Tag Archives: poverty

Culture, Economics

Finland: A Pioneer in Universal Basic Income

coat_of_arms_of_finlandOn January 1, 2017, the idea of universal basic income (UBI) took another small but significant leap forward, in Finland.

UBI is a form of social security where a government institution pays its citizens a regular, unconditional sum.

Finland is testing UBI by handing around $600 per month to 2,000 jobless Finns for the next two years. It’s a bold experiment aimed at helping the long-term unemployed.

From Business Insider:

Finland has an ambitious New Year’s resolution in mind: learn how offering free money for two years helps the unemployed get back to work.

Starting January 1, 2017 and lasting until 2019, the federal social security institution Kela will distribute roughly $590 each month to 2,000 jobless Finns.

Regardless of whether they find work during that period, the money will keep coming in at the beginning of each month — a trial version of basic income, one of the past year’s most popular theories of how to solve poverty.

Under universal basic income (UBI), people receive a standard amount of money just for being alive. By handing out the money to everyone, regardless of their income status, UBI advocates say the system prevents people from falling through the cracks.

Marjukka Turunen, head of Kela’s legal benefits unit, says the experiment in Finland should provide insights on two fronts.

The first is whether basic income could help clean up Finland’s messy system of social security. Depending on their specific needs, Turunen says residents could be on one of 40 different benefit systems. Each benefit — whether it’s for someone who’s sick, unemployed, a student, or so on— is calculated differently and must be changed when the person’s status changes.

“That’s really a burden for customers and Kela to do all those status changes,” Turunen tells Business Insider. A form of basic income could mean people just need to apply for one status indefinitely, no changes required.

The experiment will also provide clues about how people behave when they’re receiving free money. Skeptics say people will sit on their couch all day. Proponents claim they’ll actually use the money to make their lives better. (Limited evidence from developing countries suggests it’s more of the latter.)

Turunen suspects the experiment will compel at least a few wannabe entrepreneurs to make the leap into starting their own business — a risky proposition in Finland today since business owners who are forced to close shop don’t receive unemployment benefits. It’s not unlike the system in place in most US states.

Read the entire story here.

Image: Finland coat of arms. Courtesy: Vzb83 / Wipipedia. Public Domain.

Idea Soup

Bringing Work to the Homeless

google-search-homelessness

Many of us have had interactions — usually fleeting and impersonal — with the homeless. Those of us fortunate enough to have made our own luck (it doesn’t come from the sky) usually find the less fortunate on street corners asking for a donation. Sometimes, some of us may give them a dollar or two to assuage guilt or to just “make them go away”. More often than not we hear voices — sometimes our own — asking, why don’t they just get a job?

The Mayor of Albuquerque, New Mexico, Richard Berry, had a novel answer to this question, and it seems to be working. In the process, his program is moving the homeless off the street and, more importantly, delivering kindness and compassion and instilling hope and dignity in some of our most vulnerable souls.

From the Washington Post:

Republican Mayor Richard Berry was driving around Albuquerque last year when he saw a man on a street corner holding a sign that read: “Want a Job. Anything Helps.”

Throughout his administration, as part of a push to connect the homeless population to services, Berry had taken to driving through the city to talk to panhandlers about their lives. His city’s poorest residents told him they didn’t want to be on the streets begging for money, but they didn’t know where else to go.

Seeing that sign gave Berry an idea. Instead of asking them, many of whom feel dispirited, to go out looking for work, the city could bring the work to them.

Next month will be the first anniversary of Albuquerque’s There’s a Better Way program, which hires panhandlers for day jobs beautifying the city. In partnership with a local nonprofit that serves the homeless population, a van is dispatched around the city to pick up panhandlers who are interested in working. The job pays $9 an hour, which is above minimum wage, and provides a lunch. At the end of the shift, the participants are offered overnight shelter as needed.

In less than a year since its start, the program has given out 932 jobs clearing 69,601 pounds of litter and weeds from 196 city blocks. And more than 100 people have been connected to permanent employment.

