Social Policy in Ontario

How we implement basic income will define our future

Posted on March 24, 2017 in Social Security Debates

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TheStar.com – Business – Universal basic income may be our best hope of eradicating poverty
March 24, 2017.   By DAVID OLIVE, Business Columnist

“The State owes all its citizens a secure subsistence, food, suitable clothes and a way of life that does not damage their health.” —Montesquieu, Enlightenment philosopher whose theory on separation of powers underpins the constitutions of many countries, including the U.S., in a 1748 essay.

The proposition that no one should be deprived of the basics of life for simple lack of money is about to be made real this year in Ontario, with pilot projects that make cash payments to Canadians in economic distress.

The Canadian projects join a record number of experiments with universal basic income (UBI) worldwide. These initiatives are not radical. The principles of UBI date from Thomas More’s Utopia (1516), if not earlier. Today, some 83 per cent of developing economies use unconditional cash transfer programs, according to the World Bank, though the small payouts are inadequate.

In Western economies, unconditional payout schemes include Canada’s Old Age Security (OAS) and the Guaranteed Income Supplement (GIS), and the U.S.’s Social Security.

But pre-retirement assistance is an increasingly dysfunctional patchwork of schemes. Some are directed at certain groups while ignoring others. Many are tied to employment. And many others provide relief through tax credits.

Tax credits are useless to those not earning a taxable income — adults who’ve returned to college, for instance, or people caring for elderly parents. And tax credits don’t help the estimated 70 per cent of people below the poverty line who work — often at more than one job — but whose meagre earnings fall short of the lowest tax bracket.

The current UBI impetus is a reaction to shortcomings in traditional social supports; to mounting job loss due to factory and office automation; and to the social ills — poor health, substandard education, crime — that are abetted by the widening gap between rich and poor.

UBI experiments are taking place, or planned, in advanced economies such as Canada, the U.S. Scotland, the Netherlands and Finland; and in developing-world jurisdictions including India, Rwanda, Kenya and Uganda. There are now clearing houses for updates on UBI developments, including the Basic Income Canada Network and the Belgium-based Basic Income Earth Network.

Public support in Ontario for the province’s three-year UBI project to be launched this spring in three Ontario communities is remarkably strong. The 35,000 Ontarians canvassed by Queen’s Park for their input were near-unanimous in supporting the UBI projects. And they insisted that a UBI augment, rather than replace, existing welfare, medical and other social supports.

UBI experiments in Ontario and elsewhere are the most forceful attack yet on income inequality, whose end point, if it is not addressed, is potentially violent social unrest. By contrast, if UBI works, it “could be the beginning of a seminal change in how modern societies inclusively and economically reduce the negative and broad impact of poverty,” former senator Hugh Segal, charged by Queen’s Park with devising a UBI scheme, told the Star last week.

A UBI would be pointless in the absence of existing supports. In the Ontario pilot projects, the payout for a single person will be $1,689 per month. That’s still short of living costs. Average Toronto rent for a two-bedroom apartment ($1,450 per month) and a Metropass ($134 per month) leaves just $116 per month for food, clothing, prescriptions and other costs.

The model devised by Segal, a longtime advocate of UBI, is a sound and cautious one. Its payout is not that much higher than current welfare support under Ontario Works, whose payouts equal about 45 per cent of the Low Income Measure.

But the Segal payout, combined with existing welfare, is enough to lift recipients above the poverty line, ensuring substantial income for workers in precarious jobs and for those in the unpaid workforce. The latter includes tens of thousands of volunteers, whose social contribution is of immense value but doesn’t show up in GDP stats.

A well-designed UBI equates to freedom. Freedom from exploitative employers. Freedom to launch a small business or develop an invention despite a lack of employment income. Liberation from the “poverty trap,” where taking a paying job means surrendering welfare and other benefits. And freedom to escape an abusive partner relied upon for room and board.

There are several UBI models. Some have disappointed, notably in offering no evidence that improved living conditions during the experiment are sustainable. And Scotland’s proposed UBI is an anti-poverty advocate’s nightmare, as it unwisely scraps existing welfare benefits, replacing them with a single UBI payment for all citizens.

But one of the consistencies among UBI projects is that they have encouraged both work and high-risk entrepreneurialism. An example is the ambitious UNICEF-funded UBI initiative in Madhya Pradesh, India.

Skeptics have said a UBI amounts to paying people not to work. Actually, UBI schemes function to make work more attractive, by raising incomes and removing stress induced by job insecurity.

But what of paying people who don’t work?

Fact is, job scarcity in traditional vocations is acute, worsening and permanent. In 2013, two Oxford professors forecast that about 45 per cent of U.S. jobs could be eliminated by automation within the next 20 years.

And a more recent report by researchers at Indiana’s Ball State University found that 88 per cent of U.S. job loss has been caused by automation, not globalization.

Bill Gates has called for a tax on every robot that steals jobs, with proceeds going to job retraining. And Tesla founder Elon Musk, convinced that eventually most jobs will be automated, has called UBI inevitable and imperative.

If conventional paid work is disappearing, how are we to prevent the global economy from grinding to a halt as scores of millions of workers lose their income? Effective alternatives to UBI schemes are welcome, but so far none are forthcoming.

Getting UBI right may be our best hope of eradicating poverty. Only 2 per cent of traditional foreign aid goes directly to poor people; the balance is spent on infrastructure. And the World Bank reports that “skills training and microfinance have shown little impact on poverty or stability” in developing economies.

Cash is king for most UBI advocates. Ban Ki-moon, the former UN secretary general, has argued that “cash-based programming should be the preferred and default method of support.” And the European Commission (EC) has suggested that designers of anti-poverty programs should “always ask the question, ‘Why not cash?’ ”

Current developing-world relief efforts consist largely of state-subsidized food, fuel and other staples. Cash, rather than the vouchers now in use, enables people to spend as they choose. They can, for instance, turn away from the limited goods available at often corrupt government dispensaries.

We’re coming back to UBI now because the “social contract” between employers and workers lies in ruins. The decline of unions has consigned powerless workers to exploitative workplaces. And the tax system has been perverted to liberate the wealthiest 1 per cent from paying their fair share.

Income inequality is a widespread crisis. How we handle it will be a defining factor in shaping the 21st century.

https://www.thestar.com/business/2017/03/24/how-we-implement-basic-income-will-define-our-future-olive.html

Tags: disabilities, economy, featured, ideology, participation, poverty, standard of living, tax

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