Social Policy in Ontario

Annie Lowrey is a contributing editor for The Atlantic and author of Give People Money: How a Universal Basic Income Would End Poverty, Revolutionize Work, and Remake the World.

Last year, Ontario started distributing cash to thousands of lower-income adults, no strings attached. The recipients did not need to meet any conditions, save for not earning much and having lived in one of five target areas, including Hamilton, Brantford and Thunder Bay, for more than a year. They were free to use the money the government was sending them however they saw fit, whether spending it on groceries and other necessities, saving it for retirement or a degree, or frittering it away. “Our goal is clear,” said Kathleen Wynne, Ontario’s then-premier, kicking off the effort. “We want to find out whether a basic income makes a positive difference in people’s lives.”

A basic income, also known as a universal basic income, frequently shorthanded to UBI, sometimes referred to as a guaranteed income or an income guarantee or a citizen’s income. It is a very old bit of policy arcana having something of a moment, with experiments ongoing or getting started not only in Canada but also in Finland, the United States, Kenya, the Netherlands, Germany and several other countries.

The Ontario pilot is a rigorous and carefully constructed test. Policymakers want to know how the money affects its recipients’ health, mental health, income, work effort and housing status, among other metrics. Yet its architects also see the project as ambitious and urgent — and its motivations as sweepingly moral, not just small-ball technocratic.

“If I get wheeled into the emergency ward of Toronto General Hospital with chest pains, you might triage me by symptoms, my blood pressure, my pulse,” said Hugh Segal, a former Canadian senator and the current principal of Massey College at the University of Toronto, who helped design Ontario’s effort. “But they’re not going to get into a detailed analysis of why I’m having a heart attack.” He said he saw poverty as a similar kind of emergency, and argued that the Canadian state’s response was sometimes more diagnostic than therapeutic, and more clinical than caring. “We look at pathologies, and develop programs that discuss and seek to amend the way that [people are] poor. But why do it? Stabilize the patient! Bring suffering to an end!”

Stabilizing the patient, bringing suffering to an end: those kinds of sentiment underpin the UBI pilot, and reflect some of the deepest questions modern societies face. The initiative is not just about the question of whether a UBI would be efficient or cost effective. It is about whether help should be contingent on circumstance. It is about whether such payments would change our relationship with work. And it is about what it mean for a society as wealthy as Canada’s or the United States’ to just give everyone money.

The UBI has a 500-year pedigree, showing up in the writings of Saint Thomas More and Thomas Paine and Thomas Malthus. More recently, it has come up as a potential way to heal racial injustices, as proposed by Dr. Martin Luther King Jr. and other leaders of the Civil Rights Movement, and to prevent against deprivation in the event that robots end up taking all of our jobs, as suggested by Elon Musk and Bill Gates.

For the past half-century or so, it has also been touted as a better way for governments to do anti-poverty or welfare policy. The Nobel laureate Milton Friedman suggested eliminating poverty through the American tax code in his 1962 book Capitalism and Freedom. And the Nobel laureate Friedrich Hayek suggested that the government provide a “certain minimum income for everyone,” as a “floor below which nobody need fall even when he is unable to provide for himself” in the door-stopper Law, Legislation, and Liberty, Vol. 3: The Political Order of a Free People. The point is not to redistribute income, he said, but to provide a common, minimum standard of living.

Such ideas worked their way into the political mainstream in the United States in the 1960s and 1970s — the time of the Great Society and the War on Poverty. In his 1971 State of the Union, Richard Nixon announced his ambition to end poverty among families, calling out the “demeaning, soul-stifling affronts to human dignity that so blight the lives of welfare children today.” Similar sentiments came to the policy fore in Canada as well, with politicians such as former Progressive Conservative leader Robert Stanfield exploring ways to provide a guaranteed income and Pierre Trudeau seeking to foster a “just society” through welfare programs, among other efforts.

