In Canada, basic income has become a central issue in the debate on a post-pandemic recovery. Recent steps taken by the governing Liberal Party to endorse the policy has begged the question whether this might represent a serious step towards a permanent national basic income.
In their annual convention in mid-April, Liberal Party grassroots, MPs and delegates voted overwhelmingly in favour of making universal basic income a top policy priority for the party going forward. The policy earned a second place out of 26 policy resolutions to come out of the convention. Although the vote is not binding and does not guarantee that the party will go further with the policy resolution, and further, does not detail what such as Canadian basic income might look like, the move adds to growing momentum surrounding basic income in the national debate.
While the idea has garnered significant national attention previously in Canada, particularly surrounding the recent pilot project in the province of Ontario that was prematurely cancelled, the pandemic has accelerated that debate. At the onset of the country’s first national lock-down in March of last year, there was a significant push for the government to implement an emergency basic income by various advocacy groups such as Basic Income Canada Network, its provincial affiliates as well as by individual long-time basic income proponents. It also garnered significant media attention, with the debate often being centered on the ways in which the current income support system in Canada was inadequate to address the situation.
Many argued that the current employment insurance scheme and the social assistance system were out-dated models not equipped to deal with a changed, and changing, workforce. The New Democratic Party to the left of the Liberal party, which has not traditionally supported basic income but rather a strengthening of the employment insurance system, came out in favor of a universal guaranteed income as a pandemic measure and joined the push for the government to adopt such a policy.
At the time, however, Liberal Prime Minister Justin Trudeau rejected the idea of implementing a universal basic income and opted instead for a more targeted approach. This gave rise to the Canada Emergency Response Benefit (CERB), which was meant for those who did not qualify for existing support programs. The benefit provided individuals who had lost all or part of their income due to the Pandemic with a direct deposit of $2000CAD per month for up to six months. Among the five eligibility criteria for the program, an individual had to have earned minimum $5000CAD in employment income in the previous year, and, as such, it still to some degree tied eligibility to formal employment status.
There was both approval and criticism of the program from all sides of the political spectrum. The Conservative Party argued that the policy was too costly, enabled people to cheat and would prove a disincentive for people to look for and find new work, while the New Democratic Party criticised the policy for being too heavily conditional, not sufficient and not accessible to all who need it.
The program was nonetheless seen by some as a precursor to a potential basic income and as an unintended national experiment with basic income. Amid positive stories published in media on how the CERB had helped people get by, there were further calls to turn the program into a basic income – something that was again, however, rejected by the Prime Minister. Nevertheless, acknowledging that taking away this income support from people in the midst of an ongoing pandemic and new impending lock-downs, the program was replaced by a similar one called the Canada Recovery Benefit, set to end in September 2021.
Now, with the prospect of the pandemic coming to an end, the focus is on basic income as a part of the post-pandemic recovery. Further advocacy groups such as LeadNow and UBI Works have campaigned for the governing party to endorse the policy, and in February a Liberal member of parliament introduced a bill calling for national guaranteed basic income. A vote to determine whether the bill will be brought to committee is expected in coming weeks. If indeed based on the CERB, a hypothetical permanent Canadian basic income would likely not include the pandemic-specific work requirements, but further details as to what such a policy would look like are not provided in the motion.
Additionally, a week before the Liberal convention, the parliamentary budget office issued a report on the cost and the impact on poverty of a national guaranteed basic income, which has significant differences to the “basic income” as defined by BiEN. The report estimates the costs of a model akin to the one that was tested in the pilot project in Ontario to be $87.6 billion in 2022-23. This amount does not take into consideration the potential cost savings of repealing social assistance programs it might replace, as well as the potential savings in terms of health care costs, reduction in crime and less pressure on other social support systems that such a policy might have – something which Evelyn Forget’s groundbreaking work on the Mincome Project in the 1970s in Manitoba shows to be the case. The report concludes that this kind of basic income model could reduce poverty rates by 49% and further estimates that the effect on labour supply is a 1.3 percentage drop in hours worked per week on a national average. Both the cost of a national basic income and the effects on behaviour relating to work have been central concerns in the debate.
