Andrew Coyne: Guarantee a minimum income, not a minimum wage


mentalfloss
-1
#1
Andrew Coyne: Guarantee a minimum income, not a minimum wage

With a new government — the first really new government in 44 years — Alberta politics is alive with possibilities for new directions and fresh approaches. Two ideas in particular have the province’s political class abuzz.

The first is the possible introduction of a guaranteed minimum income, known to be an area of interest to the province’s new finance minister, the former city alderman and poverty activist Joseph Ceci. The second is an increase in the province’s minimum wage to $15, as promised in the NDP’s election manifesto.

The two might be thought to work in parallel, both with “minimum” in their name, both aiming — or professing to do so — to improve the lot of the worst off in society. In fact, they are opposites.

The guaranteed minimum income has been the desideratum of generations of economists and welfare theorists, from the left and the right. The idea is to combine a number of existing income support and benefit programs into one, for which every citizen would quality as of right: no forms to fill out, no eligibility criteria, just a basic entitlement.

The benefit would start at a relatively low level, for those with no income at all, but would be withdrawn relatively gradually as earned income increased, thus ensuring recipients were not unduly penalized for taking a job and advancing themselves. The easiest objection to the guaranteed minimum income — that it would leave people with no incentive to work — is thus the most easily rebuffed. The real disincentive to work arises not from giving money to people who don’t work, but taking it away from them when they do.

But notice how it works. The benefit is a social obligation; thus, it is socially financed, i.e., through the tax and transfer system. Everybody pays for it (though the more you make the more you pay) and everybody is eligible for it (though the more you make the less you receive). It is available whether you are in work or out, and has no impact either on the willingness of workers to supply their labour or the willingness of employers to demand it.

Now contrast all this to the minimum wage. This makes no pretence to be available to all. To benefit from it, you must have a job. Moreover, rather than being financed collectively, through a levy that all must pay, the cost is borne entirely by employers — at least in theory.

But of course, employers have a simple means of avoiding this obligation that the rest of us have seen fit to thrust upon them: by hiring fewer workers. And the higher the minimum wage, the greater an employer’s incentive to take this exit. It need not mean actually laying people off; it may simply be that they take on fewer new hires than they otherwise would. But all the legislation in the world can’t force a company to pay a worker who isn’t in their employ.

Of course, the minimum wage benefits some workers: those who are employed make more than they otherwise would. Surprisingly few workers are actually at the minimum wage — just five per cent of the labour force — and few of these work full-time or serve as a family’s principal source of income. But there’s also some evidence that minimum wages tend to push up wages at higher levels, to the extent wage bargainers work off the difference between the two.

But this is hardly social justice. A just society concerns itself first with the lot of those worst off, and the very worst off are surely those, not on low income, but no income at all; not those in work, but those out of work, priced out of the market by the tariff the state has thoughtfully placed on their labour.

A government that wanted to help those whose lack of skills or experience left them unable to earn what the rest of us would regard as a decent level of income would therefore prefer the minimum income to the minimum wage — that is, a government that valued results, rather than just good intentions, would do so.

Indeed, it wouldn’t bring in a minimum income in addition to the minimum wage, but as its replacement, acknowledging that, just as the estimation of what is the decent minimum anyone should be expected to live on is a collective judgment, so the fulfilment of that objective is a collective obligation. It’s simply not good enough just to fix wages, cross our fingers, and hope for the best.

Why, then, do we do that? I think it is out of a desire to pretend that we are not intervening in the economy when, in fact, we are. A guaranteed minimum income sounds like utopian socialism (it was first proposed by Milton Friedman, who called it a “negative income tax”). Whereas a minimum wage, well that’s just the market at work, isn’t it — albeit with a little “help” from the state.

Well, no. The market can do many things, but one of the things it can’t do is bring about a just distribution of income. Markets are about the fulfilment of individual wants, not collective judgments. That doesn’t change because you start messing about with wages and prices. In fact, it makes things worse: so far as we are preventing wages from doing what they are supposed to do, which is to bring the supply and demand for labour into balance, the result will be surplus labour, or what is more usually called unemployment.

Distributional equity is the state’s work. The tools for achieving it are taxes and transfers. Allocating resources efficiently is the market’s job, the tools for which are prices. Wages are prices: let them do what they can do, and help the poorest through the state instead. It’s a minimum income we should wish to guarantee, not a minimum wage.

Andrew Coyne: Guarantee a minimum income, not a minimum wage
 
JLM
No Party Affiliation
#2
Quote: Originally Posted by mentalfloss View Post

Andrew Coyne: Guarantee a minimum income, not a minimum wage

With a new government — the first really new government in 44 years — Alberta politics is alive with possibilities for new directions and fresh approaches. Two ideas in particular have the province’s political class abuzz.

The first is the possible introduction of a guaranteed minimum income, known to be an area of interest to the province’s new finance minister, the former city alderman and poverty activist Joseph Ceci. The second is an increase in the province’s minimum wage to $15, as promised in the NDP’s election manifesto.



Andrew Coyne: Guarantee a minimum income, not a minimum wage

I don't see how that will work either. You have a "box" that has only so much money in it. For it to work you have to generate more money, not just merely spread money around we already have. There's two ways to do that..................mining and killing!
 
mentalfloss
+1
#3
I'm skeptical of this idea as well but it appears to be one of the libertarian fantasies.

*paging Machjo*
Last edited by mentalfloss; Dec 8th, 2015 at 10:13 AM..
 
Walter
+2
#4  Top Rated Post
What a stoopid idea.
 
JLM
No Party Affiliation
#5
Quote: Originally Posted by Walter View Post

What a stoopid idea.

Probably!
 
mentalfloss
#6
Seems like Milton Friedman was a big fan.

