# The Town With No Poverty



## zylon (Oct 27, 2010)

"FORTY years ago, a tiny farming town in Canada was the stage for a groundbreaking social experiment.

"Everyone who needed it would get free money.

"The effect of the policy was astonishing. *Dauphin, Manitoba* thrived in almost every way.

"Doctor’s visits and hospitalisations declined, mental health improved and more teenagers completed high school. It seemed that everyone was happier.

"Now, policymakers around the world are again looking at the experiment to see if it could hold the key to our future."

read more:
http://www.news.com.au/finance/econ...e-got-free-money/story-e6frflo9-1227209545071


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## andrewf (Mar 1, 2010)

I like the policy. There are many who argue against it, mainly because they believe economic theory is a lie. A lot of people seem to believe that, if given $10k to live on, a significant proportion of the population would be content to subsist on $825 a month rather than put any effort into earning a market wage. And that this is not better than the current approach to welfare, where people are "fined" @ 100%+ per dollar they earn in market wages while receiving welfare.

I would like to see a larger scale pilot. For some reason, it is very difficult, politically.


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## Davis (Nov 11, 2014)

Andrewf, what province do you live in that uses a 100% benefit reduction? Ontario and some other provinces use a 50% benefit reduction. I understand that some use 75%, which I think does not provide much of an incentive to work.


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## bgc_fan (Apr 5, 2009)

It has been brought up recently. It's unfortunate that there was never a follow up and that all the data was buried until some researcher went digging for it.

It's definitely an interesting idea as it could be funded by consolidating all current social programs and it would be easier to administer. I remember reading some article that said it would never be implemented because current social programs cut across provincial and federal jurisdictions.


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## andrewf (Mar 1, 2010)

Davis, the statutory reduction is not relevant. What matters is the marginal effective tax rate. When multiple benefits are clawed back, the METR can rise to 100% and in extreme cases over that amount.


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## Davis (Nov 11, 2014)

andrewf said:


> Davis, the statutory reduction is not relevant. What matters is the marginal effective tax rate. When multiple benefits are clawed back, the METR can rise to 100% and in extreme cases over that amount.


Can you give us an example? Thanks.


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## Rusty O'Toole (Feb 1, 2012)

2 questions come to mind:

1) Where did they get the money? Would such an experiment be sustainable over a long period of years, and over a whole country? Or did it depend on government (tax) money taken from other areas?

2) Could the same effect be achieved by lower taxes, fewer taxes, laws and regulations that give more incentive to business and workers? In other words could people make themselves more prosperous if we let them? Without taking money away from other people?


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## Guban (Jul 5, 2011)

I would also like to know why they stopped. Being too expensive is the obvious answer, but there could be other reasons. If the results were so great, there has to be a reason that it was stopped, and never tried again. 

One possible reason that Dauphin found success with this experiment is that in a small town, there is more personal accountability. Everybody knows when somebody is just living off the state, and even trying to get a job.


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## OptsyEagle (Nov 29, 2009)

I always ask the same thing, when I see this stuff. How much of your standard of living, will you give up and take from your children, so that people who have worked a lot less harder then you or your children, get to live for free.

Giving people money without any corresponding increase in the production of goods and services is purely inflationary. When you do that, your own food costs rise, your housing costs rise and your entertainment costs rise as well ... as will your children's.

They need to work. Any incentive to reduce this, reduces everyone's standard of living.


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## Just a Guy (Mar 27, 2012)

It's funny, we find one test case which seems to prove a concept, and then try to ignore all the other cases which seem to prove the opposite...like say native reserves, Russia, China, Cuba, North Korea...

Small scale it's easier for accountability, you don't always have as "diverse" of a group of people, and the temptation for corruption is probably lower...

There are many cases of small communes working for generations, but the idea doesn't seem to scale well...


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## sags (May 15, 2010)

I believe there is a large Hutterite population in the Dauphin area, and they already lived in a self sufficient society, so that could have been a factor.


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## Rusty O'Toole (Feb 1, 2012)

So, they proved people are richer if you give them money. I can see how this could come as news to some people, and how they could not see any drawbacks to this plan but they would have to be pretty dumb.


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## bgc_fan (Apr 5, 2009)

It may be instructive to take a look at an interview with Dr. Forget, the one who rediscovered the research.
http://basicincome.org.uk/2013/08/health-forget-mincome-poverty/
It has a link to her paper which was more interest on the health effects of the MINCOME experiment and they were pretty positive.
As for why it stopped, political will disappeared and economic hard times. Of course, there was the ongoing perception that people would stop working if given free money, but there was no indication this would occur.

Quite frankly, it's not exactly an implementation of the communist system. I would say it's more of a replacement for our current social programs, as there is a 50% clawback on any earned income.

