Floyd Marinescu, a Canadian entrepreneur who describes himself as “an angel investor, author, humanitarian, and homosapien”, is featured in this interview, on CBC Radio, which has been condensed into a Whiteboard animation. Floyd has been a long-time defender of basic income, from a business perspective. According to him, the rise in aggregate demand which basic income will generate, is just what business needs to flourish. Paying for a basic income would also be fairly straightforward, Floyd reasons, especially when you realize that it’s net cost that matters, not gross cost. Financing would then come from closing redundant welfare programs, resolving tax loop holes, moderate rises in income tax and a series of other tax revenues (e.g.: carbon emissions, financial transactions, natural resources extraction, intellectual property).
Marinescu talks about “compassionate capitalism”, which builds on innovation and entrepreneurship, but also redistributes corporate gains to the whole of the population, so that “the working poor don’t need to be destitute”. For him, basic income also means freedom, personally and professionally, given the high number of people clearly mismatched with their current jobs, since it would allow them to make the necessary changes in their lives. Basic income would also allow more risk-taking, which is essential for entrepreneurship. Overall, according to Marinescu, basic income would be a great economic stimulus for Canada, putting more money into circulation, benefitting most people and also the government, which would collect more taxes to spend on public goods and services.
After the cancellation of the Ontario basic income experiment, country-wide discussions about the issue continues in Canada as the Federal Government approaches the policy, although a direct intervention in Ontario is unlikely. Prime Minister Trudeau and his Social Development Minister Jean-Yves Duclos have already stated that the Federal Government does not intrude into regional policy programs. However, Duclos has said, this month, that existing benefits will eventually cover more people than those already eligible for state (not universal) guaranteed minimum income. In his words: “At some point, there will be a universal guaranteed minimum income in Canada for all Canadians”.
So, despite all the opposition, rallies and advices against the Ontario axed basic income experiment, apparently it is indeed buried. However, it seems, interest in the concept is higher than ever, which is not surprising since the causing needs are still there (poverty, bureaucratic conditional welfare, precariousness, unemployment). Pundits on television agree over the concept, while looking at it as a tool to reduce the government influence radius (a more conservative approach to basic income), but certain that other basic income pilots will effectively be tried out in Canada (if not by other reasons, for beefing up the liberal agenda). Trudeau, on his end, has expressed sympathy for basic income, as a way to support workers, giving people some stability. That and a myriad of other considered policies, according to him: “I don’t think I’d be speaking out of turn to say that [basic income] it’s still something that is in the universe of all sorts of tools that we’re looking at on how to best help Canadians”.
Even though the Federal parliamentary budget office has calculated that supplying a guaranteed financial floor to all Canadians (up to an average of CAN$ 9421/year) would implicate an expenditure rise on social benefits of around 30%, basic income captures interest even on the Conservative side of the political spectrum. Karen Vecchio, MP for the Conservatives, has favoured the concept, although rising cost implications and questioning eventual long-term benefits for Canadians. That’s exactly why Hugh Segal, one of the Ontario basic income experiment designers (and former Conservative senator), affirms that such pilots are necessary: “to figure out whether the idea works”. Segal, as well as Jagmeet Singh, leader of Canada’s New Democratic Party, argue that the Federal Government should pick up the cancelled Ontario basic income experiment, or at least help in financing further regional pilots.
A new working paper released by Growthpolicy, which disseminates research by Harvard scholars on the topics of economic growth, employment, and inequality, argues that a universal basic income is superior to current low wage subsidies in several ways. The author, Associate Professor of Economics at Harvard, Dr. Maximilian Kasy contends that these subsidies, specifically the Earned Income Tax Credit (EITC) in the United States, comparatively carries several economic, moral, and political disadvantages.
The EITC is a subsidy to low income working families and increases with income to specific thresholds, depending on household size. The credit has been found to incentivize work, reduce welfare dependency, improve child health and educational outcomes, and lifts roughly 6.5 million people above the official poverty line. Kasy argues that a basic income could produce similar outcomes while eliminating several important drawbacks. First, because the demand for labor is finite, especially in times of recession, incentivizing some workers to work more, which ultimately creates fewer jobs overall. In other words, if a service sector employee works overtime hours in order to maximize the EITC credit, her employer will not need to hire an additional employee to cover those hours. Further, multiple researchers have found that subsidizing low wage work via the EITC plus cuts to traditional welfare, in the 1990s, decreased pressure on employers to offer a living wage and ultimately contributed to the declining value of the minimum wage. In essence, Kasy argues, the EITC is a subsidy to employers. Conversely, a UBI would increase the bargaining power of workers and wages would thusly rise.
Dr. Kasey also asserts that a basic income would reduce the coercive power that employers, abusive partners, and a paternalistic welfare system hold over economically marginalized populations. Low wage workers, survivors of domestic violence, and mothers at the mercy of intrusive welfare policy would have an increased ability to walk away from exploitative situations. Furthermore, a basic income would fairly compensate child and elder care work, which is largely done by women and goes unrewarded in our current wage-based system.
