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How to Cut the Poverty Rate in Half
- pdfcollect 13y agoWhy not do this for the entire world? :-)
- vixen99 13y agoPossibly because some lousy spoilers will object to working like a dog and financing the bloke down the street who doesn't.
- noonespecial 13y agoThis is somewhat de-fanged by the idea that said lousy spoiler also gets the $3000. Its better than the current system where only those blokes who won't/can't (damn them/pity them) get the handout. People still work like dogs under the current system so... meh?
- llamataboot 13y agoSee also: https://en.wikipedia.org/wiki/The_Protestant_Ethic_and_the_Spirit_of_Capitalism https://en.wikipedia.org/wiki/The_Protestant_Ethic_and_the_S...
- dllthomas 13y agoI think that would be fantastic, if you could figure out how to make it work. Sovereignty is a thorny issue. It could possibly happen for a cooperating collection of nations, though determining amounts would be messy.
- dragonwriter 13y agoBecause we don't have the social infrastructure -- starting with an effective world government -- to do it.
- melling 13y agoAny economics research into why this would, or would not, be a good idea? There are often unintended consequences to such a large change. My understanding, for example, is that having the tax deduction for home buyers simply leads to higher home prices.
- d4vlx 13y ago> tax deduction for home buyers simply leads to higher home prices This is actually a desired effect of a basic income. The poorest people often live in areas that are essentially cash starved with low real estate prices. There is often little incentive or ability to improve or maintain their homes. A basic income would provide the ability for many in such areas to spend on non essentials like home maintenance which could lead to higher prices and higher employment. Which in turn could lead to more pride in ownership and eventually end up re-invigorating those areas.
- notahacker 13y agoThe poorest people rent, so they have minimal incentive to improve their homes, whilst the relatively-wealthy landlords they rent from have every incentive to increase the rent, because their tenants' income has just gone up by 20% or more (as have their own taxes...) but little incentive to improve the property because the supply of low-end housing hasn't changed. I agree that some of the basic income given to some members of the working poor will end up being spent on productive improvements that benefit themselves and the people they hire to do it, but a lot of it will simply be gobbled up by inflation of essentials.
- sologoub 13y agoGuaranteeing $3000 a year isn't exactly what the Swiss have on the ballot. They are proposing the equivalent of $2800 per month. [1] Sounds like a socialist idea right? But in fact the libertarian in me loves it - if implemented, it removes the need for vast swaths of government. If everyone is guaranteed a basic income, you no longer need vast systems to manage all the means-tested programs. No social security, no disability, no unemployment insurance, no retirement programs and tax shelters. No need for minimum wage. The list goes on and on. And that's why it won't happen here... [1]http://www.salon.com/2013/10/11/rather_than_savage_cuts_switzerland_considers_star_trek_economics/ http://www.salon.com/2013/10/11/rather_than_savage_cuts_swit...
- JoeAltmaier 13y agoNonsense. Poverty level isn't $3000, nor is it a basic income - its peanuts. That's the amount to take them 'over the line' out of poverty. They'll still need the rest of the support they're getting or its pointless.
- d4vlx 13y agoI think the point is that if a $3000 a year basic income program was implemented successfully it could lead to other programs being replaced with a higher basic income.
- quadrangle 13y agoIt's a step in the right direction and would make a massive difference, it isn't pointless just because it isn't a complete solution.
- invalidOrTaken 13y ago"...if implemented, it removes the need for vast swaths of government." Of course it does. What are the odds, however, that said swaths of government and the constituencies that support them would simply surrender and close up shop?
- legutierr 13y ago
- JoeAltmaier 13y agoUnintended consequences rule. Taking people out of 'poverty' could mean they become ineligible for other programs, with a net reduction in standard of living. For example.
- Shivetya 13y agoThen you find the benefits paid by all these programs, determine the expenditure per beneficiary and set one flat basic payout per week to all who qualify. You toss all these other assistance programs in the trash. One central agency administers the money. EBT cards could be administered separately from the basic income card. The rules would be simple, the cards are usable wherever debit and credit cards are. All government agencies would be required to accept them as well. There are so many aid programs just in the US alone I bet no one can find them all, even at the Federal level the number of programs which partially if not wholly overlap is costly. Then throw in state ones which do essentially the same and we waste an incredible amount on money in just administration. One way to solve that duplicate effort, get the feds out or get the states out. One agency should be able to administer it all.
