to think we could solve poverty by simply giving everyone money?

[aufaniae]

This article makes a compelling argument for giving everyone a "mincome".

Why we should give free money to everyone

The basic idea is that poverty costs society money, and that it's cheaper, and of great benefit to society if everyone has a basic income, no questions asked - so no one ever drops below the poverty line. The intro says.

"We tend to think that simply giving people money makes them lazy. Yet a wealth of scientific research proves the contrary: free money helps. It is time for a radical reform of the welfare state."

They actually did a study in Canada where a whole town was on a mincome for some years, and it seems it was a great success.

I must say I find the idea compelling. What do you think?

(Please have a look at the article before responding if you can, there's some surprising and thought provoking stuff there).

[FunkyBoldRibena]

I totally agree. The constant barrage of benefits bashers does my head in. What do they think people do with money from benefits apart from spent it on food, housing, clothing etc, which is the lifeblood of our economy?

[IneedAwittierNickname]

Intereresting idea. But I need to read it when I've had more than 2 hours sleep!

[DonnaDishwater]

Where does the money to do this come from?

[manicinsomniac]

I don't know, seems too easy. Poverty has always been a problem, I don't think it could be eradicated so easily. I'd love to be proved wrong though.

[Scarletohello]

Well if you think it costs over £40,000 a year to keep someone in prison in kinda makes sense...

[aufaniae]

Donna the article says

"For the first time in history we are rich enough to finance a robust basic income. It would allow us to cut most of the benefits and supervision programs that the current social welfare system necessitates. Many tax rebates would be redundant. Further financing could come from (higher) taxing of capital, pollution and consumption.

Eradicating poverty in the United States would cost $175 billion – a quarter of the country’s $700 billion military budget.

A quick calculation. The country I live in, Holland, has 16.8 million inhabitants. Its poverty line is set at $1,300 a month. This would make for a reasonable basic income. Some simple math would set the cost on 193.5 billion euro annually, about 30% of our national GDP. That’s an astronomically high figure. But remember: the government already controls more than half of our GDP. It does not keep the Netherlands from being one of the richest, most competitive and happiest countries in the world."

[Onesleeptillwembley]

There will always be poverty. Some people will spend it immediately, some piss it away, some snort it. In a wide society it just wouldn't work, and that's not taking into account economic factors, rising prices, so the income becomes worthless.

[LessMissAbs]

Two problems:

(1) How much would you have to pay people who were talented and excellent in their fields to do their jobs and keep them motivated (not everyone wishes to work hard for philanthropic reasons), and how would business afford it?

(2) What about cases like Michael Carroll, the lottery winner who was given a lot of free money, and is now bankrupt?

[aufaniae]

manicinsomniac, it's beautifully simple yes. And certainly worth a try. If poverty is caused by a lack of money, surely the answer is simply to make sure everyone has enough?

The article says

"Studies from all over the world drive home the exact same point: free money helps. Proven correlations exist between free money and a decrease in crime, lower inequality, less malnutrition, lower infant mortality and teenage pregnancy rates, less truancy, better school completion rates, higher economic growth and emancipation rates.

‘The big reason poor people are poor is because they don’t have enough money’, economist Charles Kenny, a fellow at the Center for Global Development, dryly remarked last June. ‘It shouldn’t come as a huge surprise that giving them money is a great way to reduce that problem.’

[aufaniae]

LessMissAbs

1. it's only suggested to be enough money so that no one lives in poverty. People would still be motivated - by money - to get jobs which paid much better than the minimum, much the same as today.
   

1. No one is suggesting anyone gets lottery style one-off payments of millions, not sure how that is relevant?

[TheGreatHunt]

I assume you'd increase taxes to give people money?

Or, here's a radical idea, introduce a living wage. If companies want to employ people they shouldn't take the piss and bleat about the cost of, shock horror, paying decent wages. That's the cost of the business.

Then we wouldn't need so much state intervention via welfare.

[aufaniae]

Onesleeptillwembley yes, it's easy to imagine that there would still be people who managed to end up with no money because of pissing it all away, or snorting it.

But what's your point here?

Are you saying that you think people are poor because they are irresponsible with money?

Or if you accept it's only a small minority who would irresponsibly waste their money, wouldn't it be worth it for the millions of others who would have their standard of living raised and the wider benefits to society e.g. better public health, a better educated population, less crime etc etc.

[MoreBeta]

This idea is well established in economics and one I am very much in favour of.

It is called a 'Universal Benefit'. The idea rests on the idea that everyone, rich or poor. is entitled to a basic income paid out of the resources of the country owned by the state (e.g from sale of mining rights, oil rights, timber rights, pollution permits, air traffic landing rights, fishing rights, water rights, rental income on surplus Govt property and land, etc).

The payment replaces all benefits of all kinds. It is not means tested and it is not taxable. It is an absolute right and politically is widely accepted because everyone is entitled to it (eg like free NHS care, free education and Family Allowance as was).

