9 ms·

The Mincome Experiment of 1974-79

57 points by Nowyouknow 12y ago

mchanson 12y ago
Hope we start experimenting with this in the US also. Maybe at a state level.
- lkbm 12y ago
  There's the Permanent Fund Dividend in Alaska, though it only hit $3269 its peak year, and that was with a bump from a budget surplus.
  - knodi123 12y ago
    yeah, but that one was neither designed as a social safety net, nor is it big enough to function as one. It's neat, but it's so small that it's basically apples and oranges.
    - prostoalex 12y ago
      That's one of the problems with practicality of such plans - the numbers are never "big enough". People take into account today's income and capital gains revenues, and assume that they can safely increase those rates by a wide margin causing no change in underlying behavior. In reality a top-income earner who made eight digits or above can safely take the next 2-3 years off without driving his family into the soup kitchen situation, and as far as capital gains goes, people become more cognizant of harvesting capital losses before they sell anything that appreciated in value (or simply sell a smaller chunk of their assets, if we're talking highly liquid investments).
- Zikes 12y ago
  It would have to be in an extremely liberal area. Socialism is still a four letter word in the US, and this is the epitome of socialist initiatives.
  - ad_hominem 12y ago
    It seems like reducing socialism to me. Instead of the gov't hand-picking (centrally planning) benefactors of tax dollars, e.g. defense contractors or oil/ag subsidies, it's being returned to the people (and all the people - not just some according to their need or whatever).
    - JonFish85 12y ago
      It's probably an ever bigger problem than that. Regardless of liberal or conservative, if you want to raise taxes essentially across the board (which you'd have to do--even taking all of the wealth of "the 1%" would fund this project for maybe a year) you're going to have a really tough time convincing people that their taxes are going to be raised 500% or whatever it would end up being. Just back-of-the envelope numbers, if 300 million Americans received $30k/yr, that's $9 trillion dollars per year that has to come from someplace. My guess would be that the majority of people would end up handing that $30k right back in the form of taxes. And at that point, it becomes an exercise in the government giving people money, then having to get it back via taxes, so then what is the point? Is it easier to give 10 people $10 or to give 100 people $10, then take $900 of it back?
      - dsp1234 12y ago
        Is it easier to give 10 people $10 or to give 100 people $10, then take $900 of it back? If 100 people is the totality of the population, the cost of bureaucracy for monitoring which of those 10 people actually get the $10 (specifically ensuring a low fraud level) is near or greater than $100, and the social stigma of getting that $10 in the first place is reduced or eliminated, then yes, it could be "easier". In other words, would it make sense to give everyone the same amount, and take it back from some in taxes, when weighing the cost of the current levels of enforcement and the possible social good done through reduced stigmatization of the poor.
      - lifeformed 12y ago
        Well, not all 300M are adults - I would assume this hypothetical program would only give to people past a certain age. And I don't think it'd be $30k - it would probably be just enough to survive, but not enough to live a lifestyle you'd enjoy. Maybe it'd scale a little with your age, so you don't end up with a windfall on your 18th birthday. I'm not sure how'd you account for different costs of living in different areas. But I think the number would be closer to $20k. Also, it could just be an untaxed amount, no need to muddy things up with that. It's still a big chunk of money: $4-5T. But You could cancel out a lot of existing services if this was implemented. We're spending $1.2T for pensions ands $0.5T for welfare [1], so some of that could go towards this. But yeah, that's still a lot of money. Not sure where it'd come from. Maybe start with a low amount and scale upwards, hoping to reap some economic benefits from the improvements? [1] http://www.usgovernmentspending.com/breakdown http://www.usgovernmentspending.com/breakdown
jnbiche 12y ago
Where true basic income differs from this experiment by Canada is that true basic income should be for every adult, regardless of income, race, marital status, sexuality, etc. Not just for poor people, as with Mincome in this Canadian town. A few arguments for: 1) It becomes a defacto emergency lifeline when a ostensibly middle class person loses their job or suffers an extremely expensive illness. In the US, it can take forever to get on disability. With true basic income, there's no need to worry about getting on disability, since you already have a basic income (and yes, this means that disability should be eliminated if this passes). 2) It becomes much less expensive to administer. No massive bureaucracy started up and growing larger just to weed out candidates for some shitty benefit. You're an adult person? Great, you're in! 3) When everyone gets it, it's much more politically feasible to start and maintain. No more questions of "them" doing this or "they" ripping off the hard working man. 4) It allows even healthy middle class people to take risks that might have a big payoff, such as starting up a new business, or embarking on a quest to invent some new technique. Or build an open source project!