“You can just see the spiral they’ve been on to end up on the corner. Sometimes it takes a little catalyst in their lives to stop the downward spiral, to let them catch their breath, and it’s remarkable,” Berry said in an interview. ”They’ve had the dignity of work for a day; someone believed in them today.”

…

There is a persisting stigma that people begging for money are either drug addicts or too lazy to work and are looking for an easy handout.

But that’s not necessarily the reality. Panhandling is not especially lucrative, but for some people it can seem as if it’s the only option. When they’ve been approached in Albuquerque with the offer of work, most have been eager for the opportunity to earn money, Berry said. They just needed a lift. One man told him no one had said a kind word to him in 25 years.

Read the entire article here.

Image courtesy of Google Search.

Economics, Idea Soup

Scary Chart. Scary Times

Chart-percent-able-to-pay-emergency-expense

A recent report by the US Federal Reserve examines the relative financial health of US households. It makes for very sober reading, highlighting the economic pain suffered by a large swathe of the population.

The report centers around one simple question put to households:

Can you come up with $400 in an emergency (say an unexpected medical bill) and pay for it either in cash or with a credit card whose bill you could pay off within a month?

The answer was jaw-dropping:

For people earning between $40,000 and $100,000 (i.e. not the very poorest), 44 percent said they could not come up with $400 in an emergency.

Even more astonishing, 27 percent of those making more than $100,000 also could not.

The report suggests that this is not poverty. So what on earth is going on?

One thing is clear, and it’s a disturbing message that we keep seeing in many of our neighborhoods and echoed in the media — the great middle-class is declining and income inequality continues to broaden. At the low-end of the economic spectrum, the number of households in or close to poverty is expanding — this, in the richest country in the history of the world. At the high-end, the 1 percent, and especially the richest 0.1 percent, hold an ever greater share of the income and wealth.

Image: Percent of respondents who would completely pay an emergency expense that costs $400 using cash or a credit card
that they pay off at the end of the month (by race/ethnicity and household income). Courtesy: Report on the Economic Well-Being
of U.S. Households in 2014, May 2015. Board of Governors of the Federal Reserve System.

Idea Soup

The Haves versus the Have-Mores

los-angeles-billionaires

Poverty and wealth are relative terms here in the United States. Certainly those who have amassed millions will seem “poor” to the established and nouveaux-riche billionaires. Yet these is something rather surreal in the spectacle of watching Los Angeles’ lesser-millionaires fight the mega-rich for their excess. As Peter Haldeman says in the following article of Michael Ovitz, founder of Creative Arts Agency, mere millionaire and landlord of a 28,000 square foot mega mansion, “Mr. Ovitz calling out a neighbor for overbuilding is a little like Lady Gaga accusing someone of overdressing. Welcome to the giga-mansion — Roman emperor Caligula, would feel much at home in this Californian circus of excess.

From NYT:

At the end of a narrow, twisting side street not far from the Hotel Bel-Air rises a knoll that until recently was largely covered with scrub brush and Algerian ivy. Now the hilltop is sheared and graded, girded by caissons sprouting exposed rebar. “They took 50- or 60,000 cubic yards of dirt out of the place,” said Fred Rosen, a neighbor, glowering at the site from behind the wheel of his Cadillac Escalade on a sunny October afternoon.

Mr. Rosen, who used to run Ticketmaster, has lately devoted himself to the homeowners alliance he helped form shortly after this construction project was approved. When it is finished, a modern compound of glass and steel will rise two stories, encompass several structures and span — wait for it — some 90,000 square feet.

In an article titled “Here Comes L.A.’s Biggest Residence,” The Los Angeles Business Journal announced in June that the house, conceived by Nile Niami, a film producer turned developer, with an estimated sale price “in the $150 million range,” will feature a cantilevered tennis court and five swimming pools. “We’re talking 200 construction trucks a day,” fumed Mr. Rosen. “Then multiply that by all the other giant projects. More than a million cubic yards of this hillside have been taken out. What happens when the next earthquake comes? How nuts is all this?”

