$10,000/year for life

[Guest *Ste***cque**]

There's a movement afoot amongst various thinkers in several countries such as Sweden, US, etc., that recommend these governments pay every man, woman and child an annual payment of $10 000 for the duration of their lives. The only restriction to collecting this money is you can't be in jail. You can spend this money wherever you wish... rent, food, cigarettes, etc. You would still collect CPP in your retirement as you pay into this separately with your employer but you would not get any other government assistance.

The benefits are you eliminate poverty and inject additional spending money into the economy. There is also the claim that complicated and duplicated government services that already try to do this would be eliminated, resulting in efficiencies and savings.

I'm not sure what happens with all the unemployed government workers, but I like the idea and it seems crazy enough that it just could work.

What are your thoughts? Would you vote for this?

[Ice4fun 78396]

No poverty.... safety and security for all.... sounds too good to be true and I fear that would be the case.

 

Would we institutionalize social welfare... would we remove any current motivation for individuals to look after their own well being.

 

We would treat everyone the same...all getting $10,000... but us that fair... you make a million but still get 10,000. you would have to think that to do this they would make it income tested.

 

Put me down as doubtful

 

Additional Comments:

[Guest S*rca****sid]

But what would it eliminate? What would we have to pay for? There are too many unknowns in your "Theory". I've never heard of this movement, do you have a source to refer to?

[Brad 49548]

I find the idea that every family would have a guaranteed minimum income interesting and worth exploring.

 

There are a lot of myths out there about how many people "live off the system" by choice because they're lazy and just want to exploit those willing to work harder. Yes of course there a few bad apples, but for the most part few people on severe social assistance want to be there. Many others are trapped in a cycle of poverty that this sort of standard minimum income would help with. Plus, doing it this way also removes the stigma many people face.

 

Many affluent countries do indeed have the resources that everyone could be guaranteed sufficient food, shelter, education, etc. I'd happily pay my share of taxes to help make this happen. This video is specific to the States, but the points it makes and the general trend of the data are likely true for Canada as well:

http://www.upworthy.com/9-out-of-10-americans-are-completely-wrong-about-this-mind-blowing-fact-2

I certainly don't advocate for complete socialism, clearly the current distribution of wealth is out of whack!

 

That said, I too am doubtful about the $10 000 per person figure. That seems an unrealistic amount to fund. I mean, correct me if my math is wrong but in Canada we have a population of about 34 million. Multiply that by ten grand a person and you'd need 348 billion dollars. In 2011-2012 the federal government's entire expenses was about 271 billion...

[qwertyaccount 15793]

We would treat everyone the same...all getting $10,000... but us that fair... you make a million but still get 10,000. you would have to think that to do this they would make it income tested.

 

You make a million and you'll still get $10,000... but we heavily tax your million leaving you with only $30,000 -- the money has to come from someplace.

[MightyPen 67414]

I don't really know enough about the whole proposal to judge its merits. I gather, though, that it's an idea strongly embraced by prominent conservatives and libertarians (among some others).

 

One of the key bits is "... but you would not get any other government assistance." I just read on Wikipedia (yeah, yeah, I know) that here in Canada we could nearly institute such a programs today with no additional taxes required:

 

[in Canada] A 2004 taxable basic income benefit of $7800 per adult could be afforded without any tax increases by replacing welfare, unemployment, and core Old age services. [/Quote]

 

I don't particularly like this idea offhand though. I'm very much in favour of using our national resources to take care of our fellow human beings, and to mitigate the inequities built into our economic system. But if we as a society are going to redistribute wealth using the tax system to further social justice (yes!), I think we the electorate should agree on what those social principles are and then institute programs that see them through... and NOT just hand everyone a cheque and say "that's it, now off you go, you're on your own."

 

In essence, I only back the redistribution of wealth to achieve specific social goals, and distributing cash erodes our ability to ensure those goal are achieved. Plus, there'd be no social programs remaining to take care of all those people who still ended up destitute despite the basic income. Who could bear to walk among the homeless and desperate and just wave them off saying, "shoulda used that ten grand better I guess!" No, thanks.