Even someone as right-winged as Hugh Segal has been championing this approach for a while.
http://www.huffingtonpost.ca/2014/12/23/minimum-income-basic-income_n_6370458.html


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## CPA Candidate (Dec 15, 2013)

Not only was poverty eradicated, but pierogie production and consumption soared!


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## Spidey (May 11, 2009)

With respect, I think that people who think this will work don't understand human nature. I don't think most people are against helping those who are truly in need but once you get beyond those basic needs, poverty becomes a relative measure. The Dauphin experiment works because it is done in isolation. Give an isolated group money and surprise, surprise they are very content with that situation because they are that much better off than friends, relatives and acquaintances in neighboring communities. If you reproduced this across the country, the general contentedness would disappear and we would simply redefine poverty. If you think about it that's in fact what's already happened as the society we live in today would be considered a dream to those of past generations but I don't know that people are any happier than they ever were. (And possibly even less happy given the levels of depression and mental health issues.)


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## Rusty O'Toole (Feb 1, 2012)

I don't see it as a matter of human nature. I see it as a matter of arithmetic.

They gave everybody $10,000. Who gave it to them? It doesn't say. For all the article tells you, dollar bills fluttered down from the sky. But, let's assume it came from the government.

For every $10,000 they handed out, they had to take $10,000 from someone else. Whether they took $1 each from 10,000 people or whether they borrowed the money and left the debt to their grandchildren to pay, it came from somewhere.

So, some people were better off and some were worse off. In fact the administration of the hand outs cost money so they actually spent more than $10,000 for every $10,000 they gave away, resulting in a net drain on the economy, what is known as a "negative sum game".

Try to play such a game on a large scale across a whole country for example, and the result must be more poverty not less. This has been proven true by every communist country that ever existed.

So where do we go if we want to see the opposite? What countries have managed to eradicate poverty? You will see countries like Switzerland, the US and Canada, Japan, China, Singapore. Countries where genuine business and productivity were encouraged. They had a productive economy, and it was possible to drain off part of the wealth of the productive class to support the others. But without a productive economic base your giveaways won't work, and if you drain off too much money from the private sector you can kill it or cripple it.


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## Rusty O'Toole (Feb 1, 2012)

It may be significant that this "experiment" took place when Canada's national debt was exploding at more than 20% a year. When they thought you could get rich by borrowing and spending, before inflation hit double digits.


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## bgc_fan (Apr 5, 2009)

Rusty O'Toole said:


> They gave everybody $10,000. Who gave it to them? It doesn't say. For all the article tells you, dollar bills fluttered down from the sky. But, let's assume it came from the government.
> 
> For every $10,000 they handed out, they had to take $10,000 from someone else. Whether they took $1 each from 10,000 people or whether they borrowed the money and left the debt to their grandchildren to pay, it came from somewhere.


The National Post had a recent article and yes, that would cost $288B to do give everyone over the age of 20 $10000. However, by folding some of the social programs like GIS and welfare and OAS you can free up $140B that those programs dole out. The shortfall may be made up by changes in taxes, not to mention that there is a 50% clawback from earned income, so unless everyone in Canada stops working, the actual cost will be lower.

In case you were wondering where you can find extra money, the government has made a number of tax cuts over the years that have could have been better used to reduce the 2 middle tax brackets to 15%. So it's just a question of priorities.



Rusty O'Toole said:


> So, some people were better off and some were worse off. In fact the administration of the hand outs cost money so they actually spent more than $10,000 for every $10,000 they gave away, resulting in a net drain on the economy, what is known as a "negative sum game".


Except the cost of administration would be absorbed by the cost to administer the current social programs.


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## zylon (Oct 27, 2010)

*not exactly on topic, but poverty is a common link*

What a novel idea! - help the poor instead of the bankers.

"Croatia is introducing a more direct stimulus plan. They will cancel the debts of the poor up to May 2015 if they do not exceed 4,550 euros and their monthly income does not exceed 325 euros. All claims for debt relief will be restricted to citizens who have no properties or other assets and their bank account is locked for a year because of the debt. This is at least more direct than handing billions to bankers who do not lend it out anyway. A little thinking out of the box."
~ArmstrongEconomics.com Feb 25/15


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## Just a Guy (Mar 27, 2012)

My bet is it won't have any more success in the long run...

You forgive the loans of the poor, and most will just run them up again as they don't know any better. Sure, a handful may benefit, but given time the vast majority will wind up right back in the same situation looking for another loan forgiveness.

Seems like another poorly thought out plan that will certainly buy more votes...can't wait for it to come to canada.


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## Guban (Jul 5, 2011)

What about a poor person who does not have debt? Should they not go out and quickly borrow 4,550 euros, so that it can be forgiven?


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## Spidey (May 11, 2009)

I does seem to punish the poor person who avoided debt. All his friends and neighbors get a big bonus and he gets nothing.


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## Just a Guy (Mar 27, 2012)

Ahhh, the voice of entitlement...


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