The idea of guaranteeing a basic income for everyone, whether or not they are employed, isn’t a new one. Both Canada and the US experimented with the idea in the ’60s and ’70s, but the idea fell out of favour as politics shifted to the right. Today, as the economy shifts away from secure employment, we are experiencing a resurge in interest in the idea. In a 2013 survey, 46 per cent of Canadians supported the idea, nonetheless, many people still see it as unrealistic, unaffordable, or out of reach.
In fact, a basic income guarantee would address many social problems we struggle with here in Canada — particularly with regard to women’s equality.
A basic income guarantee (BIG) — also known as guaranteed annual income, a Mincome, or universal basic income (UBI) — is money the government gives to everyone whether they need it or not.
There are a couple of approaches, one which involves providing supplemental pay only to low income people (this is called the negative income tax or NIT), and another that provides everyone the same amount upfront, then taxing it back from higher income earners (this is called the universal demogrant or UD). Many people prefer the NIT approach because it looks cheaper upfront, but the UD approach has the advantage of treating everyone equally. It may also be easier for people whose income fluctuates a lot.
The purpose of a BIG is to replace means-tested programs like welfare and old age security that are only available to people who have nothing left (means-testing looks at savings and property like housing and cars to determine eligibility for support), with a universal support that would prevent people from ending up in that position to begin with. In Canada it could be $20,000 per year, no questions asked, with possible additional amounts for seniors, disabled people, and Northern residents (i.e. people who get additional tax deductions in recognition of the extra costs of living in remote areas), though it would probably be less than that initially. While that might sound like a lot, if you look at what it replaces and the way it would impact society as a whole, it makes a lot of sense, economically and socially.
There have been numerous experiments that show simply giving money to those living in poverty and letting them figure out what to do with it is more successful than giving them targeted aid. In the ’60s and ’70s, the US ran experiments in five different regions to see if people would quit working (they didn’t), while Canada experimented with a Mincome in Dauphin, Manitoba — for the five years the program existed in Dauphin, poverty was completely eliminated. In general, people’s motivation to work was not impacted, but when people did stop working outside the home, it was mostly women who were staying home with young children or teenagers who stayed in school longer.
Mexico started giving impoverished people cash in the ’90s, to replace food subsidies, and found that people ate better and were healthier, and that children stayed in school longer. In 2008, Uganda’s Youth Opportunities Program offered cash to young rural applicants to learn a skilled trade. (Women in these programs fared particularly well because they were so much worse off to begin with.) In 2009, 13 long-term homeless London men (“rough sleepers”) were offered £3,000 each to help them move off the street, with logistical support from a project coordinator. Far more of them moved off the street than was originally expected. And in 2012, GiveDirectly, insipired by Mexico, gave impoverished Kenyan families $1,000 each to see what they would do. The Kenyans did things like upgrade their houses with better materials and start businesses. There have also been recent pilots in Namibia and India.
The biggest concern people seem to have about these programs is that recipients will just drink or otherwise waste the money instead of spending it wisely, the assumption being that poor people don’t know how to manage money. (Do the wealthy never “waste” money?) But it turns out that the reason people are poor is because they don’t have enough money, so when they get it, they spend it on things they need, like better food, improved housing, education, and starting businesses. They know how to manage money as well as anyone else does. They just don’t have enough to work with.
Another concern is that if people are given enough to live on, they will stop working (which would actually be bad for the economy, because then who would pay taxes to pay for all of this?). And it’s true — people do work slightly less. In the US studies, the overall decrease in working hours was 13 per cent for the entire family, but it was mothers and teenagers who disproportionately reduced work hours. In general, fears about people becoming lazy and quitting work are not born out by the facts. Sure, a few people might slack off, but not enough to have a notable impact on the economy.
In any case, demonstrated benefits appear to outweigh any potential cons: improved physical and mental health (which leads to reduced health costs), lower rates of domestic violence, lower crime rates in general (which means lower policing costs), higher school graduation rates; and overall increased economic productivity.
Why give the poor more money?
1) Economic security is a human right.
Human beings — all human beings — have the right to be treated with dignity and respect, to be fully equal, just because they are human. The Universal Declaration of Human Rights (UN, 1948) includes economic security (articles 22, 25) as a basic human right.
2) It’s cheaper to administer than the welfare programs we operate currently.
Current benefit plans pay people to judge other people — sometimes repeatedly — in order to determine whether or not they “deserve” help. For example, in the UK, private contractors spent more money weeding out ineligible disability recipients (many of whom were actually eligible) than the money the government saved by taking them off the rolls.
3) A basic income program would work better than what we have now.
