When the government of Kenya began giving cash instead of food aid to poor people in Kenya’s drought-stricken North Eastern region, the aim was to help them buy food more efficiently and conveniently.
But the cash-transfer program has had an unexpected effect: Most of the recipients of the cash have used it to start small businesses, which they see as the best way of adapting to increasingly tough climatic conditions.
“We expected them to buy food, given the emergency situation. But investing the money into businesses shows how very little resources can be used to build resilience among very poor communities,” said Evelyn Nadio, manager of the Hunger Safety Net Programme (HSNP), which provides the cash aid under Kenya’s National Drought Management Authority. source
if you wanted to give every adult in the US 20K, it would cost about 5 trillion dollars a year. The federal budget is about 4 trillion
dollars a year so, to raise the money, you would have to double everyone's taxes.
By the ‘new urban poverty’, I mean poor, segregated neighbourhoods in which a majority of individual adults are either unemployed or have dropped out or never been a part of the labour force. This jobless poverty today stands in sharp contrast to previous periods. In 1950, a substantial portion of the urban black population in the United States was poor but they were working. Urban poverty was quite extensive but people held jobs. However, as we entered the 1990s most poor adults were not working in a typical week in the ghetto neighbourhoods of America’s
larger cities. ...
Using the employment to population ratio we find, for example, that in 1990 only one in three adults ages 16 and older held a job in the ghetto poverty areas of Chicago, areas with poverty rates of at least 40 percent and that represent roughly 425,000 men, women and children. And in the ghetto census tracts of the nation’s 100 largest cities for every 10 adults who did not hold a job in a typical week in 1990 there were only 6 employed persons (Kasarda 1993).
The disappearance of work has adversely affected not only individuals and families, but the social life of neighbourhoods as well. Inner-city joblessness in America is a severe problem that is often overlooked or obscured when the focus is mainly on poverty and its consequences. Despite increases in the concentration of poverty since 1970, inner cities in the United States have always featured high levels of poverty, but the levels of inner-city joblessness reached during the first half of the 1990s was unprecedented. ...
The consequences of high neighbourhood joblessness are more devastating than those of high neighbourhood poverty. A neighbourhood in which people are poor, but employed, is much different from a neighbourhood in which people are poor and jobless. In When Work Disappears (1996) I attempt to show that many of today’s problems in America’s inner-city ghetto neighbourhoods — crime, family dissolution, welfare, low levels of social organisation and so on — are in major measures related to the disappearance of work.
... In the absence of regular employment, a person lacks not only a place in which to work and the receipt of regular income but also a coherent organisation of the present — that is, a system of concrete expectations and goals. Regular employment provides the anchor for the spatial and temporal aspects of daily life. It determines where you are going to be and when you are going to be there. In the absence of regular employment, life, including family life, becomes less coherent. Persistent unemployment and irregular employment hinder rational planning in daily life, a necessary condition of adaptation to an industrial economy (Bourdieu 1965).
Thus, a youngster who grows up in a family with a steady breadwinner and in a neighbourhood in which most of the adults are employed will tend to develop some of the disciplined habits associated with stable or steady employment — habits that are reflected in the behaviour of his or her parents and of other neighbourhood adults. These might include attachment to a routine, a recognition of the hierarchy found in most work situations, a sense of personal efficacy attained through the routine management of financial affairs, endorsement of a system of personal and material rewards associated with dependability and responsibility, and so on. Accordingly, when this youngster enters the labour market, he or she has a distinct advantage over the youngsters who grow up in households without a steady breadwinner and in neighbourhoods that are not organised around work — in other words, a milieu in which one is more exposed to the less disciplined habits associated with casual or infrequent work.
More to the point, however, the libertarian vision of the society we actually have bears little resemblance to reality.
Mike Konczal takes on a specific example: the currently trendy idea among libertarians that we can make things much better by replacing the welfare state with a basic guaranteed income. As Mike says, this notion rests on the belief that the welfare state is a crazily complicated mess of inefficient programs, and that simplification would save enough money to pay for universal grants that are neither means-tested nor conditional on misfortune. But the reality is nothing like that. The great bulk of welfare-state spending comes from a handful of major programs, and these programs are fairly efficient, with low administrative costs.
During the 2013 tax year, the average EITC was $3,074 for a family with children (boosting wages by about $256 a month)....
The EITC is designed to encourage and reward work. As noted, a worker’s EITC grows with each additional dollar of earnings until reaching the maximum value. This creates an incentive for people to leave welfare for work and for low-wage workers to increase their work hours.
This incentive feature has made the EITC highly successful. Studies show that the EITC encourages large numbers of single parents to leave welfare for work, especially when the labor market is strong.
In 2013, the EITC lifted about 6.2 million people out of poverty, including about 3.2 million children. The number of poor children would have been one-quarter higher without the EITC. The credit reduced the severity of poverty for another 21.6 million people, including 7.8 million children. In combination with the Child Tax Credit (CTC), the EITC lifts even more families with children out of poverty (see figure).
An all-cash strategy such as a guaranteed income is touted as a simple solution to the complex problem of poverty. In this context, we should all heed H.L. Mencken's famous aphorism: "For every complex problem, there is a solution that is simple, neat, and wrong."
To pay for UBI all of those supports would be removed and replaced with a monthly cheque and the assertion "you'll be just fine now you are on equal footing with everyone else".
Efficiency ratio (E) is defined as the share of the VAT in GDP divided by the standard VAT rate. An efficiency ratio of, say, 30 percent, implies that if the standard VAT rate is increased by one percentage point, the shares of the VAT revenues in GDP is expected to increase by 0.3 percentage point. In general, the higher the ratio E, the better the performance of the VAT. The IMF survey shows that small islands and members of the European Union (EU) have the most effective VAT systems: their estimated efficiency ratios attained at 48 and 38 percent respectively, while the worldwide average was 34 percent.
... we can still learn something from the basic income debate while taking a more incremental and realistic approach. Rather than a universal basic income to replace all existing programs, we could provide a modest, targeted transfer that is means-tested through a gradual phase-out as income rises. This way, those who find work don’t immediately lose all their benefits, and so we can balance the desire to help with efficient work incentives. We also can target the benefits where they will do the most good, instead of including high earners in the plan.
In fact, the federal Liberal government’s proposed new child benefit does just that. It will pay about $500 a month for each child and be phased out as income rises. Moreover, economists Wayne Simpson and Harvey Stevens have a similar proposal for the personal exemption and other non-refundable tax credits in our income tax system. They would transform the existing credits into a basic income for everyone, phased out for higher earners. The cost would be an extra $6-billion to $7-billion over the existing system, but we’re not talking Finnish-sized payments here. The transfer would be at most $1,300 a year – a 10th the size of the Finnish proposal.
It has been said that “work gives people something welfare never can.” Work is not a punishment. Work instills a sense of purpose, self-worth, self-sufficiency, and dignity that cannot be duplicated. The happiness that work provides is not due to money earned, but instead from the “value created in our lives and the lives of others – value that is acknowledged and rewarded.” - House GOP group Republican Study Committee [pdf]
"...women carry the burden of emotional labor—the childcare, support, and household work, which largely goes uncompensated. “Of course this unpaid work is valuable and I think UBI is recognition of that,” says Bregman."
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