basic income doesn't take the place of things like alcohol rehab programs or mental health facilities. But it will be a huge boon to people who are poor because they don't have money, people living paycheck to paycheck in bullshit jobs (if they can manage to find jobs at all), which is an increasingly large slice of the US population.
> A housing voucher would cover analogous issues in the US.
Or it wouldn't. I don't really want someone to suffer just because a bureaucrat forgot to put an item on a list of approved purchases. Or someone suffers because they have a particular edge case that wasn't considered.
What were the results of the same experiment in a first world country?
Because I am not convinced that the results transfer. Most poor people are poor because they failed to do things that will get them a job that pays money.
If somebody dropped out of high school because he liked to party, what argument is there for trusting him with a thirty thousand dollar check?
On the other hand if he dropped out because his parents needed him to work, he would still benefit from food and a bed while he studied for his GED.
In Kenya the ratio of accidental indignants is likely so high that the increased efficiency beats the loss for the deadbeats.
Before you down-vote me, my parents didn't have a lot when I was born and my grandparents would qualify as poor by any standard but their own. We still did okay, but I have good friends who make very decent sums of money and their bank accounts are always empty on the first.
> Why not instead give each adult a voucher for housing (just barely adequate for cheap housing) and each person $5/day food stamps (or something similar), regardless of income.
Because individuals are better at determining their priorities than are central planners.
It sounds like your parents were bad with money -- but it also sounds like your assistance with budgeting has been more valuable than the government could ever hope to be.
I'm not promoting any central planning. That certainly would be a disaster. The reason I suggest a voucher and food stamps is because they give the individuals the flexibility to apply them to their situation.
Edit: Also, it's definitely not just my parents. Look around you, there's payday loans on every corner. My parents only took a couple payday loans that I knew about. Their money-management issues are a drop in the ocean of similar problems.
Transportation
Education
Health
Childcare
Clothes
Job-seeking expenses
If you want the flexibility to cover every avenue of "i and my family have a shot at making it," you either arrive at a combinatorial explosion of complex needs-tested programs, or basic income.
Since every program you make will induce some unique form of leakage, corruption or freeloading, the expectation of BI is that it limits that to "some people do not have the personality to manage personal finances, and will always be broke in any given situation." But that doesn't take anything "away" from people who can be responsible - they will in fact be insulated from the drag-the-family-down dynamic that prevails in the deepest instances of developed-world poverty, because they get their own BI at adulthood and can just run away from the situation without severe risk or hardship.
With vouchers and food stamps, you're effectively prescribing how the basic income is supposed to be spent. But that totally misses the point of a basic income. You get money, you spend it as you see fit. Where some people will pay their rent and buy food, others may want to spend it on booze and gambling. They'd still have free reign over the money just like people with an income have nowadays. Nobody shall be able to force you to spend your money in a way that prescribes a very specific kind of lifestyle.
"Nobody shall be able to force you to spend your money in a way that prescribes a very specific kind of lifestyle."
But they're not spending their money, they're spending other people's money.
ak, If your version of basic income is about taking money from one group and letting another group blow it on alcohol and cigarettes, then it's obviously a bad idea.
"But they're not spending their money, they're spending other people's money."
No, that's not true. The purpose of the BI is that it's their money and their decision. It's just like when you get salary you get to decide what to do with it, it's not your employers money.
"If your version of basic income is about taking money from one group and letting another group blow it on alcohol and cigarettes, then it's obviously a bad idea."
It isn't at all obvious to me. If everybody would spend money on alcohol and cigarettes, we wouldn't face an ecological crisis, for example. A famous scientist or actor has a much larger ecological footprint than a gambling addict.
People with food stamps but no money still need to buy things that cost money (e.g. new glasses, bike tire repair). The solution is to sell their food stamps for cash, and the black market only pays ~$.80 on the dollar. It's more efficient (and less patronizing) to give people $1000 to spend as needed than to give $1000 in vouchers, requiring them to jump through hoops to extract the needed cash at a 20% loss.