- JoeAltmaier 13y agoVery positive. Until somebody is incapable of managing themselves for a variety of reasons - not just mental health or drug addiction, but lack of education or self-control. Its galling to hand out money and have it gambled away or spend on cigarettes and whiskey. Don't laugh - a generation of women had to scrape by during the depression because the paltry paycheck went into a bottle. That's why we have food stamps etc - they can't be spent on anything but food.
- joshuaheard 13y agoTake 20 men and give each a dollar. Lock them in a room for a week. At the end of the week one man will have all 20 dollars.
- gaius 13y agoWanna bet? ;-)
- 001sky 13y agoMy money is on the bookie ... !
- amerika_blog 13y agoThe house always wins.
- d4vlx 13y agoIn the poorest areas there are strong incentives for the residents to spend any extra money on necessities such as housing, housing maintenance, utilities, food and clothing. Much of that work would be done by other residents or local businesses. As far as I understand money distributed this way gets cycled through the economy at a high rate, changing hands many times.
- noonespecial 13y agoMore like 1 man will have $18, 17 men with none will refer to him as "the honorable..." and the two men who still have a dollar will be "trouble-makers".
- quadrangle 13y agoUnless the one man can physically dominate all the others, this will never happen. Capitalism as we know it requires state-controlled force. You know what all the evidence says? Lock 20 people in a room, each with a dollar, and nobody will care about the dollars as there's no market to do anything with them. If they have food in the room, they will tend to realize that it's gonna be a terrible mess and have violent conflicts if there's anything far from equal share of the food. Everyone reasonable will gang up on any hoarder. At their core, human groups are actually communist: from-each-by-ability to-each-by-need. Check out the book Debt: The First 5,000 Years by David Graeber
- jfe 13y agothis article is ridden with economic fallacies.
- steveklabnik 13y agoHalf DH1, half DH3. You can do better! http://www.paulgraham.com/disagree.html http://www.paulgraham.com/disagree.html
- jfe 13y agoi know, and i don't care.
- pliny 13y agoLower the poverty line to the median income of people who are currently under the poverty line. You can repeat this as many times as you like to make the poverty rate arbitrarily low.
- gaius 13y agoA lot of statistics like this in the UK are published by the Joseph Rowntree Foundation, which openly admits to using a relative measure of poverty, the bottom third. So say your neighbours on either side were watching Blu-Rays and you had a humble DVD player. They'd count that as "poverty". Every now and then their PR machine will arrange for headlines like "one third of children live in poverty!!!" which sounds terrible in a developed country, but actually, is completely meaningless.
- DanBC 13y agoIs there anyone doing better reporting of poverty in childhood? Or is the problem more around behaviours and societal stuff than money? A Channel 4 documentary is a poor source of information but the breadth and depth of the problem is shown in programmes like Skint. The nihilism of multiple generations, the apathy, the learned hopelessness. http://www.channel4.com/programmes/skint/4od http://www.channel4.com/programmes/skint/4od While these people may not be objectively poor[1] the children have obviously sub-optimal lives. [1] People have homes, and food, and heat.
- rafd 13y agoI'm supportive of basic income, but slightly apprehensive of side effects. I think it would have to be rolled-in gradually so as not to shock the economic system. Some other potential pros not mentioned in the article: - lowers barriers to entrepreneurship - allows parents to stay home and take care of young children - lowers barriers for re-education - could reduce costs of social services (through elimination of complex programs) Side effects I'm curious about: - how will BI impact minimum wage? - how will BI impact entry level jobs? - how will BI impact cost of basic goods? Also, the 'poverty line' should actually be location dependent because of the difference in food and rent costs in different places. Should BI be location dependent too?
- amerika_blog 13y agoOne paradox of money is that the more you distribute it, the less it is worth. When you think about it, this makes sense. If it's easy to come by, it's proportionately "worth less."
