The simple idea behind a “basic income” is that no citizen should be allowed to fall below a certain standard of living which allows for a dignified existence. This is often proposed as a monthly government paycheque given to all individuals whose income falls below that standard, regardless of whether or not they work. Proponents of a basic income argue that such a policy would reduce inequality (and its well-studied harmful effects), boost the economy, and eradicate poverty. It is an idea that has spanned two centuries of political debate, starting with seminal advocate Thomas Paine in the 18th century, and currently part of the Canadian Liberal Party’s political platform. The concept has enjoyed support from the far left, such as civil rights leader Dr. Martin Luther King Jr., all the way to the far right, such as the staunch conservative economist Milton Friedman.
Why then, is such a policy not already in place? This article addresses the two main counter-arguments which supposedly discredit the idea of a basic income and have been relied upon in political and social discourse for far too long.
If you give people money, they won’t go to work.
This statement ignores the fact that a basic income provides, as the name suggests, a basic standard of living, i.e. not a luxurious one. Moreover, there is virtually no empirical evidence to support it. Dozens of large-scale basic income experiments have been conducted world-wide, five notably in North America, with one of the largest occurring in Dauphin, Manitoba in the 1970s. None of these experiments found that people stopped working when given money, and specifically in the Canadian study, it was found that an economically insignificant reduction in working hours among teenagers and new mothers was associated with an increase in high school graduation rates and healthier babies.
Moreover, poorer people tend to spend more money within their local economies, stimulating growth—a stark contrast to richer people who have been observed to save their money or invest it in foreign equities. This is in addition to the greater likelihood that more people will take the risk of starting a small business or pursue other creative endeavours which contribute to the economy and society in a multitude of ways.
Well, even if it is a good idea, it’s not affordable.
Beyond the fact that eradicating poverty would save tens of billions of dollars in healthcare, judicial, and social welfare costs, there is an abundance of research suggesting that a basic income is economically feasible. University of Manitoba Economics professor Wayne Simpson, senior economist for the Canadian Centre for Policy Alternatives David Macdonald, and Queen’s University economist Robin Broadway are just a few supporters of basic income being implemented at the federal level in Canada. Dr. Boadway’s plan, arguably the most generous and cost effective, suggests a supplemental income of approximately $1,200/month to any individual whose own annual earnings fall below that number, with additional payments for seniors and those with disabilities. This plan is virtually revenue-neutral, that is, it doesn’t cost any more than the current welfare system, with some scenarios actually costing less. Accordingly, discourse is now shifting away from the economic feasibility of a basic income and towards the specific kind of basic income that would be best for the Canadian people.
In a recent Angus Reid poll, a majority of Canadians supported the idea of some form of basic income (at least twice as many as those who oppose it), and indeed the government of Ontario will be releasing details of another large-scale basic income pilot project early next year. It seems as though basic income is an idea whose time has come, and if implemented, may very well be one of the most significant policy initiatives undertaken in Canada in our time, potentially setting a new social and economic standard for the rest of the world.