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GiveDirectly Planning to Give $30M in Basic Income to East Africa

274 points by deegles 11y ago

deegles 11y ago
TL;DR: "With your help, we will run a long-term, universal basic income and study it rigorously to find out. We think the whole thing will cost roughly $30M, of which around 90% of the funds will go directly to very poor households."
geekfactor 11y ago
FYI the April 13 show of the Freakonomics Podcast takes on the question "Is the World Ready for a Guaranteed Basic Income?" and mentions some of the prior studies noted in this article. [1] http://freakonomics.com/podcast/mincome/ http://freakonomics.com/podcast/mincome/
- ultramancool 11y ago
  A few more good podcast links here, 2 episodes of NPR's Planet Money about GiveDirectly's results: http://www.npr.org/sections/money/2013/11/08/243967328/episode-494-what-happens-when-you-just-give-money-to-poor-people http://www.npr.org/sections/money/2013/11/08/243967328/episo... http://www.npr.org/sections/money/2013/08/16/212645252/episode-480-the-charity-that-just-gives-people-money http://www.npr.org/sections/money/2013/08/16/212645252/episo... Overall the basic income idea... I don't like it in a lot of ways, I just can't see it resulting in a productive society personally. But that's just my gut reaction and I could be wrong, so far the data I've seen is a pretty mixed bag. I think things like this are a great way to experiment with it though (and without tax payer money). I might change my mind if there's more good data.
  - rm_-rf_slash 11y ago
    Basic income could just as likely increase productivity. Without the need to work, there is a greater incentive to automate jobs. People don't work crap jobs because they like to, they do it because they have to. Anyone who wants a higher standard of living than the basic income minimum can improve their skills while they're sustained by their safety net. Meanwhile, basic income puts more money in the pockets of consumers, creating more market opportunities, especially for the low-cost goods and services those consumers used to work to make. Or maybe everything I've said is bullshit. Who knows? Only one thing is for sure: without experimentation, we only hurt ourselves in the long run.
    - maaku 11y ago
      Why wouldn't I just let someone else figure out how to automate jobs? I've got my income. Let someone else figure that out.
      - lintiness 11y ago
        that other person was a lot more likely to figure it out anyway.
        maaku 11y ago
        I suppose he is also more likely to clean the public toilets too?
      - dragonwriter 11y ago
        > Why wouldn't I just let someone else figure out how to automate jobs? I've got my income. Empirically, people often expend effort to increase their income when there are opportunities available, even if their current income meets basic survival needs. I don't see why that wouldn't continue to be the case with basic income. What, people are going to stop wanting luxuries?
        ultramancool 11y ago
        > What, people are going to stop wanting luxuries? Not sure about you, but most of the luxuries I own, I've basically only bought because I had money for them. If I didn't have money to blow on them, they really don't bring me that much joy, relatively basic items would suffice. So many things I think of as the real luxuries these days are free or basically free. I can spend hours watching youtube or playing games for extremely little cost. I would not exert extra effort to buy better phone or a 4k monitor and a 980ti instead of settling for a weaker setup. Instead I only have these things because the money was there already and I had nothing better to do with it. Basically, I'd drop out of the workforce in a heartbeat if I could afford living and a few minimal luxuries. $15-20k/year would do the job to split a cheap apartment with a friend and keep the rest under control. This is half of what some people have proposed as a UBI.
troycarlson 11y ago
Recently fascinated by the thought of piping donations directly to poor populations and allowing them to use it as they wish. I watched the documentary Poverty, Inc. [0] regarding the "poverty industry" and how endless foreign aid in these countries is killing the economy. If Toms shoes dumps 1,000 pairs of shoes in the city center every week, how the hell would a cobbler stay in business. Or if the U.S. pumps an endless supply of rice into Haiti, how could Haitian rice farmers sell their inventory? Instead, give these people the cash to purchase locally sourced goods or open a business of their own. Economies don't spring up out of a pile of free rice. [0] http://www.povertyinc.org/ http://www.povertyinc.org/
- ktRolster 11y ago
  Also worth considering are countries where a large portion of the economy is based on family members sending remittances back from the United States (or other country). In a sense, they already have a form of basic income for the people who remain at home.
  - dragonwriter 11y ago
    > Also worth considering are countries where a large portion of the economy is based on family members sending remittances back from the United States (or other country). In a sense, they already have a form of basic income for the people who remain at home. Only in that some of the people that remain home have a source of income. But that doesn't make it anything like a "basic income", anymore than the fact that some people are supported by family members working in the same country means that that country already has something like basic income.
    - ktRolster 11y ago
      In both cases we're talking about an infusion of cash from the outside, distributed somewhat equally (as opposed to being given to banks and politicians). This can be useful for answering questions such as: * Will this discourage entrepreneurship? * Will this create a culture of dependency? * Will this boost the economy overall? * If the economy is boosted, how sustainable is it? These are the kinds of questions you're not going to be able to answer from a single data point, so it's worth finding similar situations to compare.
awt 11y ago
While initially in favor of basic income due to the income trap created by the traditional approch, I have come to oppose it due to a better understanding I now have of the nature of money. Consider that basic income works when you think of money in the micro context as a means of exchange for goods and services, but not when you think of it in the macro context as a reflection of the wealth of a society. Simply transferring money from one group to another does not make the second group wealthier.
- dragonwriter 11y ago
  Basic income isn't designed to make the recipients wealthier directly (OTOH, access to greater goods and services produces more opportunities to become wealthier over time, which is more the point.)
