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033 – Nixon on the poverty line

Posted by  Shawn Callahan —November 12, 2018
Filed in Business storytelling, Podcast

Tags: Data, experimentation, income, insight, poverty, research, science 

Is poverty a lack of character or a lack of cash? This story could change your mind.  

Presidential seal

This week, it is Mark’s turn to share a story. The story he has chosen is one which demonstrates how stories can change minds and influence people. This story changed his mind. It reminded him to be aware of his assumptions and aware of the lessons of history. 

Many of us are not familiar with the universal basic income concept. Just fifty years ago it was nearly reality. The concept proposes a minimum level of income be provided to all people. This ensures that no one falls below the poverty line. A significant body of research has shown that implementation of the concept can have significant benefits. 

Is poverty a lack of character or simply a lack of cash? Mark thought it was the former but changed his mind. With big ideas it is easy to jump to one perspective. We often rethink that perspective when we unravel the idea.

If you’d like to listen to the podcast Mark listened to, you can find it here. It features Rutger Bregman, author of Utopia for Realists – And How We Can Get There. 

For your storybank

Mark was recently in the car with Sarah when she suggested they listen to a podcast about the universal basic income concept. He agreed to listen, but already thought the concept was unrealistic. Then he heard the stories contained within the podcast…  

In 1968, five leading economists wrote an open letter to the Congress of the United States of America. Another 1,200 economists signed the letter. It recommended the implementation of a universal basic income.

In 1969, President Richard Nixon proposed legislation for a modest basic income to apply to all citizens of the United States. The legislation went to Congress and passed by a significant margin. There were 243 votes for and only 155 votes against. The legislation then went to the Senate, but was blocked. The Democrats sought a higher income starting point.

The legislation was revised one year later. It again passed Congress but was blocked by the Senate. 

A universal basic income remained a possibility for the US until about 1978. Four big experiments were conducted within the country at this time. They were delivering impressive results, but an analysis of data from a Seattle experiment showed divorce rates had increased by 50%. This statistic scared away support for the concept, and the discourse surrounding it dropped away. 

Ten years later, an analysis of the analysis showed the increase in divorce rates was a statistical error. There was in fact no change to divorce rates. 

Additional experiments were conducted all over the world. A significant experiment was conducted in Dauphin, Canada. It started in 1974.

The city had a population of some 13,000. The government guaranteed each person a basic income of about $19,000, no questions asked. 

Many people were against the concept because they thought most people would stop working. The experiment ran for four years, until a change of government led to a complete cut in funding. The data was not analysed and was soon lost.

In 2004, Canadian researcher Evelyn Forget heard about the experiment. She went looking for the data. It took five years, but she eventually found the 2,000 boxes of data the experiment had generated. 

Evelyn analysed the data over three years. Whichever way she cut it, she found the experiment a resounding success.

The experiment was financially self-sustainable. Hospitalisations fell 85%. There was less violence, particularly less domestic violence, and less mental illness; children received better results at school; young people delayed marriage; and the birth rate decreased. There was also no evidence that people were working less. 

The podcast taught Mark that a universal basic income was, and still could be, a real possibility. He learnt that poverty isn’t a lack of character, it is simply a lack of cash. 

Podcast transcript

Shawn:

Welcome to Anecdotally Speaking – a podcast to help you build your business story repertoire. Hi, I’m Shawn Callahan.

Mark:   

And I’m Mark Schenk.

Shawn:  

Now, Mark, I believe you’ve been listening to an interesting podcast that sparked today’s story.

Mark:

It’s a story that changed my mind. I was in the car and Sarah said she’d been listening to something about a universal basic income and how this was a possibility. I went sure I’m happy to listen to it but that’s not going to happen; it’s ridiculous. I’ve quickly learned that a story can change your mind.

This is from a book called Utopia for Realists by Rutger Bregman. Back in the late 1960’s Richard Nixon, who was a republican not a democrat, proposed a modest basic income that would apply to everybody in the United States.

In 1968, the year before, 5 of the leading economists in the U.S wrote an open letter to Congress saying that this was the responsibility of the government. It was signed by 1,200 other economists.

Shawn:      

That’s amazing.

Mark:   

What? Economists don’t do this. Nixon saw this as his big contribution and in 1969 proposed legislation for this modest basic income and it went to Congress and passed through Congress. And it wasn’t passed by a narrow margin: 243 votes for, 155 against.

Shawn:   

That’s a big margin.

