Point/Counterpoint: Basic Income

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A guaranteed living wage for everyone—that’s the heady promise of basic income. The idea has been bandied about by economists and poverty advocates for decades as a way to reduce poverty and simplify the morass of government social services. But the idea has been gaining traction in recent years, particularly as more and more people face the uncertain future of precarious labour (working a series of short-term jobs rather than a proper career).

Last year, the province of Ontario embarked on the Basic Income Pilot Project, a three-year experiment that will provide monthly basic income payments to as many as 4,000 low-income people in select cities across the province, including Lindsay.

But is it the answer? Can it even work—economically, politically, socially? We convened David Tough and Elisha Rubacha for a spirited discussion of the merits of basic income. David has written many times about politics in these pages, and is a historian of taxation in Canada. Elisha works with the Nourish Project and is an advocate for low-income people. And both are longtime members of the precariat.

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Elisha Rubacha

Today I worked three jobs. I am on day five of an eight-day work week. My best-paying job is a contract position, and I’m always worrying about when it will end, because it’s the only thing standing between me and poverty. Like far too many Canadians, I have lived hand to mouth. I am just one contract away from living paycheque to paycheque again. Unfortunately, this is becoming the norm. In fact, the main sources of income for 60% of food-insecure households are wages or salaries. A job is no longer enough. The new minimum wage, while a huge improvement, is still below a living wage. This is why 70% of the applicants to the Basic Income Pilot Project are working people. The face of poverty has changed.

The current social assistance system, although it is certainly better than nothing, does not begin to cover the cost of living. After the cost of housing, many are left with next to nothing. The recipients of basic income enrolled in the Pilot Project are thrilled to be able to afford a new walker, a new winter coat. One woman bought curtains and described them as a luxury she wouldn’t have dared indulge in before receiving the negative income tax. If you are making a decent living, I urge you to imagine that for a second.

Ontario Works (OW) and Ontario Disability Support Program (ODSP) provide insufficient funds and act as a poverty trap that keeps people poor. It is a highly stigmatized process, and often forces people to rely on other undignified services like food banks. Food banks are the absolute last resort for people living with food insecurity, and only 1 in 4 food-insecure households actually access them. They take away choice. Basic income, in comparison, is freedom. It is an income floor that provides every person living below the poverty line a way to live without fear.

The Project posed the question, “Is there a more humane and efficient way to reduce poverty, a way that better respects the rights of those in poverty to make their own life choices, reduces stigma and growth in bureaucracy, yet produces improved outcomes in terms of work and life prospects?” So far, the answer is yes.

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David Tough

I’ll follow suit and establish my credentials as a member of the precariat. I’m almost 50, and I’ve never had a job that entitles me to a pension. I have a chronic illness and, though I regularly have two or three jobs, including co-owning a local business of some note, my treatments are subsidized by Trillium, a drug plan for low-income Ontarians.

I’m very sympathetic to the general idea of a basic income, and I was a supporter until recently. My opposition to it is practical, not philosophical. I don’t think it’s politically or fiscally realistic. In Ontario, for instance, a basic income of $10,000 per person would cost more than what the province currently spends on everything else combined. We know from the very modest changes Federal Finance Minister Bill Morneau has tried to introduce how hard people fight when their taxes increase. Whose taxes will double so I can quit one of my jobs?

Like you, I was touched by the stories of what people have done with their basic income pilot money. Was anyone actually surprised, though, that the lives of people on the pilot program have been improved by receiving the money? That’s the fundamental cynicism of the gesture: it’s based on the pretense that we need to experiment with giving people money to see if it helps them. Obviously it helps them.

Scale is the defining feature of basic income. The only meaningful scale on which to test basic income would be the exact scale on which we plan on implementing it. Spending a few million on giving some low-income people more money is a good idea because those people could use the money, but it tells us nothing beyond what common sense tells us.

Increasing OW and ODSP rates along the lines suggested by the Raise the Rates campaign would be almost free in comparison to basic income, and would be eminently achievable if artists and intellectuals lent their weight to that campaign, rather than forever chasing after the white whale.

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Elisha Rubacha

The Raise the Rates campaign recommends raising social assistance rates “to the modest levels being provided on the present Basic Income Pilot Project, which is providing income at about 75% of the Low Income Measure, up to $16,989 for a single person with an additional $6,000 for disabled people,” so I fail to see how it would be free compared to a basic income. Additionally, raising the rates would not change the fact that OW and ODSP are overly invasive programs.

Basic income is more than just a dream. It already exists in Canada in different forms. You know it as Old Age Security and the Canada Child Benefit. These existing refundable tax credits are a proven model for delivering an income, but they leave low-income workers without children in the cold. The tax system infrastructure is already there. Without the need for constant monitoring, a federal basic income would be a far leaner system than social assistance.

According to the Designing a Basic Income Guarantee for Canada study (PDF), “the system is virtually self-financing, or revenue-neutral, in the sense that the cost of the federal basic income guarantee roughly equals the value of federal refundable tax credits and non-refundable tax credits.” They go on to say that no tax rate increases would be required. In fact, replacing the welfare system with negative income tax-style basic income would actually result in a savings, not just in overhead, but in annual healthcare costs.

