
A New Approach to Aid: How a Basic Income Program Saved a Namibian Village - gasull
http://www.spiegel.de/international/world/a-new-approach-to-aid-how-a-basic-income-program-saved-a-namibian-village-a-642310.html
======
thret
One aspect of Basic Income that seems to be forgotten quite often is the
absence of guilt. The poor no longer need to feel guilt or shame about
welfare, it's a right they share with everyone else. Those who don't need it
can spend it on luxuries without the guilt associated with 'wasting' money.

~~~
themartorana
Genuinely curious about the macroeconomics of this - how is the "basic income"
not quickly pushed down to the lower-bound where it quickly stops being a
livable wage?

That is, if say, $500/week was the basic income level, wouldn't the price of
everything rise quickly to subsume that $500 almost immediately, as it moves
the lower-bound from $0 to $500?

If not, that's wonderful, and I'd like to learn more about the idea of a
society where you can still get rich but will never be in poverty.

~~~
gizmo686
Warning, highly simplified economics.

The basic income is a form of wealth distribution. The poorer people get a
larger share of the economy at the cost of the richer people getting a smaller
share.

Assuming that we have the capacity to produce enough stuff for everyone to
live off of, then we could give everyone a livable wage by putting 100% of the
money into the basic income.

The downside to this is that (for the most part) a basic income mucks with the
incentive structure, so it results in us having a lower production capacity
[0]. The hope is that our production capacity is sufficiently large that we
can have a much smaller percent of money go into basic income where it is
still a livable wage, but small enough that it does not shrink our total
capacity significantly.

Additionally, you also have to look at how elastic the supply of basic
necessities are (that is to say, how much prices increase with demand). In the
USA (and probably other countries), food is highly elastic, so prices would
not raise significantly. Housing is weird (because politics and zoning), but
we would expect to see more low cost housing to be built to match the demand,
however this would take a while to occur.

[0] At a macro level, it can be argued that a basic income could actually
increase production capacity, but that is not relevant to your question.

~~~
ppereira
Warning, more highly simplified economics. Another possibility is that the
redistribution acts as a true Keynesian stimulus, giving money directly to
those who will immediately spend it (rather than banks), increasing demand and
bringing us out of a recession. But who knows.

The economics are so complex that unless someone tests it at least at a town-
wide level, nobody can predict the outcome. This Namibian town and Dauphin,
Manitoba are two such sites. Some other experiments have failed because tests
were not done with 100% of the local population, which creates an unwanted
interaction between the BI and non-BI group.

A very simplified view of a basic income is that your new post BI income
becomes a percentage of the population's average income plus 1 minus that
percentage of your current income:

> I_post_bi = a _I_ave + (1-a)_ I_pre_bi

If a=0 we have capitalism, a=1 communism.

For small 'a', this does change individual incentives a bit, but not much for
those with very high income. That is because your incentive to produce is a
function of how much more you will make (as a percentage) vs. how much more
time you invest (as a percentage). For incomes much larger than the basic
income, this ratio remains the same.

What is the optimal 'a'? Who knows. Just start with a low one and slowly
increase it to find out.

If one really wanted incentives to be neutral across the board, one could try:

> I_post_bi = a*(I_pre_bi)^p, where 0 < p < 1, a<1

This would be a subsidy for lower incomes and a (pre-Reaganeque) progressive
tax for higher incomes.

The more important question is what will happen to the group that is around
the cusp of working/not-working. Some may choose not to work post-BI. Some may
choose to stay home and take care of the kids, elderly parents (which is not
necessarily "bad" for the economy when you factor in future earnings of
children and reduced health care costs of parents). Some might even choose to
start a business.

~~~
vidarh
> If a=0 we have capitalism, a=1 communism.

I realise you're intentionally oversimplifying, but it's worth pointing out
that Marx wrote page up and page down to complain about simplistic ideas about
redistribution, including simplistic ideas put forward by other socialists and
communists about the practical politics of redistribution.

To Marx, under _socialism_ it seemed reasonable to push individual incomes
_closer_ to an equal proportion of their contribution to production (but even
then distorted in various way by welfare), while under _communism_ he made the
point that distribution would explicitly be unequal not just as a side effect
of imperfections, but as a fundamental property of the system, because the
goal according Marx would be for distribution to follow _need_ independent of
your ability to produce, and peoples needs are wildly divergent.

Under _no circumstances_ did he advocate a "flat" equal distribution per
person (nor anything similar to that). Instead he explicitly argued for
unequal distribution. In the Critique of the Gotha Program, he wrote:

"Further, one worker is married, another is not; one has more children than
another, and so on and so forth. Thus, with an equal performance of labor, and
hence an equal in the social consumption fund, one will in fact receive more
than another, one will be richer than another, and so on. To avoid all these
defects, right, instead of being equal, would have to be unequal."