Mark:

It went to Senate and it was rejected.

Shawn:   

Why?

Mark: 

Because the democrats believed that the achievement of a universal basic income was completely inevitable, but they wanted a higher start point.  They wanted the dollar figure upped initially so they knocked it back in the Senate.

A year later it went back to Congress again, again voted through, again blocked in the Senate. I find this completely amazing because Nixon is not someone you associate as for the people, but the possibility of this basic income was maintained until about 1978.

There were four big experiments being done in the U.S over this time, in different places where people were given a modest basic income and it was showing very good results. But then in 1978 some analysis of results in Seattle showed that the divorce rate amongst people who were receiving the basic income had increased by 50%.

And even the republicans went ‘oh, we can’t have this’ and it went by the wayside. Of course, 10 years later someone did some analysis of that analysis and found out it was a statistical error; there was no increase in divorce rates. There is a huge body of research about this; England, Finland, India, South America, Africa but probably the most significant experiment was done in Canada.

In 1974 they picked a town called Dauphin, just northwest of Winnipeg, 13,000 people and they guaranteed a basic income for those people. It meant that about a 3rd of the population got a cheque in the mail each month, no questions asked. Everybody had a minimum wage of about $19,000.

The people who were against the idea (including me); the objection was that people would just stop working. And this just did not happen.

Shawn:      

Kick back on the X-Box.

Mark:    

Yeah. The experiment in Dauphin ran for 4 years, then there was a change of federal government in Canada and they went ‘we’re paying for two thirds of this – no way’ and they just cut the funding. No funding for the research—no analysis done of the results. So four years of research and they didn’t analyse the data.

That data was basically lost for 25 years—2,000 boxes had been stored somewhere. In 2004 the Canadian researcher, Evelyn Forget from the University of Manitoba, heard about the Dauphin experiment and went looking. It took her 5 years to find those boxes. And when she did the analysis, which took 3 years, her assessment was that the Dauphin universal basic wage experiment was a resounding success.

Some of the stats: hospitalizations were down 8.5%, that alone nearly covered the cost. There was less violence, domestic violence particularly. Kids did better in school, mental health was significantly down. There was no evidence of people working less and young people were putting off getting married and the birth rate decreased.

So, kind of counter-intuitive. By the end of the story I was in agreement with Rutger Bregman; poverty isn’t a lack of character, it’s simply a lack of cash.

Shawn:  

That’s nice isn’t it? People quickly jump to a particular perspective but once you start to hear the full unfolding of it, where it’s been tied out and the things people have learnt from it, it makes so much sense.

Mark:    

And a universal basic wage was so close to being a reality.

Shawn:     

I wonder what’s the chance of it getting through these days.

Mark:   

Well with people like Bregman putting this story out there there‘s a lot more talk so maybe there is a chance. But hopefully there’ll be some experiments at least.

Shawn:   

You’d think so wouldn’t you?

Mark:  

In fact, there was one in England in 2009 and 13 homeless men who had been homeless for 40 years were given £3,000 a year each. The Economist (magazine) published that the savings were £350,000. Seven of the 13 found houses were now living off the streets and all these benefits.

But not only were there benefits but it saved £350,000 in welfare payments, hospitalisation, policing.

Shawn:   

You can point out all these figures to the rationalists out there, you’re changing people’s lives.

Mark:

The story really changed my mind and it’s a great example of how this amazing initiative could well have been a reality, but these days most people have not even heard of the concept. It’s just something that has disappeared from our consciousness.

Shawn:    

There are a couple of things I like about that story. It’s one of my favourite genera of stories: the scientific experiment. In this case a couple of scientific experiments but interleaved in that is this nice stuff about surprising political things.  The fact that Nixon was a republican, you’d expect that suggestion more from a democrat.

Mark:      

Totally. And for it to have been blocked by the democrats, that was very surprising when I first heard it.

Shawn:

Too because it has that experimentation feel which was vital in that is the data. The percentages, the numbers, the dates—all those things are really important parts of that story. It just gives it credibility, right? Especially with a story about scientific experiments you’ve got to get that right. You can’t wing that ‘oh, maybe it’s X’.

Mark:   

Yeah, those were the things that I wrote down—the dates, the data.

Shawn:  

I also like the fact that it’s like a 3-part story. You have the setup story: you and Sarah in the car, an ante story that you throw out there. Then you hear the story of the Nixon situation, and then the data story, the scientific experiment story. It’s nicely structured as a result of that.

