Possible New Minimum Income Experiement in Manitoba

Possible New Minimum Income Experiement in Manitoba

Manitoba, the Canadian province which was the location of one of the most well-known basic income experiments of the last century, may be re-examining the possibility of instituting a basic income guarantee (BIG) following a recommendation from the Winnipeg Chamber of Commerce.

The Winnipeg Chamber, which describes itself as “Winnipeg’s largest business association”, recently contributed to the local Manitoban government’s consultation on poverty reduction strategies. Among the suggestions made by the Chamber was a further study into the viability of what is called minimum income, mincome, or a basic income guarantee.

A mincome differs from BIEN’s own definition of basic income due to being means-tested, and tapered off for higher income groups. However, it also differs from more traditional benefits systems for several reasons: it is not targeted at specific groups such as parents or those with disabilities; there are no requirements to spend it in certain ways; and it is guaranteed to all those below a defined income level. Some regard mincome as a stepping-stone to universal basic income (UBI), while others see it as an end in itself.

A policy paper released by the Winnipeg Chamber stated: “Minimum income supports the concept that all work has value, including non-paid work. Examples of non-paid work would be volunteering in the community or working in the home supporting family members. People have been taking on those roles without pay and some may think their work doesn’t have or create any value. Yet without those volunteers and homemakers, our society would suffer greatly. Earning an income increases an individual’s feeling of personal worth and value, which is invaluable.”

In 1973, one of the most well-known experiments on basic income took place in Manitoba, in a number of areas including the town of Dauphin. All residents of the town were provided with regular income, free of conditions, for a period of several years, and analysis of the data collected has shown that a number of positive effects resulted from this, ranging from improved school results for children to a reduction in several mental illness.

Podcast: Uncovering the town that overcame poverty

Podcast: Uncovering the town that overcame poverty

There was once a town in Canada that essentially eliminated poverty, and at the time no one seemed to know. One filmmaker is doing his best to shine a bright light on the research into this town.

Vincent Santiago is producing “The Mincome Experiment” documentary that looks into the Manitoba experiments in the 1970s, which provided a minimum income guarantee to the entire town of Dauphin. Santiago recently spoke with The UBI Podcast about his project.

“The experiment was completed but there was a change in government in Manitoba and federal level so experiment was never analyzed,” Santiago said.

That is until Dr. Evelyn Forget of the University of Manitoba began digging up these old records. Forget found there was a reduction in hospital visits and instances of mental health issues in the area with a minimum income. Despite worries, there was no large reduction in the amount of work being done, Santiago said.

“The only sector that was affected was the mothers who gave birth and the teenagers who stopped working to finish high school,” Santiago said.

Santiago said any new idea like minimum income guarantee will cause backlash, especially if the research is not explained well.

“Just like when they first introduced universal health care in Canada, there was a lot of opposition,” he said.

In order to explain these results, Santiago said it is important for the basic income movement to focus on public relations. He said his documentary is an important way to show the positive results of minimum income systems.

“I would like to make this documentary to dispel a lot of these misconceptions,” he said.

Currently, Santiago is running a crowdfunding campaign to help cover the costs of production for the film.

 

‘Mincome Experiment’ documentary will investigate 1970s experiment

‘Mincome Experiment’ documentary will investigate 1970s experiment

The crowdfunding campaign for “The Mincome Experiment” can be found here.

The Mincome Experiment is a documentary that is as much a story about basic income as it is about human socioeconomic evolution throughout the years. Vincent Santiago, the director for the documentary, first heard that University of Manitoba professor Dr. Evelyn Forget was looking for volunteers to digitize the results of the 1970s Mincome experiment. While Santiago did not consider himself an experienced social activist, he was nevertheless keen to study possible measures to prevent government excesses that he believed could lead to growing social inequality and injustices. Santiago was convinced that basic income and open government were foundations that could help prevent social inequality and injustice.

The Mincome experiment and the concept of basic income caught Santiago’s imagination, and he took a passionate interest in seeking out more information. He finally talked to Dr. Forget on April 2014. Another opportunity arose soon after to interview then-Conservative Senator Hugh Segal, a very vocal and strong basic income advocate in Canada. Vincent Santiago read about and researched basic income and talked to economists and others. In the process, he discovered several interesting side stories not widely known, even within Canada.

Santiago wanted to make the Mincome experiment into a documentary. He soon realized there was so much story to be told. He looked into the various forms of basic income and decided the film should be told as an engaging narrative about human socioeconomic evolution. Intertwined into the historical and visionary backdrop is the concept of basic income and its role. Of the film, Santiago said:

While the Mincome experiment is very much the central theme of the documentary, the documentary also looks into other basic income experiments and the various forms and possible implementation. I’ve started calculating the various ways to pay for it and how to implement them.

The promotional trailer created for the crowdfunding campaign asks various questions typically uttered by people who are cynical or against basic income. That is because Santiago did not want to make a film only for those already familiar with basic income. He wanted to create an entertaining and fun documentary that also draws in the skeptics by presenting facts, without shying away from common ridicule and prevailing concerns.

Another project that occupies Santiago’s time is creating a low-cost, no commission fee platform for crowdfunding, curating, and showcasing creative works. With this platform, which first went into development in 2012, Santiago is now launching the crowdfunding campaign for his documentary. The Mincome Experiment project is still a long way from reaching the stated fundraising goal, but the team remains confident the amount can be reached. Efficient use of the funds would allow the project to include more engaging footage and animation for the documentary, ensuring that it will capture and convince audiences worldwide.

The crowdfunding runs until June 15, 2017 and can be found here.

