13 June 2014

Yet more support for basic income

http://national.deseretnews.com/article/1677/What-if-we-just-gave-poor-people-cash.html

I just read this fairly short article.  It turns out yet another organization has tried giving poor people cash, this time in developing countries, and surprise, the results are the same as nearly every other trial.  Instead of buying more tobacco and alcohol, poor people given cash spend the money on health care, education, and even starting new businesses.  As usual, they found that giving poor people cash, even in one time payouts, raises their income even many years down the road.  Most of the poor people given cash in this experiment actually spent less on tobacco and alcohol, because they had enough money to spend it on better things.

The evidence in favor of giving poor people cash, with no strings attached (nearly every study and article on the subject uses this exact wording) is already overwhelming.  How much evidence do we need before we do something about it?  Over the last few months (ever since I became familiar with the idea of a basic income) I have randomly come across something providing more evidence that it is a good idea at least once every two weeks, and I have not even been looking.

What all of this tells me is that poor people, in nearly every culture, respond positively to cash donations.  Contrary to popular belief, they do not use the money to get drunk or high but rather use it to get out of poverty.  Most Americans, even liberals, think that welfare should be carefully regulated to prevent misuse of the money.  It turns out, they are all wrong.  Instead of food stamps, we should be handing out cash.  Instead of subsidizing housing, we should be handing out cash.  Maybe it would be better to hand out cash instead of providing Medicare/Medicaid benefits as well.  Who knows!  It might even be better to hand out cash instead of funding homeless shelters and soup kitchens.

I wonder how much money we spend on welfare.  Now, I do not just mean government welfare.  I am talking about all of the welfare from any source, including charities.  Sadly, in the U.S., we donate far more to charities helping people outside of the country than people inside the country, but I still suspect that we spend enough on welfare to fund a major cash based reconstruction effort to get U.S. citizens out of poverty.  I have established before that the overhead on government welfare is huge.  We spend absurd amounts of money to make sure that only seriously poor people get welfare money.  Many charities have higher overheads than the U.S. government (successful charities typically spend a lot of money advertising).  Including all overhead, how much are we spending to carefully dole out charity money in forms that are more difficult to abuse, to only the people that we think actually need it?  Added all together, how much money per person per year is that?  I do not have a clue.  I scraped up some rough numbers for just government welfare spending, which I discussed in a previous article on this subject.  They were pretty amazing.  By itself, the government could payout about half what is needed for a complete basic income (complete meaning that it is enough to get everyone in the U.S. out of poverty).  Even though most U.S. charity donations are going to other countries, I think in-country donations could easily make up the difference.  I suspect that added together, all welfare money spent in the U.S. is enough to get the entire population out of poverty.  Given the evidence that most of those in poverty will become productive citizens if this occurs, it is clearly in our best interest to do so.

A basic income is the cheapest form of effective welfare we could have, because the administrative overhead is extremely low.  The evidence indicates that it would also be a major boost to the economy, not just by increasing spending, but also by increasing the number of successful businesses.  The evidence also indicates that it would reduce harmful behaviors like smoking and excessive alcohol consumption.  It is also likely it would substantially reduce drug use.  The evidence indicates it would improve education as well.  This means that a basic income could be the best solution to many of our current problems.  It could help dramatically in the "war on drugs."  It would effectively end poverty in the U.S.  It would help speed up economic recovery, and it might even result in an economy too robust to fail to dramatically again.  It will reduce smoking.  It will reduce drinking, which would also likely reduce alcohol related violence and would certainly reduce harm caused by driving while intoxicated.  This means it would probably substantially reduce crime (which could eliminate the problem of overcrowding in jails).  It could even pull our failing education system out of the dumps.  While a basic income is probably not the perfect solution to all of our most major problems, it seems to be an essential element of such a solution.  In fact, it may be the only viable solution to breaking down the walls preventing progress for all of these problems.

As the evidence in favor of a basic income mounts, the apparent intelligence of those opposed to it shrinks.  Our lawmakers in the '60s who supported a basic income look more and more like geniuses as more data is generated and revealed.  It is a crying shame that the bill never passed.  Problems have arisen between now and then that never would have happened if they had been successful.  It is time to correct their 50 year long failure and make the U.S. truly the Promised Land.