Mark: 

I was tossing up whether I should do the Dauphin experiment first and then bring in the Nixon side of it.

Shawn:  

I liked it the way it unfolded. What do you like about that story?

Mark:  

Again, relatability in that we all know who Nixon was but contrary to expectations he was the one proposing the universal basic salary.

Shawn:  

Unanticipated.

Mark:   

So that one was one of the things I liked and certainly one of the surprises—Nixon? It works because most people had expectations about the way he was, and it was unexpected.

Shawn:      

I love the unexpected element of the experiment running for 4 years and then the data is lost for 25 years. On one hand I don’t find it that surprising. Government research does all sorts of weird things like that every now and then.

I liked the fact that the research took 5 years to find those boxes, that would be a great find. I hope she got a good PhD or something out of it.

Mark:

I hope so. Three years of work analysing that data.

Shawn:

Where do you think we’d be able to use a story like this?

Mark:

When you’re encouraging people to really question the fundamental assumptions that they’re operating under. For me, the fundamental assumption was that being poor was a choice; you’ve got it wrong, work harder, try harder and it wasn’t until I heard that story that it really became apparent to me.

And I’m embarrassed about it, embarrassed that I held that view. But if you had argued with me rather than told me that story, I may not have changed my view. I was the one who chose to change my view.

Shawn:

You’re the only one who can change your own view. That’s definitely a nice place to put it. I think anything around the topic of universal basic incomes that’s an important element of it.

When anyone talks about the pros and cons for it you can throw in your weight behind it or if someone is against it you’ve got a lot of data there in a narrative form that is very persuasive.

Mark: 

Very persuasive. So another way to use it is to encourage people not to shout down ideas too quickly because it’s so easy for us, based on our views of the world, to go, ‘no, no, no that won’t work’.

Shawn:

In politics we’ve got very much an us versus them sort of attitude and it’s easy to say ‘that’s how it’s always been, left versus right’ but this is an example where both sides of the house had come together on an idea that was so close to being put into practise.

In some ways you just had one asking a little bit too much—a little greedy on it—so maybe there’s a lesson in there as well.

Mark:  

One of the reports I read said they were testing 3 areas. Can we afford it was the first question? Which was a ‘yes by the way because the thing actually pays for itself. Will it work? Yes, it does work. And is it politically feasible? The only one it failed on was the political feasibility.

Hopefully that creates the opportunity for us to review that with a different political environment.

Shawn: 

It becomes an ideological discussion, which is a bit sad.

Mark:

But to have something which is essentially a democrat idea being put forward by the republicans and showing that bilateralism that gives me great hope that this is achievable.

Shawn: 

What would we give this?

Mark: 

The ratings. Well I told the story so what would you give that as a rating?

Shawn:    

I would give that a 7.5.

Mark:   

Do you want to unpack that a little bit?

Shawn:  

The reason I said 7.5 is that I can imagine myself sharing it but I don’t know if I could actually nail all the data. I feel it might be a bit harder for me to tell that story. That was the only niggle in the back of my head. To really land it do I need to have all the dates and data? Probably not. You’d probably still have a relatively o.k. version if you didn’t do all those things. But it wouldn’t be as powerful as the version you told.

Mark:   

I originally was going to give it a 7 but after that conversation I’m going to give it an 8 because I can definitely see myself using it and I do think there is a more concise simpler version that I would be more likely to use.

Shawn:   

It’s like the version where you’re in the pub and someone say’s ‘universal basic income.  What a laugh eh?’

Mark: 

You could almost do the 3-minute version—1,200 economists, Nixon put it through twice and by the way there was an experiment in Canada that showed this.

Shawn:     

You don’t have to go through all those minute details.

Mark:    

Indeed and to make that story even better is to have a 2-minute version so a long version but also a 2-minute version.

Shawn:  

Well, I think that’s where we should wrap things up. Great to have everybody onboard again. Thanks again for listening in to Anecdotally Speaking and tune in next time for another episode on how to put your stories to work.

 

About  Shawn Callahan

Shawn, author of Putting Stories to Work, is one the world's leading business storytelling consultants. He helps executive teams find and tell the story of their strategy. When he is not working on strategy communication, Shawn is helping leaders find and tell business stories to engage, to influence and to inspire. Shawn works with Global 1000 companies including Shell, IBM, SAP, Bayer, Microsoft & Danone. Connect with Shawn on:

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