Thought became action, with the United States and Canada both trialing anti-poverty income guarantees during these years. In the States, pilots in seven states provided families with a “negative income tax” (or NIT) to add to their earnings, in the first randomized control trials ever conducted in the country. Studies of those pilots found that granting families money with no strings attached had a number of policy effects. The NIT seems to have reduced work effort by a modest amount. It seems to have kept young people in school for longer, extended job searches among the unemployed, and allowed mothers more time to spend with their children — all positive effects, if not one that would boost tax revenue or GDP in the short term. Researchers also found that the families’ consumption patterns did not change, meaning there was no evidence that they “squandered” the cash, as many opponents of the idea had feared. The programs seemed to allow participants to buy homes sooner and to increase their educational attainment, too.

Decrease in working hours and earnings in four ‘negative income tax’ experiments in the U.S. between 1968 and 1982

Inspired by the United States, Canada ran a grand experiment relevant to today’s UBI debate as well. In the mid-1970s, the government provided an income guarantee to all of the residents of a small Manitoba town called Dauphin, a tight-knit community of farmers. The NIT pilot (called the Manitoba Basic Annual Income Experiment, or “Mincome”) ensured that no family’s income fell below a certain level, thus eradicating poverty there. “It was to bring your income up to where it should be,” Amy Richardson, who ran a beauty parlor in the town, later explained. “It was enough to add some cream to the coffee. Everybody was the same so there was no shame.”

The experiment had a similar labor-market effect to the ones performed in the United States, showing a modest reduction in work. Given that the whole town was eligible for the money, its participants also noted how little stigma came with the initiative. There’s evidence that the community more easily justified taking time off to spend with a family member or on education. It also had a marked effect on the health and the vitality of the town, the economist Evelyn Forget has found, reducing hospitalizations and cutting down diagnoses of mental-health conditions.

These studies — as well as many others — counter many of the most common objections to a UBI. Such policies do not turn the safety net into a hammock, for one. People still work, particularly if the payments are not too big. Indeed, one benefit is that such payments do not penalize people for working and earning more, as many other welfare programs do. “I think Mincome would replace many other welfare agencies and probably be more equitable,” one participant in the pilot in the 1970s in argued. “Many people on minimum wage would get the assistance they needed without quitting their employment to get welfare assistance.” The pilots also provide evidence for some of the potential salutary effects of such a policy, in terms of making people healthier and less stressed, providing recipients with more control over and choices in their lives, and eliminating poverty.

In its new pilot, Ontario is providing single recipients up to $16,989 a year and families up to $24,027, minus 50 percent for any earnings. That means that the stipends are enough to lift families close to Canada’s poverty line, but not above it if they have no other income. Individuals with disabilities have an additional stipend, and earnings from other social-welfare programs, like the Canada Pension Plan and Employment Insurance, cut down the basic income dollar-for-dollar.

The initiative has plenty to show us in terms of the efficacy of a UBI to end poverty, the effect it might have on homeownership and educational attainment, and whether it might cut health expenses and stress. There are broader, more societal implications too.

Low income in Canada at a glance

Might Ontario show us that unconditional cash payments are a better way to end poverty — not just as a technical matter, but as a moral one as well?

It is a pressing question on both sides of the border. Nearly five million Canadians live in poverty, including 24 percent of indigenous people and two in five children in single-parent families. The situation is more dire in the United States, where the overall poverty rate is a few percentage points higher, as is the poverty rate for children — and where the safety net is decidedly thinner.

Given those rates, both Washington and Ottawa have sought ways to address the persistence of deprivation in spite of the billions and billions of dollars spent to end it. The Republican government in the United States is seeking to make the safety net more contingent and tied to work, an effort that stands to intensify deep poverty in the United States and to push millions of Americans off of income-support and health programs. The Trudeau government in Canada has promisedto come up with a novel (and, one prays, more effective) Poverty Reduction Strategy, one that is likely to make programs easier to use and easier to access, as well as to provide more dollars to low-income families.

As the Ontario pilot’s supporters explain, a UBI would mean seeing impoverished people’s primary issue as not having enough money, and all other concerns and contingencies and circumstances as secondary. “They say that poverty is complex,” Segal told me. “I say: Well, it’s not. The actual reality is [that these families] don’t have enough money to pay for clothes, heat, an apartment, and transportation. There’s this notion they’re all sitting at home with bon-bons watching the soaps — 70 percent of Canadians beneath the poverty line have jobs. They just don’t earn enough to meet cost of living.”

