‘Basic income’ is tempting – but it could backfire
Posted on February 13, 2016 in Social Security Debates
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TheStar.com – Opinion/Editorials – Depending on how it’s designed, a Guaranteed Annual Income plan could turn out to be an alluring trap that undermines efforts to achieve more social justice.
Feb 12 2016. Editorial
An old idea is having a new moment. The idea goes by various labels – guaranteed annual income, basic minimum income, negative income tax. But it comes down to much the same thing: give everybody a minimum yearly income, no strings attached.
It’s been a favourite intellectual plaything of economists and social theorists for decades. But some new developments are bringing it back into the limelight.
Over in Europe, Finland has announced it plans to experiment with the concept by paying all its people 800 euros (about $1,250) a month. Closer to home, Justin Trudeau’s minister in charge of social programs, Jean-Yves Duclos, says he thinks it’s worth a look. His counterpart in Quebec, François Blais, has also been asked to study the idea by Premier Philippe Couillard.
On the surface, a guaranteed annual income, or GAI, is indeed a seductive idea. It appeals to notions of economic justice: surely in a rich country like Canada we should make sure no one falls below a minimum standard of living – regardless of whether they work or not. Proponents say it would abolish poverty, reduce inequality, improve health and cut crime.
For others (those on the libertarian right) it appeals to ideas of efficiency. Rather than employ a small army of welfare workers, snoops and bureaucrats to enforce the rules on a host of social programs, they ask, why not just give people a monthly cheque and let them use it as they wish?
Sounds great, especially in an era of precarious work when our social safety net seems increasingly inadequate. But before we go too far down this road it’s worth considering some thorny issues that have always made GAI a tempting idea in theory – but a minefield in practice. Progressive-minded voters, in particular, need to keep in mind that depending on how it’s designed, a GAI plan could turn out to be an alluring trap that actually undermines efforts to achieve more social justice:
Cost: The cost of a GAI obviously depends on where the basic income floor is set. But every available study suggests that to guarantee a decent minimum such a plan would cost an awful lot – estimates vary wildly from about $17 billion a year to as much as $400 billion.
Proponents argue the net costs would be manageable, since other forms of social assistance would be abolished. So take away the costs of welfare, disability payments, Employment Insurance, Old Age Security, workers’ compensation, child benefit and so on. And subtract the cost of employing the many thousands of people who run those programs. Then further calculate savings that would be realized in health costs, prisons and mental health caused by poverty, they say.
Those savings, though, would depend on dismantling the social safety net constructed over past decades. How believable is it that that could be done without enormous resistance? Some poor people would be better off, but others would inevitably end up worse off. Are we prepared to accept that? And is it realistic to think the tens of thousands of people who are paid to oversee current social programs will just disappear from their jobs?
Fairness: Equal, unconditional payments for everyone might seem like the fairest possible system. But people aren’t the same; their needs vary enormously. For example, would disabled people with life-long issues get the same benefit as able-bodied people facing short-term unemployment?
What about those with accumulated or inherited resources? A fairly modest annual payment might be fine for them, but for someone with no savings it would just guarantee perpetual poverty.
And what about housing? It’s the biggest cost for most people, so those in areas with cheap housing (or those lucky enough to have no housing costs, such as young people living at home) would get a windfall. Many poorer people can’t just leave the big, expensive cities, so they would be left struggling with sky-high rents.
Of course, all that could be dealt with by assessing everyone’s needs and costs, and adjusting payments accordingly. But that would just drive the system back to means-testing, and undo most of the advantages that proponents claim for GAI.
Social planning: There’s a reason why some right-wing theorists love the idea of a basic minimum income – and it’s not that they’ve suddenly fallen in love with social justice. It’s no accident, either, that the Finnish experiment that has GAI proponents excited actually comes from a right-wing government pushing an austerity agenda.
For libertarian conservatives, a basic income would essentially be a way of junking the tangled web of social programs developed over the past 70 years or so. These programs may be inefficient or inadequate, but they are at least aimed at helping people with various needs – disability, mental illness, child care, unemployment and so on. A one-size-fits-all payment risks leaving many worse off.
That’s why some progressive-minded theorists are very skeptical about GAI. In a 2009 study for the Canadian Centre for Policy Alternatives, for example, Margot Young and James Mulvale warned it could simply “reinforce the individualism and market focus of neo-liberalism” and lead to results that are “regressive and less just.” Not a pretty picture – at least, not one that would make social justice advocates happy.
Of course, no one is proposing to enact such a program in Canada anytime soon. In many ways, it’s less of a plan than a vision – of a country in which no one is left behind. Thought of like that, it may well be expressed in many ways in a federal country like ours, rather than as one uniform scheme. It may be wiser to boost and expand the existing patchwork of programs, rather than replace them entirely.
There’s a pressing need for fresh thinking about the social safety net as the labour market becomes increasingly dominated by precarious employment, and benefits attached to stable, long-term jobs vanish. GAI – or some variation on that theme – could be an important part of the solution. But proponents have plenty of work to do to come up with a workable (and politically saleable) plan.
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Tags: budget, economy, ideology, jurisdiction, participation, standard of living, tax
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