  - awt 11y ago
    This implies that they're not wealthy because they don't have access, would you agree? Is it possible they're not wealthy because of some other reason?
    - dragonwriter 11y ago
      > This implies that they're not wealthy because they don't have access, would you agree? Is it possible they're not wealthy because of some other reason? Two things: (1) opportunity for wealth building is only one, of many, reasons for BI, and (2) It is certain that for some portion of the population, additional income will not be sufficient for notably better wealth building. But its equally certain that some portion of the population that would net benefit from BI is held back solely by short-term resources.
    - mbil 11y ago
      I find it hard to imagine that if you're struggling to attain your own bare necessities you're going to have the energy or wiggle room to generate more wealth (e.g. to start a business)
Aelinsaar 11y ago
I like this. Everything I've learned about charity seems to indicate that in most cases, giving people who need money, money... is the way to go. Being able to examine the impact of a basic income in my view, is an additional benefit.
tn13 11y ago
Letting markets function has helped poor countries like India, China and even North Korea. Making decisions on behalf of poor people has hurt poor even in the richest countries like USA. Common sense to me. There is always an issue of law and order though. If theft is a common problem then this may not work.
- abannin 11y ago
  If people choose to donate, isn't that just the market working?
mathattack 11y ago
Seems like a great experiment. I think this will do wonders for both the people, and our knowledge of how to best provide aid. 2 things I'm interested in seeing: 1 - Does it make a difference if it's USD sent over, versus local currency? (Is it a cash shortage, or a foreign cash shortage?) 2 - How much inflation will occur?
- skybrian 11y ago
  1. The donations will likely be in local currency (via mobile phone payments), but the charity needs to exchange dollars for local currency. So it helps somewhat with the exchange rate if the country is short on foreign currency, but I'd guess the scale is not nearly enough to have any significant effect. 2. It doesn't increase the amount of currency in the country as a whole. Locally, if the economy is doing better, perhaps people will charge more for jobs, but they also trade with other parts of the country so that would tend to keep prices stable (if not too isolated).
  - mathattack 11y ago
    So to be the devils advocate, why wouldn't the country print more money rather than rely on money from abroad?
    - skybrian 11y ago
      It's a western charity, not a government. They don't print the money. More generally, many countries need to make sure they have enough foreign currency to buy imports. Poor countries especially need to worry about this. Printing money to give away doesn't make sense when you can exchange it for something valuable.
      - mathattack 11y ago
        Right - it's a Western charity, but I'm asking - is it just solving a liquidity issue by pumping in the money? And if so, is the effect that different than if a central bank had done this? I buy the "You need foreign currency as a country to purchase imports" point, but if we are talking about local money to support local demand, how is sending $30mm in, and exchanging it for local currency for local projects that different than the government just printing that same amount of local money? There are inflationary effects of printing large amounts of money, but wouldn't this exist if you imported the same amount of money? I recently reread the babysitting co-op story [0] and it got me thinking about these monetary implications. Please note that I do agree that "giving people general support, and let them figure out what to do with it" is largely better than "I know what you need, so let me provide it for you" aid. II'm just working through the mechanics of this. [0] https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op
fche 11y ago
"With this pilot, we want to provide a true test of a universal basic income." ... except for the part where taxes are collected from the population to pay for said universal basic income.
- dragonwriter 11y ago
  Yeah, an exogenous UBI is a fundamentally different kind of thing than an endogenous UBI. (Also, an openly close-ended trial is different than an open-ended program in the way that it affects behavior.)
kogepathic 11y ago
Interesting concept. I'll be interested to see if it works. I worked with a company building AC mini grids in East Africa. They connected around 130 households in each village to a 220V grid. The expectation was that people would use the electricity for basic needs (e.g. light, cell phone charging) but also for productive uses (e.g. grinding grain to flour, air compressors, saws, etc). The expectation was that as people entered the second phase of energy use (after basic necessities) their consumption would increase as their income increased. What this company found though, was that very few customers followed this pattern. If people bought anything that increased their consumption, it was almost always a TV. This obviously didn't improve their income, so often their use would actually decrease because they can't afford the increased consumption. Last I heard, they were having serious problems getting people in these villages to use more power. Through some pricing campaigns, they discovered that people's energy use was almost directly correlated to the price. If you made the price similar to other well developed countries ($0.10-$0.30 kWh) people would use lots of energy, but the amount they paid was still relatively small. If you raise the energy price, people use much less, but end up paying almost the same amount per month. So if it costs $0.25 per kWh people will use 4kWh, but if it costs $1 per kWh they'll only use 1 kWh. Since their model included batteries to cover the night load, they couldn't afford to sell the energy this inexpensively. Hence their wish to increase day time energy use among the villagers through equipment use (e.g. welding, grinding). My expectation from this program: some small percentage of people will use the money to invest in tools and means to improve their economic situation. The vast majority though will waste the money on things which benefit them in the short term, but provide no long term economic benefit to them (e.g. better cell phone, television, or maybe a solar home system) Also from hearing the horror stories of doing business in East Africa (draconian regulations + corruption) I'm sceptical if anywhere close to 90% can make it into the hands of normal people. Hopefully this isn't the reality... Not sure why I'm getting down votes. I've worked with a company actually working in East Africa and I don't see people using the opportunity of energy to improve their economic situation. After basic necessities they seem to use it for leisure.