That underpins the argument for making support more automatic and less contingent, as with a UBI. “In our social-assistance system, there is not enough focus on enabling and there’s too much focus on holding people to account for the money that they get,” Wynne told Fast Company earlier this year. “There are all sorts of rules and regulations that people have to go over to get an amount of money.” She continued: “I believe we need to inject more respect into the system. We need to believe that people want to work and be part of society in a respectable way. They don’t want to be looked down on and seen as not useful parts of society.”

Such a sentiment sounds straightforward and compelling, yet is radical in, and contrary to, the context of modern welfare. Today’s systems have their roots in Tudor England. In the latter half of the sixteenth century, that country faced any number of economic calamities, chief among them famine caused by poor harvests, unemployment caused by the conversion of feudal public lands to private farms, and deprivation rooted in war. Thousands were indigent or starving, and young men and women were accumulating in town centers looking for work. Given the risk of social unrest, Parliament and the Crown decided to make antipoverty efforts a function of the state, not just the church. A series of “Poor Laws” empowered parishes to raise taxes and provide aid, but only to those deemed worthy. England, and later its colonies, set out to separate the deserving poor from the undeserving poor — and to provide help only to the former.

Both the United States and Canada remain reliant on means-tested benefits, in many cases putting an emphasis on work and sanctioning those who do not comply. Generous and no-strings-attached benefits are only for the deserving, such as the elderly, individuals with health conditions and disabilities, and children. To adopt a basic income would be to end such stigma of the poor. It would further put the government — and thus society — in the role of providing its citizens’ basic needs, regardless of circumstance. A UBI would see the government, in essence, lop off the bottom of the psychologist Abraham Maslow’s “hierarchy of needs,” where air, food, water, and shelter reside, with self-actualization up at the other end.

Then, there is the question of work. As the American and Canadian experiments from the 1970s show, it is unlikely that many people would drop out of the labor force entirely when they received a basic income. But they might work less. They might stay in school longer. They might spend more time with sick family members. They might pursue less remunerative jobs. They might also refuse to do jobs that they deemed too unpleasant, or whose wages were too cheap. Workers, in other words, would have more choice and more power — and our sense of what “work” even is might change.

Consider the Mincome participants’ explanations for why they stopped working when they received the payments. One participant told researchers: “From this stage on, I believe I can’t work much longer if any.” Another responded that she wanted to spend time with her children, another said she wanted to finish her university education. “We had no other choice as my husband is disabled and with my health and age, I am not able to work full time,” an older participant said, explaining why she had left the labor force. “If it wasn’t for Mincome, I don’t know how we would survive as there would be no income whatsoever.” In another circumstance, today’s circumstance, such people might have no choice but to work. Mincome provided them another option, and a good one.

Rather than making the safety net contingent on work, a UBI might change our social conception of work, then, changing our sense of what is truly valuable. A UBI might foreground the social role of care-taking, by providing people with a kind of socially sponsored “wage” for assisting a parent or nurturing a baby. Such payments might thus be particularly powerful for women, who provide the lion’s share of uncompensated care work in both Canada and the United States. “It’s society that’s getting a free ride on women’s unrewarded contributions to the perpetuation of the human race,” Judith Shulevitz wrote in an opinion piece about UBI for the New York Times. “I say it’s time for something like reparations.” A paycheck is hardly the only means of societal recognition, and many families split up paid and unpaid work with an appreciation for the inherent value of both. But a UBI is a powerful rejection of the notion that people who toil without pay do not contribute.

It might act as a kind of buoy for working class families facing wage stagnation. With a basic income, workers could refuse to take a job with low pay. With a basic income, workers could demand better benefits. With a basic income, companies would have to compete to win workers over. “It’s like making a permanent strike fund for people,” Andy Stern, the former head of the SEIU, a major American labor union, told me. “It makes a shift in the power dynamics. Imagine if you’re a young person calling in to see if you can get a shift at H&M or Nike for $8 an hour. Now, imagine if you did not need to do that.”

