An Evelyn never Forgets

Why yes, I am proud of the title. This is a nice article, but it seems to conflate "basic income" with "universal basic income", which are not at all the same thing.

I'm pretty much convinced of the need for the goal behind UBI, which is to provide a global safety net that prevents anyone and everyone from falling into ruin. Perpetual worry about how to make ends meet does not provide a sensible motivation to work one's way out of poverty. To work merely in order to avoid death is no way to live, and while the idiot masses have a lot to answer for, I don't have such a low view of them as thinking they'd prefer to laze about all day if they didn't have to worry about being evicted. It takes far more prolonged and luxuriant surroundings than life in a meagre domicile in order to fall into corruption and complacency. That sort of behaviour is infinitely worse, and more dangerous, at the top of the economic pyramid than at its base. To live with a basic level of dignity is not an obscene privilege but an entirely correct entitlement. Permanent fear is not a sane approach to social policy.

More pragmatically, while a modest lack of resources can provide a motivation - or at least a desire - to work harder and climb the economic ladder, in excess it does not provide the necessary facilities but actively acts against anyone trying to rise above their station. The "Sam Vimes 'Boots' theory of socioeconomic unfairness" is hugely non-linear - it's easier for a billionaire to make another billion than it is for a starving family to survive another day. Social and economic progress does require motivation and hard work, but it also requires sheer resources. Money buys resources, which can be transformed into money and invested into more resources. Thus the poor stay poor precisely because they are poor, and the rich get richer only because they are already rich. It has little, although not nothing, to do with intrinsic character or motivation. Sure, you'll find the odd layabout on the scrapheap who got there by virtue of being a lazy sod, but that says nothing about the majority of such unfortunates.

So that's the goal : ensure everyone - without exception - has enough to live decently and with dignity, and if they want to live more luxuriantly, they have to work to earn it. As to what economic solution would be the best way to achieve that, I remain open-minded except that self-evidently the free market is not the solution to this particular problem.

Evelyn Forget was a psychology student in Toronto in 1974 when she first heard about a ground-breaking social experiment that had just begun in the rural Canadian community of Dauphin, Manitoba. “I found myself in an economics class which I wasn’t looking forward to,” she remembers. “But in the second week, the professor came in, and spoke about this wonderful study which was going to revolutionise the way we delivered social programmes in Canada. To me, it was a fascinating concept, because until then I’d never really realised you could use economics in any kind of positive way.”

That last sentence alone shows what a weird dystopia in which we live. The hell's the point of having economics if it doesn't do any good ?

The experiment was called ‘Mincome’, and it had been designed by a group of economists who wanted to do something to address rural poverty. Once it was implemented in the area, it had real results: over the four years that the program ended up running in the 1970s, an average family in Dauphin was guaranteed an annual income of 16,000 Canadian dollars ($11,700, £9,400). 

“It wasn’t a case of getting money to live and do nothing,” says Sharon Wallace-Storm, who grew up in Dauphin and was 15 when the experiment began. “They set a level for how much a family of three or four needed to get by. You applied showing how much you were making, and if you didn’t meet that threshold they would give you a top up.”

Which, for the unfamiliar, is not at all the same as Universal Basic Income, which would be giving absolutely everyone the same amount of cash per month regardless of their other income sources. The disadvantage of UBI is that it's potentially expensive and inefficient (billionaires don't need an extra $11,700). The advantage is that it is absolutely impossible to cheat, and by extension, it does not encourage cheating. It also ensures that working always means greater income than not working. Mincome, on the other hand, ensures everyone has at least enough to get by, but would seem rather easier to cheat (because you could fiddle your accounts to present yourself as having a lower income than you really do) and it's less clear if you'd be guaranteed to always be earning more by working - or, you might find that you need to work tremendously hard to earn just above the threshold, whereas if you didn't work at all your income would be only slightly less. That would stop you living in a slum but wouldn't do anything to tackle the grosser problems of extreme wealth inequality. It would be a safety net, but one it might become very easy to become entangled in and so more difficult to escape from. Ideally, what we want is not a net but a trampoline, but "economic safety trampoline" is unlikely to catch on as a mainstream term.

