Premier Doug Ford’s decision to scrap Ontario’s basic income pilot project was made before any results could be gleaned from the program, making it impossible to determine whether it was a success. While the concept of a basic income guarantee is simple determining the economic benefits and costs is a bit more complicated. This is why running the pilot program was so important. It would either prove the naysayers right and end any future debate or it would prove the concept is sound and create a platform for the program to expand.
The idea of a basic income guarantee is supported by a wide range of thinkers who cite the multiple benefits that could be realized by such a program. This includes may corporate CEOs, 100 of whom wrote an open letter to Mr. Ford to try to encourage him to continue the program.
“If the Ford government truly believes that basic income will discourage work, then you should allow the pilot program to continue so you can have data on your side, if however it encourages work, then this idea is one that all parties can build off.”
We need the data. Moreover, there are very sound reasons why the basic income guarantee is becoming increasingly a necessity in our society. Tech innovators like Elon Musk (Tesla and SpaceX) believe the solution to taking care of human workers who are displaced by robots and software is creating a basic income guarantee for all. Musk and others are at least keeping the dialogue going that we need some solution to the looming human jobs crisis that automation threatens to bring about. How, exactly, Musk thinks we’ll get to that universal income status is unclear, but if we do get there, he believes it could open up a new chapter in human life.
“People will have time to do other things and more complex things, more interesting things,” said Musk. “[They will] certainly have more leisure time.”
In their appeal to Premier Ford the group of Canadian CEOs said in their letter:
“Automation, globalization, the conversion to more of a gig economy, precarious work, the monopolization of certain industries, like the way Amazon is on retail — all these things are putting downward pressure on wages of everyday Canadians. We all want to grow the economy, and the economy consists of people.”
Historian Yuval Noah Harari sees the same issues as Musk but is less enthusiastic about a basic income guarantee. For Harari, the basic income guarantee removes meaning from an individual’s life. Not feeling that your contribution is in some way valuable quickly spirals into depression, disappointment, and hostility. The chronic strain on your nervous system and body becomes debilitating. A basic income can never offer an antidote to the emotional and psychological ravages of feeling worthless.
However, work is not the only means of generating meaning. In fact if we need to consider the rationale in support of basic income guarantees proffered by its supporters. Floyd Marinescu, CEO of C4Media made this observation:
“Imagine if you … knew that you would never starve. You have this money coming in and there’s no shame around the money. Everyone gets it, There’s no shame in using that money to stop, take a breather, think of your life and think of what you want to do next. Imagine the confidence, the self-reliance, the ambition we could unlock, the entrepreneurship we could unleash if everyone could take a longterm perspective on their lives.”
On this Harari seemed to agree. He noted that work is essential for meaning only according to some ideologies and lifestyles. Eighteenth-century English country squires, present-day ultra-orthodox Jews, and children in all cultures and eras have found a lot of interest and meaning in life even without working. Moreover, work should not be defined simply as wage earning endeavours. Any people are egged in activities that create economic value and are not compensated for their efforts. This includes work done for charities on a volunteer basis. It also includes child-rearing and going to school. Again, having the data is essential to working out who is right in this debate.
Manitoba’s Mincome program launched as a pilot in 1974 in Winnipeg, Dauphin and a number of other small rural communities. provided 1,300 families with annual incomes ranging from $3,800 to $5,800 for five years. It was seen by many as a huge success. However the program was abruptly halted when Conservatives came to power provincially in 1977 and federally in 1979. No final report was ever published on this pilot.
30 years later Evelyn Forget, an economist in the Department of Community Health Sciences at the University of Manitoba, found data on the program in the provincial archives. Using the information she had discovered, Forget determined that the program had a positive impact on the recipients and generally did not creative a disincentive to work. The only notable exceptions on workforce participation were that new mothers stayed home longer to care for their children, and teenagers who would have had to quit school to help support their families stayed in school.
While many people who identify themselves as Conservatives are fundamentally opposed to any form of basic income guarantees these sentiments are not supported by economic theory or by any empirical evidence. Even libertarians and other critics of the welfare state believe that far from promoting government dependency, a basic income guarantee is the best way to check the growth of entitlement spending and to promote individual initiative, self-sufficiency and human thriving.
Those Conservatives who are opposed merely believe that providing a guarantee will encourage people to stay at home and drink beer. It is a sentiment shared by many people but has no foundation in reality. It is just a sound bite that appeals to the uninformed voter. Economists and social thinkers believe that we are entering into an age wherein we need to shed this narrow thinking. We need the data!
We do not know, because the data has not been fully matured the true economic benefits of a basic income guarantee can be. The Manitoba data suggests that some people stayed at home longer to take care of their children or to attend school. Clearly these are activities that ultimately translate into measurable economic benefits. Other benefits include:
- Reduced government bureaucracy (basic income guarantees can replace dozens of other social welfare programs);
- Reduced health care costs including measurable reductions in health care claims related to mental health issues, domestic abuse and work-related injuries;
- Money consistently being spent on better food, staying in school, and improving housing;
- Creating incentives for people to start small businesses or enter into self-employment;
- Reduced incidence of crime.
These are not “theoretical” outcomes. Rather these are the observable effects from some of the studies that are available including not just the short-lived Manitoba experiment but projects done in Alaska, Brazil, Finland, Kenya and India. Unfortunately there simply is not enough data yet.
Kwame McKenzie, CEO of the Toronto-based Wellesley Institute, an urban health think-tank, and a special adviser who worked with the former Liberal government on the Ontario pilot, said researchers and policy-makers all over the world were looking forward to the results from the biggest basic income project ever rolled out.
“There were people from high-income countries, literally all over the world, ringing, saying, ‘When can we get the results? How can we work with you?’ So everybody was interested in knowing how this would end up,” he said.
Opposition on ideological grounds is also not supported by economic theory. No less a personage then the economist Milton Friedman supported the notion of a guaranteed income. He believed, and the data we have indicates he was right, that with a guaranteed income it pays to work. You can always work to earn more. Welfare systems are designed in ways that punish people for working or engaging in certain activities (like attending school). Friedman also suggested that the basic income guarantee allows people receiving the benefit to spend the money according to their own need thus allowing the free market to work. Under welfare scheme often the recipient is told how much to spend on rent, on food and on other things.
Though identified as a “conservative” one of Friedman over-riding beliefs was in the equal moral worth of all humans, and in the ability of all humans to contribute economically. Thus as a counter to Harari’s misgivings about basic income guarantees we need to ensure that the guarantee is promoted as a foundation of our democracy and is administered in a just and equitable way. In other words that there is no shame in collecting it. It has to be promoted as an essential element to a Canadian Industrial Strategy for the future. It behooves every Canadian, not just Ontarians, to petition Mr. Ford to change the decision to end the program (payments are continuing until March 2019). We have a chance to provide global leadership in economic thinking in practice.