Ultimately, a UBI might also change our sense of what work is worth doing at all. Scott Santens is perhaps the world’s foremost basic-income advocate, the moderator of the basic-income community on Reddit, a tireless cheerleader online, and a “writer focused on the potential for human civilization to get its act together in the 21st century,” as he puts it. He is also the recipient of a kind of basic income himself. Santens uses the online crowdsourcing platform Patreon to fund his basic income of about $1,500 a month. This is not enough to live on lavishly in the United States, he is quick to say, but it is enough to give him control over his work life. “When I didn’t have a basic income, I’d accept a writing assignment for $50 even if it took me an entire week to research and write, because $50 is better than $0,” he argues. “Now that I have a basic income, I know my work has value. I know my time has value. I know I have value.”

A UBI would give people the economic bandwidth to do what they wanted with their lives, he says. “We are not facing a future without work. We are facing a future without jobs,” he argues. “We’ve got it all backwards thinking that work enables money. Work is not possible without money. As long as we have a monetary system, money comes first. And so we need to make sure everyone starts every month with enough money to be enabled to perform intrinsically motivated work. We don’t start Monopoly with zero dollars. Why do we start our economy with zero dollars? Universal basic income then allows a shift towards an entirely new system.”

In this paradigm, a UBI would not just give workers choice, but might act as a bridge right out of the capitalist system of wage labor itself. Individuals would be liberated to do what they wanted, whether it was tackling hard work for low pay, starting a business, caring for a child, or doing something artistic. Of late, thinkers like the British journalist Paul Mason, the digital-economy expert Nick Srnicek, and the futurist Alex Williams have pushed for economies to build that bridge, using automation to eradicate as much human toil as possible and using a UBI, along with policies like universal health care, free access to the Internet, and state-provided housing, to support livelihoods.

“The most promising way forward lies in reclaiming modernity and attacking the neoliberal common sense that conditions everything from the most esoteric policy discussions to the most vivid emotional states,” Srnicek and Williams write in their engaging, radical book Inventing the Future: Postcapitalism and a World Without Work. “This counter-hegemonic project can only be achieved by imagining better worlds— and in moving beyond defensive struggles. We have outlined one possible project, in the form of a postwork politics that frees us to create our own lives and communities.”

It is worth pausing to note how radical that vision is. Economic growth, household income, and even inequality would become less important metrics than health, longevity, and thriving. GDP might even go down as more qualitative measures of human welfare go up. The world would not be defined by scarcity, but by abundance.

For all of those heady thoughts, there remain hard questions about the policy.

One is how much it would cost. The Ontario pilot itself has a price tag of roughly $50 million a year, and a UBI similar in scope might cost the Canadian government something like $40 billion. A similar NIT policy in the United States would add up to $200 billion to $400 billion, depending on its generosity. Of course, such proposals might be offset by slimming less-effective programs, reduced health spending, and so on. But the outlay would still be significant. There is also the question of whether the money might be better spent on more targeted efforts, such as bigger bequests for low-income areas or initiatives aimed at children. Whether the money might be more effective if spent on health, jobs, or other social programs is a question as well.

Still, there might be a deep upside in having something for everyone, and in making such a program truly universal. In this way, a UBI would not be a welfare program so much as a form of social insurance, a social dividend, or a citizen’s income. The effort would stress that poverty elimination and protecting against the vicissitudes of life are a social goal, not just an individual responsibility.

A basic income would be an acknowledgment that our market economy leaves people out and behind, creating poverty and punishing individuals who cannot or are not working for an employer. As King once argued, “We have come a long way in our understanding of human motivation and of the blind operation of our economic system. Now we realize that dislocations in the market operation of our economy and the prevalence of discrimination thrust people into idleness and bind them in constant or frequent unemployment against their will. The poor are less often dismissed from our conscience today by being branded as inferior and incompetent.” A UBI would undercut the basis of such judgments and be a powerful force for human dignity. It would acknowledge our interdependence as well as our independence.

A universal, unrestricted cash benefit— just giving people money— would promote the “true individual freedom” that comes from “economic security and independence,” as Franklin D. Roosevelt argued seventy years ago. It would give everyone the freedom to live their life, while also conveying a sense of communal investment in each and every person, through every stage of life, as well as in the public goods to help society more broadly thrive.

In Ontario, it is a pilot helping up to 4,000 people. But globally, it is a movement about what society should do, for whom, and why, together.

https://www.theglobeandmail.com/opinion/article-smart-money-why-the-world-should-embrace-universal-basic-income/