There was much anticipation leading up to the convention, and the vote to endorse basic income as a top policy priority signals a shift in the party’s stance on the policy, even though it is not binding. And while basic income was not a part of the Liberal’s federal budget for 2021-22, which was unveiled following the convention, the endorsement comes in an election year, which could make it a key election issue.
In his first piece for the Niskanen Centre, Edwin G. Dolan presents “three types” of libertarian who might be sympathetic to the idea of a universal basic income (UBI).
Dolan writes, a “UBI is a policy for pragmatic critics of well-intentioned but ineffective government, for classical liberals, and for advocates of personal freedom.”
For libertarian pragmatists, the issue with government – philosophical concerns aside – is that it so often does not get done what it sets out to get done. A UBI would dismantle today’s policies which diminish work incentives. With no benefit reductions, you would pay nothing but income tax which itself is low for those in poverty. UBI could also replace the benefits afforded to middle and upper class households. The result, for Dolan, would be no impact on the federal budget with a general streamlining of the system.
Secondly, Dolan argues classical liberals are more open to the legitimacy of the social safety net than we might imagine. For classical liberals the appeal of a UBI is its administrative efficiency. UBI administered as a universal demogrant is even superior, in the eyes of Dolan’s classical liberal, to Milton Friedman’s negative income tax.
Finally, the appeal for the lifestyle libertarian is the freedom to utilize the UBI as he or she sees fit. The UBI, for Dolan, stands in contrast the “nanny state mentality” of today’s policies, and offers a strong incentive for libertarians to ditch their rigid opposition to the redistribution of wealth.
Before beginning this essay, let me describe the people about whom I am speaking when I use the term “liberal”. In the American 21st century context, I am essentially describing the people you would likely find in the leadership of the Democratic party. Despite the conservative view of mainstream liberals as radical socialists, they are, at most, cautious reformers. Even that probably goes too far. The way they depict themselves, and probably actually see themselves, is as people who believe in the system, but want it to be fairer, more compassionate, and more efficient. When viewed systematically, the most important of those is efficiency. A look at policy reveals that the primary aim of liberals is using the government to make capitalism work better and more efficiently. This also applies to seemingly non-market concerns like welfare benefits, civil rights, and education.
Let us look at equal pay and anti-discrimination labor laws for women. Some economic theorists on the right argue that such laws are unnecessary. According to them, the market would automatically correct any form of discrimination. If sexist employers refused to hire women or paid them significantly less than their equally skilled male counterparts, other employers would exploit the opportunity to hire the women at higher wages. The productivity gains of the fairer employers would lead to emulation and competition for women workers until parity with men is achieved.
Liberals usually respond by appealing to empirical reality. If this argument were true today, it would have also been true in 1910. We know there was sex discrimination then, as there continues to be today. If markets corrected inefficiencies by themselves, there would never have been any gender discrimination. But liberal arguments do not contradict the claim that sex discrimination is inefficient. Laws preventing gender discrimination may be just and compassionate, but they also make markets work more efficiently. Eventually, laws against gender discrimination turned out to benefit employers as much as they benefited women. In the documentary Inequality For All, Robert Reich showed that employers took advantage of the growing numbers of women in the workforce competing with men for the same jobs, and this was one of the factors that eventually lead to the leveling off of real wage growth that began in the United States in the late 1970s and early 1980s .
This analysis applies across the range of policies pushed by liberals. Consumer protection laws and tort laws may protect and compensate consumers, but they also encourage trade by making it easier to trust strangers in the market. Public health care and education saves and enriches people’s lives, but they also produce a skilled and healthy workforce for employers. Laws that support strong unions help the workers themselves, but they also increase workers’ wages so that they can spend more as consumers. Infrastructure projects provide public goods that are used by all, but they notoriously prioritize the needs of businesses over the needs of the disadvantaged communities where they are inevitably built.
