Canada has quite a good system of helping to reduce poverty in our senior citizens.  OAS is payable to most.  GIS is available for low income seniors, plus every province and territory has a variety of support programs.

But what about a guaranteed minimum income amount for all adults?

This fall Swiss voters will vote on a referendum that would guarantee every citizen a yearly income equivalent to approximately $35,000 CDN, whether they work or not – no strings attached.

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This idea is not new.  Every ten or fifteen years there is renewed interest in the concept.  A group of activists from Basic Income Canada Network is currently trying to drum up support for providing every Canadian with a minimum income of $20,000.

Advantages

The proponents of a guaranteed minimum income state that it is a superior way of stabilizing poor people’s income and reducing poverty.

  • It would keep administration costs to a minimum by eliminating all other social assistance programs, such as unemployment insurance, disability payments, welfare, and GIS, as well as Child Tax Benefits and GST/HST rebates.
  • “Frees up people to pursue what creates more meaning for them.” (Daniel Straub – The Liberation of Switzerland).  In other words, unleash the potential to pursue personal interests, and inspire creative thinking for innovations.
  • Give people some financial independence and control.
  • Increase the flow of money back into the economy – housing, food, and clothing.
  • Social justice problems (read crime) associated with poverty would be diminished.

Disadvantages

The biggest barrier is negative stereotypes about poor people – “Whatever happened to earning a living?

When my mother (who had worked at paid employment since she was a teenager) became eligible for OAS payments she was incensed that her neighbour (a life long stay-at-home housewife) also received the same amount.  “I’ve worked all my life and she just sat at home!

Related: The Third Rail – Confronting Our Pension Failures

In our culture we’re brought up to believe that in order to survive you have to work.  There are strong feelings that we shouldn’t give people money for nothing.  “They’d probably just spend it on beer and cigarettes.

Other objections:

  • Payments might discourage recipients from looking for a job – those lazy ne’er-do-wells.
  • It would require a massive amount of money.
  • Low-paying, low-status jobs would be expensive to fill.
  • Current workers may leave the workforce and rely solely on basic income “hand-outs.”
  • Lazy, greedy people would just abuse the system.
  • Who will work if we’re giving away money for free?

A social experiment

In a labour market experiment, for a four-year period (1974-1978), the poorest families in Dauphin, Manitoba were granted a guaranteed minimum income.

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The government thought it would become a universal program, but the idea eventually just died off.  It came to a quick halt when an economic recession hit Canada causing prices to increase 10% each year.

All that remains of that experiment are hundreds of boxes of unanalysed documents in a warehouse, collecting dust.

University Study

Professor Evelyn Forget of the University of Manitoba unearthed some of the government documents and performed her own analysis.  She found that the unemployed had more opportunities to find work better suited to them rather than taking the first job that came along.

Only two segments worked less – new mothers who wanted to stay home longer with their babies, and teenagers who, under less pressure to support their families spent more time in school, resulting in more graduates.

Related: CPP’s Child Rearing Dropout Provision

She also discovered an 8.5% decrease in hospital visits with fewer work related injuries, accidents, domestic abuse and mental health problems.

“In today’s terms, an 8.5% decrease in hospital visits across Canada would save the government $4 billion annually … the amount (they are) currently trying to save by slashing social programs and arts funding.”

Her conclusion was that “a guaranteed minimum income program is a superior way of delivering social assistance.

Final thoughts

In theory, the concept of a guaranteed minimum income sounds good.  In practice, I think about our government bureaucracy.

Can our federal and provincial governments come together and agree on the administration of such a complex plan when their usual response is the quick fix (raise the eligible age for OAS, cut certain benefits)?

Is it feasible?  What kinds of tax policies and adjustments would be required to support it?

How do you feel about a guaranteed minimum income?


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