The concept of a universal grant to furnish a basic livelihood, conditional only on citizenship, is not a new one. Thomas Paine advocated such a concept, termed a “citizen’s dividend”, in his 1797 essay Agrarian Justice. In Paine’s plan, a set amount, adequate to furnish a livable but in no way extravagant existence, would be payable to all men each year after age of majority was obtained, along with additional payments for elderly or infirm citizens. Paine linked the legitimacy of such a payment, financed primarily by an estate tax on land, to the notion of a common stake shared by citizens in the natural resources and land value of their nation. If some were allowed to own and extract value from these resources, Paine reasoned, it followed that they owed a basic amount of that to their fellow citizens. In principle, it’s not so different from the system we have in Canada today, where governments collect resource rents for redistribution through social programs.
Some historians have traced even earlier antecedents to Paine’s notion. Classical Athenian general and statesman Aristides once proposed a universal common payment to be given yearly from the proceeds of a newly-discovered seam of silver in the mines at Laurium. In a twist that would foreshadow future guns-or-butter policy dilemmas, the proceeds were instead spent on building warships for the Athenian navy.
In the 20th century, advocates for basic income proposals ranged from Martin Luther King to Milton Friedman, though they often held wildly differing notions about the purpose and design of such a program. Left-wing advocates, such as King and Francis Fox Piven, saw in basic income a chance to end poverty and to lessen employee dependence on employers, while libertarians like Friedman viewed basic income as an opportunity to simplify and shrink the bureaucracy around social assistance.
Republican U.S. President Richard Nixon’s administration put forward a version of basic income, named the Family Assistance Plan, in response to research showing perverse incentives in the existing welfare system, and tried to sell it to social conservatives as a way to encourage two-parent families. After this plan was blocked by Congress, owing primarily to concerns over cost, the U.S. government undertook several experiments with a basic income-esque “negative income tax” in several cities in the late 1970s. The Canadian government piloted a “Mincome” program in Dauphin, Manitoba around the same time. However, these and other experiments never gained much political traction, and the efforts mostly petered out in the 1980s.
An idea whose time has come?
Still, the basic income idea has endured in academic and policy circles and it has lately seen a resurgence of interest within governments. Finland intends to pilot a basic income program in several test communities, with the notion of rolling it out nation-wide. Several cities in Europe are also experimenting with smaller-scale programs, and private sector initiatives providing basic incomes to target communities have cropped up in both Kenya and the United States. In Canada, municipal and provincial government officials from Alberta and Quebec have expressed interest in transitioning social assistance systems toward basic income. Most prominently, the government of Ontario has announced that it will pilot a basic income project in an Ontario city in 2017, with former Conservative Senator and longtime basic income advocate Hugh Segal chairing a panel charged with its design.
Despite support from such stalwarts, many conservatives remain skeptical of these initiatives, seeing them as little more than newly-minted big government giveaways. However, there are a number of ways a basic income program of some form would speak to conservative principles and address some of their long-standing complaints against the welfare status quo.
At root, a basic income system reflects the inherently conservative notion that the average person knows better what to do with their money than the government does. Those who have not interacted first-hand with existing systems of social assistance, either as a client or a worker, often assume that they are simply “free money”, but the reality is much different. Recipients typically have to jump through numerous bureaucratic hoops, and the system is always changing to reflect the latest “cure” for poverty. It is true that participation in these programs has tended to ebb and flow according to levels of benefits and restrictions along with the general state of the economy, but at almost all times perverse incentives have been a feature of them. To choose one example, persons receiving Ontario Works payments can receive money for child care expenses, but lose it if they move off of the system by obtaining higher-paying employment, which incents many to stay on the dole. This is a common problem among welfare systems across Canada.
Conservatives rightly denigrate the micro-managing of people’s lives by overweening governments when it comes to regulation and industrial policy favouritism, yet remain curiously silent on the issue when it comes to welfare policy. Why not apply the principle of “more freedom through less government” to welfare? A significant amount of welfare spending currently goes to providing in-kind services such as child care, housing and education, rather than direct monetary assistance. Some of these services are helpful, no doubt, but it still seems reasonable to ask if the money spent on at least some of them would be more beneficial in the pockets of the people they ostensibly serve.
Basic income for Burkeans
From a more Burkean perspective, a basic income could be a tool for strengthening families and community associations, the “little platoons” of a healthy society. The well-documented decline of civic participation at the community level, and thereby the delegation of more and more authority to centralized government, is a trend which rightly worries conservatives. For instance, in the debate over child care, the left advocates for state-financed institutional care, while the right insists that most parents prefer informal, usually familial, care arrangements. A basic income, and the consumer preference power it would enable, would allow more money to go to what individuals actually want, as opposed to what governments think is good for them.