05 June 2014

More Support for basic income

This article discusses yet another study supporting the idea of a basic income.  Florida recently discovered each homeless person in the state costs the state about an average of $31,000 a year.  This is enough to keep each of them above (the Federal definition of) the poverty level if it was just handed to them.  It mostly covers wages for law enforcement involvement (according to the article, mostly for trivial crimes like trespassing, public intoxication and sleeping on park benches) and medical costs.  For far less than this, the state has found that it can provide long term homes for these homeless people.  The study estimates annual housing costs could be covered at around $10,000 a person.  This would eliminate nearly all law enforcement costs (since most of the "crimes" are caused by the fact that these people do not have homes to sleep and be drunk in) and it would dramatically reduce the medical costs (if they are not on the streets, they are less likely to get hit by vehicles and they are not going to have many medical emergencies related to exposure to extreme weather).  According to the study, Florida could save $350 million over the next ten years by paying to provide housing for the homeless in the state.  This averages out to $35 million a year in savings.

Evidently, Florida is not the only state to discover that well designed state welfare can actually save substantial amounts of money.  Colorado recently converted a prison into a homeless shelter.  The cost is around $3.9 million, but the cost to the state for caring for the homeless people served is just over a third of the original cost.  It turns out that Utah has been providing free housing to homeless people for almost a decade, to save money.  Some believe that Utah will eliminate long term homelessness in the state entirely within the next year or two.  As the article says, not only is it morally expedient that we end homelessness by providing free housing to the homeless, it is also financially expedient that we do so.

I am sure you can see how this relates to basic income.  Of the states mentioned in the article, two revealed the cost per person of homelessness to the state.  One was around $31,000 a year, and the other was around $43,000 a year.  In both cases, the amount of money spent is enough to take the homeless population entirely out of poverty just by giving them the money with no strings attached.  In fact, Florida could keep $6,000 of the $31,000 and still bring their homeless out of poverty.  Colorado, which spends over $43,000 a year per homeless person (not counting the savings seen from converting the prison), could keep $18,000 per person and still bring them out of poverty (using $25,000 as the required income to eliminate poverty; this is close to the Federal government definition of poverty).  Not only is $25,000 a year enough to pay for a small apartment, in most places it is enough to pay for food, a cell phone subscription, and maybe even internet.  It will not cover a car payment with all of this, but we are talking about people who do not have jobs and thus do not need a car to get to work.  Homeless people typically already "live" near places that sell necessities (otherwise they would starve), so they will probably already be close enough to walk.  And of course, I have already discussed the proven fact that given the resources, many homeless people will get out of poverty on their own (in a previous article).  This means that many homeless people given the money that is normally used reactively to help them would become tax paying citizens, further reducing the cost.

Again, I want to point out that basic income is cheaper than welfare with restrictions.  Every restriction placed on welfare recipients costs more money.  If the state has to check bank accounts and employment records to make sure that welfare recipients really are poor, the state has to pay someone to do it.  The costs can go very deep.  First, the welfare applicant has to spend time filling out and filing the forms.  Second, the welfare worker has to review the forms. Third (assuming no revisions are required), the welfare worker has to contact the banks and employers.  Fourth, the banks and employers have to spend time and effort verifying the validity of the legal information release forms.  Fifth, the banks and employers have to look up the requested information and send it back to the welfare worker.  Sixth, the welfare worker has to do whatever math is necessary to determine whether the applicant qualifies.  Seventh, the welfare worker has to send (or otherwise communicate) either a rejection or acceptance letter.  Eighth, the welfare worker has to communicate the acceptance or rejection to whoever starts the next phase of processing.  Do not forget to add to this the fact that few states require only back account and employment records.  Most states require even more.  This is not the end though.  Most welfare departments in the U.S. require recertification either every month or every sixth months.  When there are tens of thousands of welfare recipients in each state, this becomes a full time job for hundreds or thousands of employees.  Of course, this means that managers are also needed, as well as buildings, which have utility costs, and janitors.  Also, do not forget that all of these employees need office supplies and computers to do their jobs.  The welfare department of nearly every state is the size of a typical large business.  Unlike for-profit businesses though, they do not generate any revenue.  So each state has a large welfare business funded by the state, that only consumes funding, and rather large amounts of it.  An unconditional basic income could dramatically reduce the size and thus cost of state welfare systems.  A basic income that provides enough to avoid poverty would cost significantly less than the cost of living on the street for homeless people.  It is possible that taxes would have to be increased, but it would hardly matter, because for most people, the income increase would pay for most if not all of the tax increase.  In the end, it looks like many states could save money this way, even with little or no tax increase.  Do not worry to much about the welfare workers that would loose their jobs.  The basic income will provide enough to support them while they try to find new jobs.  What is the downside?  So far, every suggested downside of a basic income has either been disproven by research or was based on faulty interpretation of data.  It looks like there is no downside.