 

Still, I'd like to hear someone advocate the case so I could better judge the proposal on its proper merits.

[bcguy42 38594]

I suppose it should be noted that Caliph Abu Bakr implemented a guaranteed annual income around 600 AD. Thomas Paine and Napoleon proposed similar schemes. Martin Luther King Jr., John Kenneth Galbraith, Daniel Moynihan, Richard Nixon, and Andrew Coyne all proposed programs along this line.

 

There are minimum income programs in operation in France, Cyprus, UK, Ireland, Germany, Liechtenstein, Austria, Switzerland, Netherlands, Sweden, Denmark, Finland, Norway, Iceland, Portugal, Luxembourg, and Spain. Granted, some of those countries are fiscal basket cases but I don't see Germany curling up and dying in the next little while.

 

For four years, a program popularly known as Mincome was in place in Dauphin, Manitoba, from 1974 to 1978. All the data that was collected about this project has been stored in archives and not analysed. A researcher won access to the data in 2009 and is working on it but hasn't published results yet. What is known is that, regarding whether or not people would work under such a program, everyone did except for two groups. New moms and teenagers. The moms stayed home with the kids and the teenagers stayed in school, graduated and got better jobs.

 

There was an 8.5% decrease in hospital admissions during the program period as well as decreases in demand for other health care treatments.

 

An article detailing the Dauphin experiment is here: A Town Without Poverty? Canada's only experiment in guaranteed income finally gets reckoning

[roamingguy 300291]

Could you collect the $10,000 and be on UI?

Could you collect the $10,000 and be on social assistance

 

It's hard to give an answer without knowing the details of the program.

And $10,000/year is not enough to live on, for those that need it, it would have to be just be a supplement to any income (ie welfare) however minimal they already make. Otherwise I can't see it being of benefit to those in need and a nice perk to those who don't really need it

 

A real early morning rambling

 

RG

[lipualipua 4704]

I remember reading somewhere that the Trudeau Liberals experimented on a small town in Manitoba ( or Sasketchewan) some time in the 60s. While it lasted, results were so good that nearby towns wanted the same "treatment". The experiment stopped because hard times hit Canada and also bureaucrats in charge of the program never accepted the idea of doling out "free" money. The government shelved the program and stored its results without analyzing them to see pros and cons. I read a prof in the country is currently trying to have access to the results to see what impact it had on the town. Has any CERBite heard or read of this program?

 

Be it as it may, I am of the view that poverty holds the whole world back. This is because the poor are shut out of the life of the community in which they exist. Geniuses in all walks of life most likely exist among the poor also but these cannot contribute their talents to their communities due to their daily struggles to make a living.

[Guest *Ste***cque**]

I read about this idea in a investment club newsletter, of all places. The investment advisor read about it and put it in his newsletter. While he isn't a fan of big government, he liked this idea. This was an American based newsletter and I was surprised that most of the online comments from subscribers were tentatively supportive of the idea.

What I read was just a summary but you would still collect your CPP and EI as you contribute to them.

The government would still provide medical, psychological and other services to help those in need obviously. Just no welfare, housing allowance, etc. That's what the $10 000 would help with, without the stigma attached to it as everyone receives this money.

It is also only meant as "assistance". Giving too much might take away incentive to work.

lipaulipau, see the earlier post by bcguy42. He discusses the Manitoba experiment and provides a link.

[Eric Northman 16522]

I think it's a great idea. Multiple redundant government programs and subsidies could be eliminated. I bet the overhead cost reduction alone would pay for a lot of it.

 

In my opinion, the biggest problem with many welfare/social assistance programs is that they create a disincentive to work. It's not intentional but rather a side-effect of clawbacks and broken taxation rules.