What about same-sex marriage? It is crucial for social justice, but does it help market efficiency to allow people to marry whom they wish? No, it does not, and that is why same-sex marriage provides a useful counter-example. The fact is that same-sex marriage was never really a mainstream liberal goal. Nor was it really a goal of the large mainstream gay rights organizations. The main goal was just for more acceptance of the LGBTQ+ community. If straight people can partake in hookup culture on apps like Tinder then why can’t gay people go on Discreet Gay Dating without being judged for it? If dysfunctional heterosexual couples can have a baby why can’t stable same-sex couples adopt one? Both the politicians and the organizations focused on the acceptances of the community and getting anti-discrimination laws passed, which do serve market efficiency as previously noted. Same-sex marriage as a goal arose from the gay and lesbian grass roots and was pursued more through the courts than through legislation. As late as 2008, all three top contenders for the Democratic nomination for President declared their opposition to same-sex marriage. The speed and enthusiasm with which virtually all of the top Democrats reversed their positions the moment same-sex marriage polled over 50% could certainly cause a person to doubt the sincerity of their previous opposition. But to blame that insincere opposition on political cowardice would be to miss the point. Professional politicians fight uphill battles against initial public opposition a lot. But they also have to pick their battles. And however much powerful liberals may have secretly sympathized with the plight of their gay and lesbian friends who wished to marry, and may have even supported them with donations towards items to help them consumate such a marriage (be it a feeldoe or helping with the ceremony itself), they were simply not going to prioritize a political battle for social justice that would not increase market efficiency, grow the economy, and enrich their campaign donors.
So where does this leave us with basic income? To answer this, we need to examine how liberals approach welfare in general. It is certainly true that they support much more generous benefits than conservatives, they also tend to be even more concerned with separating the deserving poor from the undeserving poor than conservatives, whose main concern is turning whatever welfare spending that does exist into a way to funnel that money into corporate coffers. Liberals usually support robust Earned Income Credits, a kind of negative income tax limited to low wage earners, dropping off quickly above the poverty line. They support benefits for children and the elderly as well as the disabled, although they can be extremely strict about whom they consider disabled. They will give welfare benefits to unemployed single parents sparingly, on a temporary basis, and require education or employment search conditions designed to get the parents back to work as soon as possible. Drug and alcohol abuse are seen as reasons to cut off benefits. For unemployed working age adults, liberals sponsor “Care Not Cash” initiatives, which replace cash benefits with direct services, in the few localities that offer any benefits at all.
The pattern is clear: liberals believe that humans have value primarily as engines of production and consumption. Within this view, welfare is a legitimate tool to push people into the labor market. This ensures that goods and services can be produced. Those who do work and those incapable of working are to be given a sufficient income to take them slightly above the poverty line. This appears compassionate, but the systemic reason is to ensure that they have just enough money that they spend all of it. This way there is sufficient demand for goods and services to be produced, but people can not save enough money to become capitalists or be able to leave the workforce. Indeed, virtually all public assistance programs cut off recipients with any significant savings. While conservatives fight for the direct interests of the capitalist class, liberals fight for the interests of the capitalist system.
I understand that few liberals consciously believe and support the goals and beliefs which I ascribe to them here. They believe they are compassionate people who want to make the system work better for the unfortunate. That is probably true. But it does not matter. Like with institutional racism, the conscious intent of the participants does not matter; it is their actions and the results that matter. And the fact is, if you assume that the primary concern of liberals is market efficiency, you will predict their actions better than if you assume that their primary concern is uplifting the downtrodden or achieving economic and social justice.
Let us look at one more example before we turn to basic income: the minimum wage. One obvious way that the minimum wage fits the pattern I have described is that you have to be employed to benefit from it. A less obvious way is that it looks free, but it is actually a tax that is passed on to consumers, so it is the middle class that pays for it, not the capitalist class.
But the most striking way that the minimum wage fits this pattern is when you look at its amount. Democrats pick a new number every seven to twelve years. They refuse to index it to inflation so they can have at least one winning issue against Republicans every decade. Opponents of raising the minimum wage always mock the arbitrary nature of the new number picked and ask something like, “Why not $100 per hour?” Liberals typically dismiss this mockery with empirical evidence, pointing out that raising the minimum wage has almost never resulted in a loss of jobs, and sometimes results in increased employment due to increased demand.