He then went on to argue the famous "from each according to ability, to each
according to his needs!" [as a goal for an advanced communist society] after
explicitly pointing out the unequal nature of such redistribution, and went on
to write:

"Quite apart from the analysis so far given, it was in general a mistake to
make a fuss about so-called distribution and put the principal stress on it."

Instead, according to Marx "any distribution whatever of the means of
consumption is only a consequence of the distribution of the conditions of
production themselves" \- in other words, it is the working class control of
the means of production that is important; redistribution would follow from
that - an argument that e.g. the Bolsheviks either learned from or ignored,
depending on how cynical you are about their intentions, when they started
reigning in their early experiments in worker control in favour of the control
of their party.

------
sharp11
To me, the most interesting part of this is the way that it fosters
entrepreneurs. If it were "just" about guaranteeing people have enough money
to buy food, it would still be good to do, but a much harder sell. But this
looks more like YC for the bottom of the pyramid. That might be the greatest
wealth creation scheme of all time.

------
lazyjones
Every time Basic Income is discussed here in the first world, people mention
monthly amounts that would sustain their comfortable lifestyles. The article
links to a project where the basic income grant was just about enough to
reduce extreme poverty (about 45 times minimum hourly wage, that would mean
USD 400-500/month in the US/Europe), thus conclusions (both for and against)
about much higher basic income schemes in the developed world are not valid.

By the way, with the US military budget you could provide similar Basic Income
for about 3.75 billion people. Just saying ...

~~~
wozniacki
You had me going right until the closing line

    
    
      > By the way, with the US military budget you could 
      provide similar Basic Income for about 3.75 billion 
      people. Just saying ...
    

I am quite sure what I'm about to say will no doubt, sound hawkish to anyone
outside of the United States. To some Americans even. But that is the
forbidding truth.

The reason the United States has to spend so much on defense - constantly one-
upping the bad actors of the world [1] - is because no other nation will ( or
wants to ? ). Perhaps if Western Europe stepped to its end of the bargain,
U.S. won't have to.

President Obama summed it up nicely in a recent 60 Minutes interview with CBS
News' Steve Kroft:

    
    
       Steve Kroft: I think everybody applauds the efforts
       that you've made and the size of the coalition that
       has been assembled. But most of them are contributing
       money or training or policing the borders, not getting
       particularly close to the contact. It looks like once 
       again we are leading the operation. We are carrying...
    
      President Obama: Steve, that's always the case. 
      That's always the case. America leads. We are the
      indispensable nation. We have capacity no one else
      has. Our military is the best in the history of 
      the world. And when trouble comes up anywhere in 
      the world, they don't call Beijing. They don't call 
      Moscow. They call us. That's the deal.
    
      Steve Kroft: I mean, it looks like we are doing 90 
      percent.
     
      President Obama: Steve, there is not an issue ...
      when there's a typhoon in the Philippines, take a look
      at who's helping the Philippines deal with that situation.
      When there's an earthquake in Haiti, take a look at who's
      leading the charge making sure Haiti can rebuild. That's
      how we roll. And that's what makes this America.[2]
    

[1] U.S. Navy unveils high-speed rail gun

[http://www.youtube.com/watch?v=ygHN-
vplJZg](http://www.youtube.com/watch?v=ygHN-vplJZg)

[http://www.onr.navy.mil/media-center/fact-
sheets/electromagn...](http://www.onr.navy.mil/media-center/fact-
sheets/electromagnetic-railgun.aspx)

[2] President Obama: People Don't Call Beijing, Moscow, They Call Us When
Trouble Comes Up In The World

[https://www.youtube.com/watch?v=6XZRQgT9D5k](https://www.youtube.com/watch?v=6XZRQgT9D5k)

[http://www.cbsnews.com/news/president-
obama-60-minutes/](http://www.cbsnews.com/news/president-obama-60-minutes/)

~~~
jberryman
> The reason the United States has to spend so much on defense ... is because
> no other nation will

I don't think it's clear which way the causality runs there.

~~~
ajcarpy2005
Yes but if others are not because we are...how does one do the hand-off
without leaving a gap in worldwide military operations?

------
discardorama
The premise of Basic Income is that money will go directly to the needy, and
won't be wasted in bureaucracy, etc. But I'm not sure how it'll work
practically.

I live in SF. Every day I see dozens of homeless people, camped out on the
sidewalks or under overpasses, panhandling.

So suppose you introduce BI into this. Let's say every homeless person in SF
gets $1500/month (or pick a number). The homeless person, say, decides to blow
it all on hookers and blow, and is out that money in 2 days. Now what happens
to him? He's still on the streets. Who will take care of him? Who will pay for
his emergency room visits? Who will clean up after he takes a dump on the
street? Who will provide him with food and clothes?

Please don't get me wrong: I'm all for some magic wand which removes poverty,
even if it means more taxes for me. But I don't know how BI will work in
practice.

~~~
vidarh
Who took care of the homeless person before?

