Basic income pilot projects need scrutiny

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Money House

Ontario has announced some of the details of its pilot project for a guaranteed basic income, which would see 4,000 selected low-income recipients in Thunder Bay, Hamilton and Lindsay receive monthly cheques to supplement their income for the next three years. The payments will max out at nearly $17,000 for a single person, about 75 per cent of the province’s low-income measure, commonly referred to as the poverty line.

(The cheques will be also reduced by $1 for every $2 earned by recipients, so someone earning more than $34,000 won’t see any money.)

Quebec, which has also said it wants to explore the basic income model,  instead struck an “expert committee” last fall whose report is expected to be delivered by the summer. Although the Ontario pilot project would hardly be described as generous, the Institut de recherche et d’informations sociaux-économique (IRIS) thinks Quebec has been planning on offering much less. A December report by Université de Sherbrooke professors Luc Godbout and Suzie St-Cerny — which will no doubt figure prominently in the Expert Committee’s thinking — instead invoked two scenarios for a guaranteed income, one for just over $9,000 and a second, “more ambitious” plan for a little over $12,000.

Expressed as a percentage of the low-income measure, a single Quebecer on welfare now gets about 46 per cent of that poverty threshold, while the two Sherbrooke scenarios would theoretically boost that to 55 or 65 per cent, says IRIS.

And those scenarios assume that Quebec does not claw back benefits, as it does under the current welfare system: cutting benefits in half, for example, for new recipients who turn down work training programs.

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Basic Income programs have received support around the world by prominent thinkers both on the left and the right. That alone raises eyebrows, especially when the Ontario program is being advanced by the Liberals and is encouraged by Conservative senator Hugh Segal. Yet basic income is also supported by the Green Party and Québec solidaire. How can a single measure be supported by such a strange mix of bedfellows?

The simple answer: they’re not supporting the same thing. Saying you support basic income is a little like saying you support income taxes. Most people do, but there’s widespread disagreement over who and what to tax and how much to tax them.

Conservatives often see BI as a means of simplifying the social support system, allowing the government to eliminate all sorts of programs and replace them with a straightforward cheque that’s the same for virtually everyone. They envisage huge layoffs in government bureaucracies and greater control over expenses. Their goal is not to achieve a more equitable distribution of collective wealth but to reduce government expenditures and reduce the tax burden.

Progressives who support BI, on the other hand, see it as a way to ensure every citizen has the means to maintain a minimum standard of living, to end the stigma attached to social assistance programs and end the invasiveness of government control measures.

Both sides eye each other suspiciously whenever the BI idea is floated, both often convinced that it’s a Trojan horse for the other side’s agenda.

There’s  a lot of mythology surrounding BI, because objections on both sides are largely theoretical. There has never been a truly thorough basic income experiment, though the so-called Mincome project conducted in Dauphin, Manitoba, in the 1970s, came close — until it was cancelled by a Conservative government before the study could be completed. When the raw research was unearthed again in 2005, the piecemeal data and belated follow-up seemed to indicate that the theoretical weakness favourited by Conservatives turned turned out to be false, at least among Mincome recipients. It did not, as predicted, kill incentives to work, though it did allow some people the luxury of returning to school. It also, as expected, improved health outcomes for recipients.

However, the belief that giving poor people money encourages sloth (as opposed to the rich, many of whom elevate slothery to an art form) is so widespread that it remains part of the Ontario pilot program. That 75-per-cent cap is intended, in Segal’s words, to ensure people continue to have an incentive to work.

At the same time, the project counters that incentive by taking back 50 cents on every dollar earned, an effective tax rate that one Conservative economist gleefully calculated at 90 per cent once factors like income tax were considered. “Basic Income recipients [will] retain only 10 cents on a dollar of earnings,” chortled C.D. Howe economist Kevin Milligan, who ironically hopes this will end up becoming fodder for the argument that taxes on the wealthy need to drop!

Indeed, all eyes are on Ontario and Quebec as they join a handful of jurisdictions around the world that have or will launch minimum-income initiatives. Regardless of where one sits on the political spectrum, the projects, despite their flaws, should at least give us real-world answers regarding the strengths and weaknesses of a universal basic income system.

We used to see technological advances as a path towards a society of leisure, now our advances occur so quickly that they threatens to leave many of us with lots of leisure but no livelihood. Basic income is an option we can no longer afford to ignore.

But neither should we ignore the very real threat that it could become just another tool to keep the collective wealth in the hands of a selected few. These projects may well be our way forward, we mustn’t allow ourselves to be led blindly down the path. ■

Peter Wheeland is a Montreal journalist. His sardonic observations about the city and province appear on Cult MTL every week. You can contact him by Email or follow him on Twitter.

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