I like the idea of ubi because of its simplicity and it makes more dificult to "game the system" . In Brazil I see that a lot.
With food stamps there would have places with food and cigars, that would sell cigars for food stamps. If there was a rule for no drinks on the the food stamps, people would that too.
Similar things would happen to rents.
It's better to keep it simple, and avoid the rules, bureocracy, and extra fiscalization.
That said, ubi also would have its flaws: some would use dead people ids to receive it, take from someone else before he receives. It happens here with social security. But that should be easier to identify.
While some poor people are bad with money, I'd be willing to bet the vast majority of them are capable of deciding between paying rent and buying a new TV.
Speaking from personal experience with a bunch of people that live way too close to zero or negative net worth, it's not buy a new TV or pay rent, it's buy a new TV or maintain a 6-12 month safety net in case everything goes to hell (which you might need, one day, to pay rent). But hey, that's what loans and credit cards are for, right?
This exactly. It's not like they buy TVs instead of paying rent. Of course very few are that stupid. The problem is that they charge up their cards and blow their safety buffer on the TV/car/etc.
Your proposal is something other than universal basic income. You want to solve the problem of some people making bad choices with money. That's a different problem, and as you show in the case of your parents, it has little to do with how much money someone has.
Most people are rational and will act rationally if given the option. UBI wants to give everyone the option.
Moreover there are models for how to handle stabilizing a person who has demonstrate gross negligence with managing their personal finances if they live on public money.
For instance, in the U.S., if you are on disability and mismanage your money, you can be required to have a payee who makes sure that your money is spent first on basic needs (rent, food, and such) and then issues what remains as an allowance.
I think a system like this would need to be in place to handle people who live solely on UBI and mismanage it, but it's clear that doing something like that would be far from unprecedented.
Money management education, of course, remains a gigantic problem in the way of adopting UBI schemes. Any country considering trying them needs to accept that they need to also give these people pervasive access to education on how to manage money.
One interesting sociological change I imagine would happen if you had a UBI is a shift in cultural treatment of destitution. Today, being homeless is often being down on your luck - bad circumstances beyond your control can leave you on the streets, and you get sympathy for that. That sympathy can, and often does, reduce due blame for poor money management that got someone into that situation.
Under a UBI you have no excuse anymore, assuming the allocated funds are proper to afford cheap poverty-level housing and food, if you are not able to live sustainably on that income that is entirely your fault, and you would correspondingly get much less sympathy.
People macroscopically usually act in self interest. If you are poor, it is often rationalized as being a net positive to blow what you have and appeal to others for handouts using a mask of bad luck. Systemically, it can promote cultural absolution of responsibility for money management, which combined with the current welfare system (and its well documented extraordinary flaws) promote poor money management.
We would have to see how a society adapted to basic income performs, but I imagine the incidence of poor money management would dramatically decline when social acceptance of it evaporates.
Of course it is in the way - it is meant to replace safety nets, and those exist in part for the employed with poor money management skills. If you change the source of income but do not solve the problem of people not budgeting their income well, it solves nothing and you lose a lot of the potential savings from UBI.
Perhaps your original point -- that a UBI-like system would shift blame from luck/voodoo/society to the individual -- would provide societal pressure for individuals to take personal responsibility for their choices. That pressure might be a good-enough substitute for formal money-management education. It takes a village.
UBI should be simple. Tying it to educational requirements[x] risks mucking it up with special-interest agendas, much as any other condition would.
[x] You didn't say that individuals would be required to avail themselves of any UBI-related educational programs. But the entire program could be stalled if its implementation were conditional on the development of an educational program that established, once and for all, how a government believes its citizens should wisely spend money.
Or just give them no-strings-attached digital cash (ie some sort of credit card) and track it to learn about what people do when unsupervised. I will admit to being an optimist, but my understanding is that there's a history of paternal policy being oversimplistic, and of people solving their own problems in clever and unexpected ways when given the latitude to do so :)
While I can appreciate the optimism, I think it's important that we get this right (which might or might not be my idea).