Welfare programs typically impose too many conditions and don’t provide enough money, due to irrational fears around giving money to people who don’t “deserve” it. Most welfare recipients in Canada, for example, are well below the poverty level even with maximum support. And in many jurisdictions in Canada and the US, single “employable” adults may not be eligible for any support at all, depending on their circumstances. There may be a waiting period before they receive benefits, even if they are down to their last dollar, and there is often a time limit after which they run out of benefits, regardless of need.
No one is actually entitled to a job
Today, our priority is training people to hold down jobs or to get better jobs. But the reality is that no one is legally entitled to a job. In Canada, our government doesn’t ensure there are enough jobs to go around, or that the jobs available are suitable for the people who are looking for work. The government does encourage the business sector to create jobs, and we have the right to be considered for those jobs, when they exist, on the basis of qualifications and not demographics. However, that does not guarantee that there will be an appropriate job available for every individual. There are no secure fields either. Even engineering jobs can go offshore. (I had a chat with a German engineer online a while back and he mentioned that his employer gave him early retirement and shipped his job to India. Do they still have those “German engineering” ads?)
There are many ways a BIG could be introduced, but so far there is no consensus as to how to go about it or which level of government would pay for it. In Canada, Ontario is planning a pilot project, and Quebec is also talking about it, but it would be preferable to approach this at the federal level, supplemented by the provinces if needed.
In my fantasies, the Canadian government could take our Goods and Services Tax Credit infrastructure, and start by giving everyone $100 per month instead of the GSTC payments. There would be no eligibility requirements other than to sign up, and no clawbacks on welfare and other handouts already in place. Raise the amount to $250 the second year and $500 the third, and you start to see stress levels and debt go down. Once you get to $1000 a month (provided everyone continues to be better off from year to year), you can start to partially clawback benefits such as welfare, disability, old age security, the non-refundable tax credit on your tax return (basic personal amount), minimum wage, subsidies for social housing and daycare, registered savings plans, etc. Eventually you reach the end goal and from then on the amount would simply increase every year, based on inflation. In reality, it’s unlikely to be quite that simple, but the point is that if BIG is brought in in stages, people have time to adjust, as does the job market.
A number of countries already have partial BIG programs in place, including Macau (since 2008), Iran (since 2010), and Alaska (since 1982), which indicates that it’s possible to at least get things started.
In the meantime, for far too many people, poverty is an emergency right now. It’s possible the provinces might be willing to raise welfare rates or make eligibility easier in the short term if they know they’ll get to phase it out in a few years.
Also, since women tend to have less money than men, we need to make sure we clawback programs that benefit men/higher earners more (such as retirement savings plans) as well as plans that benefit women/lower earners more (such as minimum wage).
There are a number of social benefits to a basic income, including:
– The poorest will be better off — many people will be healthier and less stressed.
– Homeless youth will be better protected — if the minimum age to qualify for a basic income is 16, a significant portion of homeless youth will be able to afford food, shelter, and further education.
– It’s easy to get. There is no paperwork beyond filing a tax return, no means testing, no delays, no clawbacks if you earn other income, you don’t have to sell everything you own first before qualifying.
– It isn’t dehumanizing like welfare is now.
There may also be also some negatives:
– People will most likely pay off their debts, so banks will lose some income. Also, student loans may become unnecessary. This may reduce administrative jobs, which tend to be held by women.
– People whose jobs involve administering government handouts will need to look for other sources of income to supplement their new BIG. (This is one reason why it needs to be brought in in stages, so people have time to adjust.) (Most of these people are women.)
– There will be an adjustment period while everyone gets used to it.
– A few slackers might stop working.
A BIG would benefit women in particular
There are numerous situations where a BIG would help women in particular. For example:
– The number of women in poverty is increasing at a much faster rate than men, meaning that poor people are disproportionately female. A BIG could address the feminization of poverty.
– Family care (e.g. child care, elder care).
– Preventing girls/women from entering the sex industy, and helping them exit the trade more easily than if they were to make use of welfare/job training.
– Leaving abusive relationships (there may also be fewer abusive relationships to begin with).
– In developing countries, girls may be more likely to stay in school longer.
Having enough money to cover basic costs gives people real choices and protects their human rights. We talk a lot about choice now, but many “choices” we make are made under economic constraints. A BIG would not be enough to buy the company and fire the boss, or buy the building and fire the landlord, or hire that lawyer who totally blows your enemies out of the water (or whatever your personal power fantasy is), but it would make it easier for people to protect themselves from exploitation and abuse. It would also make it easier for people to find the time to work towards a better world.
Anemone Cerridwen has three science degrees and no job. She has been on welfare/disability for 18.5 years to date (15 continuous) and would not wish it on her worst enemy. She currently lives in Edmonton.