- MicroBerto 11y ago
  The pareto principle is everywhere. 90% of the productive activity will come from 10% of the people in a situation like that - if not more heavily slanted. So is there a better way of finding that 10% and investing in them directly, without ridiculously wasteful organizations?? Do you force them to make ROI? You are being downvoted because your real world experience violates the increasingly liberal tenets amongst HN readers lately. Free money for everyone means that I get to work on my killer app idea during the day, so free money for everyone is clearly a Good Thing(TM), right?
EGreg 11y ago
Basic income is inevitable. Wages have been lower relative to inflation, real estate etc because demand for human labor has been dropping. Consumer goods come down in price but real estate, gold and other limited resources are a reference for how low demand for human labor is falling. Technology enabled outsoucing, and automation, to erode the demand for human labor. Luddites were 150 years too early. The capabilities of computers are only growing. The next will be self driving cars, kiosks at mcdonalds and drone delivery. That will put a lot of people out of work. Relying on wages to trickle money down only works when employers value their employees. These days we are in the intermediate period with a growing unemployed class, part time temp work, two year stints at companies, and stagnant wages for the average profession including developers. There is no reason not to tax the productivity gains made by corporations by R&D and automation, and redistribute that to everyone. Alaska has been doing unconditional basic income from a tax on using its natural resources. Most people will be 90% consumers and only 10% producers. Already, most full time jobs are just make-work. Conditional welfare and fulltime jobs make people afraid they'll lose their check if they work on what they are passionate about. That's an infantile mentality that holds many back from living productive lives. They instead pretend to work or pretend to be poor, to keep getting that conditional check. It's time to let the humanity at large grow up, stop wasting time and tap their potential.
- jjawssd 11y ago
  > Already, most full time jobs are just make-work. Wow this is quite a bold statement! How can you be so sure and generalize so much?
  - EGreg 11y ago
    Because I choose to be bold. And I like to focus on the main factors in a situation if I can find them.
brianbreslin 11y ago
Can someone point me to any unbiased research on the micro/macro effects of basic income vs raising minimum wage? I've been struggling to find non-hyperbolic politically laden information on the subject.
- choward 11y ago
  In my perfect world, most human work is automated away. What's the point of minimum wage if there are no jobs to do?
thedevil 11y ago
While it's noble to give away $30M, it won't necessarily give strong support for universal basic income. In order to have an effective experiment, you need to also tax those people $30M and redistribute it. That's missing from their checklist. Of course free money is better than no free money! That's all this will prove and few will debate that. The real questions are: 1) is it worth the cost, and 2) is it better than alternatives? I would personally donate to a large-scale A/B experiment where you give one group cash and the other group food, housing and education worth an equal amount and see which works better. I worry that the recipients are going to be better off (because you just gave them $30M) and then everyone is going to want to implement a huge, risky (and fundamentally different) program in the US. Note to avoid excessive downvotes: I like the idea of UBI in theory and I will support it one day but I think we're not there yet. I think we need more automation and more overall wealth before it makes economic sense - before benefits > costs.
- noahlt 11y ago
  > Of course free money is better than no free money! That's all this will prove and few will debate that. The real questions are: 1) is it worth the cost, and 2) is it better than alternatives? I think the majority of dissent in the United States would actually argue that free money is worse than no free money. (If this surprises you, you may also have been surprised that Trump is going to be the GOP nominee.)
larrik 11y ago
"It is provided to everyone, regardless of need, forever." How long will the experiment last? I feel like the recipients knowing they are guaranteed a payout for at least a decade will result in very different behavior than only knowing you have it this year and maybe next year, even if you do for it a decade.
agrona 11y ago
GiveDirectly's previous work involves finding the poorest communities in the world and targeting the poorest members with direct cash transfers. I was turned on to them a few years ago by GiveWell (unrelated), which attempts to evaluate charities based on cost effectiveness and capacity for more funds. In addition to the GiveWell reports, GiveDirectly also document and publish their work and research. It's exciting to see the impact that they are having (and how minimal the systemic abuse of the money is): https://givedirectly.org/research-at-give-directly https://givedirectly.org/research-at-give-directly https://givedirectly.org/research-on-cash-transfers https://givedirectly.org/research-on-cash-transfers
scottrogowski 11y ago
While I find UBI to be a fascinating idea worthy of consideration, I vehemently disagree with running this experiment in East Africa. The proposal seems to either be blind-to or minimizing the potential for unintended consequences. Decades of trying to alleviate poverty in Africa have taught us, more than anything else, that the road to hell is paved with good intentions. Giving food tends to act as “dumping” and weaken the agricultural industry. Providing foreign aid tends to empower corrupt governments. These consequences only became clear after years of hindsight. Who knows what unintended side effects of UBI will be? If we are going to try UBI, a fundamentally Western idea, it’s only right that it should be tried in the West. I’m not saying it won’t work - just that we don’t really know what will happen. East Africa has suffered enough from our neo-colonial experiments.
- oconnor663 11y ago
  This seems to be an argument against operating any charities at all in East Africa. That must be controversial?
  - flatline 11y ago
    It could certainly spell doom for future UBI proposals if the first prominent implementation goes badly, and it could be that it went badly due to factors that are simply not as prevalent in the West.
    - scotty79 11y ago