The point is not that it will cure all societal ills, but that there are a
substantial percentage of poor people who are _not_ poor because they lack the
ability to spend money wisely, but because they've been thrust into situations
that are beyond their ability to solve without cash.

For starters, it is extremely expensive to be poor, to the extent where
certain situations are far harder to claw yourself back out of than it is to
remain out of them in the first place - but sometimes people get knocked down
into that hole. Basic income provides a means to protect a lot of people from
those kind of situations.

Basic income further changes the dynamics even for those who end up messing
up: Aid towards those people can then focus on addressing the problems that
prevent them from making proper use of the income, rather than be limited by
their lack of income.

A lot of problems poor people struggle with are related: Mental health
problems can trigger poverty, but poverty can also drive people far into
depression and make other problems worse by virtue of making treatment
difficult; physical health suffers, and reduced access to health care makes it
worse; alcohol and drug problems are a frequent escape, and while they won't
disappear with basic income, treating addictions without addressing the
situations which contributed to driving people into addictions is vastly
harder. You will not automatically solve the mental health and addiction
problems, but you can reduce homelessness to predominantly a health/addiction
problem (as it _is_ in many countries with decent welfare systems, even
without basic income) and leave yourself with a smaller challenge.

Consider that your argument is similar to that of the Namibian farmer in the
article, who assumed that people would just spend it on alcohol. The reality
is that while he was right about some people, he was also wrong about a lot of
people, who were able to not only change their own situation, but contribute
to further improve the situation of others (e.g. the money helped some start
businesses, but also contributed to creating a market for those businesses).

It is irrelevant whether or not your hypothetical homeless person is still on
the streets. The more relevant question is how many are helped off the streets
or otherwise see their lives improve, and whether the improvements seen are
worth the cost.

~~~
discardorama
> Who took care of the homeless person before?

That implies that the current "inefficient" infrastructure will still be
needed after BI. That doesn't seem like a good use of resources; it just adds
a massive tax burden on top of the current system.

BTW: I'm not arguing from philosophy, but from actually seeing homeless people
on the streets every day. Each and every one of them seems to have mental and
physical problems, and every one of them seems addicted to various substances
(and incapable of taking care of their own finances).

------
Danieru
"The money comes from various organizations, including AIDS foundations, the
Friedrich Ebert Foundation and Protestant churches in Germany's Rhineland and
Westphalia regions."

So this was straight up a cash infusion. I don't think anyone questions that
if money gets injected into a local economy that this improves the standard of
living. This isn't Basic Income, this is a new way to distribute aid.

Still, congrats to the project it sounds like they are going good.

~~~
peteretep

        > This isn't Basic Income, this is a new way to distribute 
        > aid.
    

A way to distribute aid? As in unearned money and assets? Sounds like Basic
Income to me...

~~~
bdcs
It's called Unconditional Cash Transfers. It is BIG, except the money comes
from a different country's citizens. My buddy at USAID can't stop raving about
their efficacy...

[http://en.wikipedia.org/wiki/Unconditional_cash_transfer](http://en.wikipedia.org/wiki/Unconditional_cash_transfer)

------
ph0rque
Just noticed that this was written in 2009. Any updates on the experiment in
the five years since then?

~~~
guantes
It sounds like they ran out of money for a while and stopped the grant:
[http://www.economist.com.na/general-news/699-big-
resources-d...](http://www.economist.com.na/general-news/699-big-resources-
depleted)

They then got some additional funds and started it up again:
[http://allafrica.com/stories/201407170971.html](http://allafrica.com/stories/201407170971.html)

------
skybrian
This is from 2009. Apparently the pilot program is over:

"From January 2008 to December 2009 the BIG Coalition implemented the world-
wide first Basic Income Grant pilot project in Otjivero - Omitara, Namibia.
After the conclusion of the Pilot Project a monthly bridging-allowance (N$ 80)
to all who participated in the pilot was paid regularly until March 2012."

From:
[http://www.bignam.org/BIG_pilot.html](http://www.bignam.org/BIG_pilot.html)

Edit: another comment says it it resumed:
[http://allafrica.com/stories/201407170971.html](http://allafrica.com/stories/201407170971.html)

------
ommunist
I'd like to see that in Russia. There villages are dying for the last 40
years. Providing basic income in rural economies would save Russia too.

------
sage_joch
If philanthropy became a bigger part of our culture, I believe we could
achieve something similar to basic income. Of course, that starts with
individuals getting in the habit of giving and encouraging others to do the
same. A couple things I have found:

1) The starfish parable ("it made a difference to that one") is the right
mindset. It can be daunting when you consider how much is needed compared to
how comparatively little is in your bank account. Instead visualize at what
was made possible by your donation.

2) As a general rule, I think it makes more sense to give habitually over the
course of a career than it does to wait until the end of your career. This
probably applies more to stable jobs than startups, though.