Finally, a basic income could be a powerful tool for unleashing entrepreneurship and innovation. The lack of an income safety net incents individuals to stay in low-productivity jobs, rather than taking risks to start their own businesses or upgrade their skills. As anyone who has ever moved from the position of employee to business owner knows, there is usually a sharp drop in income in the initial years after making the move. A basic income would provide a floor of social protection, thereby enabling greater risk taking, and the long-term productivity gains would likely outweigh the immediate program costs.
Much of the conservative, and broader public, concern around basic income is its potential effects on work incentives. But most of the research on prior basic income projects has shown only minor effects on labour force participation rates, and most of that is related to people spending more time at home with young children and undertaking additional education and training. It is true, of course, that a “basic” income set too high would likely prove a major employment disincentive. This may be part of the reason the Swiss rejected a basic income program in a recent referendum, since the proposed income threshold was well above the poverty line.
However, there would doubtless be some individuals who, content with a basic standard of living, choose not to work at all. Some might use it as a way to subsidize a life of crime. This risk of fostering dependence highlights the need to set minimum incomes as low as possible (most proposals set it at or slightly above the national poverty line).
There are also those genuinely difficult cases of individuals with disabilities, severe addiction problems and others who may be made more vulnerable to exploitation by being directly provided a minimum income payment. These risks would have to be addressed in designing a policy framework, but they represent a small minority of the population and should not be seen as a deal breaker.
How to make it affordable
The biggest and most obvious concern about minimum income programs is the cost. Multiplying the most recent Canadian Low-Income Cut-Off (LICO) “poverty line” for single individuals by the total population reveals a price tag of $679 billion. This is more than twice the approximately $319 billion a year Canada currently spends on “social expenditures” other than health and education, as measured by the OECD. But these numbers exaggerate the cost difference, because very few basic income proposals rely on a “cut everyone a cheque” approach, and the LICO poverty line is probably higher than the basic income benchmark in Canada needs to be.
There are other ways to bring the economic cost down from the stratosphere. Friedman, for instance, conceived of the basic income as an alternative to not only virtually all social services, but also as justification for eliminating minimum wage laws. There are a host of other government programs that could see their funding repurposed, including the vast amounts of corporate welfare spent in the name of economic development and job creation. A basic income program could also replace OAS payments, low-income tax benefits and Employment Insurance. As has been well-documented by the Canadian Taxpayer’s Federation amongst others, EI in particular creates large perverse incentives against labour mobility via its regionally-based design.
Another way to cut down costs would be to administer the grant as a benefit through the tax system, which would “top-up” persons falling below the basic income line to it. If this were done, it could build upon and eventually replace existing payments to low and moderate income individuals within the Canadian tax system, such as the Working Income Tax Benefit and the HST/GST tax credit.
Another concern might be a basic income attracting opportunistic international economic migrants, as has occurred with generous social welfare systems in Europe. However, setting aside geographic factors that make Canada a less likely target for such movements, most basic income proposals include a condition of citizenship. Given the often lengthy process involved in obtaining citizenship, it seems unlikely that a person eager to simply exploit the system would go through all that trouble. If anything, it is likely that the current health and social safety net is more attractive to economic migrants than a citizenship-restricted basic income would be.
There is also the risk that basic income would create a political constituency outside the workforce, voting ever-higher benefits for itself and eventually bankrupting the system. There are, however, several reasons to believe this is unlikely. First, this risk already exists with the current welfare system and has yet to emerge, with most benefit increases being only inflation-paced. Second, as previously mentioned, in the studies on experimental basic income programs, the drop-off from the workforce was modest and limited to particular groups. This would seem to indicate that most people are not satisfied with a basic income and will seek to increase it through employment. Third, a large body of psychological research has demonstrated that the sense of happiness and fulfillment that people attribute to their jobs comes less from the money earned than from a feeling of earned success and social benefits related to work. These hard-wired human incentives to work would not diminish with a basic income.
The concerns enumerated above are not, individually or collectively, adequate reasons to defend the expensive, inefficient, and often counterproductive social welfare status quo. Progressives and conservatives may have different views on what a minimum income system should look like, but those disagreements should not obscure the fact that support for the concept spans the political spectrum. Just as the defining piece of the modern Canadian welfare state, public health care, was a product of collaboration between politicians on the left (Tommy Douglas), right (John Diefenbaker) and centre (Lester Pearson), basic income could be just such an invention for the 21st century.