- intopieces 12y ago
  I like this idea a lot, but what would stop goods/housing from rising in price to meet the influx of free money?
  - ergothus 12y ago
    That was my initial response when I first heard this concept a few years ago, and the answer is somewhat surprising (Note: I'm not an economist, so please someone correct me if I get anything wrong here): 3 things can alter those prices: A change in supply, a change in demand, or general inflation/deflation. The supply doesn't inherently change in this plan, nor does demand (*assuming everyone is getting these goods today.) And there's no inflation, as this is just redistribution, not printing new money.
    - schrodinger 12y ago
      Doesn't demand go up, as more people can afford a given house?
_delirium 12y ago
Previous discussion of Mincome, prompted by a different article: https://news.ycombinator.com/item?id=8792192 https://news.ycombinator.com/item?id=8792192
raisedbyninjas 12y ago
I don't understand the notion regarding feedback from participants in the experiment. Evelyn Forget said that opinions from respondents may skew positive because those with negative experiences would be less likely to reach out to her. I was under the impression that consumers with negative experiences provide feedback far more often than satisfied consumers. Has that been debunked or am I missing some factor?
clavalle 12y ago
I wonder if it would be feasible to pick a small town in the US and have private parties contribute enough to run such an experiment -- perhaps with better record keeping. Say a town of 3000 adults and 1000 needed help to get to a 'living wage' level. Let's call living wage an average of $40K per year and, on average, the 1000 people needed about half that to get to that level. $20m/year plus administrative costs, let's say $5m. $25m for the experiment. Say we run it for a guarantee of 5 years, so that is $125 million. Too bad. A bit beyond a kickstarter level. Maybe somebody could supplement it with a reality show.
- andkon 12y ago
  I think reality TV would prefer if mincome made for worse outcomes.
- monort 12y ago
  There is was a negative income tax experiment in 70s in Seattle: http://www.econlib.org/library/Enc1/NegativeIncomeTax.html http://www.econlib.org/library/Enc1/NegativeIncomeTax.html
  - clavalle 12y ago
    That article is very negative on the whole idea and is short on facts of the experiment and long on conclusions. One point it made that had me thinking was that it would be impossible to cover enough of the population because the poverty line is so close to median income. Well, what if we didn't cover everyone? What if we picked areas that are having a particularly rough time and used a negative income tax to prime the pump?
vlunkr 12y ago
Can someone explain to me how basic income could work? I'm really interested, not trying to start a battle. The biggest question: Where does the money come from? Massive taxes on the wealthy? You can't just pull a salary for everyone out of thin air. In the case of this town in Canada, the project was probably funded by taxes from other parts of the country, and could not have worked universally.
- bryanlarsen 12y ago
  It's not as expensive as you think, if you run the numbers. Most of the money comes from dismantling welfare, social security, food stamps, et cetera. Tax rates on the middle class are increased enough to cancel out the basic income benefit, so that washes out. As long as the poor isn't the majority of your population, it's not a large tax increase on the rich.
JonFish85 12y ago
Let's do some back of the envelope math here. 316 million Americans, at a $30k/year money sample works out to be $9 trillion dollars a year. The budget that Obama just proposed is $4 trillion dollars (and that has no chance of getting implemented in full). Even if we say you can cut half of that out (Social Security, Medicare/Medicaid, etc), let's call it $2 trillion dollars. So we need $11 trillion dollars of tax money to fund this. The total net worth of US private people is $67 trillion or so[1]. The aggregate net worth of the top 400 people in the USA is $2.3 trillion[2]. You could take all of their money, and still not even come close to paying for the program for ONE YEAR. At that point, you start having to come down hard on the upper middle class. The top 25% owns roughly 73% of the wealth in the country, or ~$48 trillion. If you tax their NET WORTH at 25%, you could fund the program for a year. Pretty quickly you're going to run into a situation where you're cutting a check to everyone, then collecting the money (and more) back in taxes. And in this case, it's terribly inefficient. On a small scale, a program like this probably works well. On a large scale, it would be a disaster. [1] http://en.wikipedia.org/wiki/Financial_position_of_the_United_States http://en.wikipedia.org/wiki/Financial_position_of_the_Unite... [2] http://www.forbes.com/forbes-400/ http://www.forbes.com/forbes-400/
- maxerickson 12y ago
  $30,000 is a pretty big number. If you made it $8,000, a family of 4 would still be above today's poverty line (which is still arbitrary, but it seems like a better "minimal income" than one that gives everybody approximately the current median personal income). $9 trillion / (30/8) = $2.4 trillion.
  - JonFish85 12y ago
    According to [1], for a family of 4 the poverty line is just under $24k? [1] http://aspe.hhs.gov/poverty/14poverty.cfm http://aspe.hhs.gov/poverty/14poverty.cfm
    - maxerickson 12y ago
      Uh-huh. 4*8=32. You used 316 million as one of your multipliers, that presumably includes children.