The cost of poverty on the Ontario healthcare system has been estimated (PDF) at $7.6 billion. According to the World Health Organization, poverty is the single greatest determinant of health. Income inequality is associated with the deaths of 40,000 Canadians a year. By shifting $350 million from healthcare to social transfers, we’d see improved health outcomes without any additional spending.

The money is there. This comes down to whether we believe all people deserve financial security. With enough political will, basic income could be a game-changer for individuals, and the economy.

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David Tough

One of the unique features of basic income advocacy is that basic income can take many forms. Advocates advocate different things that are all called basic income, and skeptics have to keep track of exactly which version of basic income we’re discussing currently.

People currently on OW and ODSP are a tiny minority, and their very low payments are easily supported as a miniscule portion of the provincial budget. Raising the rates of OW and ODSP to the level of the Pilot Project would be… well, free was an exaggeration, but it would still be a very easy change to absorb fiscally.

If a basic income is going to allow people like you and me, who struggle but mostly succeed at getting an income from paid work, to drop out of the work force or scale back our involvement in it, it will need to cover a much wider population, and will therefore be a lot more expensive. Like a lot lot more.

If basic income instantly put out of work all the social workers whose jobs—much to their chagrin in the vast majority of cases—involve invasive monitoring of people of social assistance, they will also presumably be without a salary. And nurses, assuming we as a society are spending $7.6 billion less on healthcare, are going to see massive layoffs.

Is basic income a universal program or a targeted program? You’re comparing it to programs whose scale and costs are inherently limited. (Not everyone is a senior or has kids, as you note.) Assuming it’s not universal—I did assume it was, but you’re telling me it’s not going to be expensive, so I’m assuming now it’s not—who doesn’t get a basic income? They have to collectively have enough taxable income to support everyone who is, and also be very, very enthusiastic taxpayers.

“The money is there” to raise the OW and ODSP rates—no question. And putting resources that are now spent on policing people into more positive and helpful non-mandatory programming would indeed be revenue neutral. If that’s basic income, I agree that it’s feasible and overdue. If it’s going to allow everyone we know to quit our day jobs, though, I’m still confused.

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Elisha Rubacha

You’re right that there are several forms of basic income, and that it can lead to confusion. However, the Pilot Project and the recommendations for a federal basic income both focus on the negative income tax variety. The universal demogrant style of basic income, which goes to everyone rather than just those who are in need, is definitely far more expensive, and for that reason is not really on the table for most Canadian advocates of whom I’m aware.

The precariat would be supported, but all studies point to basic income recipients staying in the workforce. The only dip in workforce participation, according to the analysis of the Dauphin Mincome, is in two demographics: mothers choosing to stay at home with their children, and young people choosing to stay in school. Basic income does not make people rich. Folks continue to work, but without the worries associated with the gig economy and poverty wages. The security net basic income offers gives people choices. You can leave a toxic or exploitative work environment without the risk, while still having the incentive to find another job. Some even become entrepreneurs. It is certainly a wider population that would require coverage, but it’s a population that isn’t starting at zero.

Social workers and healthcare professionals would face some job losses, but they would have a basic income to protect them from hitting rock bottom. It would certainly be a blow to their standard of living, but there will always be concessions when revolutionizing a system. And it needs to be changed. The benefit of creating a new system, rather than adapting OW and ODSP, would be the elimination of stigma. Welfare, even if it were changed to be more humane, would always carry the same negative connotations.

This is our best chance at eliminating poverty. And that should matter to everyone. The money that would be distributed through a negative income tax does not disappear. It circulates. That should make any taxpayer enthusiastic.

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David Tough

We’ve been debating and, while you’re clearly an active supporter of basic income and I’m skeptical of it, being right honestly doesn’t appeal to me much. At the outside, if people find the skeptic argument convincing, it might mean that they would shift their energies to other campaigns like Raise the Rates, or try to organize their workplaces to fight for the kind of employment they want or need. But I have no equivalent faith that these approaches would be successful against the scourges of austerity and precarity. I’m simply less skeptical of them.

A reverse income tax works very well as a replacement for social assistance, where people have consistently low incomes year after year. But it’s a very blunt instrument for dealing with precarity, where incomes can fluctuate wildly and unpredictably from year to year. So you report your 2014 income, when you had a good gig or two, and get almost nothing in 2015, when every hustle falls through; then you report your meagre 2015 income and get a lifeline thrown to you in 2016, when you don’t need it anymore. Again, though, I don’t have a better idea.

I’m tempted to think that this is the crux of the issue. Basic income, at least as it affects the precariat, is fundamentally about using the welfare state to compensate for problems in the job market, when we really ought to fix the problems in the job market—to plug the leak, as it were, rather than giving more and more people taller and taller rubber boots. It would be better to put public money into arts organizations, for instance, and make it contingent on hiring people, than to have the public treasury pay people who work for free for arts organizations. But that is probably a different conversation entirely.

 

Come to a discussion of Lindsay’s Basic Income Pilot Project on May 3 at Peterborough Public Health from 7pm to 8:30pm (more info).

 

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Elisha Rubacha and David Tough

Elisha Rubacha and David Tough

Elisha May Rubacha is the editor and designer of bird, buried press. David Tough is a musician, scholar, and journalist from Peterborough, Ontario. He is Contributing Editor and co-Publisher of Electric City Magazine.