But as with anti-discrimination laws, just because right-wing critics are empirically wrong does not mean that they do not have a point. What criteria do liberals use to determine how much the minimum wage should be? $100 per hour likely would wreck the economy. But if $10.10 per hour, the current consensus goal of the Democratic Party, would have no ill effects, why not fight for $15, or $20, or $25? Why not commission a study to determine the maximum sustainable minimum wage? Applying the principle that liberals are working to support the capitalist system, we can see where they get their numbers. Liberals pick a minimum wage that puts workers near the edge of the poverty line, where they can be good consumers but never save enough to exit the workforce.
So what can we expect from liberals in the fight for a basic income?
We can start with two broadly optimistic points. First, since liberals are concerned with efficiency, evidence can sway them, and the scientific and empirical evidence is strong that a basic income is cheaper to administer, raises health and education outcomes, and does not cause people to quit working and live an idle life. Masses of healthy and educated people working and spending money churns the economy, and this is good for the capitalist system.
Second, liberals will join the basic income cause with little hesitation when the technological unemployment crisis starts receiving mainstream media attention. While liberals will tolerate significant unemployment because it keeps down labor costs, they will see too large a number of unemployed as wasted potential consumers. This will be especially true if more workers are not actually needed to produce the goods and services that the unemployed could otherwise buy.
Now the caveats.
Let me start off with a particularly American concern. Despite the significant libertarian origins of and current support for a basic income, many people hear the idea of the government giving everyone free money and they think, “socialism”. And in America, this is a problem. Despite the good arguments that could be made that the United States in the 1950s and 1960s had the most socialist economy that has ever existed in human history, America during the Cold War defined itself in opposition to “socialism”. For many, fear of the label has stuck. Conservatives still use “socialism” as an epithet for economic policies they oppose, and many liberals will do or say whatever is necessary to avoid being associated with socialism. If you ask prominent liberals, they will point to surveys showing the unpopularity of socialism in America. This could be a chicken and egg problem: why should most Americans not be afraid of socialism if even liberal leaders oppose it? Fortunately, this also appears to be a generational problem that is going away. Recent surveys of Americans under 30 show support for socialism to be equal to support for capitalism, and the Presidential campaign of Bernie Sanders may be showing that fear of the label “socialism” is overblown.
The next problem with liberals will be to educate them. The facts being on our side will not help if establishment liberals do not know them. The specific problem here is that the misrepresentations of the work participation and family stability effects of the Negative Income Tax experiments that were spread in the mid 1970s are still believed by many establishment liberals. We will have to work hard to correct those misbeliefs.
Another problem will be that if technological unemployment does not reach a crisis point, liberals will simply not prioritize basic income on their own. They will have to be dragged into taking action by political pressure. This will be similar to the example of same-sex marriage, except that instead of claiming opposition up until the public changes its mind, look for liberals to vocalize general support for the concept of a basic income, but not do anything about it. An example of this strategy was how, in the years following the U.S. invasion of Iraq, a lot of politicians of all stripes, including President Bush, voiced support for setting up an Alaska style trust fund to pay oil dividends to all Iraqis, but it never happened. This will be because, even if liberals come to agree that a basic income would be a better policy than the current welfare system, the efficiency benefits to the capitalist system are not great enough to put it on their priority list. Just as the suffering of gays and lesbians who wanted to marry was not sufficient cause to make same-sex marriage a priority, neither is the suffering of the poor. It never has been in the past. Again, this will change when technological unemployment becomes a crisis, and there will not be enough consumers to buy goods and services without a basic income.
The final, and biggest challenge with liberals as allies will be their attempts to dilute the idea of a basic income. While they may become far more generous with the cash amounts, it will be difficult for them not to attach strings and conditions. The reason is that it will be difficult to change their belief that they know how to run the lives of the poor better than the poor themselves. But a bigger danger is that they will try to insist on means-testing. They will try to make the middle-class believe that means-testing will make it cheaper for them. The reality is that means-testing will make the financial burden of a minimum income fall on the middle-classes. This, again, is because the goal for liberals is not economic justice, but making the current capitalist system run better.
In order to relieve the immediate suffering of the poor and establish the principle that poverty is not tolerated in our society, it may be necessary to agree to means-testing to pass an initial guaranteed minimum income. Liberals will trumpet that the job is done. Those of us who count justice as one of our goals need to be prepared to continue the fight.