By “all this,” he means not just the house with five swimming pools but the ever-expanding number of houses the size of Hyatt resorts rising in the most expensive precincts of Los Angeles. Built for the most part on spec, bestowed with names as assuming as their dimensions, these behemoths are transforming once leafy and placid neighborhoods into dusty enclaves carved by retaining walls and overrun by dirt haulers and cement mixers. “Twenty-thousand-square-foot homes have become teardowns for people who want to build 70-, 80-, and 90,000-square-foot homes,” Los Angeles City Councilman Paul Koretz said. So long, megamansion. Say hello to the gigamansion.

In Mr. Rosen’s neighborhood, ground was recently broken on a 70,000- to 80,000-square-foot Mediterranean manse for a citizen of Qatar, while Chateau des Fleurs, a 60,000-square-foot pile with a 40-car underground garage, is nearing completion. Not long ago, Anthony Pritzker, an heir to the Hyatt hotel fortune, built a boxy contemporary residence for himself in Beverly Hills that covers just shy of 50,000 square feet. And Mohamed Hadid, a prolific and high-profile developer (he has appeared on “The Shahs of Sunset” and “The Real Housewives of Beverly Hills”), is known for two palaces that measure 48,000 square feet each: Le Palais in Beverly Hills, which has a swan pond and a Jacuzzi that seats 20 people, and Le Belvédère in Bel Air, which features a Turkish hammam and a ballroom for 250.

Why are people building houses the size of shopping malls? Because they can. “Why do you see a yacht 500 feet long when you could easily have the same fun in one half the size?” asked Jeffrey Hyland, a partner in the Beverly Hills real estate firm Hilton & Hyland, who is developing five 50,000-square-foot properties on the site of the old Merv Griffin estate in Beverly Hills.

Le Belvédère was reportedly purchased by an Indonesian buyer, and Le Palais sold to a daughter of President Islam Karimov of Uzbekistan. According to Mr. Hyland, the market for these Versailles knockoffs is “flight capital.” “It’s oligarchs, oilgarchs, people from Asia, people who came up with the next app for the iPhone,” he said. While global wealth is pouring into other American cities as well, Los Angeles is still a relative bargain, Mr. Hyland said, adding: “Here you can buy the best house for $3,000 a square foot. In Manhattan, you’re looking at $11,000 a square foot and you get a skybox.”

Speculators are tapping the demand, snapping up the best lots, bulldozing whatever is on them and building not only domiciles but also West Coast “lifestyles.” The particulars can seem a little puzzling to the uninitiated. The very busy Mr. Niami (he also built the Winklevoss twins’ perch above the Sunset Strip) constructed a 30,000-square-foot Mediterranean-style house in Holmby Hills that locals have called the Fendi Casa because it was filled with furniture and accessories from the Italian fashion house.

The residence also offered indoor and outdoor pools, commissioned artwork by the graffiti artist Retna, and an operating room in the basement. “It’s not like it’s set up to take out your gallbladder,” said Mark David, a real estate columnist for Variety, who has toured the house. “It’s for cosmetic procedures — fillers, dermabrasion, that kind of thing.” The house sold, with all its furnishings, to an unidentified Saudi buyer for $44 million.

Read the entire article here.

Image: Satellite view of the 70,000 square foot giga-mansion development in Bel Air. Los Angeles. Courtesy of Google Maps.

Idea Soup

Charting the Rise (and Fall) of Humanity

Rob Wile over at Business Insider has posted a selection of graphs that in his words “will restore your faith in humanity”. This should put many cynics on the defensive — after all, his charts clearly show that conflict is on the decline, and democracy is on the rise. But, look more closely and you’ll see that slavery is still with us, poverty and social injustice abounds, the wealthy are wealthier, conspicuous consumption is rising.