Finally, as many have argued, Dr. Kasey finds that a universal basic income carries potentially greater political stability than means-tested benefits. For example, while the passage of Social Security in the 1930s and Medicare in the 1960s was met with cries of “Socialism!,”, these were soon widely popular across the political spectrum and are rarely considered as potential areas for federal budget cuts.
By Amy King, in collaboration with Basic Income Waterloo Region
Basic income is currently a hot topic in Canada. From debates across the political spectrum of a basic income and reminders of the success of Manitoba’s Mincome experiment in the 1970s, to the cancellation by the Progressive Conservative (PC) government of Ontario of the previous Liberal government’s basic income pilot, “basic income” is the subject of lively discussion among Canadians.
While this widespread attention is welcome, it has also raised the concern that the discussion of a “basic income” often conflates two distinct concepts: a basic income (BI) and a negative income tax (NIT). The result of this conflation is that the concept of BI has been marginalized in current social and political discourse, as the term “basic income” is co-opted to refer to an NIT and not a basic income as advocated for by the basic income movement. This co-optation creates confusion around which concept one is referring to when they use the term, “basic income” and, perhaps more damagingly, leaves the basic income movement without a term to capture the concept they so passionately believe in and advocate for.
NIT is referred to by Parijs & Vanderborght (2017) as a “cousin” of BI. Briefly, a basic income is distributed upfront to all individuals in the same amount, without an obligation to work or otherwise contribute something in return and without income or means testing (Parijs & Vanderborght, 2017). A negative income tax, in contrast, is distributed within an income tax scheme and is determined based on the level of income of the individual or household (Parijs & Vanderborght, 2017). A negative income tax, therefore, differs from a basic income in important ways: It is not necessarily universally distributed; it is not necessarily distributed to individuals; it is not distributed in the same amount to all individuals; and finally, the amount may be determined through income testing.
Distinguishing between the BI and NIT is, therefore, crucial, as each has a clear, and often disparate, vision of the implementation and ends of a “basic income.” Advocates of a basic income push for the implementation of a basic income program that is universally and exclusively individually distributed. Universal distribution ensures that recipients will not be stigmatized or privileged based on income or employment and does not require individual administrative oversight by public employees. Individual distribution allows recipients to manage their own financial affairs. While an NIT has poverty alleviation as its goal and it may well succeed in achieving this, BI has a robust vision of socio-economic justice that aims toward liberty and equality for all.
Ontario’s so-called basic income pilot followed a negative income tax model. Participants were between the ages of 18 and 64, with an income below $34,000/a for an individual, and $48,000/a for a couple (Ontario Basic Income Pilot, 2017). The pilot followed a tax credit model, so that single participants were guaranteed $16,989, less 50 percent of any earned income and couples were guaranteed $24,027 per year for a couple, less 50 percent of any earned income (Ontario Basic Income Pilot, 2017). The scheme implemented during the pilot therefore differed from a basic income in that it was not universal, distribution was not exclusively individual, and it was income tested.
Another example of this co-optation occurs in Mark Gollom’s article for the CBC, “Basic income finds support on right as ‘most transparent’ form of redistribution” (2017, April 25). As indicated by the title, Gollom (2017, April 25) reports support from the right for the Ontario Liberal government’s NIT trial and discusses the championing of the concept of an NIT by Milton Friedman and Friedrich Hayek.
In this article, Gollom (2017, April 25) offers a useful outline of arguments from the right for an NIT, which may be considered by some a “welfare” program more amenable to supporters of left-leaning economic policy. However, it also offers a helpful example of the conceptual blurring that occurs around the term “basic income”. The terms “basic income” and “negative-income tax” are employed often, but the article’s focus is a negative-income tax—there is no mention of support for a basic income. If someone unfamiliar with the distinction between the concepts of a BI and an NIT were to read the article, they would conclude that an NIT scheme is a basic income scheme. This is conceptually misleading—an NIT is not a BI—and it results in the marginalization of the concept of a basic income in the current debate.
It is evident then that there are important philosophical and political differences between BI and an NIT that are obscured when the term “basic income” is employed indiscriminately. Indiscriminate use of the term “basic income” is also problematic because it has resulted in co-optation of the term to refer to an NIT. This marginalization and co-optation of the term “basic income” is problematic for many reasons.
First, in Canada, as we’ve seen, NIT currently serves as the default against which basic income programs are measured. The argument is made that the differences between an NIT and a BI are negligible, or that they do not make a substantive difference. The argument is also made that an NIT is more politically feasible than a BI. These factors, along with NIT’s support from vocal advocates, has positioned NIT at the forefront of the discourse around a basic income. However, the discourse does not often refer to an NIT as an NIT. Instead, an NIT is referred to as a “basic income”, and even sometimes, a “universal basic income” (for example here). Because the concept of a BI has been absorbed in the discourse into the concept of an NIT, BI advocates struggle to describe and argue their case.