      I think UBI will fare way worse int the West because of how many people rent places to live. UBI will get mostly sucked by landlords.
      - Integer 11y ago
        How about Eastern Europe? There are some extremely poor, yet relatively educated countries, and due to the Soviet legacy, the majority owns the places they live in.
jrbapna 11y ago
I'm looking forward to the day when the other half of the world gets "on the grid" so to speak. The rise of other economies will greatly benefit humanity as a whole. Great experiment. Very excited to see where this goes.
deleted 11y ago
[deleted]
dragonwriter 11y ago
FWIW, this isn't really testing a what "Basic Income" is usually defined as in any area, since the benefit will be given to people in the target area when it starts, and follow them if they leave (and not be given to new residents of the target area that arrive during the trial). And also may include different levels in the target area. So its an experiment about giving free money to individuals, in an arrangement substantially different than a Basic Income.
aab0 11y ago
I'm very interested in the outcome of this trial, and have donated $800 recently (using Bitcoin).
mwambua 11y ago
I'm a Kenyan and I can tell you that this will do more harm than good. NGO money has been distorting our economy for years now... giving people livelihoods they can't sustain, making job opportunities that create no value and making our government vestigial. The poor people that you're supporting elect the same corrupt politicians every year because they have no idea that the government is supposed to be supporting them. I pay 30% tax as a lower-middle income worker but I see very little of this used productively. The majority of voters don't pay taxes and rely on aid for everything from farm inputs to school fees. As a tax-payer who understands what taxes should do for me... I live with very poor infrastructure and amenities while the government squanders away money. If developed countries keep propping up our poor majority, they'll never learn to find innovative solutions to their problems and elect governments that will create sustainable wealth. - Frustated Kenyan
- dluan 11y ago
  Curious what you think about more independent schemes like microfinance or loans for education. Have you noticed any difference between that and outright aid?
  - mwambua 11y ago
    Yeah, those schemes tend to work a little better. If the recipients of mircro-financing are subject to the risks associated with taking credit, they tend to invest it better. For instance, the mobile micro-loans given by Safaricom (http://www.safaricom.co.ke/personal/m-pesa/do-more-with-m-pesa/m-shwari http://www.safaricom.co.ke/personal/m-pesa/do-more-with-m-pe...) are actually given by a bank and defaulters are black-listed for loans as little as Ksh. 500 (~ 5 USD). These schemes create opportunities whilst reminding people that poor decision-making has consequences. The only reason that this works is because these schemes are run by banks rather than non-profits. Perhaps there's a little room for more regulation around the margins these institutions should make off of these loans... but at the same time they're opening up credit lines to people who would have never had them.
- skunkworks 11y ago
  How are poor people supposed to find innovative solutions to their problems and elect governments that create sustainable wealth while they're steeped in desperate poverty? I believe that education is the tip of the spear, but are there any examples where a poor majority has pulled itself up by its bootstraps?
home_boi 11y ago
The study won't be valid unless they wait at least 2 generations after UBI is implemented. People born before UBI grew up with the scarcity on their minds, shaping the way they act with UBI. People born right after UBI is implemented will be biased by parents who grew up wirh scarcity, like the children of American immigrants. The study can only be valid when the parents of the person to be observed has UBI for their entire life.
- dragonwriter 11y ago
  UBI doesn't eliminate scarcity, so that whole argument is grounded in a false premise.
  - home_boi 11y ago
    Put differently, people train their work ethic in an environment that does not include UBI. It will take 2 generations after UBI is implemented for this bias to mostly disappear (although there might still be a few lingering effects that converge to 0 as time goes on).
safeharbourio 11y ago
Let us jump in with our opinion (We are a startup from Kenya), This has the potential to do great good, and at the same time, great harm. As someone from this region, my first thought like mwambua, is the instant abuse by corrupt individuals as a get rich quickly mechanism, and thats my biggest worry, will this project be able to ensure that needy people actually get this, or who decides who gets it? More or less this is the only thing i would have a problem with, as integrity issues down here have and continue to ruin everything, if this program can by some means manage to rise beyond that, then for sure, this will be great, and i would definitely look forward to the results. This is my take, if you can get it done transparently and with proper selection (weed out perennial NGO dependents), this may very well be the best social/political science experiment out there. As a tangential observation, one of the reasons corrupt politicians get power down here, is that they have the means(through dubious sources, usually stolen from the taxman) to dole out cash bribes/handouts to young otherwise destitute/jobless guys. Should this experiment change the economic circumstances on the ground, the politics will also have to change, which may be quite frightening for politicians, have you guys thought of what sort of reaction you will get from influential individuals with a stake in the status quo? That said, viva la basic income, bring it ;), we are all for it, after all, whats the worst that could happen? Should some of the concerns we've raise be addressed, this will definately sidestep the problems mentioned in haiti and other areas on this thread.
jijji 11y ago
sounds like another 319 scam waiting to happen. bye bye money. all you have to do is read the thousands of stories about different governments or NGO's attempting to "help", or "fund", or "develop" projects in that part of the world and all the people have done was squander the money. History repeats itself if you don't learn from its mistakes. I think a better place to flush money down the toilet is to use an actual toilet, at least you know where its going.
j4kp07 11y ago
LMAO....they need donations to "test" Basic Income. That speaks volumes people.
Vaenae 11y ago
I wonder what is the control group here? I mean I'm sure that giving away free money helps, but shouldn't the question be 'Is this the most effective way to help'?