 

Consider, if you are on social assistance and then get work, you lose access to many benefits and other income. You often will be considerably worse off by working. It's perverse but real and people living around the poverty level will often choose not to work, not because they're lazy, but because they can't afford to. Loss of child care or other benefits plus higher taxation make working a losing proposition.

 

IMHO, the greatest benefit of a program like this is that there will ALWAYS be incentive to work. You will ALWAYS be better off by getting a job but there will still be a social safety net in place if you need it.

 

As far as the 'justice' of giving this to people who are making 100k a year or whatever, with the tax brackets these people are already in, much of the 10k would be retrieved anyway. So the claw-back still happens, just at a much higher income level where it's completely unnoticed.

 

For those of you making good money here, would an extra 10k a year really be a life-changer one way or another? For myself at current rates, an extra 10k would probably less than 5k after taxes which isn't much and to be honest, if it meant a better society, I'd probably be happy to pay a slightly higher tax rate to claw more of it back.

[Boomer 33202]

I don't think it is feasible the way you have laid out. You state that it would inject more money into the economy, but I'm not sure where this comes from. You still have to claw it back from the wealthy and middle class to redistribute. As we live in a free market system, the economy would adapt to a new norm and I suspect that this additional spending power for the poor would erode fairly quickly and they'd be left without the original safety net.

[cinelli 22184]

I bet the overhead cost reduction alone would pay for a lot of it

 

Nowhere near pay for it. As pointed out already, the cost this year would be $340 billion plus. And the federal gov't took in $255 billion in 2012, and only spent $276 billion. This program would more than double government spending.

 

As far as the 'justice' of giving this to people who are making 100k a year or whatever, with the tax brackets these people are already in, much of the 10k would be retrieved anyway

 

Hang on, I thought it was going to eliminate overhead? So now you want to keep all the people at Revenue Canada? And all the other organisations that deliver social services? So, no overhead reductions.

 

This program will only do one thing. Totally devalue Canadian dollars. Look at postwar Germany or Argentina a few years ago. Both goverments printed money like crazy. It ended up being so worthless people in Germany needed huge bundles of it to buy a loaf of bread. In Argentine people would skip work in the afternoon to buy food, because their money lost value hourly.

 

This is a ridiculous proposal and no sensible economist would support it.

[Phaedrus 209521]

Nowhere near pay for it. As pointed out already, the cost this year would be $340 billion plus. And the federal gov't took in $255 billion in 2012, and only spent $276 billion. This program would more than double government spending.

 

I wouldn't be too inclined to get hung up on exact numbers at the moment. What's really being debated at this stage is the principle of replacing the current welfare system with a flat payment made to everyone, no matter what. You can pick the numbers to suit any particular budget later on; the concept is the important thing here.

 

Hang on, I thought it was going to eliminate overhead? So now you want to keep all the people at Revenue Canada? And all the other organisations that deliver social services? So, no overhead reductions.

 

You'd have to keep Revenue Canada as the government would still require income, obviously. The savings would be in the elimination of most of the vast bureaucracy that exists to hand money out again, and try and get it to the people that need it.

 

This program will only do one thing. Totally devalue Canadian dollars.

 

I have no clue where you managed to get that idea from. The government could end up dishing out more money, or less, or about the same... depending on what figure you choose for the per-capita allowance. And as with government expenditures today, they can be funded by more or less taxation and borrowing. The spectre of runaway inflation has nothing to do with this conversation whatsoever.

 

This is a ridiculous proposal and no sensible economist would support it.

 

It's an interesting and innovative proposal, and a lot of sensible economists are giving it very serious thought. What's ridiculous is rejecting it out-of-hand without serious consideration.

 

In fact, one of the things I've really liked about debates I've seen on this topic is that politicians and pundits are being forced to actually think about it, which is quite rare. On most issues there are well-established party lines and talking points for the left and the right to follow, but this issue has aspects that will appeal to both sides (and be unpopular with both sides). That makes the conversation rather more interesting than most conversations about welfare.