We have a lot better ways to relieve poverty than the outdated ‘guaranteed minimum income’
February 7, 2017. Peter Hicks
The accumulation of past failures in fighting poverty has breathed new life into proposals to introduce a basic income, also known as a Guaranteed Annual Income. Ontario, for example, has a pilot project underway championed by former senator Hugh Segal. But, is the basic income approach, where governments provide direct financial support to low-income people, the best approach?
Basic income programs are examples of the top-down, one-size-fits-all siloed programs that were developed in the pre-computer age and that are part of the problem of an unresponsive, fragmented social security system. Such programming does not take into account the diversity of circumstances and needs that exist among people with low incomes.
Research over the past decade suggests the need for varied policy responses. In particular, we know that most periods of low-income are relatively short, requiring supports that cannot be well met by tax-based basic income designs.
Guaranteed annual income is a top-down program from the pre-computer age
As well, for the minority of low-income people who are persistently poor, the best solutions involve integrated mixes of income and a variety of services — not a stand-alone standardized income benefit, which is not based on individual circumstances and needs.
In terms of feasibility, most comprehensive basic income programs would be extraordinarily costly, requiring either highly unlikely large increases in taxation or cuts to existing benefits for low-income groups such as seniors or children.
Nevertheless, most current discussions still assume that some form of basic income support is the ideal solution. The evidence, however, points in a different direction. Even if we were able to find a practical and affordable program design — which is, to put it mildly, elusive — a comprehensive basic income should still not be seen as the ideal towards which policy-makers should strive.
Rather, it is an out-dated response that attempts to compensate for the imperfections in other parts of our social programming. The goal should be to strengthen these other parts of the system and, in consequence, work towards a world where programs that provide direct, standardized financial support play a smaller, not a larger, role than at present.
The effective, and affordable, way ahead lies in the use of newly available technology and data sources to steadily improve three kinds of programming: integrated services tailored to individual needs; supporting people who can save for occasional periods of low-income; and income support programming based on extending existing targeted measures such as supports directed to children, seniors and the working poor.
We now know how to implement programs that will gradually evolve and improve based on evidence of what is working best — systematically learning from the experience of countless small initiatives that take place in communities across the country. The basic techniques have been used for many years in the evaluations of employment programs. However, upfront investments and political leadership will be needed to put such an evidence-driven approach in place on a widespread basis — as is the case if any new approach to fighting poverty is to succeed.
Current policy discussions have not come to grips with the decades-old reasons holding back any large expansion in basic income pilot projects, nor have they always recognized the complex and differing experiences among the poor. Progress will be greatly supported if the energy and resources that are now devoted to basic income proposals were realigned to support this kind of broader, bottom-up, evidence-driven reform.
We should be upset about the lack of progress in alleviating poverty. The enthusiasm of active policy discussions must not be lost. It would, however, be better if it were redirected toward a new generation of social programs that take the complexity of fighting poverty into account.
Peter Hicks is a policy adviser and a former assistant deputy minister with Social Development Canada. His C.D. Howe Institute Report, “Towards a New Balance In Social Policy: The Future Role of Guaranteed Annual Income within the Safety Net,” can be found at www.cdhowe.org.