- eli_gottlieb 13y agoThe actual distribution is an upside-down parabola, a "frowny shape". Think, for instance, what would happen if one billionaire bought up the entire world supply of Bitcoins for ideological reasons (meaning: he never reaches a point of diminishing marginal utility as the price of BC increases). First, there would be a price bubble as everyone holding bitcoins gets the highest price they can. Then, everyone who had formerly used bitcoin but now sold to the billionaire would migrate to some other crypto-currency, leaving the billionaire eventually holding utterly worthless cryptographic certificates accepted by nobody at all.
- dllthomas 13y agoI see that it's lower at the ends than in the middle. I don't see that a parabola is a good fit - especially not from your example, where my intuition says it'd look more like a bubble bursting than a smooth rise and fall.
- cbeach 13y agoEven as a right-winger, I'm in favour of universal welfare, provided this isn't offered as a bolt-on to existing means-tested welfare. This should be implemented as a straight replacement, so that we can reap the cost savings in administration. The article points out "the only thing standing in the way of dramatic poverty reduction and dramatic inequality reduction is, as always, politics" Unfortunately we'd almost certainly see a rise in the cost of living (food / energy prices). If people can afford more, they'll be charged more - that's how free markets work.
- DanielBMarkham 13y agoI know this is a cause celebre among some libertarians, but dang if it makes any sense to me. I'd love to see it applied, though. It's a good thing to be proven wrong :) I see two lines of inquiry here. First, does this work on a small scale? Many HNers have lots of disposable income. I see lots of people buying expensive electric cars or talking stock options. So put your money where your mouth is. Go find 10 people who are poor and give them each 15K. I'd offer three stipulations. 1) It has to be anonymous, 2) It has to be one-time, and 3) you should anonymously follow-up after 6 months. I suspect at the end of six months you'll just find the same poor people, even though technically you've offered them half a year's salary at 30K. But this is very easy to prove one way or another. Somebody like Zucerberg could probably run a sample of 100 or 500 without much problem. I'd love toe see the results. My second line of inquiry is: does this work at scale? In other words, is the political system capable of simply giving out money? I seriously doubt it. From what I've seen, a simple program, especially involving lots of money, will grow in complexity very quickly. Yes, technically you should be able to direct-credit anybody with a bank account within seconds. I have deep reservations that anything like that would actually happen, though. If you got 50% of the money to the poor you'd be doing well, and I wouldn't bet on that much traction. The larger point is that literally trillions have been spent over the decades on poverty. Programs have been created and executed by some of the smartest people in the world. People who have managed empires of tens of billions of dollars have went down this road. And poverty still abides. I'm not saying it's intractable. I'm simply saying that caution is in order here. "Prove it" is the correct response when offered really simple solutions to problems that have stumped thousands of others. Don't write a flashy article, don't persuade me in an opinion column, don't show me some economic study. Prove it.
- pbhjpbhj 13y ago>I suspect at the end of six months you'll just find the same poor people, even though technically you've offered them half a year's salary at 30K. // Isn't this rather like complaining that a hungry person will be hungry next meal-time even if you give them a meal now?
- DanielBMarkham 13y ago
- xacaxulu 13y ago"That security might not just keep people out of poverty. It might let workers demand better wages and working conditions, because they know they always have something to fall back on. In other words, it could level the playing field for the bottom 99 percent." This is exactly what America's corporate backers don't want. Who wants a workforce that has the ability to say no or to do anything other than beg for the chance to be hired at a low-paying job without benefits?
- legutierr 13y ago> Who wants a workforce that has the ability to say no or to do anything other than beg for the chance to be hired at a low-paying job without benefits? The workers, I would hope. Unfortunately, many people don't understand their own self-interest.
- raelmiu 13y agoThis is the dumbest socialist propaganda I've read in quite some time. The end result of such an intervention is inflation, not poverty cuts. Because the money will be going out faster than it is collected simply because of logistics and population increase. There is a famous event of this happening in the old west, large portions of land was just handed out in a state lottery. It changed nothing. This is not a sustainable solution to the problem of bad income mobility.
