Trusting the poor with the money

This article Why we should give free money to everyone, shook me because it made me realised that I too tended to accept that just giving people money to help them is an invitation to abuse.

 The trend from 'welfare' to 'workfare' is international, with obligatory job applications, reintegration trajectories, mandatory participation in 'voluntary' work. The underlying message: Free money makes people lazy.

Except that it doesn’t.

The article shows how poor people all over the world can do great things with money if they're given it -and it's better than what well-meaning and even well-researched aid workers might do. And from my experience of having little money, it makes sense: it is frustrating to see how ones lack of money shuts someone out from economies of scale, helpful social networks, time-saving, training and so on. Having enough money -that is access to power to be an agent in ones own life and in community with others. So,

Proven correlations exist between free money and a decrease in crime,
lower inequality, less malnutrition, lower infant mortality and teenage
pregnancy rates, less truancy, better school completion rates, higher
economic growth and emancipation rates. ‘The big reason poor people are
poor is because they don’t have enough money’, economist Charles Kenny, a
fellow at the Center for Global Development, dryly remarked last June.
‘It shouldn’t come as a huge surprise that giving them money is a great
way to reduce that problem.’

 There's actually a virtuous circle as readers of The Spirit Level might just suspect. Add to that the costs of giving aid and there is more 'bang for your buck'.

Why would we send well-paid foreigners in SUVs when we could just give
cash? This would also diminish risk of corrupt officials taking their
share. Free money stimulates the entire economy: consumption goes up,
resulting in more jobs and higher incomes.

Only problem is that our assumption that people will waste money is so strongly ingrained that it's a hard sell. And it's an assumption that is based more on repetition than on self-reflection. Because, if we reflect (most of us, anyway) on what we would do with, say, three grand when we had nothing, we know, most of us, that we would want to 'invest' our money for the longer term and to make it go as far as possible. We'd want to use it to enable us to have a regular income and to feel like worthwhile members of society. So why do we think that others are so different from us?



And indeed, I would go with the next move in the article I've been citing:

A monthly allowance, enough to live off, without any outside control
on whether you spend it well or whether you even deserve it. No jungle
of extra charges, benefits, rebates - all of which cost tons to
implement. At most with some extras for the elderly, unemployed and
disabled.



The basic income - it is an idea whose time has come.

 Now I've known about basic income for a long while -it's been Green Party policy since the 1970s (when it was the Ecology Party) and I wrote one of my first practical theology papers in 1982 on unemployment in which one of the conclusions was that a citizen's income would be theologically justified. What i didn't know until this article is that there had been a real-life experiment in Canada which was cancelled for political reasons with the data unanalysed until recently. And the results are conversant with what we would probably predict for ourselves on reflection on ourselves rather than on presuming on the actions and attitudes of other people (hooking our 'us and them' negativity).

‘Politicians feared that people would stop working, and that they
would have lots of children to increase their income,’ professor Forget says.










You can find one of her lectures here.

Yet the opposite happened: the average marital age went up while
the birth rate went down. The Mincome cohort had better school
completion records. The total amount of work hours decreased by only
13%. Breadwinners hardly cut down on their hours, women used the basic
income for a couple of months of maternity leave and young people used
it to do some extra studying. Forget’s most remarkable discovery is that hospital visits went down by 8,5%.

 The article goes on to consider whether it would be affordable -it sounds like it would be so expensive. But then again ....

It would allow us to cut most of the benefits and supervision programs
that the current social welfare system necessitates. Many tax rebates
would be redundant. Further financing could come from (higher) taxing of
capital, pollution and consumption. [...] Holland, has 16.8 million inhabitants. Its poverty line is set at $1,300
a month. This would make for a reasonable basic income. Some simple
math would set the cost on 193.5 billion euro annually, about 30% of our
national GDP. That’s an astronomically high figure. But remember: the
government already controls more than half of our GDP. It does not keep
the Netherlands from being one of the richest, most competitive and
happiest countries in the world.

 Remember too, that such a policy would mean that employers would offer wages over and above a basic income -reducing their direct wage bills. Also the apparatus of control, surveillance and processing of social security would be hugely reduced. And if the Mincome experiment panned out, health costs would be likely to fall somewhat. I could see it making an interesting difference to education -what price student loans with less living costs needed?

Worth thinking about, surely?

PS. this RSA video with Daniel Pink showcasing research on motivations raises the tantalising possibility that a basic income could be the most creative and liberating thing we could do with our society.