I am not going to pass judgement, but I do sometimes wonder about the intelligence of our government officials and those who elected them.  I mean, look at the evidence.  According to the evidence, strong welfare reduces government spending.  All evidence so far has shown that a basic income will result in a larger labor pool, happier family relationships, and cost less than anything we have tried in the past.  It is both morally and economically wise, according to the evidence.  The fact that we have not done it and are still not even considering it leaves me with two conclusions.  Either, the average American is an evil person who wants the poor to suffer, even if it means that it will cost the government huge amounts of money, or the average American is stupid.  Given these two options, if I am to give the benefit of the doubt, I have to assume the average American is stupid.  I hate to make such assumptions (especially out loud), but what alternative is there?

I have mentioned before that I am conservative.  While I register to vote as a Republican, I do not consider myself one.  The Republican party line wants to force everyone to work for their support in an economy where there is not enough work for this to happen.  While this plan seems fair, it is no longer economically feasible.  Sorry, but our economy cannot handle the weight of a large working class anymore.  Businesses cannot afford to hire enough workers to employ the entire population, because they produce so efficiently that the overproduction would cost too much.  It looks to me like the Republican party would have us massively overproduce and then spend huge amounts of money to either store or discard the surplus.  This does not make economic sense, and it could be very damaging to the planet.  A well run business does not overproduce, because overproduction reduces profits, and since the Republican party claims to support the best interest of businesses, it should recognize this and support government action that reduces the need for businesses to provide more work than is necessary.  The only way we will get the massive working class desired by the Republican party is to deliberately make businesses less efficient (see Luddite).  I sincerely hope the Republican party leaders are not so deluded that they think this is an acceptable solution.

Conservative does not mean that a person does not support wisely designed welfare.  In fact, what it technically means that a person supports small incremental changes in government, instead of large unpredictable changes.  I prefer a government that slowly changes, and that considers evidence and consequences carefully before making big decisions.  I do not support large government actions that have poorly understood consequences.  I think that we should consider our decisions in small increments and back up when we find undesirable consequences.  In cases where things cannot be done incrementally, I would like to see a good deal of strong evidence supporting the decision before it is made.  Basic income has plenty of very strong evidence that it will be successful.  All major concerns have been resolved in various experiments and studies on basic income or closely related things.  A great deal of positive side effects of basic income have been discovered in studies that implement very limited versions of the idea, and even more have been found in experiments that have fully implemented a basic income.  As a conservative, I think that we have enough evidence that basic income will improve our society and reduce government spending to justify making this major decision.  To add to this, we need to realize that we can always reverse it if it does not work.  One of the great things about our form of government is that law can be repealed fairly easily.  In my opinion, we have not used this feature often enough, but if we go into this recognizing that this is an option, and if we go into it determined to see the experiment through (instead of bailing at the first sign of difficulty), we can safely test the evidence and ultimately make the best decision for us.  Instead of following outdated and illogical party lines, we need to look at the evidence and use it to make the best decision.

03 June 2014

Economic Value of Religious Freedom

A few years ago, I wrote an article on religious freedom, where I suggested that even atheists should support religious freedom, because it is the root of all of our freedoms.  Ultimately, if there was no belief in God, there would be no justification for the idea of human rights.  Survival of the fittest would be the only real law, and freedom would only exist so far as the fittest permitted.  Unsurprisingly, it goes further than this though.  I just read an article discussing recent research showing that religious freedom also impact economic well being.  The study found that religious freedom is one of only three variables that are reliable predictors of economic growth (measured by GDP).

