ONTARIO FOR ALL
Canada calculates expanding Ontario's guaranteed income to the entire nation
ANDREW COYNE of the NATIONAL POST summarizes the findings (all figures are in Canadian dollars):
“The results, speculative as they are, are intriguing. The PBO puts the cost of a nationwide rollout of the Ontario program, guaranteeing every adult of working age a minimum of 16,989 CAD annually (24,027 CAD for couples), less 50 per cent of earned income—there’d also be a supplement of up to 6,000 CAD for those with a disability—at 76.0 billion CAD.
“Even that number, eye-watering as it is (the entire federal budget, for reference, is 312 billion CAD), is a long way from the 500 billion CAD estimates bandied about in some quarters.
“But that’s just the gross figure. The PBO estimates the cost of current federal support programs for people on low-income (not counting children and the elderly, who already have their own guaranteed income programs) at $33 billion annually. Assuming a federal basic income replaced these leaves a net cost of 43 billion CAD. That’s still a lot—one seventh of current federal spending.”
Full article here.
- A few features of the Ontario model differentiate it from a a prototypical (universal) basic income: 1) the Ontario pilot is not universal: only those “living on low income (under 34,000 per year if you’re single or under 48,000 per year if a couple”) are eligible, according to the Ontario government. 2) It functions as a negative income tax—50% of any earned income above a set threshold is subtracted from the benefit. 3) If implemented, this guaranteed basic income would "replace Ontario Works and the Ontario Disability Support Program." The PBO report uses similar parameters expanded to the federal level.
- In an article in Fast Company from February on the pilot, Ontario premier Kathleen Wynne explains the thinking behind using basic income to replace other social assistance: “‘I’ve met lots of people on social assistance who give a lot to the community and I have often thought ‘why aren’t we paying you to do this?’ Wynne says. ‘I envision a world where we help people to do the work that they can do. By work, I mean involvement in human society. I hope that, as we go through this project, we will see how that will work better.’” Link.
- A HuffPost article imagines other ways the guaranteed income might cost even less over time: "This raw cost estimate is a very simplified snapshot. It just models what the government would have to spend to deliver the basic income, if nothing else changed. But with a basic income, plenty would change. First, we could expect a steep drop in the poverty rate. And that, in turn, could mean big savings for governments, because poverty is a major expense—particularly when it comes to health care." Link.
How new information can change opinions on redistribution
A new paper looks at the way Americans (mis)understand their wealth in a global context. Accurate information makes them much more generous regarding foreign aid:
"Study participants profoundly underestimate how affluent they are in comparison to most of the world. While the median respondent is in the top decile of the world’s purchasing power adjusted for income distribution, she places herself at the 60th percentile of the distribution and estimates the global median income at $20,000 per year. Participants underestimate their percentile rank in the global income distribution by 27 points on average and overestimate the global median income by a factor of 10.
Respondents who were randomly assigned to information on the global income distribution supported higher spending on foreign aid and cuts in agricultural trade protections at larger rates. A behavioral measure validates these survey data—donations to charities abroad rise by 55% relative to the control group."
Link to the paper by GAUTAM NAIR of YALE UNIVERSITY.
- Another recent paper by economist Bastian Becker examines similar dynamics, but at the domestic level. Becker argues that information about the magnitude of income gaps serves as an index of unequal economic opportunity (as opposed to simply unequal incomes), knowledge of which leads to greater support for redistributive programs. Link.
- A 2016 paper by Asli Cansunar of Duke University surveys the evidence on the (mis)perceptions of the income distribution, and finds "that in making decisions about taxation policies, individuals often rely on misperceptions of income distribution, income inequality and their standing in the economy; they do not use factual information." It goes on to suggest that the provision of accurate information can be used as a treatment for the effects of these widely held misperceptions. Link.
- A 2017 NBER working paper looks at "frontier culture" attitudes towards redistribution: "Many decades after the closing of the frontier, counties with longer historical frontier experience exhibit more prevalent individualism and opposition to redistribution and regulation. We take several steps towards a causal interpretation, including an instrumental variables approach that exploits variation in the speed of westward expansion induced by national immigration inflows." Link.
On the place of hardware in the AI conversation
A new paper by TIM HWANG, Director of the HARVARD-MIT ETHICS AND GOVERNANCE OF AI INITIATIVE, explores the role that hardware plays in the broad societal impact of artificial intelligence. He writes:
"To the extent that computational power is mentioned, it is typically addressed simply as an enabling factor in the emergence of machine learning.… Such a shorthand enables a focus on the numerous problematic ways that machine learning might be applied and the implications of those applications for justice, equity, and a host of other values.
However, it also flattens out the role that computational power plays in these issues to simply that of a trigger for technological progress. This may miss the significant and nuanced ways that hardware influences the impact of AI on these broader values and social concerns.