57 points by Nowyouknow 12y ago

mchanson 12y ago

Hope we start experimenting with this in the US also. Maybe at a state level.

lkbm 12y ago
There's the Permanent Fund Dividend in Alaska, though it only hit $3269 its peak year, and that was with a bump from a budget surplus.
- knodi123 12y ago
  yeah, but that one was neither designed as a social safety net, nor is it big enough to function as one. It's neat, but it's so small that it's basically apples and oranges.
  - prostoalex 12y ago
    That's one of the problems with practicality of such plans - the numbers are never "big enough". People take into account today's income and capital gains revenues, and assume that they can safely increase those rates by a wide margin causing no change in underlying behavior. In reality a top-income earner who made eight digits or above can safely take the next 2-3 years off without driving his family into the soup kitchen situation, and as far as capital gains goes, people become more cognizant of harvesting capital losses before they sell anything that appreciated in value (or simply sell a smaller chunk of their assets, if we're talking highly liquid investments).
Zikes 12y ago
It would have to be in an extremely liberal area. Socialism is still a four letter word in the US, and this is the epitome of socialist initiatives.
- ad_hominem 12y ago
  It seems like reducing socialism to me. Instead of the gov't hand-picking (centrally planning) benefactors of tax dollars, e.g. defense contractors or oil/ag subsidies, it's being returned to the people (and all the people - not just some according to their need or whatever).
  - JonFish85 12y ago
    It's probably an ever bigger problem than that. Regardless of liberal or conservative, if you want to raise taxes essentially across the board (which you'd have to do--even taking all of the wealth of "the 1%" would fund this project for maybe a year) you're going to have a really tough time convincing people that their taxes are going to be raised 500% or whatever it would end up being. Just back-of-the envelope numbers, if 300 million Americans received $30k/yr, that's $9 trillion dollars per year that has to come from someplace. My guess would be that the majority of people would end up handing that $30k right back in the form of taxes. And at that point, it becomes an exercise in the government giving people money, then having to get it back via taxes, so then what is the point? Is it easier to give 10 people $10 or to give 100 people $10, then take $900 of it back?
    - dsp1234 12y ago
      Is it easier to give 10 people $10 or to give 100 people $10, then take $900 of it back? If 100 people is the totality of the population, the cost of bureaucracy for monitoring which of those 10 people actually get the $10 (specifically ensuring a low fraud level) is near or greater than $100, and the social stigma of getting that $10 in the first place is reduced or eliminated, then yes, it could be "easier". In other words, would it make sense to give everyone the same amount, and take it back from some in taxes, when weighing the cost of the current levels of enforcement and the possible social good done through reduced stigmatization of the poor.
    - lifeformed 12y ago
      Well, not all 300M are adults - I would assume this hypothetical program would only give to people past a certain age. And I don't think it'd be $30k - it would probably be just enough to survive, but not enough to live a lifestyle you'd enjoy. Maybe it'd scale a little with your age, so you don't end up with a windfall on your 18th birthday. I'm not sure how'd you account for different costs of living in different areas. But I think the number would be closer to $20k. Also, it could just be an untaxed amount, no need to muddy things up with that. It's still a big chunk of money: $4-5T. But You could cancel out a lot of existing services if this was implemented. We're spending $1.2T for pensions ands $0.5T for welfare [1], so some of that could go towards this. But yeah, that's still a lot of money. Not sure where it'd come from. Maybe start with a low amount and scale upwards, hoping to reap some economic benefits from the improvements? [1] http://www.usgovernmentspending.com/breakdown http://www.usgovernmentspending.com/breakdown

jnbiche 12y ago

Where true basic income differs from this experiment by Canada is that true basic income should be for every adult, regardless of income, race, marital status, sexuality, etc. Not just for poor people, as with Mincome in this Canadian town. A few arguments for: 1) It becomes a defacto emergency lifeline when a ostensibly middle class person loses their job or suffers an extremely expensive illness. In the US, it can take forever to get on disability. With true basic income, there's no need to worry about getting on disability, since you already have a basic income (and yes, this means that disability should be eliminated if this passes). 2) It becomes much less expensive to administer. No massive bureaucracy started up and growing larger just to weed out candidates for some shitty benefit. You're an adult person? Great, you're in! 3) When everyone gets it, it's much more politically feasible to start and maintain. No more questions of "them" doing this or "they" ripping off the hard working man. 4) It allows even healthy middle class people to take risks that might have a big payoff, such as starting up a new business, or embarking on a quest to invent some new technique. Or build an open source project!

intopieces 12y ago
I like this idea a lot, but what would stop goods/housing from rising in price to meet the influx of free money?
- ergothus 12y ago
  That was my initial response when I first heard this concept a few years ago, and the answer is somewhat surprising (Note: I'm not an economist, so please someone correct me if I get anything wrong here): 3 things can alter those prices: A change in supply, a change in demand, or general inflation/deflation. The supply doesn't inherently change in this plan, nor does demand (*assuming everyone is getting these goods today.) And there's no inflation, as this is just redistribution, not printing new money.
  - schrodinger 12y ago
    Doesn't demand go up, as more people can afford a given house?