In total, the scheme ran for more than four years, with the primary goal of investigating whether a basic income reduced the incentive to work, one of the main public concerns at the time regarding such schemes. Forget had long wondered what had happened to the social experiment that so captivated her in 1974... [she] discovered that the data had fallen under the jurisdiction of the Winnipeg regional office of Canada’s National Library and Archives. After gaining permission to analyse it, she was confronted with 1,800 dusty boxes packed full of tables, surveys and assessment forms, all of which needed to be digitalised. 

After several years of painstaking work, she was finally able to publish the results, many of which were eye-opening. In particular, Forget was struck by the improvements in health outcomes over the four years. There was an 8.5% decline in hospitalisations – primarily because there were fewer alcohol-related accidents and hospitalisations due to mental health issues – and a reduction in visits to family physicians.

There was also an increase in the number of adolescents completing high school. Before and after the experiment, Dauphin students – like many in rural towns across Manitoba – were less likely to finish school than those in the city of Winnipeg, with boys often leaving at 16 and getting jobs on farms or in factories. However, over the course of those four years, they were actually more likely to graduate than Winnipeg students. In 1976, 100% of Dauphin students enrolled for their final year of school.

All well and good, but did it create jobs ? Implicitly yes. No statistics are given for the mincome study, but the results of the recent Finnish study are positive :

But when the experiment ended in 1979, the improvements which had been seen in health and education soon returned to how things had been in 1974. Taylor remembers how many of the small businesses that had sprung up over the preceding four years began to vanish. Her husband was forced to close their shop, and the couple soon left Dauphin for good.

One of the things we do know from the Mincome experiment is that basic income does not appear to discourage the recipients from working – one of the major concerns politicians have always held about such schemes. Forget found that employment rates in Dauphin stayed the same throughout the four years of Mincome, while a recent trial in Finland – which provided more than 2,000 unemployment people with a monthly basic income of 560 euros ($630, £596) from 2017 to 2019 – found that this helped many of them to find work which provided greater economic security.

“They recently released the final results, which showed the nature of the jobs that people got once they received a basic income was changing,” says Forget. “So instead of taking on precarious part-time work, they were much more likely to be moving into full-time jobs that would make them more independent. I see that as a great success.”

Clearly yes, though numbers would be nice to have. The ideal would be to move people into jobs which could be self-sustaining even if UBI was removed, but if it created economic conditions where UBI was sustainable indefinitely, this would also accomplish the same goal. And of course Finland isn't necessarily the best test case, since it already has a strong safety net.

“All the experiments so far have only considered whether basic income affects the willingness to work of those receiving the extra payments,” Mason says. “But they haven’t looked at the people who are just above the threshold for receiving basic income. Those people could well become very resentful of anyone who isn’t working, and yet only earn slightly less than them.”

Yes, but if you have UBI - not mincome! - plus minimum wage, that's not a problem. Mincome could easily suffer from this - UBI can't. The question remains as to whether UBI is really affordable en masse or not, and the large-scale effects aren't easy to predict. What will people spend an extra monthly ~$10k on ? Hookers and cocaine ? Moving to a nicer house ? And how will prices change in response ? The fractional change in income will vary enormously depending on existenting income. And spending intention is likely to vary if you know the scheme is going to be permanent or just temporary. So it's not at all easy to predict... but surely the underlying goal is a worthy one.

Canada's forgotten universal basic income experiment

Evelyn Forget was a psychology student in Toronto in 1974 when she first heard about a ground-breaking social experiment that had just begun in the rural Canadian community of Dauphin, Manitoba. "I found myself in an economics class which I wasn't looking forward to," she remembers.