What would happen if we randomly gave $1,000 to poor families? Now we know | Hacker News Reader

What would happen if we randomly gave $1,000 to poor families? Now we know

washingtonpost.com

86 pointsundefined131 comments

Link to actual study: http://emiguel.econ.berkeley.edu/assets/miguel_research/88/G...

Thanks for the study, getting pay walled. Will have to read this later.

Side note: on mobile, the papers in line citations are anchored to the individual reference (tapping the citation redirects user to reference). This is a pretty neat feature. Hope more people start to use it.

That's a PDF which has been compiled by LaTeX.

Yes hope more people start using latex.

The originally linked article is quite misleading regarding the multiplier:

> But this study found a much bigger impact: Every $100 given directly to the poorest households was generating between $250 and $270 in GDP. That’s a fiscal multiplier in the range of 2.5 to 2.7 [...]

The paper itself states 2.6 +/- 1.5 which is a huge range of possible values. It sounds like the article is instead quoting the central estimates for income and expenditure.

The paper says that they're sure the multipliers are greater than 0 only at the 10% significance level.

So thanks for linking to the paper!

Maybe instead of doing share buybacks to transfer .9% of the value to shareholders, major conglomerates could just give money to poor people to spend on their products.

Or rich software engineers who consider themselves to be socially progressive, should give their money to the poor, instead of into 401Ks. Because, who knows if the company managing the the 401K is backing share buyback programs of the Apples of the world

I can help 2, maybe 3 people, and retire without any assets. Not saying buybacks are the root of all evil, but if companies could give a crap about their employees or communities they might increase wages.

Broadly, 20% of GDP already goes on welfare [1]. Government tax take is about 40% of GDP [2], so about half the taxes that corporations "pay" [3] already go to poor people to spend on their products in some sense (if we neglect benefits-in-kind).

I'm sure companies would love to be able to give poor people vouchers rather than paying their taxes but I don't think that's a great idea. This study is primarily saying that cash is great because it's fungible.

[1]: https://data.oecd.org/socialexp/social-spending.htm

[2]: https://data.oecd.org/gga/general-government-revenue.htm

[3]: scare quotes are because all taxes ultimately fall on human beings, whether that be through shareholdings (pensions), suppressed wages or higher prices.

That 20% includes a lot of social spending that isn't necessarily spent on the poor like social security and medicare.

Yeah. In the UK about a third goes on actually poor people. I hope that doesn't invalidate my point: we already have a mechanism where corporations give money to poor people.

Famed anthropologist James Ferguson wrote a pretty thorough read that breaks down the arguments on both sides that was also reviewed by the Washington Post: https://www.washingtonpost.com/news/monkey-cage/wp/2015/07/2...

Tax cuts are the best way to put $$ in the hands of the poor.

Raising taxes on the poor, to "give them" more money as proposed by UBI is a terrible policy no matter what this or any other study says.

Why?

Governments are the largest, most inefficient and wasteful monopolies in the world. There's zero incentive for them to provide cost effective or reliable solutions to problems. Private sector alternatives are better the large majority of the time.

Yeah that worked very well with Goldman Sachs, Morgan Stanley, AIG, S&L's in the 90's, General Motors, Chrysler, etc. The Eisenhower National System of Interstate and Defense Highways, Hoover Dam, and similar projects were all complete failures. /s

Bill Clinton repealed glass steagall in 1999. It allowed that 08 bank meltdown to occur. General Motors and Chrysler business culture of excess led to their financial troubles around the same time. Hoover Dam? NASA doesn't even build its own rockets anymore. SpaceX does the job better and more affordably. The united states is the only major power in the world that fails to upgrade its aging amtrak system in favor of high speed rail. How many trillions did the state waste on war and failed projects like the F-35 and obamacare. Imagine what someone like Elon Musk could accomplish with $1 trillion in funding.

definitely. i'm personally so inspired by Comcast's awesome breakthroughs and super duper customer service inspired by all of this wonderful free market competition and efficient allocation of resources that i figure we'd be fine letting them handle social security payments, Medicare/Medicaid, defense spending, and all of that stuff. imagine the overhead we'd save by just having Comcast running the government!

Would you prefer to have a state run pension plan like social security which pays out NEGATIVE returns. Or a privatized pension plan like a 401k or roth IRA paying POSITIVE returns?

Donald Trump tried to block AT&T from buying Time Warner to prevent market centralization which enables negative trends you object to. Why does the private sector bear 100% of the blame for negative trends, while faults of state regulation and our judicial system go ignored?

Nobody tell this person about municipal broadband

Thanks for sharing that Mr Koch. We’ll be sure to file your response for appropriate consideration.

Privatisation of essential infrastructure leads to price gouging, service failure, and cartel behaviour. There’s zero incentive for corporations to provide cost effective or reliable solutions to problems. The actual incentive is to raise the cost of the service you need to the point where you can barely afford the service, but aren’t motivated to either do without or start your own business to compete.

If you want to know what a private-industry future has in store for any market, just play Raid Shadow Legends for a couple of months.

Between this:

>Governments are the largest, most inefficient and wasteful monopolies in the world. There's zero incentive for them to provide cost effective or reliable solutions to problems. Private sector alternatives are better the large majority of the time.

and this:

>Privatisation of essential infrastructure leads to price gouging, service failure, and cartel behaviour. There’s zero incentive for corporations to provide cost effective or reliable solutions to problems. The actual incentive is to raise the cost of the service you need to the point where you can barely afford the service, but aren’t motivated to either do without or start your own business to compete.

lies our political divide. It seems like politics is just these two viewpoints bouncing back and forth at one another over and over and over again.

On a completely separate note, if you want people to take you seriously I would suggest not using a video game to bolster your argument.

The key to having a political divide is to avoid paying attention to reality, such as dismissing the gambling industry as “a video game”.

Once you have experience with capitalism in the real world you will find that “corporations suck” and “governments suck” are not two sides of a political divide but simply two versions of the same problem: power corrupts, and anyone granted power needs regulation and oversight.

>Once you have experience with capitalism in the real world

This is an incredibly snide, condescending thing to say to someone you don't know anything about. So your experience is the "real world", and anyone who thinks differently from you must be hallucinating, right? Sometimes I think it would be nice to be so confident.

UBI does precisely that. Instead of the government offering a service, they redistribute that money so the poor can get that service on the open market.

This is the Libertarian conception of UBI. In my understanding, the general progressive conception of UBI does not advocate any corresponding reduction in the welfare state upon implementing a UBI. And UBI has many more progressive supporters than Libertarian supporters.

Social Security pays out negative returns. Meaning you're guaranteed to receive lower returns from it in contrast to whatever capital you invest. A person could do better putting their money in a bank account that pays out 0.000001% APY.

UBI is the same as social security. You're guaranteed to receive less money than whatever you invest in it. The state will likely funnel a major portion of collected tax revenues into dubious projects like giving free healthcare to illegal immigrants and funding transexual beauty pageants.

Then when the program fails as it inevitably will, they'll say the problem is taxes are too low. They'll propose tax hikes and people unfortunately being uneducated will far for it and think its a good idea, the same way many are falling for it right now.

The poor already have tax cuts.

Trump wanted to cut income taxes for the poor down to 5% to 10%. That would have represented a real tax cut and policy far more effective and beneficial than UBI. Even without exploiting tax loopholes Warren Buffett went on record as paying 17% income taxes, which is far lower than what the poor pay. Based on the above: no the poor definitely do not have tax cuts and many taxes target them indirectly in ways that are not clearly visible / often ignored.

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