From Business Insider:

Lately, it feels like the news has been dominated by tragedies: natural disasters, evil people, and sometimes just carelessness.

But it would be a mistake to become cynical.

We’ve put together 31 charts that we think will help restore your faith in humanity.

2) Democracy’s in. Autocracy’s out.

3) Slavery is disappearing.

Read the entire article here.

Environs

Your Weekly Groceries

Photographer Peter Menzel traveled to over 20 countries to compile his culinary atlas Hungry Planet. But this is no ordinary cookbook or trove of local delicacies. The book is a visual catalog of a family’s average weekly grocery shopping.

It is both enlightening and sobering to see the nutritional inventory of a Western family juxtaposed with that of a sub-Saharan African family. It puts into perspective the internal debate within the United States of the 1 percent versus the 99 percent. Those of us lucky enough to have been born in one of the world’s richer nations, even though we may be part of the 99 percent are still truly in the group of haves, rather than the have-nots.

For more on Menzel’s book jump over to Amazon.

The Melander family from Bargteheide, Germany, who spend around £320 [$480] on a week’s worth of food.

 

The Aboubakar family from Darfur, Sudan, in the Breidjing refugee camp in Chad. Their weekly food, which feeds six people, costs 79p [$1.19].

 

The Revis family from Raleigh in North Carolina. Their weekly shopping costs £219 [$328.50].

 

The Namgay family from Shingkhey, Bhutan, with a week’s worth of food that costs them around £3.20 [$4.80].

Images courtesy of Peter Menzel /Barcroft Media.

Idea Soup

The Myth of Social Mobility

There is a commonly held myth in the United States that anyone can make it; that is, even if you’re at the bottom of the income distribution curve you have the opportunity to climb up to a wealthier future. Independent research over the last couple of decades debunks this myth and paints a rather different and more disturbing reality. For instance, it shows how Americans are now less socially mobile — in the upward sense — than citizens of Canada and most countries in Europe.

[div class=attrib]From the Economist:[end-div]

THE HAMPTONS, A string of small towns on the south shore of Long Island, have long been a playground for America’s affluent. Nowadays the merely rich are being crimped by the ultra-wealthy. In August it can cost $400,000 to rent a fancy house there. The din of helicopters and private jets is omnipresent. The “Quiet Skies Coalition”, formed by a group of angry residents, protests against the noise, particularly of one billionaire’s military-size Chinook. “You can’t even play tennis,” moans an old-timer who stays near the East Hampton airport. “It’s like the third world war with GIV and GV jets.”

Thirty years ago, Loudoun County, just outside Washington, DC, in Northern Virginia, was a rural backwater with a rich history. During the war of 1812 federal documents were kept safe there from the English. Today it is the wealthiest county in America. Rolling pastures have given way to technology firms, swathes of companies that thrive on government contracts and pristine neighbourhoods with large houses. The average household income, at over $130,000, is twice the national level. The county also marks the western tip of the biggest cluster of affluence in the country. Between Loudoun County and north-west Washington, DC, there are over 800,000 people in exclusive postcodes that are home to the best-educated and wealthiest 5% of the population, dubbed “superzips” by Charles Murray, a libertarian social scientist.

THE HAMPTONS, A string of small towns on the south shore of Long Island, have long been a playground for America’s affluent. Nowadays the merely rich are being crimped by the ultra-wealthy. In August it can cost $400,000 to rent a fancy house there. The din of helicopters and private jets is omnipresent. The “Quiet Skies Coalition”, formed by a group of angry residents, protests against the noise, particularly of one billionaire’s military-size Chinook. “You can’t even play tennis,” moans an old-timer who stays near the East Hampton airport. “It’s like the third world war with GIV and GV jets.”