How do conbots reconcile this?
 
IdRatherBeSkiing
#7
Quote: Originally Posted by mentalfloss View Post

Seems like Milton Friedman was a big fan.

How do conbots reconcile this?

Who is Milton Friedman?
 
mentalfloss
#8
Tell me you're joking.
 
HarperCons
#9
Friedman did in fact have sexual relations with Ayn Rand
 
lone wolf
Free Thinker
-1
#10
I'd prefer the minimum income deal so that prices can be in line with it. With minimum wage setting your bottom line, people below that line - pensioners too - not just the "welfare people" idiots tend to look down their noses on - do without
 
JLM
No Party Affiliation
#11
Quote: Originally Posted by HarperCons View Post

Friedman did in fact have sexual relations with Ayn Rand

And that has ------------------- to do with minimum income?
 
IdRatherBeSkiing
#12
Quote: Originally Posted by mentalfloss View Post

Tell me you're joking.

Thanx to google and wiki, I now know. I had not heard the name before. But I have never been one to collect Economist trading cards. They are all witch doctors anyways.
 
JLM
No Party Affiliation
#13
Quote: Originally Posted by lone wolf View Post

I'd prefer the minimum income deal so that prices can be in line with it. With minimum wage setting your bottom line, people below that line - pensioners too - not just the "welfare people" idiots tend to look down their noses on - do without

"Minimum wage" is impossible because it doesn't ONLY jack up the minimum wage but every wage up the pyramid.
 
Glacier
No Party Affiliation
+1
#14
In some ways I am a supporter of guaranteed income. It would eliminate Welfare, and the disincentive to work that brings. It would also get rid of minimum wage, or at least it should.

On the flip side, Canada's Minister of Jean-Yves Duclos, minister of families, children and social development, has co-authored a peer reviewed study that found that both minimum wage and minimum income do nothing to help the poor.
 
mentalfloss
#15
Good post Glacier.

Do you have a link to that study?
 
IdRatherBeSkiing
#16
I think the idea could work. The savings in Welfare, EI, Social Security, CPP would be significant. They can also fund it by converting the equivalent of the EI & CPP deductions as tax. But I think the first N$ (the N being the guaranteed amount) should also be 100% tax free.

I don't see the current government implementing it correctly.
 
HarperCons
#17
Quote: Originally Posted by Glacier View Post

In some ways I am a supporter of guaranteed income. It would eliminate Welfare, and the disincentive to work that brings. It would also get rid of minimum wage, or at least it should.

On the flip side, Canada's Minister of Jean-Yves Duclos, minister of families, children and social development, has co-authored a peer reviewed study that found that both minimum wage and minimum income do nothing to help the poor.

It doesn't do anything to help the poor because there's not enough money allocated into it, you idiot. It doesn't disincentive people to work because you can't survive on it in the first place.
 
mentalfloss
#18
Here's an article on the Finnish who may be the first to fully implement it.

It looks like the feasibility of this scheme may depend on median income.

Finns May Get Paid for Being Finns - Bloomberg View
 
Walter
#19
Quote: Originally Posted by HarperCons View Post

Friedman did in fact have sexual relations with Ayn Rand

Liar.
 
mentalfloss
-1
#20
I feel sorry for anyone who had sexual relations with Ayn Rand.

Woof!

 
lone wolf
Free Thinker
+1 / -1
#21
Quote: Originally Posted by Walter View Post

Liar.

Walter'd do her in a heartbeat. Not much for stamina, that boy
 
Walter
+1
#22
Quote: Originally Posted by lone wolf View Post

Walter'd do her in a heartbeat. Not much for stamina, that boy

She's bin dead for decades, dolt.
 
lone wolf
Free Thinker
-1
#23
Bin dead. Most are. Stamina, speed ... at least you could catch her, red her and she wouldn't reject you

You're too predictable....
 
gerryh
#24
Quote: Originally Posted by Walter View Post

She's bin dead for decades, dolt.


That makes her right up your alley then, doesn't it.
 
JLM
No Party Affiliation
#25
Quote: Originally Posted by gerryh View Post

That makes her right up your alley then, doesn't it.

Be nice Gerry! You don't want me to have to come out there!
 
Curious Cdn
Conservative
#26
Quote: Originally Posted by HarperCons View Post

Friedman did in fact have sexual relations with Ayn Rand

... and there was no exchange of funds?

That's Communism!
 
gerryh
#27
Quote: Originally Posted by JLM View Post

Be nice Gerry! You don't want me to have to come out there!



roflmfao... ya...right.......
 
darkbeaver
Republican
#28
Quote: Originally Posted by mentalfloss View Post

Seems like Milton Friedman was a big fan.

How do conbots reconcile this?

I remember this, Friedman explained why free cash to the peasents was a good thing, the value of cash is circulation, the wider the better even if you have to hire circulators and you can collect it by positioning yourself in the flow. Bread booze drugs sex medicine univercity automobiles and cheezebugger platers
weapons amminishun
 
mentalfloss
#29
Quote: Originally Posted by lone wolf View Post

Walter'd do her in a heartbeat. Not much for stamina, that boy

Except she would be the one that would provide the stamina.
 
mentalfloss
#30
Canada has been a leader in this kind of experimenting, but it has been four decades since the last large scale effort, when everyone in Dauphin, Manitoba, was guaranteed a minimum income as a test case. The program ended without an official final analysis, but Evelyn Forget, an economist at the University of Manitoba, did her own analysis and found minor decreases in work effort but larger benefits on various social indicators, from hospitalizations to educational attainment.

“These results would seem to suggest that a Guaranteed Annual Income, implemented broadly in society, may improve health and social outcomes at the community level,” she wrote.


Old anti-poverty idea — guaranteed minimum income — getting new life in Alberta
 

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