274 points by deegles 11y ago

TL;DR: "With your help, we will run a long-term, universal basic income and study it rigorously to find out. We think the whole thing will cost roughly $30M, of which around 90% of the funds will go directly to very poor households."

geekfactor 11y ago

FYI the April 13 show of the Freakonomics Podcast takes on the question "Is the World Ready for a Guaranteed Basic Income?" and mentions some of the prior studies noted in this article. [1] http://freakonomics.com/podcast/mincome/ http://freakonomics.com/podcast/mincome/

ultramancool 11y ago
A few more good podcast links here, 2 episodes of NPR's Planet Money about GiveDirectly's results: http://www.npr.org/sections/money/2013/11/08/243967328/episode-494-what-happens-when-you-just-give-money-to-poor-people http://www.npr.org/sections/money/2013/11/08/243967328/episo... http://www.npr.org/sections/money/2013/08/16/212645252/episode-480-the-charity-that-just-gives-people-money http://www.npr.org/sections/money/2013/08/16/212645252/episo... Overall the basic income idea... I don't like it in a lot of ways, I just can't see it resulting in a productive society personally. But that's just my gut reaction and I could be wrong, so far the data I've seen is a pretty mixed bag. I think things like this are a great way to experiment with it though (and without tax payer money). I might change my mind if there's more good data.
- rm_-rf_slash 11y ago
  Basic income could just as likely increase productivity. Without the need to work, there is a greater incentive to automate jobs. People don't work crap jobs because they like to, they do it because they have to. Anyone who wants a higher standard of living than the basic income minimum can improve their skills while they're sustained by their safety net. Meanwhile, basic income puts more money in the pockets of consumers, creating more market opportunities, especially for the low-cost goods and services those consumers used to work to make. Or maybe everything I've said is bullshit. Who knows? Only one thing is for sure: without experimentation, we only hurt ourselves in the long run.
  - maaku 11y ago
    Why wouldn't I just let someone else figure out how to automate jobs? I've got my income. Let someone else figure that out.
    - lintiness 11y ago
      that other person was a lot more likely to figure it out anyway.
      - maaku 11y ago
        I suppose he is also more likely to clean the public toilets too?
    - dragonwriter 11y ago
      > Why wouldn't I just let someone else figure out how to automate jobs? I've got my income. Empirically, people often expend effort to increase their income when there are opportunities available, even if their current income meets basic survival needs. I don't see why that wouldn't continue to be the case with basic income. What, people are going to stop wanting luxuries?
      - ultramancool 11y ago
        > What, people are going to stop wanting luxuries? Not sure about you, but most of the luxuries I own, I've basically only bought because I had money for them. If I didn't have money to blow on them, they really don't bring me that much joy, relatively basic items would suffice. So many things I think of as the real luxuries these days are free or basically free. I can spend hours watching youtube or playing games for extremely little cost. I would not exert extra effort to buy better phone or a 4k monitor and a 980ti instead of settling for a weaker setup. Instead I only have these things because the money was there already and I had nothing better to do with it. Basically, I'd drop out of the workforce in a heartbeat if I could afford living and a few minimal luxuries. $15-20k/year would do the job to split a cheap apartment with a friend and keep the rest under control. This is half of what some people have proposed as a UBI.

troycarlson 11y ago

Recently fascinated by the thought of piping donations directly to poor populations and allowing them to use it as they wish. I watched the documentary Poverty, Inc. [0] regarding the "poverty industry" and how endless foreign aid in these countries is killing the economy. If Toms shoes dumps 1,000 pairs of shoes in the city center every week, how the hell would a cobbler stay in business. Or if the U.S. pumps an endless supply of rice into Haiti, how could Haitian rice farmers sell their inventory? Instead, give these people the cash to purchase locally sourced goods or open a business of their own. Economies don't spring up out of a pile of free rice. [0] http://www.povertyinc.org/ http://www.povertyinc.org/

ktRolster 11y ago
Also worth considering are countries where a large portion of the economy is based on family members sending remittances back from the United States (or other country). In a sense, they already have a form of basic income for the people who remain at home.
- dragonwriter 11y ago
  > Also worth considering are countries where a large portion of the economy is based on family members sending remittances back from the United States (or other country). In a sense, they already have a form of basic income for the people who remain at home. Only in that some of the people that remain home have a source of income. But that doesn't make it anything like a "basic income", anymore than the fact that some people are supported by family members working in the same country means that that country already has something like basic income.
  - ktRolster 11y ago
    In both cases we're talking about an infusion of cash from the outside, distributed somewhat equally (as opposed to being given to banks and politicians). This can be useful for answering questions such as: * Will this discourage entrepreneurship? * Will this create a culture of dependency? * Will this boost the economy overall? * If the economy is boosted, how sustainable is it? These are the kinds of questions you're not going to be able to answer from a single data point, so it's worth finding similar situations to compare.

awt 11y ago

While initially in favor of basic income due to the income trap created by the traditional approch, I have come to oppose it due to a better understanding I now have of the nature of money. Consider that basic income works when you think of money in the micro context as a means of exchange for goods and services, but not when you think of it in the macro context as a reflection of the wealth of a society. Simply transferring money from one group to another does not make the second group wealthier.