- dragonwriter 13y ago> This is the dumbest socialist propaganda I've read in quite some time. The end result of such an intervention is inflation, not poverty cuts. Presumably, redistribution increases inflationary pressure in some sectors and reduces it in others, but it only increases them across the board if it results in more money being spent, e.g., by increasing the domestic velocity of money, total economic activity, and aggregate demand. But that's not a bad thing, and the danger of high inflation can be managed by monetary policy -- tightening monetary policy in response to expansionary conditions that would otherwise produce inflation is pretty much monetary policy 101. > Because the money will be going out faster than it is collected Obviously, its trivial to aggregate benefit to a dedicated revenue source so that its money is going out no faster than it is collected. > There is a famous event of this happening in the old west, large portions of land was just handed out in a state lottery. Presumably, this is a somewhat confused reference to the Homestead Act, which had a pretty significant impact on building the American middle class. But, even so, a continuous redistribution through basic income is different than a one-time distribution of land.
- raelmiu 13y agoFirst point: Inflation doesn't profit anyone, and it isn't strictly necessary, just hard to avoid. Handing out money that then, because of the hand out, loses a large portion of its value is not redistribution of wealth, but only paper. Second point: Trivial? It has never been done so far. No government has managed to do this yet, it's the main source of inflation today. Third point: It is different in that it's recurring instead of a one time hand out. The problems still remain. But the idea of "citizen pay" is not a new one. The problems remain: logistically difficult. Economically inflation removes the "wealth" being redistributed so people end up with nothing. Socioeconomically it removes pressure to invent wealth generating enterprises.
- AJ007 13y agoReduce the cost of living by $3,000 a year. Cut waste producing production, reduce co2 emissions, and the results scale out to the rest of the world's population. How about a freemium economy? The fries are free but the salt and ketchup cost money. The biggest lesson I've learned from running a company is blanket money tossing tends to be an excuse for intellectual laziness.
- sseveran 13y agoWhere would you remove $3000 of costs per year? Reducing CO2 emissions would cause prices to rise since alternative forms of power are more expensive. What you really want to do is mandate a lower standard of living, which is by definition cheaper.
- dllthomas 13y ago"What you really want to do is mandate a lower standard of living, which is by definition cheaper." That's not at all "by definition" - incarceration, for instance, is a horrible standard of living and is hugely expensive.
- deleted 13y ago[deleted]
- sseveran 13y agoshakes head
- dllthomas 13y agoMy example was obviously extreme, but it wasn't purely a usage note - there is a meaningful distinction between forcing a lower standard of living and expecting reduced resource usage, and forcing reduced resource usage and accepting a lower standard of living.
- jiggy2011 13y agoUntil the customers just come in for the free fries because the ketchup is cheaper next door.
- deleted 13y ago[deleted]
- johnnyg 13y agoMy first reaction was "hell no". My second was "there would at least be one and only one number to vote on and administer in this area of government" My third "oh...wait, you can't live on 3k anyway. The rest of the machinery would have to stay and this would be in addition. Worse, next year its 3.5k, and then next 4k..." So my counter is this: Will it work if we give everyone 30k a year? Because that would actually simplify and change things. Anything less and this isn't a serious proposal.
- pbhjpbhj 13y agoOur family income amounts to ~$4800 per person per annum. So you're proposing a 6 times income increase (we're in the UK). I think $3k is probably just enough to live on in the UK and it's generally accepted that the cost of living here is greater, certainly it would be enough if one weren't spending ~50% of their income on a mortgage. We run a car too (£1.30/l for petrol), if we weren't working we wouldn't need the car and we'd be able to get an allotment to supplement our food supply. I consider us to be quite well off yet, of course, relatively poor. We don't qualify for free school meals so apparently there are a lot (400,000 children in England alone do qualify) of people worse off than us and still surviving. $30k per year sounds like it would be a massive disincentive to seek a wage, whether that would also amount to a large population who don't work or not is anyone's guess really (but I'd say yes).