_delirium 12y ago

Previous discussion of Mincome, prompted by a different article: https://news.ycombinator.com/item?id=8792192 https://news.ycombinator.com/item?id=8792192

raisedbyninjas 12y ago

I don't understand the notion regarding feedback from participants in the experiment. Evelyn Forget said that opinions from respondents may skew positive because those with negative experiences would be less likely to reach out to her. I was under the impression that consumers with negative experiences provide feedback far more often than satisfied consumers. Has that been debunked or am I missing some factor?

clavalle 12y ago

I wonder if it would be feasible to pick a small town in the US and have private parties contribute enough to run such an experiment -- perhaps with better record keeping. Say a town of 3000 adults and 1000 needed help to get to a 'living wage' level. Let's call living wage an average of $40K per year and, on average, the 1000 people needed about half that to get to that level. $20m/year plus administrative costs, let's say $5m. $25m for the experiment. Say we run it for a guarantee of 5 years, so that is $125 million. Too bad. A bit beyond a kickstarter level. Maybe somebody could supplement it with a reality show.

andkon 12y ago
I think reality TV would prefer if mincome made for worse outcomes.
monort 12y ago
There is was a negative income tax experiment in 70s in Seattle: http://www.econlib.org/library/Enc1/NegativeIncomeTax.html http://www.econlib.org/library/Enc1/NegativeIncomeTax.html
- clavalle 12y ago
  That article is very negative on the whole idea and is short on facts of the experiment and long on conclusions. One point it made that had me thinking was that it would be impossible to cover enough of the population because the poverty line is so close to median income. Well, what if we didn't cover everyone? What if we picked areas that are having a particularly rough time and used a negative income tax to prime the pump?

vlunkr 12y ago

Can someone explain to me how basic income could work? I'm really interested, not trying to start a battle. The biggest question: Where does the money come from? Massive taxes on the wealthy? You can't just pull a salary for everyone out of thin air. In the case of this town in Canada, the project was probably funded by taxes from other parts of the country, and could not have worked universally.

bryanlarsen 12y ago
It's not as expensive as you think, if you run the numbers. Most of the money comes from dismantling welfare, social security, food stamps, et cetera. Tax rates on the middle class are increased enough to cancel out the basic income benefit, so that washes out. As long as the poor isn't the majority of your population, it's not a large tax increase on the rich.

JonFish85 12y ago

Let's do some back of the envelope math here. 316 million Americans, at a $30k/year money sample works out to be $9 trillion dollars a year. The budget that Obama just proposed is $4 trillion dollars (and that has no chance of getting implemented in full). Even if we say you can cut half of that out (Social Security, Medicare/Medicaid, etc), let's call it $2 trillion dollars. So we need $11 trillion dollars of tax money to fund this. The total net worth of US private people is $67 trillion or so[1]. The aggregate net worth of the top 400 people in the USA is $2.3 trillion[2]. You could take all of their money, and still not even come close to paying for the program for ONE YEAR. At that point, you start having to come down hard on the upper middle class. The top 25% owns roughly 73% of the wealth in the country, or ~$48 trillion. If you tax their NET WORTH at 25%, you could fund the program for a year. Pretty quickly you're going to run into a situation where you're cutting a check to everyone, then collecting the money (and more) back in taxes. And in this case, it's terribly inefficient. On a small scale, a program like this probably works well. On a large scale, it would be a disaster. [1] http://en.wikipedia.org/wiki/Financial_position_of_the_United_States http://en.wikipedia.org/wiki/Financial_position_of_the_Unite... [2] http://www.forbes.com/forbes-400/ http://www.forbes.com/forbes-400/

maxerickson 12y ago
$30,000 is a pretty big number. If you made it $8,000, a family of 4 would still be above today's poverty line (which is still arbitrary, but it seems like a better "minimal income" than one that gives everybody approximately the current median personal income). $9 trillion / (30/8) = $2.4 trillion.
- JonFish85 12y ago
  According to [1], for a family of 4 the poverty line is just under $24k? [1] http://aspe.hhs.gov/poverty/14poverty.cfm http://aspe.hhs.gov/poverty/14poverty.cfm
  - maxerickson 12y ago
    Uh-huh. 4*8=32. You used 316 million as one of your multipliers, that presumably includes children.