dragonwriter 11y ago
Basic income isn't designed to make the recipients wealthier directly (OTOH, access to greater goods and services produces more opportunities to become wealthier over time, which is more the point.)
- awt 11y ago
  This implies that they're not wealthy because they don't have access, would you agree? Is it possible they're not wealthy because of some other reason?
  - dragonwriter 11y ago
    > This implies that they're not wealthy because they don't have access, would you agree? Is it possible they're not wealthy because of some other reason? Two things: (1) opportunity for wealth building is only one, of many, reasons for BI, and (2) It is certain that for some portion of the population, additional income will not be sufficient for notably better wealth building. But its equally certain that some portion of the population that would net benefit from BI is held back solely by short-term resources.
  - mbil 11y ago
    I find it hard to imagine that if you're struggling to attain your own bare necessities you're going to have the energy or wiggle room to generate more wealth (e.g. to start a business)

Aelinsaar 11y ago

I like this. Everything I've learned about charity seems to indicate that in most cases, giving people who need money, money... is the way to go. Being able to examine the impact of a basic income in my view, is an additional benefit.

tn13 11y ago

Letting markets function has helped poor countries like India, China and even North Korea. Making decisions on behalf of poor people has hurt poor even in the richest countries like USA. Common sense to me. There is always an issue of law and order though. If theft is a common problem then this may not work.

abannin 11y ago
If people choose to donate, isn't that just the market working?

mathattack 11y ago

Seems like a great experiment. I think this will do wonders for both the people, and our knowledge of how to best provide aid. 2 things I'm interested in seeing: 1 - Does it make a difference if it's USD sent over, versus local currency? (Is it a cash shortage, or a foreign cash shortage?) 2 - How much inflation will occur?

skybrian 11y ago
1. The donations will likely be in local currency (via mobile phone payments), but the charity needs to exchange dollars for local currency. So it helps somewhat with the exchange rate if the country is short on foreign currency, but I'd guess the scale is not nearly enough to have any significant effect. 2. It doesn't increase the amount of currency in the country as a whole. Locally, if the economy is doing better, perhaps people will charge more for jobs, but they also trade with other parts of the country so that would tend to keep prices stable (if not too isolated).
- mathattack 11y ago
  So to be the devils advocate, why wouldn't the country print more money rather than rely on money from abroad?
  - skybrian 11y ago
    It's a western charity, not a government. They don't print the money. More generally, many countries need to make sure they have enough foreign currency to buy imports. Poor countries especially need to worry about this. Printing money to give away doesn't make sense when you can exchange it for something valuable.
    - mathattack 11y ago
      Right - it's a Western charity, but I'm asking - is it just solving a liquidity issue by pumping in the money? And if so, is the effect that different than if a central bank had done this? I buy the "You need foreign currency as a country to purchase imports" point, but if we are talking about local money to support local demand, how is sending $30mm in, and exchanging it for local currency for local projects that different than the government just printing that same amount of local money? There are inflationary effects of printing large amounts of money, but wouldn't this exist if you imported the same amount of money? I recently reread the babysitting co-op story [0] and it got me thinking about these monetary implications. Please note that I do agree that "giving people general support, and let them figure out what to do with it" is largely better than "I know what you need, so let me provide it for you" aid. II'm just working through the mechanics of this. [0] https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op

fche 11y ago

"With this pilot, we want to provide a true test of a universal basic income." ... except for the part where taxes are collected from the population to pay for said universal basic income.

dragonwriter 11y ago
Yeah, an exogenous UBI is a fundamentally different kind of thing than an endogenous UBI. (Also, an openly close-ended trial is different than an open-ended program in the way that it affects behavior.)

kogepathic 11y ago

Interesting concept. I'll be interested to see if it works. I worked with a company building AC mini grids in East Africa. They connected around 130 households in each village to a 220V grid. The expectation was that people would use the electricity for basic needs (e.g. light, cell phone charging) but also for productive uses (e.g. grinding grain to flour, air compressors, saws, etc). The expectation was that as people entered the second phase of energy use (after basic necessities) their consumption would increase as their income increased. What this company found though, was that very few customers followed this pattern. If people bought anything that increased their consumption, it was almost always a TV. This obviously didn't improve their income, so often their use would actually decrease because they can't afford the increased consumption. Last I heard, they were having serious problems getting people in these villages to use more power. Through some pricing campaigns, they discovered that people's energy use was almost directly correlated to the price. If you made the price similar to other well developed countries ($0.10-$0.30 kWh) people would use lots of energy, but the amount they paid was still relatively small. If you raise the energy price, people use much less, but end up paying almost the same amount per month. So if it costs $0.25 per kWh people will use 4kWh, but if it costs $1 per kWh they'll only use 1 kWh. Since their model included batteries to cover the night load, they couldn't afford to sell the energy this inexpensively. Hence their wish to increase day time energy use among the villagers through equipment use (e.g. welding, grinding). My expectation from this program: some small percentage of people will use the money to invest in tools and means to improve their economic situation. The vast majority though will waste the money on things which benefit them in the short term, but provide no long term economic benefit to them (e.g. better cell phone, television, or maybe a solar home system) Also from hearing the horror stories of doing business in East Africa (draconian regulations + corruption) I'm sceptical if anywhere close to 90% can make it into the hands of normal people. Hopefully this isn't the reality... Not sure why I'm getting down votes. I've worked with a company actually working in East Africa and I don't see people using the opportunity of energy to improve their economic situation. After basic necessities they seem to use it for leisure.