The system is then coupled to a removal of minimum wage. As people have a basic income they only choose to work if it is worth their while working and not because they have to work in order to be able to eat. It increases equity in the worker employer relationship and removes the political tension between tax payers and recipients of benefits.

It has several major economic effects.

1. It removes almost all benefit fraud;

1. Causes the value of labour and land (i.e. housing) to be priced correctly rather than being distorted by benefits which makes the economy more efficient;

1. Reduces the cost of administering benefits dramatically

1. The money handed over tends to be spent quickly by the poorest people and that stimulates the economy.

[aufaniae]

TheGreatHunt but if you only focus on wages, then you must accept that that system is only fair if there are enough jobs to go around?

But our system doesn't have full employment And so if you design a system where those people out of work live in poverty, then we're building poverty into our society, and it costs us all dearly.

[DameFanny]

I read that article this morning and loved it. Totally agree. Never underestimate people's appetite to do work even when they don't "have to".

And let's be honest - we genuinely need people to purchase and consume in order to keep the producers in business. Economies don't thrive when landlords take their money into offshore tax havens and don't spend in the country they're asset stripping.

Particularly loved the response to Henry Ford when he asked a union rep how the rep was going to get Ford's robots to pay their union dues, the rep said "how are you going to get the robots to buy your cars?"

[LessMissAbs]

Aufanie

(1) The premise possibly has less resonance in the UK with its myriad of benefits, not just unemployment benefit, but means tested targeted benefits at those in more need, such as disability benefit, housing benefit, etc.. It might be that in such systems, giving everyone the same amount of money is considered too unequal!

(2) The Michael Carroll case is indirectly relevant as it proves that there are those individuals who simply cannot handle money well, however favourable the circumstances.

I think its good that there is lateral thinking like this going on, but it may be that a more varied solution is needed. I read the Dutch version too and although its a pretty exact interpretation, it somehow comes across differently in Dutch, more logical and without so many possible exceptions and objections. It may be that it would work better in a country like The Netherlands where the culture is to be more up front and to the point.

[hazchem]

I think it's a good idea provided it is coupled with addressing the structural inequalities in society. So I think big business need to actually pay their fair share of tax. We need to tighten loop holes for high rate tax payers and I think those on middle to high incomes probably need to pay more tax.

[LynetteScavo]

Isn't this a bit like family tax credits and working working tax credits?
I can see the idea of helping long term homeless working in theory.

[Smilesandpiles]

I can see how it will work but I'm getting the nagging feeling that the second this comes into play - the price of everything will rocket from energy to, I don't know, peanuts... Putting us back to square one, as businesses are greedy. If more people have money, they can charge more as people are willing to pay for it.

[contortionist]

The Great Hunt - higher minimum wages is a terrible idea. It makes shipping jobs overseas or replacing them with machines much more attractive.
Whereas with a guaranteed minimum income, even a very low paid job can provide some extra income as well as all the other benefits that come from useful and engaging work.

[aufaniae]

"If more people have money, they can charge more as people are willing to pay for it."

Only if there's some kind of price fixing going on, like they have a monopoly or are in a cabal.

Otherwise, the usual principles of competition and supply and demand apply - so the company who can offer the cheapest price gets the most custom (disregarding other variables such as advertising, availability, brand loyalty etc).

[WooWooOwl]

I can see the benefits of a citizens wage type thing, but I think the article is very idealistic and far too simplistic.

I cannot see how it would eradicate poverty. Poverty is caused by too many things to be fixed by free money alone.

Free money won't automatically make drug addicts get treatment, it won't stop people having children that the free money doesn't cover, it won't stop child abuse and neglect that leads to adults repeatedly making poor choices in life, and poverty will continue.

Especially when you look at how the poverty line is decided on now. Isn't the poverty line in the UK set at something like 60% below average income? (Disclaimer- I might be making this up, but I'm almost certain I read it somewhere) We are constantly hearing about relative poverty being more relevant in the UK than absolute poverty, and there will always be relative poverty even if it ends up being a decent standard of living.

I'd be in favour of giving everyone the same basic amount of money, and of taxing everyone at the same rate, but there will always be people whose choices lead to it not being enough money to keep them out of poverty.

[aufaniae]

"Isn't this a bit like family tax credits and working working tax credits?"

Kind of - expect no means testing, everyone gets it, at the same level. So no costly administration.

[aufaniae]

"there will always be people whose choices lead to it not being enough money to keep them out of poverty."

Yes, granted. But what the studies seem to show (according to that article) is that that happens less than you think. And the fact that a small minority of people mess up isn't a good enough reason not to do it, if it benefits society as a whole, is it?

"it won't stop people having children that the free money doesn't cover" the article implies that in the successful Canadian Mincome experiment, people got money per child. They didn't however have more DCs, they had fewer.

[MorrisZapp]

What exactly is the difference between this and a decent benefits system, with free healthcare and education?

Can you give a rough idea of how much money we're talking about, as a salary equivalent?