Think about all the payday loan places. They're everywhere. Think about all the credit card debt (among other excess debts). Note that a lot of people with credit card debt make much more than any basic income would be. Think about how much the poor (who do not have luxury of wasting money) spend on cars, cigarettes, and TVs. With all these things in your head, do you still think that people will manage the money well if you just hand them money? Will they handle money that they didn't work for better than they handle the money they did work for?
Sure, some of it will go to good purposes. Why not make most of it go towards good purposes?
And to be clear, I'm not just trying to blame the poor - good money management is psychologically hard.
It's much more important that we get this right (as Ontarians). Sweeping generalisations like yours about 'the poor' are largely unwelcome here, and also a driving force for the incredible level of inequality in your country.
There are government systems in place to provide housing, food, and more already. The idea is to replace these many systems with one, which would reduce the occurrence of people who need benefits being denied, and also dramatically reduce administrative overhead.
The overall goal is not just to raise people from poverty, it's also to allow people a break from working to survive so they can take time to focus on personal development, family and mental health.
> At least here in the US, money problems are (mostly) a money-management problem.
There is a money-management problem in the US, but it crosses class lines and is a different problem than addressing/ameliorating poverty. Financial literacy would do a lot of good for a lot of people, but money management advice/lessons don't address the needs of those without money, regardless of whether they grok the message.
My experience with poverty in the US, both first- and second-hand, is that the money problems are mostly a money-deficit problem. Being poor is expensive in many ways: financially[0], emotionally[1], intellectually[2]... and poverty closes doors in ways many don't realize[3].
> The biggest problem I see is giving people cash. Why not instead give each adult a voucher for housing (just barely adequate for cheap housing) and each person $5/day food stamps (or something similar), regardless of income.
You haven't explained whatsoever what the "problem" is. Like saying "there is a big problem with nuclear energy. Why aren't we just using windmills." So... whats the problem?
Food stamps have a funny way of skewing the prices of the things you can use them for. What's wrong with cash? Why do we need to everybody like irresponsible children? (Giving new meaning to the word nanny state, eh)
Do food stamps cover tampons? Sanitary pads? Painkillers? Which type, aspirin or ibuprofen?
Are landlords required to accept housing vouchers? Are they required to not ask for more rent than a housing voucher provides? Will the housing vouchers also help me pay my mortgage? What about hotels, if I suddenly lost my house? Why don't you want me to save money by moving in with my partner? Which other scenarios have you not considered? How much money do you want to spend on micromanaging everybody's lives?
The biggest problem I see is giving people cash. Why not instead give each adult a voucher for housing (just barely adequate for cheap housing) and each person $5/day food stamps (or something similar), regardless of income.
Everyone gets a lower stress level this way. The risk of being homeless or hungry go to near zero. It doesn't matter if you're unemployable, or starting a business, or between jobs. You know you're going to be okay.
While giving people cash seems to have the same effect, it doesn't. At least here in the US, money problems are (mostly) a money-management problem. Many people use any cash they get to pay for whatever seems the most pressing at the moment - whether it's rent or a big screen TV. People buy the TV when they have money and rent isn't due yet, then have a little unexpected expense and can't pay rent. The stress level hurts them, hurts their families, causes increased expenses (e.g. payday loan).
My parents were like this, in six-figure-income years and in dead-broke years. It hurt us quite a bit. And "loaning" them money NEVER helped - they'd pay the mortgage today and then buy the TV when the next payday came in. And there's LOTS of people like this, which is why there's a payday loan on every corner.
Now, we've taken care of my mom by covering her housing and utilities directly. And her stress level is down a lot. It works great. This would have also helped me a lot when I was a student. And it means more startups - since all startups would be "ramen profitable" by default. And in the US, we could fund this with about a 10% tax (probably less if we took some funds out of SS, disability, section 8, etc.).