Thirty years ago, Loudoun County, just outside Washington, DC, in Northern Virginia, was a rural backwater with a rich history. During the war of 1812 federal documents were kept safe there from the English. Today it is the wealthiest county in America. Rolling pastures have given way to technology firms, swathes of companies that thrive on government contracts and pristine neighbourhoods with large houses. The average household income, at over $130,000, is twice the national level. The county also marks the western tip of the biggest cluster of affluence in the country. Between Loudoun County and north-west Washington, DC, there are over 800,000 people in exclusive postcodes that are home to the best-educated and wealthiest 5% of the population, dubbed “superzips” by Charles Murray, a libertarian social scientist.

[div clas=attrib]Read the entire article following the jump.[end-div]

Idea Soup

It’s About Equality, Stupid

[div class=attrib]From Project Syndicate:[end-div]

The king of Bhutan wants to make us all happier. Governments, he says, should aim to maximize their people’s Gross National Happiness rather than their Gross National Product. Does this new emphasis on happiness represent a shift or just a passing fad?

It is easy to see why governments should de-emphasize economic growth when it is proving so elusive. The eurozone is not expected to grow at all this year. The British economy is contracting. Greece’s economy has been shrinking for years. Even China is expected to slow down. Why not give up growth and enjoy what we have?

No doubt this mood will pass when growth revives, as it is bound to. Nevertheless, a deeper shift in attitude toward growth has occurred, which is likely to make it a less important lodestar in the future – especially in rich countries.

The first factor to undermine the pursuit of growth was concern about its sustainability. Can we continue growing at the old rate without endangering our future?

When people started talking about the “natural” limits to growth in the 1970’s, they meant the impending exhaustion of food and non-renewable natural resources. Recently the debate has shifted to carbon emissions. As the Stern Review of 2006 emphasized, we must sacrifice some growth today to ensure that we do not all fry tomorrow.

Curiously, the one taboo area in this discussion is population. The fewer people there are, the less risk we face of heating up the planet. But, instead of accepting the natural decline in their populations, rich-country governments absorb more and more people to hold down wages and thereby grow faster.

A more recent concern focuses on the disappointing results of growth. It is increasingly understood that growth does not necessarily increase our sense of well-being. So why continue to grow?

The groundwork for this question was laid some time ago. In 1974, the economist Richard Easterlin published a famous paper, “Does Economic Growth Improve the Human Lot? Some Empirical Evidence.” After correlating per capita income and self-reported happiness levels across a number of countries, he reached a startling conclusion: probably not.

Above a rather low level of income (enough to satisfy basic needs), Easterlin found no correlation between happiness and GNP per head. In other words, GNP is a poor measure of life satisfaction.

That finding reinforced efforts to devise alternative indexes. In 1972, two economists, William Nordhaus and James Tobin, introduced a measure that they called “Net Economic Welfare,” obtained by deducting from GNP “bad” outputs, like pollution, and adding non-market activities, like leisure. They showed that a society with more leisure and less work could have as much welfare as one with more work – and therefore more GNP – and less leisure.

More recent metrics have tried to incorporate a wider range of “quality of life” indicators. The trouble is that you can measure quantity of stuff, but not quality of life. How one combines quantity and quality in some index of “life satisfaction” is a matter of morals rather than economics, so it is not surprising that most economists stick to their quantitative measures of “welfare.”

But another finding has also started to influence the current debate on growth: poor people within a country are less happy than rich people. In other words, above a low level of sufficiency, peoples’ happiness levels are determined much less by their absolute income than by their income relative to some reference group. We constantly compare our lot with that of others, feeling either superior or inferior, whatever our income level; well-being depends more on how the fruits of growth are distributed than on their absolute amount.

Put another way, what matters for life satisfaction is the growth not of mean income but of median income – the income of the typical person. Consider a population of ten people (say, a factory) in which the managing director earns $150,000 a year and the other nine, all workers, earn $10,000 each. The mean average of their incomes is $25,000, but 90% earn $10,000. With this kind of income distribution, it would be surprising if growth increased the typical person’s sense of well-being.

[div class=attrib]Read the entire article after the jump.[end-div]