MicroBerto 11y ago
The pareto principle is everywhere. 90% of the productive activity will come from 10% of the people in a situation like that - if not more heavily slanted. So is there a better way of finding that 10% and investing in them directly, without ridiculously wasteful organizations?? Do you force them to make ROI? You are being downvoted because your real world experience violates the increasingly liberal tenets amongst HN readers lately. Free money for everyone means that I get to work on my killer app idea during the day, so free money for everyone is clearly a Good Thing(TM), right?

EGreg 11y ago

Basic income is inevitable. Wages have been lower relative to inflation, real estate etc because demand for human labor has been dropping. Consumer goods come down in price but real estate, gold and other limited resources are a reference for how low demand for human labor is falling. Technology enabled outsoucing, and automation, to erode the demand for human labor. Luddites were 150 years too early. The capabilities of computers are only growing. The next will be self driving cars, kiosks at mcdonalds and drone delivery. That will put a lot of people out of work. Relying on wages to trickle money down only works when employers value their employees. These days we are in the intermediate period with a growing unemployed class, part time temp work, two year stints at companies, and stagnant wages for the average profession including developers. There is no reason not to tax the productivity gains made by corporations by R&D and automation, and redistribute that to everyone. Alaska has been doing unconditional basic income from a tax on using its natural resources. Most people will be 90% consumers and only 10% producers. Already, most full time jobs are just make-work. Conditional welfare and fulltime jobs make people afraid they'll lose their check if they work on what they are passionate about. That's an infantile mentality that holds many back from living productive lives. They instead pretend to work or pretend to be poor, to keep getting that conditional check. It's time to let the humanity at large grow up, stop wasting time and tap their potential.

jjawssd 11y ago
> Already, most full time jobs are just make-work. Wow this is quite a bold statement! How can you be so sure and generalize so much?
- EGreg 11y ago
  Because I choose to be bold. And I like to focus on the main factors in a situation if I can find them.

brianbreslin 11y ago

Can someone point me to any unbiased research on the micro/macro effects of basic income vs raising minimum wage? I've been struggling to find non-hyperbolic politically laden information on the subject.

choward 11y ago
In my perfect world, most human work is automated away. What's the point of minimum wage if there are no jobs to do?

thedevil 11y ago

While it's noble to give away $30M, it won't necessarily give strong support for universal basic income. In order to have an effective experiment, you need to also tax those people $30M and redistribute it. That's missing from their checklist. Of course free money is better than no free money! That's all this will prove and few will debate that. The real questions are: 1) is it worth the cost, and 2) is it better than alternatives? I would personally donate to a large-scale A/B experiment where you give one group cash and the other group food, housing and education worth an equal amount and see which works better. I worry that the recipients are going to be better off (because you just gave them $30M) and then everyone is going to want to implement a huge, risky (and fundamentally different) program in the US. Note to avoid excessive downvotes: I like the idea of UBI in theory and I will support it one day but I think we're not there yet. I think we need more automation and more overall wealth before it makes economic sense - before benefits > costs.

noahlt 11y ago
> Of course free money is better than no free money! That's all this will prove and few will debate that. The real questions are: 1) is it worth the cost, and 2) is it better than alternatives? I think the majority of dissent in the United States would actually argue that free money is worse than no free money. (If this surprises you, you may also have been surprised that Trump is going to be the GOP nominee.)

larrik 11y ago

"It is provided to everyone, regardless of need, forever." How long will the experiment last? I feel like the recipients knowing they are guaranteed a payout for at least a decade will result in very different behavior than only knowing you have it this year and maybe next year, even if you do for it a decade.

agrona 11y ago

GiveDirectly's previous work involves finding the poorest communities in the world and targeting the poorest members with direct cash transfers. I was turned on to them a few years ago by GiveWell (unrelated), which attempts to evaluate charities based on cost effectiveness and capacity for more funds. In addition to the GiveWell reports, GiveDirectly also document and publish their work and research. It's exciting to see the impact that they are having (and how minimal the systemic abuse of the money is): https://givedirectly.org/research-at-give-directly https://givedirectly.org/research-at-give-directly https://givedirectly.org/research-on-cash-transfers https://givedirectly.org/research-on-cash-transfers

scottrogowski 11y ago

While I find UBI to be a fascinating idea worthy of consideration, I vehemently disagree with running this experiment in East Africa. The proposal seems to either be blind-to or minimizing the potential for unintended consequences. Decades of trying to alleviate poverty in Africa have taught us, more than anything else, that the road to hell is paved with good intentions. Giving food tends to act as “dumping” and weaken the agricultural industry. Providing foreign aid tends to empower corrupt governments. These consequences only became clear after years of hindsight. Who knows what unintended side effects of UBI will be? If we are going to try UBI, a fundamentally Western idea, it’s only right that it should be tried in the West. I’m not saying it won’t work - just that we don’t really know what will happen. East Africa has suffered enough from our neo-colonial experiments.

oconnor663 11y ago
This seems to be an argument against operating any charities at all in East Africa. That must be controversial?
- flatline 11y ago
  It could certainly spell doom for future UBI proposals if the first prominent implementation goes badly, and it could be that it went badly due to factors that are simply not as prevalent in the West.
  - scotty79 11y ago
    I think UBI will fare way worse int the West because of how many people rent places to live. UBI will get mostly sucked by landlords.
    - Integer 11y ago
      How about Eastern Europe? There are some extremely poor, yet relatively educated countries, and due to the Soviet legacy, the majority owns the places they live in.