There are several explanations for this impact of religious freedom on economic growth.  The first is that political and religious tension make the business environment of a country unpredictable.  Entrepreneurs do not want to try to start a new business in a political environment that may eventually damage, destroy, or even seize the business.  Existing businesses may choose to relocate or even shut down, as the risk of losses increase with religious tension and hostilities.  In short, hostilities over religious freedom will drive profitable businesses to leave or close.  The second (which is closely related to the first) is that tension or hostilities over religious freedom will tend to reduce government stability.  Besides the obvious affect on businesses, this also causes fears that reduce tourism.  According to the Deseret News article, this problem has been seen over the last few years in Egypt.  Besides these, it would also be reasonable to assume that hostilities against certain religions will cause immigration out of the country.  Since many of those leaving are obviously those wealthy enough to afford the costs, this will result in a exodus of wealth, leaving the country poor.  I can see more in the underlying causes than just the economic harm caused by lack of religious freedom.

In nearly all of the cases discussed in the article, the lack of religious freedom has caused significant internal unrest.  Freedom of religion has great economic value, but I think it also has significant political value.  Governments discussed in the article that limit religious freedom seem to all be unstable.  Also, we have seen over the last few decades, as the U.S. government has reduced religious freedom, increased political unrest and even some threats of rebellion (mostly in the form of states threatening to secede).  Religious freedom also seems to be a predictor of government stability, not just economic growth.

There are many things we can take away from this.  Probably the most important is that strong religious freedom is the road to economic success.  The second is that religious freedom is important to government stability.  I want to stress this second one a bit, because it appears to be counter intuitive to politicians.  Over the last few decades, politicians have repeatedly tried to limit religious freedom, because they believe it will solidify their political position and power.  This has become especially common during times of economic hardships, because it becomes harder to get votes when the economy has done poorly while a politician is in power.  It turns out that this creates a feedback loop that hinders the ability of the economy to recover, at the same time as reducing political stability.  Maybe this will get the politician needed votes, but if the economy does not recover, eventually it will not be enough, and if the government fails, those politicians will loose all of their power (and, they may get lynched for limiting religious freedom).

My point here is not that we should give unlimited religious freedom.  Some religious practices, for instance human sacrifice, should be prohibited by law.  There are also some places where limiting religious observances may be appropriate.  Schools should not be allowed to encourage or enforce the worship of a specific deity, or any deity for that matter.  On the other side though, forcing people to do things that violate their religions is unethical and unwise, in most situations.  There are cases where this cannot be avoided (for instance, I should not be able to avoid paying taxes by claiming it is against my religion), but there are many where it can.  When considering laws that would limit religious freedom, the value of the law needs to be carefully weighed against the costs of not enacting it.  If a specific minority group feels insulted that not all businesses will serve them, but there are plenty of reasonable alternatives, the economic harm of restricting religious freedom may be far greater than the harm caused by insulting a minority group.  On the other side, if a minority group will be significantly harmed by this, without anywhere to turn for relief, it may be better to restrict religious freedom a bit (as little as reasonably possible) to maintain freedom for the minority.  Minorities should not be allowed to leverage restrictions to religious freedom to harass others, but at the same time, religious freedom should not be a valid excuse to deny anyone a good quality of life.  If there are 5 good quality wedding shops in a town, it would be a travesty of justice to allow a gay couple to deliberately harass the one that is religiously opposed to serving homosexual weddings.  On the other hand, if there is limited housing, food, or clothing availability, religious freedom should not be a valid excuse to refuse to serve a homosexual couple.  If all 5 wedding had religious objections to serving a gay couple (and no others were available nearby), I could see limiting religious freedom to ensure economic fairness.  In fact, this had to be done in the South to stifle the rampant racism (some parts of the KKK did try to claim that requiring them to serve black people was a violation of their religious freedom).  The problem in the South was that a vast majority of businesses refused to serve black people, which was severely limiting the quality of life for black people.  Even if it is a limitation of religious freedom, it was necessary to restrict racial discrimination to ensure the continued freedom of the black population.  (In my opinion, any American has the right to hate someone for race or religion, but they do not have the right to harm or limit the freedom of others based on those beliefs.  Note that I do not hate anyone for race or religion.  I just recognize that freedom of thought, conscience, and religion includes the right to hate people of a certain race or religion, though not necessarily the right to act on those feelings.)

Anyhow, it turns out there is reasonable evidence to the effect that religious freedom is important to economic well being and government stability.  The idea that an atheist world where religion has been exterminated would be an ideal world has more or less been proven false on multiple occasions (the USSR provided one occasion), and now we have even more evidence that religious freedom is an important part of a strong economy.  Now when we consider restricting religious freedom to get the votes of a disgruntled minority group, we should seriously consider the harm it will do to our economy.