Hardware actively shapes the landscape of what can be done with the technology of machine learning, and plays a significant role in influencing how it will evolve going forwards. These impacts turn on more than simply the amount of processing power available, but on the details of computational architecture, supply chains, and the co-evolution of the machine learning field itself."
The final, more speculative, section introduces a compelling discussion about how hardware figures in to debates over governance and AI:
"Computational power is intimately linked to a nexus of issues in civil rights, consumer safety, geopolitical competition, labor policy, and corporate power. In contrast to the software and data that the practice of machine learning relies on, hardware and its production is more centralized, more able to be monitored, and less able to evade efforts to govern it. Hardware therefore offers one tangible point of control for those seeking to find levers on which to base policy and effectively shape the social impact of the technology."
Link to the paper.
- For more on the landscape of chip development and the race to produce the most effective AI hardware, see this Wired article from 2017, and this one from 2016. And, from chip manufacturer NVIDIA, a post on the immense performance advantage of GPUs over CPUs. Link.
- News from last week: Facebook is looking to join Apple, Google, and Amazon with in-house chip development for a variety of potential applications (including AI, per tweets from neural network pioneer and Facebook engineer Yann LeCun). Link.
- On the value of Manhattan’s land: “A new study by economists from Rutgers University tackles this question with a methodology that not only provides an estimate for the current value of the land, but also its growth in value over time.” The study estimates that “the developable land in Manhattan” was worth $1.74 trillion in 2014. Link to coverage in CityLab.
- Cory Booker’s new job guarantee pilot bill: “The Federal Jobs Guarantee Development Act, announced by Booker [last] Friday, would establish a three-year pilot program in which… every adult living [in a pilot area] is guaranteed a job paying at least $15 an hour (or the prevailing wage for the job in question, whichever’s higher) and offering paid family/sick leave and health benefits.” Link.
- On the wage effects for joining the public sector during a recession. Link.
- Quantifying the unequal effects of climate change: “For changes in regional heat extremes, the pattern is particularly stark. Africa, large parts of India and most of South America are likely to experience changes clearly attributable to climate warming early on, after a 1.5-degree increase in global temperatures. But mid-latitude regions—where most greenhouse gases are produced—won’t see such pronounced changes until the global temperature rise hits 3 degrees or so.” Link.
- Preqin is out with a giant and expensive new report on Sovereign Wealth Funds. A 12-page sample is available here. At Pro Rata, Dan Primack writes some takeaways: “If it feels like sovereign wealth funds are popping up in more and more large transactions, it's probably because they now manage a ridiculous amount of cash. Assets under management for SWFs now totals a whopping 7.45 trillion USD, up 13% from last year, according to a new report from Preqin. Of that, $5.49 trillion is managed by just 10 funds.” Link.
- Does tax evasion have an effect on the crime rate? Link.
- A comprehensive report co-authored (with six others) by Darrick Hamilton tackles the racial wealth gap and persistent myths about how to fix it. From the intro: "We contend that the cause of the gap must be found in the structural characteristics of the American economy, heavily infused at every point with both an inheritance of racism and the ongoing authority of white supremacy. There are no actions that black Americans can take unilaterally that will have much of an effect on reducing the racial wealth gap. For the gap to be closed, America must undergo a vast social transformation produced by the adoption of bold national policies." Link. (See also this older paper, in which Hamilton and co-author William Darity Jr. propose baby bonds as a targeted solution for closing the gap. Link.)
- Noah Smith at Bloomberg takes up the above report and speculates that a familiar emerging idea—the social wealth fund—could be a vehicle for distributing reparations to black Americans. Link.
- A quick look at possibilities for Universal Basic Assets: “At bottom, the idea of UBA seeks new ways to raise money without resorting to new taxes. It’s about opening up assets and bringing the market into more areas of life, empowering individuals, and recognizing the public goods that we currently give away to corporations.” Link. ht Jay
- "Successful individuals either act as partners or as rivals." Link.
- On conflict and interregional resources: "Our study highlights the idea that the likelihood of conflict (and through conflict, the path of economic development) depends not only on a region’s own resources, but also the resources of its neighbours." Link.
- Pandora Music has released results from a large-scale RCT they've conducted on user sensitivity to advertising: "We estimate a demand curve that is strikingly linear, with the number of hours listened decreasing linearly in the number of ads per hour (also known as the price of ad-supported listening)." Link.
- Senator Kirsten Gillibrand announced a bill to (re)introduce postal banking in the United States: "Gillibrand’s bill would allow the postal service to make small loans at low interest rates and would almost certainly compete payday lenders out of business.… Even by global standards, they’re setting an ambitious goal." Link.