Written by the team behind “The Mincome Experiment.”

Simpson, et al, “The Manitoba Basic Annual Income Experiment: Lessons Learned 40 Years Later”

Simpson, et al, “The Manitoba Basic Annual Income Experiment: Lessons Learned 40 Years Later”

Three University of Manitoba economists, Wayne Simpson, Greg Mason, and Ryan Godwin, have jointly authored a new research paper about the Manitoba Basic Annual Income Experiment (“Mincome”), a trial of a guaranteed income that took place from 1974 to 1979.

The Mincome experiment consisted of randomized studies in Winnipeg and rural Manitoba, as well as a saturation study in the town of Dauphin, where all residents were eligible for participation in the study. Participants received an income supplement that was phased out as personal earnings increased, and several combinations of minimum income level and taxation rates were tested. The guaranteed income scheme tested, a negative income tax, is equivalent in its distributional effects to a basic income that is taxed back with personal income over a certain amount. Decades after Mincome ended, its outcomes were analyzed by economist Evelyn Forget. The results are now frequently mentioned as evidence of the effectiveness of basic income / negative income tax.

At present, the province of Ontario is preparing a new major trial of a guaranteed income (which, as in Mincome, is likely to be designed as a negative income tax). In a lengthy discussion paper about the new trial, project advisor Hugh Segal notes that the Dauphin saturation study, showed “population health improvements, the potential for government health savings, and no meaningful reduction in labour force participation.”  

In their new article, Simpson, Mason, and Godwin re-examine Mincome, and consider how it might answer questions about contemporary experiments in Ontario and elsewhere.

Abstract

The recent announcements of the Ontario Basic Income Pilot and Finland’s cash grants to jobless persons reflect the growing interest in some form of guaranteed annual income (GAI). This idea has circulated for decades and has now been revived, no doubt prompted by concerns of increased inequality and employment disruptions. The Manitoba Basic Annual Income Experiment (Mincome), conducted some 40 years ago, was an ambitious social experiment designed to assess a range of behavioural responses to a negative income tax, a specific form of GAI. This article reviews that experiment, clarifying what exactly Mincome did and did not learn about how individuals and households reacted to the income guarantees. This article reviews the potential for Mincome to answer questions about modern-day income experiments and describes how researchers may access these valuable data.

Wayne Simpson, Greg Mason and Ryan Godwin (2017), “The Manitoba Basic Annual Income Experiment: Lessons Learned 40 Years Later,” Canadian Public Policy.


Reviewed by Cameron McLeod

Photo: Northern Lights in Manitoba, CC BY-NC-ND 2.0 AJ Batac

China’s minimum income guarantee you’ve never heard of

China’s minimum income guarantee you’ve never heard of

Back in the 1990s, China started experimenting with a minimum income guarantee that topped off incomes to a minimum level set by local governments. China called the program dibao, meaning minimum livelihood guarantee, expanding the program nationwide in 2007.

In Beijing the urban monthly dibao standard is 1050 RMB ($161.50 USD) and the rural standard is 800 RMB ($123.04 USD). For urban residents, this is about five dollars USD a day.

However, even this paltry amount often does not make it to those in poverty.

A report by the World Bank found that for every 10 RMB spent on the dibao, only 1 to 2.4 RMB reached individuals in poverty (cited by the Economist). The World Bank also found the dibao program only lowered the poverty gap by 6.5 percent.

Corruption and inability to determine households’ poverty status have plagued the program. According to Lu Yang in the Indian Journal of Labour Economics, based on 2010 survey data only 21 percent of poor households were able to receive the dibao, while more than half of dibao recipients were above the poverty line.

Many local governments go to great lengths to investigate whether dibao households are secretly hoarding wealth, visiting recipients’ homes and observing whether the household has too many “high quality” products to qualify.

Others are concerned with the dibao’s effect on the poor’s effective marginal tax rate. Higher effective marginal tax rates lower the likelihood that a household member will seek work.

If a household’s average income per person goes above the dibao standard, they could sacrifice the entirety of the benefit. Each household member raises the household’s dibao standard by 100 percent. For example, in Beijing where the standard is 1050 RMB per month, a two-person household would face a 2100 RMB dibao standard. In turn, larger households are more susceptible to the problem of high effective marginal tax rates.

In some instances, it is possible that a household will have a 100 percent effective tax rate due to the dibao benefit. In these cases, the household will have the same income regardless of whether a household member chooses to work or not. Based on data from an essay in Population and Development a family of three in Tianjin with one household member employed would have the same income as an identical family that does not work at all. Clearly this has the potential to undermine labor participation if the drop off is this steep in reality.

China plans to lift 70 million people out of poverty by 2020. Such a massive undertaking requires a robust social welfare system. As it stands, the dibao program is not equipped to do this heavy lifting.

However, the dibao does provide a starting point for China to experiment with universal coverage.

The 2014 World Bank report conducted economic simulations that demonstrated expanding dibao coverage was more effective than increasing the benefit size at lowering the poverty gap.

Like the dibao, the central government of China could initiate pilot programs that universalize the dibao cash transfer, eliminating the income and wealth requirements to qualify for the dibao benefit.

Universalizing the program would potentially address many of the issues plaguing dibao, such as the high effective marginal tax rates and low rate of impoverished individuals that receive the dibao.

China’s economic miracle successfully lifted the most individuals out of poverty in world history. To do so, China undertook some dramatic reforms that completely reshaped Chinese society. Now in order to completely eradicate poverty, China may want to take yet another drastic step with a universal basic income guarantee.