jrbapna 11y ago

I'm looking forward to the day when the other half of the world gets "on the grid" so to speak. The rise of other economies will greatly benefit humanity as a whole. Great experiment. Very excited to see where this goes.

deleted 11y ago

[deleted]

dragonwriter 11y ago

FWIW, this isn't really testing a what "Basic Income" is usually defined as in any area, since the benefit will be given to people in the target area when it starts, and follow them if they leave (and not be given to new residents of the target area that arrive during the trial). And also may include different levels in the target area. So its an experiment about giving free money to individuals, in an arrangement substantially different than a Basic Income.

aab0 11y ago

I'm very interested in the outcome of this trial, and have donated $800 recently (using Bitcoin).

mwambua 11y ago

I'm a Kenyan and I can tell you that this will do more harm than good. NGO money has been distorting our economy for years now... giving people livelihoods they can't sustain, making job opportunities that create no value and making our government vestigial. The poor people that you're supporting elect the same corrupt politicians every year because they have no idea that the government is supposed to be supporting them. I pay 30% tax as a lower-middle income worker but I see very little of this used productively. The majority of voters don't pay taxes and rely on aid for everything from farm inputs to school fees. As a tax-payer who understands what taxes should do for me... I live with very poor infrastructure and amenities while the government squanders away money. If developed countries keep propping up our poor majority, they'll never learn to find innovative solutions to their problems and elect governments that will create sustainable wealth. - Frustated Kenyan

dluan 11y ago
Curious what you think about more independent schemes like microfinance or loans for education. Have you noticed any difference between that and outright aid?
- mwambua 11y ago
  Yeah, those schemes tend to work a little better. If the recipients of mircro-financing are subject to the risks associated with taking credit, they tend to invest it better. For instance, the mobile micro-loans given by Safaricom (http://www.safaricom.co.ke/personal/m-pesa/do-more-with-m-pesa/m-shwari http://www.safaricom.co.ke/personal/m-pesa/do-more-with-m-pe...) are actually given by a bank and defaulters are black-listed for loans as little as Ksh. 500 (~ 5 USD). These schemes create opportunities whilst reminding people that poor decision-making has consequences. The only reason that this works is because these schemes are run by banks rather than non-profits. Perhaps there's a little room for more regulation around the margins these institutions should make off of these loans... but at the same time they're opening up credit lines to people who would have never had them.
skunkworks 11y ago
How are poor people supposed to find innovative solutions to their problems and elect governments that create sustainable wealth while they're steeped in desperate poverty? I believe that education is the tip of the spear, but are there any examples where a poor majority has pulled itself up by its bootstraps?

home_boi 11y ago

The study won't be valid unless they wait at least 2 generations after UBI is implemented. People born before UBI grew up with the scarcity on their minds, shaping the way they act with UBI. People born right after UBI is implemented will be biased by parents who grew up wirh scarcity, like the children of American immigrants. The study can only be valid when the parents of the person to be observed has UBI for their entire life.

dragonwriter 11y ago
UBI doesn't eliminate scarcity, so that whole argument is grounded in a false premise.
- home_boi 11y ago
  Put differently, people train their work ethic in an environment that does not include UBI. It will take 2 generations after UBI is implemented for this bias to mostly disappear (although there might still be a few lingering effects that converge to 0 as time goes on).

safeharbourio 11y ago

Let us jump in with our opinion (We are a startup from Kenya), This has the potential to do great good, and at the same time, great harm. As someone from this region, my first thought like mwambua, is the instant abuse by corrupt individuals as a get rich quickly mechanism, and thats my biggest worry, will this project be able to ensure that needy people actually get this, or who decides who gets it? More or less this is the only thing i would have a problem with, as integrity issues down here have and continue to ruin everything, if this program can by some means manage to rise beyond that, then for sure, this will be great, and i would definitely look forward to the results. This is my take, if you can get it done transparently and with proper selection (weed out perennial NGO dependents), this may very well be the best social/political science experiment out there. As a tangential observation, one of the reasons corrupt politicians get power down here, is that they have the means(through dubious sources, usually stolen from the taxman) to dole out cash bribes/handouts to young otherwise destitute/jobless guys. Should this experiment change the economic circumstances on the ground, the politics will also have to change, which may be quite frightening for politicians, have you guys thought of what sort of reaction you will get from influential individuals with a stake in the status quo? That said, viva la basic income, bring it ;), we are all for it, after all, whats the worst that could happen? Should some of the concerns we've raise be addressed, this will definately sidestep the problems mentioned in haiti and other areas on this thread.

jijji 11y ago

sounds like another 319 scam waiting to happen. bye bye money. all you have to do is read the thousands of stories about different governments or NGO's attempting to "help", or "fund", or "develop" projects in that part of the world and all the people have done was squander the money. History repeats itself if you don't learn from its mistakes. I think a better place to flush money down the toilet is to use an actual toilet, at least you know where its going.

j4kp07 11y ago

LMAO....they need donations to "test" Basic Income. That speaks volumes people.

Vaenae 11y ago

I wonder what is the control group here? I mean I'm sure that giving away free money helps, but shouldn't the question be 'Is this the most effective way to help'?