Second, when we envision a just society, where people are not prevented by socio-economic barriers from realizing their potential, where people do not face insurmountable obstacles to breaking the cycle of poverty and where people are not discriminated against, oppressed or stigmatized because of socio-economic factors, it is clear that only a BI holds this transformative socio-political promise. Why not measure proposals against a vision of a society worth striving for, rather than ignoring the differences between an NIT and a BI and limiting our vision to considerations of political feasibility? BI’s transformative potential is obfuscated when NIT-based proposals are referred to as BI proposals and the discourse centres around these NIT-based proposals. The potential of BI is dismissed and marginalized from the discourse.
Third, because the language to describe a BI has been assimilated to an NIT, BI advocates must resort to using clunky and obscure terms such as “demogrant” to describe the concept, or else engage in lengthy explanations to describe what could otherwise be summed up in the term “basic income.”
Fourth, internationally, the term “basic income” is still used to refer to a universal, unconditional and exclusively individually delivered basic income. Because of the co-optation of the term “basic income” in Canada to refer to an NIT, there is a discrepancy between the understanding of the concept in Canada and in the rest of the world. This not only creates confusion, it can create a sense of deception in supporters of a basic income when they learn about a “basic income” pilot in Ontario, where the basic income is not universal, unconditional or exclusively individual. These supporters may question their involvement in the movement when the basic income they advocate for is so different from what is implemented in a “basic income” pilot.
This is not to underestimate the importance of the NIT concept to the basic income movement, nor to set it up in opposition to BI. Because of their appeal across the political spectrum and amenability to current income tax schemes, advocacy for, and implementation of NIT schemes, may be a crucial step toward realizing the aims of the basic income movement. NIT schemes are considered by Parijs & Vanderborght (2017) to be the most appealing of basic income’s cousins because they do not exclude people who do not perform paid work from being recipients, offering a step forward in terms of liberty and equality, while also reducing the stigma against people who do not have paid employment.
Distinguishing between BI and NIT is critical at this time as support for and dialogue around the idea of a “basic income” has reached critical mass. The hope is that clarifying the distinction between the two concepts will unite supporters of both negative income tax and basic income to form an inclusive movement based on their mutual recognition of overlapping aims. The strength in unity is especially critical now as a bulwark against current and future government policies that target and punish the least well-off in society.
Lowrey, A. (2018, July 13). Smart money: Why the world should embrace universal basic income. The Globe and Mail. Retrieved from: https://www.theglobeandmail.com/opinion/article-smart-money-why-the-world-should-embrace-universal-basic-income/
Ontario Ministry of Children, Community and Social Services (2017). Ontario Basic Income Pilot. Retrieved from www.ontario.ca/basicincome.
Parijs, P and Vanderborght, Y. (2017). Basic income: a radical proposal for a free society and a sane economy. Cambridge, Massachusetts: Harvard UP.
India Network for Basic Income (INBI) will host the 19th BIEN Congress in Hyderabad, India, from 22nd to 25th of August 2019. At a time when the welfare state is undergoing major crisis, all around the world, and the discussion around basic income is gaining traction, it is ever more important to give voice to speakers and participants to present and debate this crucial new approach to social security. Being an international Congress, participants and speakers will be coming from different parts of the world, which only adds to the diversity of views and opinions a real global debate like the one referred above needs. Last year’s 18th BIEN Congress was held in Tampere, Finland, organized by the local BIEN affiliate.
The Congress organization results from a partnership between INBI and the NALSAR University of Law, which will house the Congress in its state-of-the-art campus on the outskirts of Hyderabad. INBI is also partnering with SEWA Madhya Pradesh, one of the largest membership-based women’s organization in the world and which played a key role in the Madhya Pradesh basic income pilot study. With SEWA, INBI will be producing short films and planning several campaign events in Madhya Pradesh and other parts of the country in the run up for the Congress. The days running up to the Congress will also host a major Hackathon in Hyderabad, organized by another INBI’s partner organization, the WisoCoLab. This event will also feature discussions around basic income and will feed in the Congress with a sum of its activities. Finally, the Mustardseed Trust is also partnering with INBI, as a financial supporter to the Congress, and in presenting a session at the Congress under “Basic Income and Caring Economy”.
The Congress itself will have plenary sessions, dynamic plenaries (panel of experts, with a moderator) and parallel sessions, in a structure similar to other BIEN Congresses. As in the latest Congress in Finland, there will also be a basic income short film festival integrated into to program schedule. New features planned are the BIEN Civic Forum, and the Basic Income Ideas Bazaar. The former, happening in the 22nd of August, intends to bring together different stakeholders in a given national or regional context to share views and debate basic income. The idea is to bring together policy-makers, corporate leaders and academics at the highest levels in the Indian context so as to strengthen the basic income debate in India. The latter is a space where organizations, artists and groups working on basic income who wish to showcase their work can do so at a nominal cost.
A formal Call for Papers to the Congress will soon be released.