- johnnyg 13y agoHrm. Maybe I misunderstood the proposal, which I consider radical, and took a wrong turn. I'm working back from median household income in the US. https://en.wikipedia.org/wiki/File:Median_US_household_income.png https://en.wikipedia.org/wiki/File:Median_US_household_incom... I think the proposal's underpinnings are "lets pay everyone enough to live on, shrink all the complexity down to one number so we can all understand and impact what that one number is, and hope that those who produce for love of the game do so to an extent that allows us to keep the system running". Basically communism with a uber-capitalist kicker (slogan proposal: "Musk's gonna Musk"). From your comments, it sounds like you'd think that if we put 30k more per person on the table, the incentive to work would go away, and the poor are needed to work so it would break the system. Well, I believe we've already crossed this line with current entitlements and programs and there's already an advantage to not working. This is a far right alt source so read it carefully and do your own thinking (could say the same for CNBC though!): http://www.zerohedge.com/article/entitlement-america-head-household-making-minimum-wage-has-more-disposable-income-family-mak http://www.zerohedge.com/article/entitlement-america-head-ho... In conclusion: 1. 3k is just another entitlement added onto a haze of entitlements. 2. The value would be a single number. We're giving it away inefficiently now, why not clean that part up and hope democracy/the light of day will bring a moderation to it. Likely not, but better than what is. 3. 30k would be a better number if all other entitlement of any kind were truly going away and we were going to truly play it strait up. 4. If I'm wrong on this and the number after cutting everything else off is really 8k or 10k or whatever, I'm still fairly skeptical we could pay for it. 5. I've focused a lot of my life on not being poor-ish like we were when I was a kid. I think I'm pretty disconnected from what that word really means, and intentionally so, but thanks for the reality check anyway. If you'd go into more detail, I'd read it. Specifically, say you were poor but wanted to make something, would the amount of money you'd need increase and by how much?
- guylhem 13y agoWant a quick and dirty fix? Kill half of the poor. Problem solved immediately. (I hate such rhetorical questions, so this is the ironic answer I always give) There is no quick way out, and the various "basic income" schemes are untested on such a wide scale, and their consequences unknown. Those who favour basic income on the hypothesis it will be balanced by a reduction of government redistribution jobs ignore a very important trend: governments never shrink - they grow with time (IIRC, in the US over 40% of the GDP is eaten by the gov)
- shadowspar 13y agoGenocide jokes aren't funny. No, not even yours.
- dllthomas 13y ago"(IIRC, in the US over 40% of the GDP is eaten by the gov)" http://www.morganwarstler.com/post/44789487956/guaranteed-income-choose-your-boss-the-market-based http://www.morganwarstler.com/post/44789487956/guaranteed-in... It looks like it's strictly less than 25%, though there could well be categories of spending that's excluding.
- steveplace 13y agoHere's some back of the envelope numbers... The federal government spends: -878B in Social Security and disability -961B in healthcare -422B in welfare So that's about 2.26T just in these three categories. For a single year. We've got about 320 million people in the US. So this comes out to about 7,000 a person for these three categories. You want basic income? That's fine, just use it as a replacement for some of these programs. Instead of running a vast bureaucratic network managing these benefits, just hand out a check every quarter. This is hilariously simplified and a slightly more sophisticated system is what's known as a "negative income tax." Here is Milton Friedman (yes, Milton, not Tom) advocating for an NIT: http://www.youtube.com/watch?v=xtpgkX588nM http://www.youtube.com/watch?v=xtpgkX588nM Want to keep going? When it comes to education, it's about 10k per child for k-12 spending if you include state and local spending. A high school of 2,000 kids should have a budget of 20 million... and with a student/teacher ratio of 20, would be equivalent to $200,000 per teacher. Take 50% of that to run facilities/admin and you've still got a six figure salary.
- nickpinkston 13y agoAnd for people saying $7K/person pales in comparison to the Swiss $36K/person, remember to consider that people who make a lot more would get a lot of their $7K taxed away anyway - so it's probably closer to an effective $15K-25K a year considering this.
- lutusp 13y ago> High rates of poverty can, as a policy matter, be solved with trivial ease. How? By simply giving the poor money. It's been tried. It didn't work. How can the author of this article be so ignorant of history, not just of the many experiments in communism and socialism, but of relatively limited, well-intentioned programs like AFDC in the U.S., programs that are now recognized as having made the problem worse? Giving the poor money is not, and never will be, "simple". Reasonable people may differ, but I personally think putting the money into education would be a better investment.
- prostoalex 13y ago> There is also plenty of room to cut tax expenditures on homeowners, personal retirement accounts, capital gains exclusions at death, and exclusions on annuity investment returns. Let's use today's data and assume no changes in economic behavior.