The Sad Reality of Basic Income in Ontario

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In the crass lead-up to an election, governments will roll out freebies to people who might be thinking of voting them out. The Ontario government, under Kathleen Wynne’s leadership, has alienated voters with high electricity bills which, in places where homes are heated with electricity and the hydro bill is not included in rent, have caused immense hardship.

In response, the government has announced that young people will now get prescription drugs for free. This is great in a sense: pharmacy costs should be included in medicare, as they are for hospital patients. But upon examination it’s a bit of fake-out: young people tend statistically to be healthy, and also tend to be covered by their parents’ drug plans; low-income youth are already eligible for Trillium.

What makes the announcement somewhat exciting is the principle of universality it embodies.

Trillium is means-tested, which means the burden is on sick people to prove their destitution; making a public good free for any group is an improvement. Medicare is free; being free makes it administratively cheaper than programs like Trillium that require an army of gate-keepers to determine eligibility.

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That’s supposed to be how basic income works: everyone gets it, so it’s administratively simple, and the money saved on administration actually goes to people. You increase rates, and you ease the stigma of collecting welfare while actually cutting costs. Everybody wins.

The problem is that this flies in the face of how social policy has been moving for the last several decades: universal programs are under constant attack, targeted programs are increasingly measly because people who need them are marginalized and have no champion in politics or the media. The political class—across the political spectrum—agrees that costs need to be kept down to ease tax burden, so ‘less eligibility,’ the principle that any system of giving out money to poor people has to be more dehumanizing than the worst work available, prevails.

Business created the job market, as the Globe and Mail will tell you very plainly, for flexibility, productivity, and profit, not for us.

Advocates of basic income say that a major shift will happen in social policy because it has to, because changes in the economy, in labour force participation, that make it hard for even highly skilled workers to find stable employment, will require it.

This is true from a technocratic perspective: all the experts agree that precarious work is not tenable, and we as a society need to find an innovative solution to a system that is clearly broken.

The truth, however, is that business benefits immensely from a terrible job market. The more anxious prospective employees are about getting enough money to get through the month, the more eagerly they’ll accept work that is underpaid, unrewarding, and unhealthy, and the harder they’ll work to keep that job. Business created the job market, as the Globe and Mail will tell you very plainly, for flexibility, productivity, and profit, not for us.

Without a change in fundamental principle or, more accurately, without relentless and focused countervailing pressure, this will not change.

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Not surprisingly, the test version of basic income that’s been announced by the province is terrible. Even as a model it’s useless. It will tell us what we already know—more money makes people healthier—or it won’t. Either way it’s a waste of time, because the model is so bad.

How bad is it? For one thing, it is invitation-only. It’s someone’s job to determine whether you might be a good candidate for the pilot. If you are, you get a letter in the mail asking if you want to sign on.

Now, the whole point of basic income is supposed to be that, unlike welfare, it eliminates administrative oversight. The reason Basic Income appeals to both the left and the right is that it costs less than welfare and is less invasive. All the money goes into people’s pockets, not into policing people’s purchases. The model, in that sense, flunks Basic Income 101.

Besides, if you make money while you’re on the program, the government demands a contribution of 50% of your earnings. 50%, it should be clear, is the top marginal income tax rate at an income of over $200,000 per year, the top 1% of income earners in Canada – the rate Tom Mulcair said was “confiscation.”

I believe that access to housing, food, and health should not be dependent on one’s ability to sell one’s time to employer.

That is to say that on the first $200,000, high earners pay proportionally less of their income in taxes than someone on the basic income does after $10,000. (It’s even worse if you consider that most high earners have ample opportunities for avoiding tax, especially if their income isn’t in the form of salaries.) Even Ontario Works, the current welfare system that is intended to be measly, allows you to earn $200 a month before paying anything on it.

Raising the rates of existing programs, and eliminating the invasive policing of recipients, would be a much better option than the proposed model, though it sounds less impressive to people who imagine basic income will transform society, and whose votes the government needs to survive.

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Please don’t get me wrong: I am on the side of the people who think basic income would be better than welfare abstractly.

I am a socialist, and I believe that access to housing, food, and health should not be dependent on one’s ability to sell one’s time to employer. When advocates of basic income speak rhapsodically about what we could all do if we didn’t have to worry about making a living, I am genuinely moved.

But we are not there—clearly. As Nora Loreto says, “Nothing is given to us by the business class. If we haven’t struggled to win this, we must treat it with the highest of skepticism.” That this is true with Ontario’s basic income experiment might have been debatable in the past. The pessimists were, sadly, proven right again.

 

Illustration by B Mroz.

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David Tough

David Tough

david.tough

David Tough is a musician, scholar, and journalist from Peterborough, Ontario. He is Contributing Editor and co-Publisher of Electric City Magazine.